Neoliberalism, a new political economic initiated aggressively by Margaret Thatcher and Ronald Reagan in the 1980s, was consolidated with more stealth by their successors, New laborer as well Conservative, Democrat as well as Republican. The neoliberalism economic policy foreshadows the huge inequality gaps all over the world. With some astonish data showing 70% of American wealth is with the top 10%, and top 0.1% of households now hold about the same amount of wealth as the bottom 90%. French economist Thomas Piketty ‘s research indicate similar distribution, although may not as extreme, all over the world.
Neoliberalism’s policies, following its deployment, exhibited crisis more and more damaging in its scope and magnitude. There has hardly been a moment since 1980 when there is not a financial crisis happening somewhere. From Mexico in 1982, to other countries in Latin America soon after that, to the U.S. stock market collapse in 1987, to Japan in 1990, to the Asian financial crisis of 1997, to Russia and Brazil in 1998-99, to Turkey and Argentina in 2000-2002, to the collapse of the dot com bubble. Not to mention the most recent total break down of financial crisis 2008. These crisis proved beyond a doubt that markets don’t regulate themselves, that efficient markets theory as building blocks of capitalism has huge gaping holes. What usually happens in such times is that governments take measures to protect the elites (usually the bankers who actually caused the crisis) and shift the burden of paying for the costs to the general public, which further intensify existing societal social, political crisis.
Andrew Sayer, a professor of Social Theory and Political Economy at Lancaster University, UK, author of Why We Can’t Afford The Rich, cuts through the hype so often used to defend growing inequality and penetrate to the core of problem: these recession are evidence of something more basic – Capitalism’s crisis-prone nature. He argued with compelling illustration that the main reason why inequality has increased over the last generation in so many countries is that the incomes of those already rich have increased so much faster than everyone else’s. He further reasoned that the problem of the rich isn’t just a matter of quantity of income or wealth, but one of where the money they get comes from. The richer people are, the higher the proportion of their income is likely to be unearned, through being based on power rather than some kind of contribution. The super-rich now sees themselves as superior beings who are doing the majority a kindness by living amongst us. Professor Sayer identified three key features of Neoliberalism:
#1. Markets are assumed to be the optimal or default form of economic organization, and to work best with the minimum of regulation. Competitive markets supposedly reward efficiency and penalize inefficiency, and thereby ‘incentivize’ us to improve. Governments and the public sector, by comparison, are claimed to be inferior at organizing things – monopolistic and prone to complacency, inefficiency and cronyism. Governments should there fore privatize as much as possible. Financial market should be deregulated and thee should be ‘flexible labor markets’ – political code languages for jobs in which pay can fall as well as rise and in while there is little security.
Where parts of the public sector can’t be privatized, league tables should be established and individuals, schools, universities, hospitals, museums, and so on should be made to compete for funds and be rewarded or penalized according to their placing. Democracy needs to be reined in because the ballot box can’t match markets in governing complex economies; people can express themselves better through what they buy and sell.
#2. The rise of neoliberalism also involves a political and cultural shift compatible with its market fundamentalism. Through a host of small changes in everyday life, we are increasingly nudged towards thinking and acting in ways that fit with a market rationality. More and more, the media address us as self-seeking consumers, savvy investors, ever pursuing new ways of supplementing our incomes through ‘smart investments’. Risk and responsibility are transferred to the individual. Job shortages are no longer acknowledged, let alone seen as a responsibility of the state: there are just inadequate individuals unable to find work: ‘loser’. No injustice, just bad choices and hapless individuals. The word ‘loser’ now evokes contempt, not compassion. Those unable to find jobs that pay enough to allow them to cope and who still need the welfare state are marginalized, disciplined and stigmatized as a actual or potential cheats. State health services and pensions are run down and replaced by private health insurance and private pensions. You’re on your won, free to choose, free to lose, depending on how you navigate through the world of opportunities and dangers.
Instead of seeing ourselves as members of a common society, contributing what we can, sharing in its growth, pooling risks and providing mutual support, we are supposed to see ourselves as competing individuals with no responsibility for anyone else. Want to give your child an advantage? Pay for private tuition. We should compete for everything and imagine that what is actually only possible for the better off is possible for everyone; everyone can win simultaneously if they try. We are expected to see ourselves as commodities for sale on the labor market, but also as ‘entrepreneurs of the self’. Hence the rise of the cult of the curriculum vitae (resume) and self-promotional culture. Education is increasingly debased by efforts to turn it into a means for making young people in this mold.
#3. Neoliberalism has ushered in a shift in the economic class structure of the countries it has most affected. It involves not only a shift of power and wealth towards the rich, marked most clearly by the weakening of organized labour in industrialised economies and the enrichment of the 1%, but a shift of power within the rich: from those whose money comes primarily from control of the production of goods and services, to those who get most of their income from control of existing assets that yield rent, interest or capital gains, including gains from speculation on financial products. The traditional term for members of this latter group is ‘rentier’. Many of the changes noted in #1 and #2 above benefit them. Neoliberalism as a political system supports renter interests, particularly by making the 99% indebted to the 1%.
Professor Sayer argues that the ideology that the rich shower on us is meant to justify their privilege, but it turns the truth completely inside out. When inequality reaches the insane levels, the rich depend on hoodwinking us all into thinking that they are the source of jobs prosperity and everything we value.
Shibboleths like “competition is always good’ need to be challenged. yes, it can sometimes raise the general standard of practice and encourage innovation, but it can also lead to a race to the bottom – cutting wages, citing taxes to attract the rich, closing firms without putting anything in their place, offloading costs onto others, including dumping waste in countries where the law is too weak to stop it, and increasing inequalities.
Likewise ‘economic efficiency’. Of course it’s usually good to do things ‘efficiently’. though often that’s confused with cost savings achieved through cutting pay. We have always to ask: efficient for whom? Does it give us more time, or jut speed up the treadmill? And as the case of the disposable plastic spoon reminds us, what is ‘cost-effective’ in money terms can be an absurdly wasteful and polluting use of resources. In the public sector, much cost cutting in the name of ‘efficiency’ merely reduces service quality and distracts services from their core purposes, so that schools teach to the test. it encourages vacuous nonsense from management about ‘leveraging our skillets to meet the challenge of competition going forward’, and suchlike, eroding professionals’ commitments to doing what is best for clients, parents and students, and other workers’ desire to do their job well. It can produce stress, disaffection and burn-out in workers – too busy to care for themselves and family or to have time for friends. We have to weight all these things up in the different spheres of economic life and limit and regulate competition accordingly.
All this means questioning our whole way of life and what well-being and wealth are. What is consumption for? What is really ‘development’? Many development economists have already argued that GDP is pretty useless as a measure of development. Real development means creating circumstances that allow everyone simultaneously to be able to have and do the things necessary for a good life: having enough food, shelter and health services; having security and freedom from threat and violence, including sexual violence; being able to develop their capacities through education and access to a range of activities; being able to participate in political decisions that affect them and having free speech and conscience; being able to care for others and be cared for; being able to have respect and interact with others without coercion, exploitation, sigma or neglect; and son on.
The neoliberal dream of a society of self-reliant individuals, able to avoid any dependence on others beyond what they can pay for, is absurd and deceitful. Those who regard themselves as wholly independent, perhaps because they have taken out private health insurance and a private pension, are deluding themselves; they are still dependent on others, but through having the financial power to be so, rather than because those others agree that they need it. This is nothing wrong with transfers of wealth between people, where they’re for supporting those unable to work, such as children, the sick or elderly. The problem is when transfers are based merely on control of assets that others need but lack – so that they provide owners with unearned income, at the expense of those less well off.
Neoliberalism doesn’t just redistribute wealth from the 99% to the 1%. The neoliberal attack on the welfare state cuts bak democratically regulated transfer of income based on needs, and expands flows of unearned income based on control of assets, pushing people from the generous arms of the former into the grasping claws of the latter. It shrinks the humane part of our economy and diverts wealth to an economy based on power. Those who can get to control the most assets win at the expense of others, simply because they can.
Actually, neoliberalism does not produce self-sufficient individuals. In ‘freeing’ them from democratically controlled support via the local and central state, it produces new forms of dependency for the majority: indebtedness – isolated individuals dependent on this who control money, those who will ‘support’ them only if they provide their creditors with unearned income in the form of interest. Within organizations, replacement of any element of democracy with ‘leadership’ reduces employees’ autonomy and encourages them to compete with each other in order to win management approval. We need each other, but we don’t need the dependence of the rich on our wealth production. Further, neoliberalism increases nations dependence on borrowing from the rich instead of taxing them to make them contribute.
When a country switches from profiting its students with grants to giving them loans, which it then sells off to private business, it doesn’t free those students from dependence and make them self-reliant. It just means that instead of being temporarily dependent on a state that has supported them from birth and to which they will continue to pay taxes throughout their lives, they become dependent for decades on private lenders who have previously done nothing for them and who just want to extract as much interest as they can. It is another switch from democratically regulated transfers of income based upon need to payments of unearned income to those who control money. Similarly, when people switch from renting a house from the state to buying one, they become more, not less dependent; while the ‘rent’ they pay to the state need only pay for construction and repairs, their mortgage repayments make them dependent for decades on private creators of credit money seeking interest.
Nature must be valued not as a mass of resources that we can simply exploit one by one according to separate myopic calculations of costs and revenues and opportunities foregone but as whole ecosystems in an interconnected planet, in which things have value beyond advantages that they happen to bring us in terms of money. Price is not value; it is just one very limited one-dimensional way of assessing something that’s multi-dimensional. The idea of pricing individual species by creating ownership rights in them may be a way in which private corporations can enrich themselves by charging for what was formerly free, but it is an absurd way to value things that are always dependent on immensely complex webs of relationships that make up the world’s ecosystems, or ‘the biosphere’. Nature provides things like soils, water, fish and plants for free, but it makes no sense to regard them as free to be used without limit, regardless of the health of the biosphere. Nature doesn’t respond to the signals of the market. Capitalist firms live or die accordingly to whether they make profit, not whether they meet social or environmental goals. So where markets are allowed, they have to be regulated to stop exploitation of labour and unsustainable practices, and to protect biodiversity.
In summary, contrary to Neoliberalism, economies are supposed to serve societies, not vice versa. As Aristotle argued, money is a means to an end, not an end in itself; it is madness to devote our lives to accumulating money. But under capitalism, what Aristotle regarded as an aberration becomes a necessity: capitalists survive by accumulating money, and go out of business if they don’t, and they employ their workers only as long as they make this accumulation possible. It obscures the point of economic activity: provisioning to enable us to live well – and , we can now add, in a a way that is sustainable, so that future generations are not faced with a deteriorating environment and a world riven by forced migration and resource wars.
Crises are opportunities. The neoliberal push down wages, dismantle the welfare state, allow corporations to dictate policy and push up profits still more. To offer a genuine alternative we need to go back to basics. We must confront a wider range of issues: how can we organize economic life in ways that are fair conductive to well-being, and sustainable?