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To: add1dda@aol.com
Sent: Tue, May 4, 2021 6:08 p.m.
Book Review: A Brief History of Neoliberalism
Book Review: A Brief History Of Neoliberalism
Book Review: A Brief History Of NeoliberalismSummary and commentary on David Harvey's "A Brief History Of Neoliberalism"
I. Around 1970, something went wrong. The global economy, after twenty-five years of good post-war growth, suddenly blipped. The post-WWII-but-pre-1970 economic world - the world of "embedded liberalism" - was a pleasant place. There were corporations, but they didn't do anything garish like compete with each other. Executive pay was taxed so heavily that nobody had much incentive to try to increase their profit margin; workforces were so heavily unionized that companies were nervous about any changes that might upset employees. As long as companies followed the script, the government embraced and protected them. Starting a new business was considered some bizarre act of alchemy, like discovering a new form of matter; normal people worked for the same giant company their whole life and got a nice gold watch as a reward when they retired. The government wasn't exactly socialist per se, but it kept starting and expanding programs like Medicare and Medicaid and Social Security, and every night you went to sleep knowing there would be probably be another uncontroversial, mostly-successful government welfare program tomorrow. Then the global economic system blipped. As usual, economists will debate the exact causes forever. But the basic story is: after World War II, the great powers came together at Bretton Woods to design a new financial system. The US, as leader of the free world, dictated the terms: all global currencies would be pegged to the dollar, which in turn would be pegged to gold. This heavily favored the US, and the US pressed its advantage to get two decades of stellar growth and fund all those government programs and concessions to public sector unions. But the harder the US pressed, the more stress it placed on Bretton Woods, until finally in 1971 it collapsed under the strain and the global economy flailed around, confused. Status 451 had a great post about the 1970s as lacuna in cultural memory - we don't remember how bad it was. Their focus was violence and terrorism - "people have completely forgotten that in 1972 we had over nineteen hundred domestic bombings in the United States", including attacks on the Capitol and Pentagon. "A Puerto Rican group bombed two theaters in the Bronx, injuring eleven, in 1970; NYT gave it 6 paragraphs". Reading A Brief History Of Neoliberalism, I got the impression that our economic amnesia about the 1970s is no less striking. There was no 1929-style thunderclap market crash, just one damn thing after another. I read the book close enough to Passover that the Ten Plagues came to mind. The dollar glut (*spills drop of wine*). The Nixon Shock (*spills another drop*). The Economic Stabilization Act of 1970. The fall of the gold standard. The 1970s Steel Crisis. The 1973 Oil Crisis. Stagflation. The Winter of Discontent. The 1979 Energy Crisis. And the Angel of Death was the Volcker Shock of 1980, when unemployment crossed 10% and people mailed the Federal Reserve coffins and unused two-by-fours in protest. It was bad. New York City came one day away from declaring bankruptcy in 1975 (other sources say it was technically bankrupt, but avoided getting called on it) and got taken over by state government for a few years until it got back on track. The stories from Britain were even worse:
Mexico declared bankruptcy in 1982; by the time the smoke cleared, average Mexican wages had fallen 40%. The rest of Latin America did little better. Communists suggested that the inevitable fall of capitalism was finally at hand. But we know how this ended. The US got Reagan. Britain got Thatcher. A tide of free-market sentiment, later termed "neoliberalism", swept over the world. Governments confronted public sector unions and left them shells of their former selves; a series of regulatory changes let companies do the same with their own workforces. Top tax rates went down; newly money-hungry executives launched an orgy of mergers and buyouts. Entrepreneurs founded new companies and forced the old dinosaurs to compete on an equal footing; the dinosaurs responded by downsizing and offshoring their employees. Employment went from a lifetime guarantee to a bullet point you put on your resume when applying to the next place. By 1990-2000, most of this had settled down, and for better or worse we had a stable new system. II. Sound straightforward? Not if you read about it in David Harvey's A Brief History Of Neoliberalism. This treatment is almost the opposite of the way ABHoN describes events. Telling the story this way makes me feel like Jacques Derrida deconstructing some text to undermine the author and prove that they were arguing against themselves all along. Harvey is an extreme conflict theorist. The story he wants to tell is the story of bad people destroying the paradise of embedded liberalism in order to line their own pockets and crush their opponents. At his best, he treats this as a thesis to be defended: embedded liberalism switched to neoliberalism not primarily because of sound economic policy, but because rich people forced the switch to "reassert class power". At his worst, he forgets to argue the point, feeling it so deeply in his bones that it's hard for him to believe anyone could really disagree. When he's like this, he doesn't analyze any of the economics too deeply; sure, rich people said something something economics, to justify their plot to immiserate the working classes, but we don't believe them and we're under no obligation to tease apart exactly what economic stuff they were talking about. In these parts, ABHoN's modus operandi is to give a vague summary of what happened, then overload it with emotional language. Nobody in ABHoN ever cuts a budget, they savagely slash the budget, or cruelly decimate the budget, or otherwise [dramatic adverb] [dramatic adjective] it. Nobody is ever against neoliberal reform - they bravely stand up to neoliberal reform, or valiantly resist neoliberal reform, or whatever. Nobody ever "makes" money, they "extract" it. So you read a superficial narrative of some historical event, with all the adverbs changed to more dramatic adverbs, and then a not-very-convincing discussion of why this was all about re-establishing plutocratic power at the end of it. This is basically an entire literary genre by now, and ABHoN fits squarely within it. Harvey's theses, framed uncharitably, are: 1. Embedded liberalism was great and completely sustainable. The global economic system collapsing in 1971 was probably just coincidence or something, and has no relevance to any debate about the relative merit of different economic paradigms. 2. Sure, some people say that the endless recession/stagflation/unemployment/bankruptcy/strikes of the 1970s were bad, but those people are would-be plutocrats trying to seize power and destroy the working class. 3. When cities, countries, etc, ran huge deficits and then couldn't pay any of the money back, sometimes the banks that loaned them that money were against this. Sometimes they even asked those places to stop running huge deficits as a precondition for getting bailed out. This proves that bankers were plotting against the public and trying to form a dystopian plutocracy. 4. Since we have proven that neoliberalism is a sham with no advantages, we should switch back to embedded liberalism. Let's go through these one by one and see whether I'm being unfair. The first thesis is mostly implicit. ABHoN doesn't give any reason for the failure of Bretton Woods and the 1970s economic crisis. It mostly takes it as a given, interesting only insofar as plutocrats used it as an excuse for pushing neoliberal policies. It never explicitly denies that it happened, it just thinks that it happened in the same sense that the sinking of the Maine happened - less interesting in and of itself than the fact that sinister forces were able to leverage it for their sinister ends. Which brings us to the second thesis. How do we know that the neoliberal reformers - the people saying "given that the economy is in shambles, maybe we should reform it" - were sinister, rather than genuinely motivated by the extremely real economic shambles all around them? Harvey's argument is complex. One part of it is "because there was organized lobbying for it". He ably charts the existence of various neoliberal lobbying groups, explains how corporate funding flowed into think tanks, and quotes important business figures saying that neoliberal reform would help their bottom lines. For example:
This seems like a kind of conspiratorial take on "businesses did not like anti-business policies, and lobbied to change them". Also, I wonder if any movement could survive this level of critique. Some progressives formed anti-inequality think tanks after the Great Recession? Guess progressivism is a sham astroturf movement that merely used the Great Recession as an excuse to push their class war agenda! Harvey's other argument here is that neoliberalism is ideologically incoherent in ways that don't match its supposed commitment to freedom, but do make sense as a Trojan horse for plutocratic interests.
I'm not super sure what Harvey means by saying that the Bush tax cuts are antithetical to true free market ideology. But apparently he thinks this is true, and a sign that the government is trying to provoke a global financial crisis in order to "finally rid itself of any obligation whatsoever to provide for the welfare of its citizens". There were some other supposed examples of neoliberal practice contradicting liberal ideology - although I can't find easily quotable bits, I think he's thinking of the Iraq War and various bailouts (though not the 2008 bailouts, since this book was written in the early 2000s). I agree that the government has not been a perfect ideological neoliberal at all times, but this impresses me less than it seemingly impresses David Harvey. Again, I think this critique is strong enough to apply to any ideology - what government has ever perfectly followed the diktats of socialism, or conservatism, or theocracy? The government is a blob of power that gets captured by different groups at different times and directed willy-nilly to one purpose or another; just because it does not perfectly follow a specific philosophy without deviation for fifty years doesn't make that philosophy inherently fraudulent. The third thesis, the one about debts and bankers, starts in the book's fascinating narrative of the 1975 NYC near-bankruptcy. Here's a (long) excerpt:
If you're like me, you read all of this about "the counterrevolution from above", "the final indignity" and "narcissistic exploration of self, sexuality, and identity" (does he mean gay people?) and after a while you want some numbers or at least some background. Like - how did New York get this far in debt? Were its creditors unreasonable (by the standards of the time) in asking them to pay it back, or was this accepted practice? How does Harvey believe that governments and banks should handle a situation where someone takes out a loan and can't pay it back? We get none of this, Harvey doesn't even seem to understand it's a potential question, and instead there's page after page about how greedy bankers destroyed New York. Also, I think at least some of those pages are false: Wikipedia says that "the city [had] gained notoriety for high rates of crime and other social disorders" by 1970, five years before any of this happened. Also, here's some more of the relevant article:
So Harvey's picture of an idyllic New York getting hit with a financial crisis for no reason, being betrayed by greedy bankers, and then turning gritty and mean doesn't really seem to check out. Harvey comes across a little better when talking about debt crises in Mexico, Latin America, and beyond. My understanding here is something like: the Volcker Shock caused a sharp increase in the price of the US dollar. Latin American countries had taken out a lot of dollar-denominated debt, which (as the dollar rose) suddenly became much bigger. They had been prepared to pay off their old debts, but not their new, much-bigger debts, so they had to cut deals with their creditors. These were mostly American banks, and the American government was backing them. The banks and government, negotiating partly through the IMF, weren't really willing to compromise and demanded quite a lot of the money back. But also, as a condition for what compromises they did make, they demanded these countries neoliberalize. The banks/US/IMF said this was so that they could break their addiction to debt and overspending, have functional economies, and be able to pay off what they owed eventually. Obviously Harvey isn't buying it, and says it was a plot for the American rich to enhance their power, plus crushing all fair and decent systems that might have provided an alternative to the dystopia they were planning at home.
I am not sure what Harvey means here about how under (non-neo) liberal practices lenders take the losses. In the 1960s, would bankers have loaned to Mexico and then, when Mexico couldn't pay it back, just said "okay, whatever, keep the extra"? Maybe they would have! I don't know! I would like to learn more about this! But Harvey doesn't tell me. He leaves the minds, actions, systems, and norms of bankers as a black box, except for the part where they are trying to crush others and "reestablish class power". There's an interesting section on how countries that followed IMF recommendations tended to do badly, and those that spurned the IMF tended to recover and go on to even greater heights. I suspect something like this is true, and am trying to read some other books to understand it better. But ABHoN, despite its chapter on this, is of little help. The fourth thesis is that we should return to embedded liberalism. The exact details of how to do this are left to the reader, but I imagine it would involve pro-union regulation, higher taxes on the rich, and instituting some sort of cradle-to-grave welfare heavily tied up with employment. Most of us should want this (says the book) because it means people other than plutocrats can lead decent lives. But even the plutocrats should be a little in favor:
III. Here's a more positive take on ABHoN: despite all of that, it manages to be a good read anyway. It talks about under-explored topics in an engaging way. Although I was unsatisfied with Harvey's explanation of some issues, this is a 200 page book, he can't explain everything in depth, and he got me reading papers and Wikipedia articles on things I wouldn't have read about otherwise. Although the book has too many loose ends and apparent mistakes that for me to trust everything it says, some of the things it says would be fascinating if true, and I plan to follow up on them and try to see if they are. And although I think I'm fair in characterizing Harvey as far left, he has some unique and original views that I found surprising and challenging. These were most apparent when he was condemning things I thought of as pretty left-wing/progressive as symptoms of neoliberalism. For example, NGOs:
Or human rights:
I'm not sure I would have thought of human rights as a symptom of neoliberalism before. But as a neoliberal, I am happy to accept the blame! IV. One more great thing about David Harvey: he makes specific predictions. And since it's been 16 years since he wrote ABHoN, we can check how he did. In order to avoid debate over which things I count as predictions, I'll only be looking over the middle of his last chapter, Freedom's Prospect, which deals with the future. You can follow along here and make sure I'm representing him honestly. Harvey says that US spending is growing out of control. The Bush administration's wars and tax cuts for the rich create an unsustainable situation. Foreign countries are currently funding this by buying US debt, but the interest will soon spiral out of control. Americans will get increasingly angry as foreigners own more and more of the country, America will have less and less ability to service its debts, and "it is unthinkable but not impossible that the US will become like Argentina in 2001 overnight". For example:
As far as I know, nothing at all like this happened. We kept spending money, interest rates stayed low, foreigners didn't get too much of our debt, nobody protested foreigners having too much debt, and nowadays economists (including the most left-leaning ones) are telling the government it should be less concerned about debt, not more. Harvey gets some credit for predicting a financial crisis, which in fact happened in 2008, three years after he published. But he seems to have gotten all of the specifics wrong, and it's not clear how much credit he gets. There will always be a next recession, so predicting "recession coming!" without a time scale will always sound good later. I don't know enough about different kinds of recessions to know whether saying "fiscal crisis" and "financial crash" made this extra-prescient. During/after the crisis, Harvey predicts the US' only options will be hyperinflation, or prolonged Japan-style deflation, and goes into detail about which one we might choose (neither happened in 2008). He doesn't think either of these will go very well, and thinks neoliberalism will need a new trick in order to survive. That trick will be neoconservatism. In several places throughout the book, but most emphatically in Chapter 7, Harvey predicts that the neoconservatism of the Bush years is the beginning of the next phase of neoliberalism. For example:
And:
As far as I can tell, neoconservatism reached its apex during the Bush administration, and since then everyone has backed away from it. It was not an inevitable next phase of capitalism. The US is now less militarily entangled than it was for most of the 20th century including the embedded liberalism period, and capitalism has done just fine. But:
Wrong about China - but right about the US! Harvey goes on to predict that these may not happen within traditional political parties, but instead be more amorphous movements like the Zapatistas in Mexico. I'm not sure how to judge this - my guess is there's a Revolt Of The Public argument that he's right, and I'm too stuck in modernity to notice. Overall it looks like Harvey was wrong about all of his specific beliefs, but right that increasingly many people would agree with him. This is probably a metaphor for life. Read A Brief History Of Neoliberalism to figure out what all the fuss is about, I guess. You're on the free list for Astral Codex Ten. For the full experience, become a paying subscriber. |
1 comment:
I'm not the philosophical thinker type of person that bandies about terms like neo-liberal or neo-conservative to hang the hat of America's demise on.What does it matter which of these,or other idealogies (and the people who follow them) are the more accurate labels to describe those who are poisoning our country?That's backwards looking--and if you haven't noticed,we haven't stopped our decline--in the slightest--by categorizing our enemies in fourteen letter,seven syllable words(at minimum).
I look at it simply.There are stupid,misguided people in our country and the world.There are others who have a desire to impose their will on everyone else--the greater good be damned.A lot of times they ally with each other.
The death of our country--the one I knew fondly most of my life--occurred simply--from the loss of White population,compared to blacks and Mexicans(and now Muslims).That's it.Somewhere along the line,some "group of people" decided to let America become diluted--to lose its strength of character and racial superiority by allowing minorities to gain control--little by little--of parts of society that Whites previously held.Once that was handed over--and it appears to be mostly complete--labels of neo-this and neo-that are useless.
There are only two terms now that matter--Patriot and communist--and everyone knows what each word means.You're one or the other,but unless Patriots find the will to fight--with the goal to return our country back to the numbers of 5 decades ago,demographically,all other discussion is moot.
Trump had it right in his inaugural speech:stop immigration,build a wall,deport criminals--he just could not get the job done as he wanted it.Too many commies I guess.
--GRA
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