Simon Wren-Lewis has a rather nice quote on his Mainly Macro blog this week when he notes during a discussion of neoliberalism:
Colin Crouch in a very interesting book defined neoliberalism as “a political strategy that seeks to make as much of our lives as possible conform to the economist's ideal of a free market” Yet economist's ideal of a free market (an efficient market discussed above) requires ‘perfect competition', which means that there are very many producers, none of whom has the power to set prices. Yet neoliberals ... seem very relaxed about monopoly power when it comes to firms. In contrast neoliberals are happy to attack monopoly power when it comes to workers and unions.
There you have the hypocrisy of neoliberalism exposed in a paragraph.
The whole blog post is well worth reading.
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A friend sent me this quote from Jim Stewartson this morning. It seems apposite.
“Under-regulated capitalism has allowed a strain of raging psychopathy to take control of key sectors of life, including business and politics.
At the root of this dynamic is that our system rewards people who don’t care about others because they have an array of options that people with empathy don’t have. It’s hard to be competitive when your competition is willing to do inhumane things you would never be willing to do. So the people who are willing usually win.
In this way, we sort all the high-functioning sociopaths and psychopaths to the top of the pyramid—and reward them lavishly for it. And once they get there, those people want to surround themselves with others who have no interest in empathy either—so they replace anyone who won’t behave like a sociopath with someone who will.”
He goes on to vivisect fascism.
Full Tweet here:
https://twitter.com/jimstewartson/status/1684358979886125056
@ Helen Heenan
That’s pretty good and of course the weakness in human beings for a wide variety of reasons is some don’t get much empathy as a kid. Democracy can be viewed as a process to minimise the damage such psychologically damaged children may begin to cause as they make their way through life.
As a further point Jim Stewartson classifies Rupert Murdoch as a sociopath. Why then is Keir Starmer willing to associate with him. Is it a case of it takes one to know one? In my book Starmer’s brutality to Labour politicians on the left of what is really only a social democrat party suggests to me that he is. I’ve met personality types like Starmer before! Read Jim Stewartson’s Twitter comment in full:-
https://twitter.com/jimstewartson/status/1684358979886125056
In Boris Johnson then it is patently clear our democracy is not working.
Simon Wren-Lewis’s opening quote from Kevin Vallier actually sets the proper context, but he ignores the first sentence and this allows him to ignore the validity of early neo-liberalism’s critique of socialism (in the prevalent form of totaliarian communism), of fascism and of an over-bearing and over-weening social democracy and the modifications required in terms of public choice theory and institutional economics to minimise its flaws.
That neo-liberalism was subsequently hi-jacked by those with mendacious intent does not invalidate its early contibutions.
Except communism is not the most prevalent form of socialism and supposed neoliberal governments have never shrunk the state so what is the point you are making, or are you just suffering the standard neoliberal delusion?
Thank you, Richard. I’m simply highlighting the historical context set out in Simon Wren-Lewis’s opening quote from Kevin Vallier’s comprehensive assessment of neo-liberalism. Friedman, von Hayek and Buchanan (and many others involved in the early years) would have been revolted by much of what neoliberalism has now come to be characterised in this era. The now infamous Washington Consensus was firmly in that tradition. However, John Williamson, who drafted the original is on the record as asserting “..I of course never intended my term to imply policies like capital account liberalization (…I quite consciously excluded that), monetarism, supply-side economics, or a minimal state (getting the state out of welfare provision and income redistribution)…” and sought to establish a clear distinction between his policy precriptionsand what is now pejoratively labelled as neoliberalism.
It is also interesting that the IMF staff who critiqued neo-liberalism in 2016 focused on the detrimental impacts of capital account liberalisation and excessive fiscal retrenchment.
Paul T Hunt
Please tell me how a snake-oil collection of theories that is neo-liberalism can produce a valid critique of ANYTHING?
If you want a valid critique of socialism, then just ask a real socialist Paul – yeah?
Real socialists and socialism are/is openly reflective and critical of their/its own system in way that neo-liberalism is certainly not. Think about what really happened in Soviet dominated areas like Hungary, Czechoslovakia, Yugoslavia and Poland in the post war era. Read Milan Kundera for example . Socialism was full of new ideas and approaches that were oppressed by a rogue state (Russia) claiming to be communist but nothing of the sort.
When von Hayek was espousing his ‘theories’ about rational self interest in human beings, by his own admission he did acknowledge altruism. In doing so, in one stroke he took it upon himself to rewrite hundreds of thousand of years of human development – just like that.
How can that be taken seriously? I tell you how Paul – money – lots of money over many years. And nothing else.
And as for ‘public choice theory’ from the likes of Charles Buchanan – talk about the teapot calling the kettle black – how Buchanan in all seriousness just ascribes self interest to the public sector and the state and completely ignores the self interest in companies, banks and markets is just not credible at all.
‘Institutional economics’ – a coded phrase say ‘This is the truth and there are no other truths because we are the experts and we are in charge. Now shut it!’. Commonly known as ‘authoritarianism’ Paul.
Both ‘institutional economics’ and ‘public choice theory’ did not address the flaws of neo-liberalism. They hid them behind by more waffle.
Does that help? Probably in your case not – more’ the pity.
But thank you for coming to remind us what we are up against.
Dear Pilgrim,
Your intemperate response appears to be based on a misunderstanding. I’m simply suggesting that the comprehensive assessment of neoliberalism presented by Kevin Vallier, which Simon Wren-Lewis used as his point of departure, is well worth a read. Simon, unfortunately, goes on to use a modern version of neoclassical economics in an attempt to demolish the modern manifestation of neoliberalism.
I’m not in any way denying that avaricious corporate capitalists, the key principals of huge global funds of assets under management in the shadow banking sector and high net worth individuals – and the legions of professional functionaries and flunkies (and tame academics) they retain – have suborned governing politicians, policy-makers and regulators and have rigged, distorted and subverted market machanisms. But some form of “socialism” in one country is certainly not going to bring them to heel – and indeed could play in to their hands.
You still seem like an apologist. Sorry, but if you intend otherwise it does not come across.
Thank you, Richard, you allowing me to comment here. It’s unfortunate that if one doesn’t condemn ‘bell, book and candle’ not only the current ugly and twisted manifestation of what is pejoratively labelled neoliberalism but also every aspect of it since its inception then one is viewed as an apologist. Despite its current perversion, a form of it that is closer to its original formulation remains salient and influential on the centre-right. And it secured that salience and influence because of deep flaws in the working out of the post-war Keynesian consensus.
It is possible that the centre-right will not recover from the extent to which it is being captured in many polities by the xenophobic, nationalist, populist right. But I would never write it off. My interest is driven by a desire “to know thine enemy”. I find it difficult to understand why that makes me an apologist.
Paul
Your use of langiage made it seem that way – and when someone appears here I offer the benefit of the dount, but also monitor tone care. I am trolled too much not to do so.
I now accept the nuance of the approach you are adopting – but, like Simon Wren-Lewis, prefer a current context for intrerpretation, using the historical contxt largely as evidence of the whole misplacement of the neoliberal narrative from the outset as a comprehensive misunderstanding of the will of the populace at large – which it never trusted, of course.
Richard
Paul T Hunt
Thank you for your response.
My view is that I am only being intemperate from the second to last line, but accept my apologies anyway. Everything else is just an effort by me to bring to your attention how any neo-liberal ‘analysis’ of anything is deeply flawed, well financed by vested interests and not to be taken seriously. Your response I was responding to mentioned neo-liberal critique as statement of fact. You did qualify whether you agreed with it or not.
Neo-liberal critiques Paul are not statements of fact. I come to you having researched a lot of it myself. I cannot find a shred of evidence to say that any of it has worked. No experiential evidence either. Neo-liberalism is getting long in the tooth.
Take for example your comment about socialism which could be taken as redolent and pregnant with a neoliberal bias. What sort of socialism are you talking about?
I thought that socialism was really about democratising the state and the economy.
If you want a decent and more challenging critique of neo-liberalism, don’t take it from me, just read anything by Philip Mirowski or Nancy MacLean.
Neo-liberal neo-classic economics has certainly failed. The question is whether it is working as conceived, or whether there was a belief that prosperity would indeed trickle down. I think many economists believe the latter, but there are also those who knew that if it failed, they would be all right, and those who seem to enjoy the deserved suffering of many.
I’ve come to realise that “free market” is a freedom that applies only to those who make a profit (ie. not workers or customers), and to do anything that achieves that goal. I think we know the answers to these “freedoms”:
➡️ Make money or dump sewage in our rivers?
➡️ Pay MPs and corporate executives way above the average or give public sector workers a market wage?
➡️ Uphold basic human rights, or withdraw from the European Convention on Human Rights?
➡️ Allow people to earn a living wage, or impose austerity and kill hundreds of thousands?
Interesting.
On the recommendation on William Keegan in the Guardian of all places, I’ve just splashed out on Amos Witztum’s 2019 two volume opus ‘The Betrayal of Liberal Economics’ (Palgrave Macmillan). It’s a very dense volume and its got equations (scary!) in it too and plenty of graphs – I’m coming to terms with my commitment albeit heavily discounted.
Already Witztum is talking about the failure of mainstream economics to meet a ‘social benchmark’, the lack of reflection/debate and new thinking in the discipline, the narrow mindedness caused by an over attention to ‘efficiency’.
The first volume seems to be an analysis of where economics is, the second is where I think he goes back to Adam Smith to reclaim the great man and put the record straight and also weaves other disciplines into it such so sociology and anthropology to open up economics to a more inclusive evaluation has how effectiveness/success is defined.(such as Wofgang Streeck advocated in ‘ How Capitalism Will End’ – 2016).
Already, Witztum has stated that neo-liberals don’t actually advocate corporate monopolies – they just seem to have become important to them because Neo-liberalism is such a mess of contradictions that corporate power is now needed as a political tool to sustain it more than ever as all the bullshit they espouse has begun to unravel (the relationship with vested interests and Neo-liberalism’s early days is something Mirowski is more intimately acquainted with). It is wealth’s backing and the capture of political and educational systems that have contributed to neo-liberalisms ‘stickiness’.
Witztum is a good writer to read, but his deliberations are deliberations (sinuous) – but that is better than reading anything by charlatans like von Hayek, Buchanan and Friedman. He also bemoans just how hard it has been to write a book like his given the wall of indifference he has faced.
At around over 600 pages I’ve got my work cut out.
I’ve also got hold of Vague’s ‘ The Paradox of Debt’ for good measure and spurned on by John Warren’s posting about our political system I’m going back to basics to try to work out where politics has gone so wrong by reading Chantel Mouffe’s ‘On the Political’ and ‘For a Left Populism’. Hopefully I will be able to add any insights into posting going forward but given my humble beginnings, wish me luck anyway.
I remain way behind on my reading
I wish you luck. I have not read Witztum’s magnum opus, but he is a polymath and he is trying something very, very ambitious; a whole life’s work. I have to confess I am not sure Neoliberalism, as an idea, has sufficient substance to deserve such an intellectually comprehensive response. I have long thought neoliberalism was essentially a shoddy piece of second rate work that too easily seduced a weak, and easily led discipline, but found a ready efficient market for itself – in the rentiers and monopolists.
The essence of Witztum’s approach was discussed in Estrin’s shrewdly thoughtful book review (Eoconomia, 10.2, 2020): “page xx (Volume I), ‘we would like to expose modern economics for what it really is: a narrowly defined individualistic theory with a false conception of the natural and where society is purely functional and ethics subservient to its functionality'”.
The disaster of equilibrium theory; over reliance on abstract mathematics but with no methodology of rigorous empirical testing to stand it up (not sure how much Witztum explores this problem); the reliance on a ‘natural order’ in competitive markets that are not themselves the product of a ‘natural order’; the assumption that efficiency of a market (itself a suspect core hypothesis), as the core of economic purpose can replace human values, without offering a method of evaluating the results (rising inequality and poverty do not count) alone matters – assumes only the abstract, and probably unobtainable in the real world ‘efficiency’ is all that matters, and only for its own sake to satisfy the aesthetic sensibility of neoliberals. That is a very loose, freely expressed interpretation of Estrin on Witztum!
What may have compelled Witztum to respond with controlled intellectual outrage to neoliberalism may be that neoliberal economics has long revealed only too readily its profound ignorance of psychology, sociology, indeed almost all the social sciences; to say nothing of philosophy. Neoliberal economics, at least since the 20th century has aspired to be the physics of the social sciences; a ludicrous ambition (it is probably the weakest); far, far beyond its capacities, or its paltry methodology.
Thanks
Ethics subservient to the supposedly ubiquitous efficiency of market fundamentalism and here we have a climate crisis!!!
All you can do is laugh at this Stone Age level of reasoning! Do these greedy clowns ever bother to really think???
Here’s the book title:-
“Climate Change: The Paradox of Market Fundamentalism”
not with a foreword by Keir Starmer!
Thank you John.
Witztum’s approach is rather like a male preying mantis approaching a female to reproduce – it’s cautious, very cautious indeed and he is aware that he is taking a huge professional risk taking on the economic establishment which is what he is really doing. I purchased the book because of his bravery.
But also, the diligence that has gone into his questioning of narrow-minded orthodoxy I just find instructive – there is gold to be mined here – insights etc., that are very heavily focussed on the economics itself as practiced, indeed Witztum has had to become so narrow himself to dig down into the marrow of neo-lib economic ‘thought’ in Volume I. In Volume II he zooms out again to measure those economic assertions in reality using other disciplines I think.
Witztum is not as colourful or openly in contempt of neo-liberalism as say Mirowski – Witztum’s prose is measured and considerate in an effort to come across as rational in an effort to be taken seriously.
As we know, real rationalism means nothing to neo-libs and you might as well talk to them until you are blue in the face. Indeed Witztum might be wasting his time, but I still think it worth the effort – another nail in the neo-lib’s coffin won’t hurt.
BTW John, your recent comments about politics have made me realise that I need to learn more about it. You and I do not always agree on things but I always find that when you share your own intellectual journey with us it is appreciated.
I’m on page 47 of Vague’s “Parodox of Debt” and already I know I’m going to have to re-read it and write down his conclusions as I go along since they come thick and fast and then I’m going to have to ponder their validity. The “paradox” in the title is that GDP growth is dependent upon continuous debt.
Thanks for the warning!
Thus we have a debt jubilee to wipe the slate clean (or other unfortunate events eg. wars).
see Michael Hudson’s presentation at the Field Institute
https://www.youtube.com/watch?v=yQZGv2xL-fw
Steve Keen Macroeconomics of bank-created money and a Modern Debt Jubilee as a way out of the private debt trap
https://www.youtube.com/watch?v=LuFNRfIibxU
‘The “paradox” in the title is that GDP growth is dependent upon continuous debt’.
Well, of course it is. Money will always needs to be created and destroyed.
To me the problem is always the same – is all the money created actually debt? And when is money debt when its been allocated to expenditure? A mortgage is a debt. But is financing public services through local authorities or the NHS debt?
I don’t think so. Sorry.
The problem is the abuse of the word ‘debt’ and its nuances. If the government prints money to bail out the banks, that’s just printing money – I don’t see how that can be a debt to the government or the taxpayer knowing what we know about the BoE, Treasury and Exchequer and Audits Departments Act 1866 and even the 1997 Act setting up the ‘independent’ BoE.
Printing money by the government is to me a sovereign action that denotes its ownership of the currency and also legitimises it to collect tax. It’s a hegemonic act and the neo-liberals in particular don’t like it, but because they see sovereignty as belonging to individuals and not states. And it does not have to be called debt. Which it is too often portrayed as for the most mendacious of reasons.
Good luck.
You should be finished by Christmas.
As ever, PSR , you enrich this blog with your contributions. Thank you for doing all this reading so the rest of us dont have to.
Indigenous American cultures identified this sort of behaviour as an illness (“wetiko”) – one with unfortunately no cure, and presenting such significant dangers to community survival that sufferers had to be expelled or even executed.
It seems to me we missed a trick when we didn’t learn from this, and we’re all (indigenous peoples particularly) suffering the consequences.
Amongst the contributions above from Mr Hunt a sly dig about the alleged failures of the Keynesian consensus.
Like all human systems Keynesianism has its faults but comparing it with the dishonesty and chronic failures of neo-liberalism is like comparing the theory of Evolution with Creationism.
Excluding the climate crisis here’s a simpler one to help explain the dogma of Market Fundamentalism:-
“The comfort of the rich depends on an abundant supply of the poor.” Voltaire
In other words where exactly is the ethics in (Free) Market Fundamentalism to stop Voltaire coming up with his statement? Are human beings ethics free? Only I’d suggest if you’re a sociopath!
https://www.researchgate.net/publication/247759661_Evolution_of_Parental_Caregiving
Might a major distortion/deceit of current mainstream « Economics » be the assiduous/enforced separation of « Economics » from its social and personal consequences and opportunities?
Might the label « Socio-Economics », or something like it, be more accurate and encourage more equitable and sustainable societies?
I call it political economy
As the saying goes, “capitalists gonna capitalise”. Monopoly is the endpoint of concentrating capital (money, market control, power).
Yes, the state can provide a balancing power to curb this tendency but there is an anthropological argument that the markets *require* a state to function, they were birthed at the same time, they are two sides of the same coin.
Anyway, what do I know, I’m a gardener…
There’s a legislative argument that’s more correct. Christine Desan points out the state needed to exercise its legislative powers and powers of enforcement to support these powers to create a unit of account that’s as stable in value as possible and enforceable for payment for capitalism to really take off.