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David Harvey's 'A Brief History of Neoliberalism'

by andrethegiant Mon Mar 19th, 2007 at 05:43:15 AM EST

I've just written a summary (for my own work) of David Harvey's A Brief History of Neoliberalism.  Having followed all the excellent diaries here recently on various economists (and Jerome's neolib reference today) I thought Harvey's ideas might be of interest to some of us around here.

Because I've summarized Harvey's work in some detail, the post is quite long, so I will be splitting it up over several days.  The first few diaries will be more or less just a plain summary.  When I get to the end, I will try and open up the discussion with some outside sources (by Harvey and others) to put this particular work in context...

From the diaries - afew


David Harvey's A Brief History of Neoliberalism makes for compelling reading for those interested in the political economy of the last thirty-odd years.  Or should I say thirty odd years.  

Of particular interest is not only the historical sweep of the book, or its relative clarity compared to other works by Harvey, but the prism the author gives the reader to understand the present contradictions of globalism comprehensively, from economic, political and, yes, even moral points of view.

The book's foundation stands on Harvey's ability to weave the global aspects of international capital into case studies of countries who have tried neoliberalism (voluntarily or not) to varying degrees, from Britain to Chile, Argentina, Mexico, China and, of course, the U.S.  From his analyses, Harvey steps naturally and logically out of history and into an investigation of the current state of neoliberalism and its possible futures.  As Harvey points out, citing visionary thinking of Polanyi, neoliberalism, in both philosophy and practice, is fraught with contradictions and ambiguities that lend it strength while undermining its central tenets.   In a word, there is much to be afraid of, but there is also space for hope.

Freedom
Understanding neoliberalism requires an introduction to the basic tenets of 'freedom' as laid out by the Mont Pélerin Society shortly after World War II.  Led by political philosopher Friederich von Hayek, the society set out to combat what they saw as the primary "dangers" facing the Occident:


The central values of civilization are in danger...even that most precious possession of Western Man, freedom of thought and expression, is threatened by the spread of creeds, which...seek only to establish a position of power in which they can suppress and obliterate all views but their own.
    The group holds that these developments have been fostered by the growth of a view of history which denies all absolute moral standards and by the growth of theories which question the desirability of the rule of law.  It holds further that they have been fostered by a decline of belief in private property and the competitive market; for with the diffused power and initiative associated with these institutions it is difficult to imagine a society in which freedom may be preserved. (Harvey 20)

Hence, as Harvey points out, freedom bcomes the result of private property and a competitive market.  Relying on neoclassical economics and the rational actor, neoliberalism showed a great distrust of certain types of government intervention such as centralized control of the economy as predicated in the Keynsian tradition coming out of the Great Depression and especially in the dirigiste form found in countries like France and Mexico.  The founding Neoliberals believed that no government had enough access to economic information to accurately plan an economy and that only the invisible hand of the market could make such decisions.

"The scientific rigor of its neoclassical economics does not," writes Harvey, "sit well with its political ideas of freedom, nor does its supposed distrust of state power for a strong and if necessary coercive state that will defend the rights of private property, individual liberty and entrepreneurial freedoms" (21).  Indeed, the contradictions between personal and entrepreneurial freedom become rapidly apparent as one neoliberal state after another paradoxically increases state power over the individual to ensure freedoms for that other individual, the corporate enterprise.  This seems to prove the thinker Polayni uncannily prescient:


Planning and control are being attacked as a denial of freedom.  Free enterprise and private ownership are declared to be  essentials of freedom.  No society built on other foundations is said to deserve to be called free.  The freedom that regulation creates is denounced as unfreedom; the justice liberty and welfare it offers are described as a camouflage of slavery. (Harvey 37)

Besides these obvious contradictions, neoliberalism is also blind to power within the system.  (Perhaps this is intentional.)  Because no market is free from the influence of power, there is a tendency in them to move towards monopolistic or oligopolistic forms of enterprise.  While there are some exceptions, this has proven true in almost every mature market, whether it is a question of car manufacturers or, in particular and most dangerously, mass media.  Mirroring the establishment of giant enterprises is the revival of a self-reinforcing and growing elite using wealth to increase power and vice versa.  The result, as Harvey notes, means that the top 358 fortunes of 1996 equaled the combined wealth of the bottom 2.3 billion, that is, the bottom 45% of the world's population (34-35).  In other words, neoliberalism has meant a revival of class power, and this too has implications for freedom, since the voices of many poor and middle-class citizens remain unheard or weakened under the strains of the supposedly democratic neoliberal state.

Class Power Reborn
The revival and strengthening of the upper class since Reagan and Thatcher is easily demonstrable by charting the trends of distribution of wealth, the tremendous rise in CEO compensation and the shape and size of tax laws over the last few decades.  That rewarding the rich with even more power and wealth through the weakening of financial rules and tax responsibilities has become so commonplace is testament to the influence of neoliberalism on a global scale, but also as way of thinking that has invaded the public's self-image.  Harvey thus relates that societies that seem to be acting with neoliberal "common sense" are not always acting for the common good.  In fact, privatization on both a grand scale and at the molecular level of "personal responsibility" saps energy from the idea of common and communal good by lending credence to the idea that what is good for the individual must also be good for the community.  


By capturing ideals of individual freedom and turning them against the interventionist and regulatory practices of the state, capitalist class interests could hope to protect and even restore their position...But it had to be backed up by a practical strategy that emphasized the liberty of consumer choice, not only with respect to particular products but also with respect to lifestyles, modes of expression, and a wide range of cultural practices.  Neoliberalization required both politically and economically the construction of a neoliberal market-based populist culture of differentiated consumerism and individual libertarianism. (42-43)

Of course, this individual libertarianism has created contradictions in neoliberalism itself as the very real breakdown of old social orders has also liberated marginalized groups (Gays and Lesbians for example).  Not surprisingly, this has led to the desire of many on the Right to replace newly won personal freedoms with authoritarianism and populist "morality."  

"Left movements," he writes, "failed to recognize or confront, let alone transcend, the inherent tension between the quest for individual freedoms and social justice" (43).  On the right, however, there was both a conscious and subconscious awareness that, in the 1970's, the tectonic cultural shifts from the left and the rising power of the finance economy begun under Nixon could be absorbed through the prism of neoliberal philosophy and economics.  Neoliberals saw, in the Left's "prescriptivism," an opportunity to gain influence by promising liberation.    They thus set out to take advantage of this situation through long-term planning and concerted effort.  Harvey cites the growth and influence of organizations such as the Chamber of Commerce, National Bureau of Economic Research and many other think tanks that quickly began to gain influence in Washington, in universities and in the press.  Quoting Blyth, Harvey determines that by the end of the decade, "[b]usiness was learning to spend as a class" (44).

The multiple economic crises of the 1970's were, in fact, the result of capitalism being unable to provide markets for its surplus gains (there seemed to be nowhere to invest).  The oil embargo of course played a role too.  The U.S. agreed not to invade or harass Saudi Arabi following the OPEC rise in power provided that the Saudis would turn right back around and reinvest the petrodollars in Wall Street.  The funneling of a huge amount of dollars into U.S. markets from Saudi Arabia following the oil crisis brought with it some problems.  The U.S. economy was doing poorly and therefore not ripe for investment.  What to do with the surplus--and surplus income always brings the danger of inflation or stagnation--became a major issue.  The answer came, over the next few years, in the form of a reconstituting of international monetary policy in the World Bank and IMF.  This process took several years and was the result of multiple processes and examples, and it essentially led to re-investment of the petrodollars in the form of loans to third-world nations, with Wall Street reaping enormous benefits as the middlemen.   The monetary crises would also mean a great deal of restructuring at home, but in a very different form than had been practiced since the New Deal's keynsian social pact.  This time the confluence of investment money would join with the allure of individualism preached by neoliberal institutions and politicians such as Reagan and Thatcher.  

As stated above, the Left should be blamed for failing to counter-argue the neoliberal narrative and demonstrate the repercussions of the rise of a new class of wealthy elite.  Harvey points out as well the flexibility of neoliberalism to insert itself into divergent political economic systems such as Britain and the U.S.  Notions of class have always been fluid in the U.S., but in Britain they have long been associated with the aristocracy and aristocratic institutions.  Thatcher's neoliberalism thus represented not a restoration of the old aristocracy, but the creation of a new one, of the London City-based financier, and in that sense did indeed "liberalize" England (if not Great Britain).

Display:
As I said, I'll be posting more over the next few days.  I should also add that I started posting this over at my own site, but then realized that it might be of interest to folks here.  So, why not roll it out here!
by andrethegiant on Sun Mar 18th, 2007 at 10:10:01 AM EST

Neoliberals saw, in the Left's "prescriptivism," an opportunity to gain influence by promising liberation.    They thus set out to take advantage of this situation through long-term planning and concerted effort.

Thanks for this diary. I'd suggest to give us a few days between each instalment to absorb and discuss each calmly.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Mar 18th, 2007 at 11:06:40 AM EST
[ Parent ]
Thanks!  I should have followed it up: "they thus set out to take advantage of this situation through long-term planning and concerted effort... to discount and dismiss long-term planning and concerted effort in the public's interest."
by andrethegiant on Sun Mar 18th, 2007 at 11:10:43 AM EST
[ Parent ]
On the other hand, although the left typically advocates benefits of cooperation, long-term planning and concentrated effort, they did not demonstrated much unity and urgency to apply these strategies politically. Especially in the US, their behaviour is very reflexive, narrow-focused and hardly cooperative.

The neo-liberal and neo-conservative movements are indeed good examples of what long-term planning and concentrated effort can do. If cooperation and long-term planning happens to be an advantage of evolutionary importance... it makes sense to fool others not to cooperate or plan long. The main difference between haves and have-nots of this world I see the following: The haves cooperate actually a lot, by providing each other plenty services (financial, legal, informative, recreational, etc), while have-nots know nothing but to compete with each other, each "cooperating" only with one rich employer, so to speak.

by das monde on Mon Mar 19th, 2007 at 01:06:21 AM EST
[ Parent ]
Via Xavier Gorce in Le Monde's electronic newsletter:

Let's unite the left of the left to makes our idea triumph.
OK.
Just one issue.
our ideas.


In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Mar 19th, 2007 at 04:36:59 AM EST
[ Parent ]
Precisely.

Cue in a march of the right-wing penguins who don't cara about ideas but just triumph.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 04:40:13 AM EST
[ Parent ]
Whatever lame ideas the right has, they bring the message of those ideas with much better conviction. They even have empirical points - look at these people, look at those countries, they are implementing their ideas the best, and they are performing the best. Even if their main tool appears to be well coined rhetorics and mass psychology, their do insert logical arguments which make people make conclusions, perhaps not fully conciously but possibly very effectively. The right can be content with frustrating us with their inconsistent logic, but forcing people to think as they intend much better than us earnestly setting and following academic rules of debating.

Consider for example Krugman's interview at Foxnews. Did he really change many minds?

by das monde on Mon Mar 19th, 2007 at 05:19:00 AM EST
[ Parent ]
I'm beginning to resign myself to belonging to a minority culture.

"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 05:20:21 AM EST
[ Parent ]
One of the things the Right does is consistently act like they are in the minority and being attacked.  It has kept them unified in the face of danger (reason) for quite a while now.  In fact, Hayek's whole foundation is based on  the presumed end of "Western Civilization."  They have milked that cow for 50 years.  It's rather astounding.
by andrethegiant on Mon Mar 19th, 2007 at 08:19:45 AM EST
[ Parent ]
From the first diary you link:
In print, Krugman is a master. But he's not suited for the television age. He stammers. A man of fairly short stature to begin with, he slouches in his chair, like he's taking up as little space as possible. He allows people to talk over him and interrupt him to get in their little bon mots and sidetrack him from his reasoned arguments. Most damningly, he has trouble making eye contact, and often looks away and down at the table when he speaks, which could give the impression that he's dishonest.
Hey, I stammer too. When I was a graduate student in California I started picking up cues in other people's speech that they stammered (or had in the past).

"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 05:31:24 AM EST
[ Parent ]
Dropped the last line in my comment...

The point is, I was amazed at the number of people I would have bet stammered.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 05:46:13 AM EST
[ Parent ]
stammer ['stamər] verb [ intrans. ] speak with sudden involuntary pauses and a tendency to repeat the initial letters of words.

Stammering, especially on TV, would a problem to me as well.

I checked the video once more, and I have to say, I did not see much stammering of Krugman until the last 55 seconds. He looked pretty comfortable, and was not hiding eyes. The description above does not really apply to this video. In particular, Krugman's face language was good when Cavuto mentioned 9/11 first time, and still fine even when he was accused of lying.

There were 2 appearance problems for Krugman: Cavuto was not allowing to talk and finish arguments around the middle point of the interview, and then 1-2 min. before the end. And with the last minute, Krugman was flattered by Cavuto saying how great economy now must be despite "corporate" and "stock" bubbles collapsing (presumably in 2000).

But on the other hand, Krugman did not have much interesting to say. His main argument was that "majority of people do not think that the economy is great" - which is a weak proposition. (How does he know what people think?) Foxnews viewers had to hear more how unequal the wealth distribution is.

by das monde on Mon Mar 19th, 2007 at 06:24:52 AM EST
[ Parent ]
Yeah...he should have been more forceful and perhaps sarcastic: You think the economy is great? How much credit card debt do you have?  How big is your mortgage compared to your salary?  How many kids do you have to feed? Is Fox going to ship your job overseas to a place with no worker protections?  Is health care a problem for you?

Taking a cue from the Lakoff school, a little laughter, pointed dismissiveness followed by some salient points can go a long way...

by andrethegiant on Mon Mar 19th, 2007 at 08:24:35 AM EST
[ Parent ]
God, that interview was infuriating. I couldn't get more than 5 minutes of it.

And people who were criticising Krugman for his body language don't know what they're talking about - he was doing just fine.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 06:00:57 PM EST
[ Parent ]
Or, as I once joked to you (quoting Lewis Black):

"Republicans are the party of bad ideas.  Democrats are the party of no ideas.  A Republican will say, 'I've got a really bad idea,' and the Democrats will respond, 'And we can make it worse!'"

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 19th, 2007 at 09:46:21 AM EST
[ Parent ]
Besides these obvious contradictions, neoliberalism is also blind to power within the system.  (Perhaps this is intentional.)  Because no market is free from the influence of power, there is a tendency in them to move towards monopolistic or oligopolistic forms of enterprise.  While there are some exceptions, this has proven true in almost every mature market, whether it is a question of car manufacturers or, in particular and most dangerously, mass media.

Indeed.  In a world in which a mere handful of corporations control every market that matters, the very concept of a free market is an oxymoron.  When a mere handful of corporations control virtually all media outlets, the very concept of a free press is an oxymoron.

We all bleed the same color.

by budr on Sun Mar 18th, 2007 at 12:23:53 PM EST
Yeah, one of the most brain-twisting, ennervating things about the neolibs (and the neocons, for that matter) is their ability to be completely contradictory and get away with it.  That partly because the media is complicit in creating neoliberal environments, and partly because people are so brainwashed by parts of the neoliberal agenda that they can't see outside of it.
by andrethegiant on Sun Mar 18th, 2007 at 02:04:01 PM EST
[ Parent ]
Thought provoking diary!  Thanks andre.

Off the cuff ruminations ....

The rigidity and bifurcative (Exclusive Or) essence of the neo-lib argument is striking.

"The Road to Serfdom" -- the title of Hayek's book, as if there is only one

Ignoring what doesn't fit.

"the state cannot adequately plan an economy" -- oh really?  The US economy in World War II was unable to produce the munitions needed by its armed forces?  My point: under certain circumstances the State can adequately plan an economy for a certain period of time.  In fact, one can make the argument the basis of the post-war expansion was the capital garnered, through deferred consumer consumption, during the enforced restriction of consumption as well as the higher level of demand over a short period of time for those consumer goods 'kicked' the US economy into a virtuous postivie feedback loop.  Additionally, the Marshall Plan - more State intervention - led to a virtuous cycle in Europe as well as increased demand for industrial goods from the US -- due to its factories were not bombed.

The point here is narrow: under war and post-war conditions the State can achieve Public Goals through central planning.  Thus the general statement, made above, is false.  

Myth of the Rational Actor

This is as exploded as a theory can be.  Notice, tho', the Exclusive Or:  Rational XOR Irrational.  In fact human decision making is a convoluted, complex, process even when confined to its purely cognitive aspects.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Mar 18th, 2007 at 12:34:07 PM EST
Exactly.  The idea that the FED/IMF/World Bank/Other financial institutions are not central planners is ridiculous, yet this is what is spouted by the right all the time.  The myth that the Fed is mostly reactive and value-free (that is, free markets are natural systems) is preposterous.  Yet again, this is what we are led to believe (in the U.S.).  Like our elections, markets are horse races where survival of the fittest prevails.  Money, influence, social relations, class issues do not (for the media) exist, and therefore they are absent from the neoliberal psyche.

Hence, many people end up thinking that programs and planning bring failure...but this leads to another discussion of planned failure à la FEMA, or social security since Reagan, where government spending (in certain arena of social importance) is manipulated to make government seem either incompetent or burdensome.  The social costs of not investing (or the benefits of investing) in this spending is NEVER discussed.

by andrethegiant on Sun Mar 18th, 2007 at 02:13:35 PM EST
[ Parent ]

Is this planning or embroidering?

Wolfowitz Takes Actions to Gear Up World Bank for Iraq
Inside Sources States Board Members Opposed

http://www.commondreams.org/news2007/0216-02.htm

The unilateral appointment of a resident Iraq country director can only aggravate an already tense standoff between Wolfowitz and the Bank Board. Members of the Board have already expressed concerns about misuse of other donors' funds in the country and emphasized to the US-appointed President "...the need for compliance with the Bank's fiduciary and safeguard requirements," also according to the ISN 2005.




Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Mon Mar 19th, 2007 at 08:50:38 AM EST
[ Parent ]
How surprising!  Actually, how predicable.  Here's a preview of Harvey's thoughts on the WB/IMF/Treasury complex:

As Indonesia's GDP fell and unemployment surged, the IMF stepped in to mandate austerity by abolishing subsidies on food and kerosene.  The riots that followed 'tore the country's social fabric' apart.  The capitalist classes, mainly ethnic Chinese, were widely blamed for the debacle.  While the wealthiest Chinese business elite decamped to Singapore, a wave of revenge killings and attacks on property engulfed the rest of the Chinese minority...The standard IMF/US Treasury explanation for the crisis was too much state intervention and corrupt relationships between state and business ('crony capitalism').  Further neoliberalization was the answer.  The Treasury and the IMF acted accordingly, with disastrous consequences.  The alternative view of the crisis was the impetuous financial deregulation and the failure to construct adequate regulatory controls over unruly and speculative portfolio investments lay at the heart of the problem.  The evidence for the latter view is substantial:  those countries that had not liberated capital markets--Singapore, Taiwan, and China--were far less affected than those countries, such as Thailand, Indonesia, Malaysia and the Phillippines, that had.  Furthermore, the one country that ignored the IMF and imposed capital controls--Malaysia--recovered faster.  After South Korea likewise rejected IMF advice on industrial and financial restructuring, it also staged a faster recovery. (Harvey 96-97)

But who would ever think the World Bank or the IMF could be instruments of repression? </snark>

by andrethegiant on Mon Mar 19th, 2007 at 09:21:05 AM EST
[ Parent ]
And as for all the talk about the rational actor, I agree too.  It is amazing how much time economists will invest in this issue despite all the problems.  Should we say that economics might just sometimes be ideological rather than scientific?  Not always, but sometimes, and especially when pet theories are trotted out.
by andrethegiant on Sun Mar 18th, 2007 at 02:17:09 PM EST
[ Parent ]

Should we say that economics might just sometimes be ideological rather than scientific?

I think this has been one of the main tunes of ET over the past year - the decryption (and description) of the ideological code that underpins so much of today's political discourse.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Mar 18th, 2007 at 02:31:37 PM EST
[ Parent ]
Thanks for the diary, andrethegiant! It's avery good start and I'm impatiently looking forward to reading the next one!

the Left should be blamed for failing to counter-argue the neoliberal narrative and demonstrate the repercussions of the rise of a new class of wealthy elite.

Let's work at it!

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sun Mar 18th, 2007 at 04:21:01 PM EST
Agreed!  That's why I check this site every day.  It's the mixture of regular folks, economists, technicians, academics, enthusiasts, students, workers, etc. that make for the best dialogue I think.
by andrethegiant on Sun Mar 18th, 2007 at 05:55:40 PM EST
[ Parent ]
Hayek in Chile toasted Pinochet's "economic freedom" in front of a crowd of military torturers. In the end, his vision is "arbeit macht frei."

But Hayek was a brilliant writer. His cool, sardonic, concise writings give the impression of clarity and incisiveness - they perfectly complement Ayn Rand's purple  prose. Instead of Rand's open sado-masochism and narcisissm, Hayek deftly urges the reader to come to the side of the smart people against the gray bureaucrats.

by citizen k (sansracine yahoo.fr) on Sun Mar 18th, 2007 at 08:40:34 PM EST
A diary just for ET!

The founding Neoliberals believed that no government had enough access to economic information to accurately plan an economy and that only the invisible hand of the market could make such decisions.

This is what infuriates me most in neoliberalism. It applies the same mistake as Social Darwinism when it misunderstood Darwinism.

If you make plans, you need two kinds of inputs: infos about the present state, from which you can extrapolate, and goals, which you want to work towards. By relying on the Invisible Hand, you don't just spare gathering accurate information of all things affecting the economy, but also forfeit setting the goals.

The neolibs get around this with the unstated setting of "efficiency" as the ultimate goal.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Mar 19th, 2007 at 10:10:39 AM EST
I never thought of the parallels, but that is true. Also,

The neolibs get around this with the unstated setting of "efficiency" as the ultimate goal.

...which leads to other understated or even hidden goals of dismantling percieved inefficiences such as "entitlement" programs.

by andrethegiant on Mon Mar 19th, 2007 at 10:45:51 AM EST
[ Parent ]
To further that parallel: the market, like natural selection, works towards a certain direction in a given environment. Thus even in the stable regime the marketistas erroneously assume all free markets reside in, that glorious 'efficiency' is the measure of something relative: the development of the most efficient production under the given conditions. Yet these conditions include resource availability, geography (limits on transportation), social norms, prevailing ideologies and religions, laws, and yes: regulations...

My favourite example for the neolib-dogma-busting practice of using the markets with a goal, that is to set the rules with the aim of getting efficient solutions in a pre-set desired direction, is a feed-in law: by fixing guaranteed purchase prices for regenerative energies, manufacturers of the latter can have a boom market of their own, large enough for the manufacturers to accumulate enough funds for competition by further development.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Mar 19th, 2007 at 01:00:48 PM EST
[ Parent ]
Neo-liberals also "forget" that, according to Walras (and also in the Arrow-Debreu model), a condition for the existence of a market equilibrium is the "survival assumption" i.e. the fact that agents do not need to exchange to survive, even their workforce.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Mon Mar 19th, 2007 at 05:28:21 PM EST
[ Parent ]
Of course, every major corporation in the world makes quite elaborate economic forecasts. Somehow, governments cannot do the same according to neolib ideology.

In fact, neolibs are required to pretend that there is no such thing as a "firm" and that economic transactions are between individuals, because otherwise they would have to deal with the differences and similarities between firms and governments. The doctrinaire libertarians will claim that the fundamental difference is that firms do not exercise police powers, but this is a fraudulent claim as if the policing of the property system on the part of the government were a natural occurrence.

For the neolib the following major factors of modern economies are invisible

  1. organizational properties of large corporations where waged employeed make decisions about OPM and essentially take on all the functions of governments incuding the planning that is supposedly impossible.
  2. Marketing - a multibillion dollar industry that makes a mockery of the full information assumption.
  3. Military and quasi-military spending - e.g. such minor firms as Boeing and Airbus.
  4. Education and public sector R&D - e.g. the internet and transistors.
by citizen k (sansracine yahoo.fr) on Mon Mar 19th, 2007 at 11:19:02 AM EST
[ Parent ]
I used to joke that when economists write down a model they unleash their "inner central planner". Clearly, they assume the have knowledge of all relevant factors in a problem and that they can figure out the consequences of various actions.

"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 05:27:44 PM EST
[ Parent ]
Understanding neoliberalism requires an introduction to the basic tenets of 'freedom' as laid out by the Mont Pélerin Society shortly after World War II... The founding Neoliberals believed that no government had enough access to economic information to accurately plan an economy and that only the invisible hand of the market could make such decisions.

Who knows when the Hayekists were truly first called neoliberals?

It is my understanding that at the time of the birth of the MPS, the term "neoliberal" was in use, but for something else: essentially, pro-Roosevent Keynesians in the US; social liberals who not only believed that state intervention in the economy is needed to ensure equal opportunities, but believed that a strong President is their best ally in delivering this.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Mar 19th, 2007 at 10:21:06 AM EST
Just wanted to inform you all that the second part of The Trap is now downloadable: here.

It might become topical after I have seen it, it is after all a lot about neoliberalism.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon Mar 19th, 2007 at 11:07:00 AM EST
Hence, as Harvey points out, freedom bcomes the result of private property and a competitive market.

Talk about turning liberalism on its head.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Mon Mar 19th, 2007 at 05:22:25 PM EST
andrethegiant, would you be interested in crossposting this to Progressive Historians?
It's a great discussion and I think it would further some good discussion over there as well...

Progressive Historians and The Next Agenda
by aphra behn (aphra (underscore) behn (at) bigfoot (dot) com) on Tue Mar 20th, 2007 at 06:13:54 PM EST


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