"Thus we see how the neoliberal utopia tends to embody itself in the reality of a kind of infernal machine, whose necessity imposes itself even upon the rulers. Like the Marxism of an earlier time, with which, in this regard, it has much in common, this utopia evokes powerful belief - the free trade faith - not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it.
For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of administrative or political barriers capable of inconveniencing the owners of capital in their individual quest for the maximisation of individual profit, which has been turned into a model of rationality. They want independent central banks.
And they preach the subordination of nation-states to the requirements of economic freedom for the masters of the economy, with the suppression of any regulation of any market, beginning with the labour market, the prohibition of deficits and inflation, the general privatisation of public services, and the reduction of public and social expenses."
Pierre Bourdieu, L’essence du néolibéralisme
What I find almost remarkable is how deeply neo-liberalism has influenced almost all modern economic thought, even among those who might blanch at that appellation. After all, we become what we hate, because that is where our mind is directed most often.
I was reminded the other day of the critique which Chris Hedges had leveled at the 'new Atheists,' on how in their argument and methods they were almost indistinguishable from the radical religious right.
So too I have been reminded of the intransigence of the so-called liberal establishment economists and their theories, and how similar their response to any debate parallels the response one would obtain from a conservative austerian economist for example. It's all in the dogma, and the discussion seems more religious than intellectual.
Statists, of both the left and the right, pursue power initially in the hopes of establishing a Utopian model that is resisted by reality and the majority of the people, and finally end up pursuing power alone for its own sake to maintain themselves in a status quo. This is, as others through history have observed, the reason why so many revolutions end in failure and repression.
And the more heated the divergence of views becomes the less effective the policy, because it will tolerate no opposition or debate, and almost no discussion except within well defined boundaries of orthodoxy.
The tragedy is when a theory and its models are founded on a fallacy, and from that original misguided assumption a plague of evils are unleashed. This is the sad story of the 'efficient market hypothesis.' And just as bad is the technocratic tendency to make public policy the product of 'objective' economic deliberation, losing sight therein of first principles on which all such discussion are based, whether explicitly or implicitly.
And so as this year ends, I can only reiterate my forecast that stagflation is the outcome which we are starting to see now and will most likely see in the future.
It is due to policy error, and was once believed to be impossible. Then in the aftermath of the oil embargo it was acknowledged as possible, but only in the face of an exogenous shock. And now we will see it as the outcome of a pernicious financial and intellectual corruption.
Hyperinflation remains a possibility, but unlikely in the Dollar as I have said many times. A step wise devaluation is more likely than that, and probably done in coordination with other currencies, but not necessarily real goods.
The central banks will strain to maintain an equilibrium until it eventually shatters, or is shattered by those who defer from participation in their schemes. Such utopianism can tolerate no opposition, because it is an act of will, that must extend to all it touches.
It would take some human decisions of substantially misdirected proportion to create such a condition as a genuine hyperinflation in a major world currency. I have trouble conceiving of it, but I know it is possible. But it is not probable as far as I can determine. And some will take comfort in that, saying as a quack doctor might say, 'We have not yet killed the patient, so we must be doing something right.' Even though the patient is suffering and debilitated from their misguided treatment.
The reason for the stagflation is the continuing policy error of the Federal Reserve and the government in their pursuit of 'trickle down' recovery solutions without reforming the system on the domestic front. This stagflation will take its toll, even as they seek to mask the reality of what they have caused through the fashion of the day, accounting gimmickry.
I suggest one might keep an eye on the real median wage and the labor participation rate to obtain a reading of how things are going. They are not perfect, but better than the usual suspects.
This will end of course, but messily I am afraid. We may all regret the weakness of our political leaders and the lack of a genuine progressive voice amongst our established 'thought leaders.'
And I have to wonder if on the broader international stage that the great currency resets are even closer than I had imagined. The hysteria that occasionally breaks to the surface from the financial 'control room' makes me a bit concerned.
Given the highly unstable underpinnings of the markets, and the propensity for the financial engineers to stubbornly return again to their asset bubbles like a dog to its vomit, gives me little hope for the innovative thinking that must and will arise, either from debate or despair.
Have a pleasant evening.
"As we long suspected, Wall Street continues to use every trick in its playbook to do whatever it can to eviscerate numerous post-financial-crisis rules. The arsenal includes high-powered lobbyists who outnumber lawmakers 10-to-1; $1,000-an-hour letter-writing lawyers who gain strength from negotiating over arcana; and the occasional hoodwinking of a president whose knowledge of the ways of finance are close to nil.
The lesson for me is: The financial sector is so powerful that they will roll things back over time. The Wall Street firms have tremendous influence, and they can impact policy to a greater degree than any one regulator or a small group of regulators can.
[Financial-industry executives contribute more money] in every election, than any other sector, and they have made more profits in every single quarter since the fall of 2008 when many of them helped crash the economy. So while the rest of the nation is suffering still, and trying to get a leg up to get out of the ditch, the financial sector didn’t miss a beat.”
William D. Cohan, Angry Bart Takes His Parting Shot
"As the dominant discourse would have it, the economic world is a pure and perfect order, implacably unrolling the logic of its predictable consequences, and prompt to repress all violations by the sanctions that it inflicts, either automatically or —more unusually — through the intermediary of its armed extensions, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) and the policies they impose: reducing labour costs, reducing public expenditures and making work more flexible. Is the dominant discourse right? What if, in reality, this economic order were no more than the implementation of a utopia - the utopia of neoliberalism - thus converted into a political problem? One that, with the aid of the economic theory that it proclaims, succeeds in conceiving of itself as the scientific description of reality?
This tutelary theory is a pure mathematical fiction. From the start it has been founded on a formidable abstraction. For, in the name of a narrow and strict conception of rationality as individual rationality, it brackets the economic and social conditions of rational orientations and the economic and social structures that are the condition of their application...
In this way, a Darwinian world emerges - it is the struggle of all against all at all levels of the hierarchy, which finds support through everyone clinging to their job and organisation under conditions of insecurity, suffering, and stress. Without a doubt, the practical establishment of this world of struggle would not succeed so completely without the complicity of all of the precarious arrangements that produce insecurity and of the existence of a reserve army of employees rendered docile by these social processes that make their situations precarious, as well as by the permanent threat of unemployment. This reserve army exists at all levels of the hierarchy, even at the higher levels, especially among managers. The ultimate foundation of this entire economic order placed under the sign of freedom is in effect the structural violence of unemployment, of the insecurity of job tenure and the menace of layoff that it implies. The condition of the "harmonious" functioning of the individualist micro-economic model is a mass phenomenon, the existence of a reserve army of the unemployed.
This structural violence also weighs on what is called the labour contract (wisely rationalised and rendered unreal by the "theory of contracts"). Organisational discourse has never talked as much of trust, co-operation, loyalty, and organisational culture as in an era when adherence to the organisation is obtained at each moment by eliminating all temporal guarantees of employment (three-quarters of hires are for fixed duration, the proportion of temporary employees keeps rising, employment "at will" and the right to fire an individual tend to be freed from any restriction).
Thus we see how the neoliberal utopia tends to embody itself in the reality of a kind of infernal machine, whose necessity imposes itself even upon the rulers. Like the Marxism of an earlier time, with which, in this regard, it has much in common, this utopia evokes powerful belief - the free trade faith - not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it. For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of administrative or political barriers capable of inconveniencing the owners of capital in their individual quest for the maximisation of individual profit, which has been turned into a model of rationality. They want independent central banks. And they preach the subordination of nation-states to the requirements of economic freedom for the masters of the economy, with the suppression of any regulation of any market, beginning with the labour market, the prohibition of deficits and inflation, the general privatisation of public services, and the reduction of public and social expenses.
Economists may not necessarily share the economic and social interests of the true believers and may have a variety of individual psychic states regarding the economic and social effects of the utopia which they cloak with mathematical reason. Nevertheless, they have enough specific interests in the field of economic science to contribute decisively to the production and reproduction of belief in the neoliberal utopia. Separated from the realities of the economic and social world by their existence and above all by their intellectual formation, which is most frequently purely abstract, bookish, and theoretical, they are particularly inclined to confuse the things of logic with the logic of things.
These economists trust models that they almost never have occasion to submit to the test of experimental verification and are led to look down upon the results of the other historical sciences, in which they do not recognise the purity and crystalline transparency of their mathematical games, whose true necessity and profound complexity they are often incapable of understanding. They participate and collaborate in a formidable economic and social change. Even if some of its consequences horrify them (they can join the socialist party and give learned counsel to its representatives in the power structure), it cannot displease them because, at the risk of a few failures, imputable to what they sometimes call "speculative bubbles", it tends to give reality to the ultra-logical utopia (ultra-logical like certain forms of insanity) to which they consecrate their lives.
And yet the world is there, with the immediately visible effects of the implementation of the great neoliberal utopia: not only the poverty of an increasingly large segment of the most economically advanced societies, the extraordinary growth in income differences, the progressive disappearance of autonomous universes of cultural production, such as film, publishing, etc. through the intrusive imposition of commercial values, but also and above all two major trends. First is the destruction of all the collective institutions capable of counteracting the effects of the infernal machine, primarily those of the state, repository of all of the universal values associated with the idea of the public realm. Second is the imposition everywhere, in the upper spheres of the economy and the state as at the heart of corporations, of that sort of moral Darwinism that, with the cult of the winner, schooled in higher mathematics and bungee jumping, institutes the struggle of all against all and cynicism as the norm of all action and behaviour."
Pierre Bourdieu, Utopia of Endless Exploitation: The Essence of NeoLiberalism, 1998
Bourdieu's essay in the original French
"The pretended rights of these theorists are all extremes; and in proportion as they are metaphysically true, they are morally and politically false. The rights of men are in a sort of middle, incapable of definition, but not impossible to be discerned. The rights of men in governments are their advantages; and these are often in balances between differences of good, in compromises sometimes between good and evil, and sometimes between evil and evil."
Edmund Burke, Reflections on the Revolution In France