The Great Neoliberal Shift

Before I was born, most folks in the US were Keynesians. There was a general sense, due in no small part to the New Deal pre-war and policies for decades post-war that social safety nets were a good thing, enabling people to live a bit better during hard times, and that government spending can, indeed, successfully stimulate otherwise lagging demand. Even many conservative Republicans, up until the economic problems of the 1970s, considered Keynesianism to be the economic theory upon which we base our policies. Economic growth slowed in the 1970s, due in no small part to the Vietnam War, the 1973 oil crisis, and the perhaps inevitable collapse of the Bretton Woods system of monetary management. In addition,emerging industrialized countries were providing competition in the metal market that the United States hadn't had to deal with previously, which led to the steel crisis. Unfortunately, this economic downturn provided an opportunity for neoliberals to decry Keynesian ideas, wrongly associating the economic downturn to common sense government spending and social programs. Thus dawned the age of Reagan and the neoliberals.

This period in American history is marked by the shift of both the Republicans and the Democrats, and by extension most of the population, from a moderate Keynesian understanding of government policy and economics to one that we might now call libertarian, suggesting that somehow all welfare is bad, greed is good, and that markets, when deregulated and left to their own devices, would not only magically make everyone willing to work hard rich, but that would be overall more efficient in many ways than the more mixed system we were accustomed to. Even Democratic President Clinton bought the argument that we needed to end welfare as we know it, leading to the current breed of centrist, wussified Democrats we see today.

The great neoliberal shift was not without its costs. The savings and loans crisis, the dot-com bubble, the subprime mortgage crisis, and the financial crisis can all be traced specifically back to policies of deregulation stemming from neoliberal theory having been adopted by both parties.

Here we are, 30 years after the shift, and what we have to show for it is, arguably, being worse off than we would have otherwise been had we not abandoned Keynesianism. We have a supposedly liberal Democratic president in office continuing what were supposed to be temporary tax cuts for the rich, wars in places the American people don't even know about, strengthening the national security state in order to send more money to the hands of private military contractors, and ignoring the most obvious fixes for the biggest problems American faces because they can't be couched in a neoliberal framrwork. Heaven forbid we consider single-payer healthcare or nationalization of massive, failed financial institutions or large stimulus to turn around an economic downturn that the free market is neither willing nor able to turn around on its own.

I'd like to live long enough to see this process reversed, to see us move from selfish, corporate-backed neoliberal fantasy to moderate Keynesianism as a national economic understanding, but there are so many obstacles in the way, it seems nearly impossible. Neoliberal corporations control the debate in the media. Neoliberal politicians control the debate in Washintgon. Radical neoliberals are often entrenched in our college economics departments, just waiting to welcome kids into the wonderful world of selfishness and market magic.

What's your take on all of this? What do you think about the shift in economic philosophy in the United States? Do you believe there's basically a neoliberal consensus in government? Would you like to see this trend reversed? If so, how could it be done?

 

It's funny. I had thought that the recent sub-prime crisis would reveal the neo-liberal policies that led to it, for the emperor's new clothes that these policies are. Sadly, it does not appear to have happened.

It's also very funny to those of us living outside the US, that anyone could call Obama a liberal. While he is quite left of the Republican party he is still very right of centre. Make no mistake about it. People voted for him for a lot of very good reasons, most of which had to do with the alternatives on offer (the fear that Sarah Palin would be a "heartbeat away from the Oval Office" was enough for many). Sadly, Obama has been an ineffective leader. His desire to bring a certain level of bi-partisanship to the office has been met with the shit show that is an extremely (moreso than ever before) partisan Republican party (being dragged around by the myopic Tea Party). As much as it pains me to say it, Obama, needs to worry less about people liking him and more about making shit happen. People voted for him to make it happen.

This thread really isn't about Obama though. Rather, it's about the fact that Milton Friedman's neo-liberal ideas have taken root in the American psyche like a nasty cancer. It's about the fact that this cancer, if not removed, will end up killing the patient.

 

Does it still count as neoliberalism when it's sitting on a foundation of corporate welfare and subsidies for the oil, agricultural and financial industries? Aren't they kidding themselves—or trying to—and the rest of us, too?

 

That's what neoliberalism has become. It's brutal anarcho-capitalism for the people and cushy, corrupt socialism for corporations.

 

I wish I knew enough economics to have a good conversation with you guys here. I plan to rectify that soon as I need to manage my money.

All I know is when I stare at my paycheck and 35-40% of it goes into taxes, with $250 into social security, it makes me go BLARAHALHRALHAFLHLFFKJSDA

 

Know a man by the friends he keeps. Bill Ayers, Jeremiah Wright, Elizabeth Warren

But this isn' t about Obama. It's an I'm Will, and I'm mad as hell OP. Office holders, even democrats, are trying to attract votes. What works now is what worked in the election last November. Everyone running for office is chasing the same principle money sources. Obama's regime has not prosecuted any banker or major Wallstreet executive. He wants to be re-elected. It is easier to raise campaign funds at $30k per plate events than
by attracting small contributions from the bottom 80 percent. They are no longer represented in a political system that responds only to the concerns of principle donors. It isn't related to conservative or liberal. The haves finally can prevent the have nots from voting in tax increases.

 

Sadly, what you say about not going after Wall Street is likely to be true of whomever is sitting in The White House. I don't think this is an Obama issue (other than that he is the current occupant).

 

I echo what ejkwt posted - while I am somewhat savvy in economic terminology, Willravel's post has me scurrying to wikipedia to help me (re)define or understand what I thought I knew. I had always thought that Keynesian WAS Liberal and that the movement away from it was the conservative (or Neo-Con) agenda. And Charlatan is right, Obama is much further right of centre when looked at globally. As for Milton Friedman, I am also shocked to see him labeled as neo-Liberal. Especially since he was Reagan's financial advisor. His monetarism concepts to me are as conservative as Reagan. Like I said, I need to review my definitions!

 

The term neo-liberal refers not to a left or right political dichotomy but rather to the increasingly liberal economic policy (i.e. unregulated). Milton Freidman is definitely on the right, politically.

 

http://www.tfproject.org/tfp/tilted-politics/145773-what-neoliberalism.html

not sure if this link works.

 

dippin's post in that thread is good.

neo-liberalism has been an ideology in the marxist sense---a worldview fashioned around quite particular class interests (perceptions of class interest)...but it has never been a total thing. like any other ideology, it took shape and was used by particular groups who came to power in particular contexts. under reagan, it was in part a guide to a largely misguided economic approach that resulted in one of the largest transfers of wealth into the hands of the top 1% of holders of wealth that's ever been seen. another result was the acceleration in the dismantling of the american manufacturing base, lead by the crisis in steel production. there's a quite good book from the period call the deindustrialization of america that presents the data and connects the dots as of the mid-to-late 1980s (if memory serves) that's well worth tracking down. the actual effects of neo-liberal policies were present, but somehow they were managed by the adoption of this stuff as the "neutral" language of televised infotainment. so the wreckage being visited on much of the country was countered with bland assurances about expansions in no particular place. telling former steel workers to get jobs at walmart, for example. a great guy, reagan. a humanitarian.

reagan really liked throwing money at the military. he liked military adventures even when they were illegal. that's another commonality amongst republican neo-liberals, it seems. the love boys in uniform and all manner of whacking and dismembering and are willing to do and say most anything to keep them looking all fine and manly. more seriously, reagan used military spending as a way to prop up the economy. the cold war, such as it was, provided the pretext. when the ussr imploded, reagan and the right tried to take credit. but i digress.

neo-liberals have, in power, really liked prisons. they build lots of them. they like manly military police forces and stuff like mandatory sentencing. they like to appear tough on things. cheap steak tough, as gil scott-heron described ronald reagan. neo-liberals tend to favor militarization of class relations. this is the logical reverse of their policy logic, which typically increases poverty and pressures on the poor. the united states has a higher percentage of its population people in jail right now than any other country on earth.

there were of course transfers of wealth that neo-liberals like---corporate welfare, subsidies, etc--and types they don't like---the sort that let actual human beings live lives with more dignity who don't, in the humanitarian views of conservativeland, deserve that.

and so on.

the real problem at the moment is the ideological domination neo-liberal has had in the states. this is compounded by the fact that for a long time it's been the only game in mainstream land. so now that it's self-evidently defunctionalized, there's a Problem. cognitive paralysis. incoherence.

i don't think it's irreversible. but i think that changing the political/cognitive space most folk are in will be a process. it'd require direct, sustained confrontation with neo-liberalism. stuff the genie back in its bottle, force the right to answer for their record rather than allowing them to run away from it.

got to go.

 

great stuff... reading through this now. Shows how specialized knowledge can get. Thanks for the info!