@paulmasonnews tells us what neoliberalism really is

It’s perhaps not as clear as you might like:

If you look closely at the screengrab from this episode (where Maggie is sent to a nursery for neoliberals) you will see, alongside the slogan, an equation: A = A. It’s a quote from that long speech in Atlas Shrugged where John Galt outlines the tenets of Rand’s proto-neoliberal philosophy, “Objectivism”.

But Trotsky’s passage — and the neoliberals’ constant demand for a definition — reminded me that maybe there is room to publish such work elsewhere, in the form some thoughts on systems theory. So I will probably do that somewhere.

Here for brevity, just bring it back to the methodological issue: much ideological thinking about capitalism is pre-scientific. It demands economic reality be broken down into static concepts that neither change nor mutate. Yet the method I’ve tried to follow in Postcapitalism — a version of complex systems analysis — says reality is a mixture of economic/non-economic, that its unstable, that it is complex (leaving aside the whole randomness issue), that it undergoes change processes where stability gives way suddenly to unpredictable and massive change.

As to neoliberalism — I’ve defined what the doctrine is. There is no point “defining” an entire era of capitalism at a given stage because — as I pointed out in the last post, even neo-liberal capitalism has gone through 4x stages of development (preparation, Reagan/Thatcher, Third Way, post-2008). But if you want the short summary:

The neoliberal project began in 1979/80 with the turn to pro-cyclical monetarist policies and the strategy of smashing organised labor in the USA and UK, based on a policy recipe imposed in Chile and other developing countries, which was to be summarised as the Washington Consensus. Its second phase began with the rapid globalisation of trade and capital flows, and the opening of the former Comecon countries, plus China after Deng’s southern tour, to the global market. The third phase is characterised by the rise of speculative finance and the concomitant financialisation of working class life. The fourth phase begins with the strategic collapse of the entire system in September 2008 and is ongoing. Though in each phase there’ve been differences, there are common traits.

In each phase more of the economy previously run by the state is privatised and more of the operating profit of the private sector becomes dependent on “corporate welfare” — ie specific favours, tax breaks and privatisation windfalls;
In each phase the strategic defeat of organised labour is reinforced by the individualisation of work and the suppression of wage bargaining power;
In each phase the possibility of a retreat to Keynesian capitalism recedes, as consumption patterns, ownership patterns and the move to reliance among the elite on asset wealth – not wealth earned through entrepreneurship or physical productivity — close off the possibility of expansionary fiscal policy, high-welfare states etc.
In each phase fiat money is used for overtly political ends: you could call neoliberalism at a policy level “monetary capitalism”. First money is tightened to induce the collapse of industries where the Keynesian model is embedded; then counter-inflationary policy is used to create a shortlived “Goldilocks Era” of imagined permanent stabiity. Then from 1997 onwards monetary expansion is used to offset the business cycle, creating a boom bust cycle. Then in 2008 the boom-bust cycle destroys the banking system, leaving the entire neoliberal system dependent on the state.
At the height of the system’s effectiveness real profit rates do recover — at the expense of the labour share — but as financial profits begin to dominate, the system’s vitality is destroyed.
I could go on, adding more and more phase-similarities, but all we’re going to do is create something the A = A crowd are never going to accept, namely: a description of matter in motion, of complexity, of historicity and the time-limited nature of all social systems. Not a definition.

Neoliberalism is Objectivism plus pro-cyclical monetary policy?

Interesting news for the ghost of Milton Friedman don’t you think? That pro-cyclical bit at least.

Targeting M3 (wrongly, as it turned out but still) with higher interest rates in a boom, lower in a slump, in order to have counter-cyclical monetary policy? And QE is rather counter-cyclical, isn’t it?

This man has a job as an economics editor?

24 thoughts on “@paulmasonnews tells us what neoliberalism really is”

  1. This is exactly why normal, sensible people spend about 8 minutes choosing a government every 5 years, but think nothing of, say, following a five day Test match.

    If the Lizard people really have been running things since 1979, then they’ve done a pretty good job. The previous lot, llamas probably, were all over the place.

  2. Vapid, confused leftist bullshit. He should be sacked for the paragraphs quoted alone never mind the rest of his tripe. A\ny BBC hack writing two paras in praise of Austrian economics would find his/her job in danger.

    Chance would be a fine thing.

  3. “In each phase more of the economy previously run by the state is privatised”.

    This sounds like a testable proposition – in an increasingly privatised economy, a smaller share of GDP should be going to Govt, no?

    So let’s check the data…oh wait…

  4. “Then from 1997 onwards monetary expansion is used to offset the business cycle, creating a boom bust cycle. ”

    I see. To prevent boom ‘n’ bust we had to create boom ‘n’ bust.

  5. Remarkably light on facts, isn’t he? He just makes a series of assertions and expects people to believe him without providing any evidence whatsoever. I guess arguments without any evidence are part of this neo-liberal project that he is unable to define because it is too complicated.

  6. “This man has a job as an economics editor?”
    Well, it needs a little basic knowledge of economics to see the ridiculousness there.

    The astonishing thing is that he has a job writing anything.

  7. “counter-inflationary policy is used to create a shortlived “Goldilocks Era” of imagined permanent stabiity. Then from 1997 onwards monetary expansion is used to offset the business cycle, creating a boom bust cycle.”

    So it’s all Gordon Brown’s fault?

  8. I’m not convinced that opening up Comecon and China was simply a decision made by the neoliberal elite in pursuit of their project.

    However, another Well Done to the Lizards there I think.

  9. from 1997 onwards monetary expansion is used to offset the business cycle, creating a boom bust cycle. Then in 2008 the boom-bust cycle destroys the banking system, leaving the entire neoliberal system dependent on the state

    That’s a curious paragraph. I mean you could swop the neocons in the conspiracy for closet Marxists who desire and achieve the same ends. If you want to crash the economy and leave it dependent on the state, then surely that outcome strengthens the case for statism. That’s why the argument for Keynes has had a revival. If you want to engineer a situation where the retreat to Keynesianism is impossible, you want to eliminate opportunities for the state to intervene as the saviour.

  10. Ascribing intent to decisions made with far less than perfect knowledge and only crude levers to pull on, the whole article sounds a lot like an Adam Curtis film. With enough library footage, interviews and statistics he can tell whatever story he likes. But it is all with hindsight.

  11. @Gareth

    An excellent comparison. I have found a high correlation between believing any old crap and a love of Adam Curtis films. It’s all about creating and spinning a narrative.

  12. Mason wants to define neoliberalism as the movement from the state to the private. And he also wants to describe it as monetarism and the culmination of this in the 2008 crash. And he also says Hayek and Mises are the founders of neoliberalism.

    He wants to lump too much together. And it is a logical mess. Monetarism is quite obviously the nationalisation of monetary policy, which took hold from the 1970s with the final severance to gold. The exact opposite direction of travel he claims. And one of the most differentiating aspects of the Austrians is their rejection of the quantity theory of money upon which monetarism rests.

  13. “First money is tightened to induce the collapse of industries where the Keynesian model is embedded; then counter-inflationary policy is used to create a shortlived “Goldilocks Era” of imagined permanent stabiity. ”

    What is an industry where the Keynesian model is embedded? What is this model? What industries have collapsed by the raising of interest rates? And is this not the exact opposite of what he has described earlier as

    “the strategy of smashing organised labor in the USA and UK, based on a policy recipe imposed in Chile and other developing countries”

    And again, what examples are there of this (in Chile or elsewhere) and what is the proof that there was some concerted neo-liberal project behind it, if it ever happened?

    Mason makes the Murph-meister seem like an intellectual titan.

  14. Diogenes,
    I think you have to try and deduce the intended meanings of some words. For example:

    “Keynesian” = Good + government support
    “Money is tightened” = withheld perhaps, rather than a rise in interest rates.

    So, British Leyland was not propped up, thus leading to collapse and a reduction in union power. (BL was not the entire car industry, but it pretty much was the British car industry).

    I think what he’s really trying to say is that Fatch and Raygun were globally influential, and he wishes they hadn’t been. No money in that sort of platitude though.

  15. Jack C

    I remember the days when the leaders of trades unions representing bus conductors – Jack Jones, welders – Hugh Scanlan, postmen – Tom Jackson, miners – Jim Gormley, Frank Chappleelectricians – dictated UK economic policy. They were more informed than Murph and Mason ffs! And probably much better paid thanks to Stalin, Brezhnev etc

  16. I’m not sure that Mason would have been all that happy in the smoke-filled rooms of the old TUC.

    Clearly, Mason wanted to be a challenging artist, but lacking the talent opted instead for Art Criticism. Hence the big bag of wanky language. Finding the money poor and the girls uninterested, he had to chisel out a living like the rest of us.
    Obviously.

    I think my assumptions are relatively mild.

  17. Jack C,

    “So, British Leyland was not propped up, thus leading to collapse and a reduction in union power. (BL was not the entire car industry, but it pretty much was the British car industry).”

    It’s the motor car that killed unions.

    If you lived in Stratton in Swindon in the mid-70s and had manufacturing skills, you worked at Rover. And if you were Rover, you had a choice of the people in Stratton and not far beyond.

    So, management could crap on workers because “where else are you going to work?” And the workers could counter that by all going on strike and “who are you going to get to run your factory”. That power meant that owners of businesses had to work with trade unions, and most employees would be a member of a union because of the power they could wield.

    The motor car (to a reliability and availability of the Mk2 Golf) and the road infrastructure of the 1980s changed everything. Don’t like your job? You go and work somewhere else. Don’t like an employee? Get someone else from the wider talent pool. This further extends to factories, and if they take the piss (like Goodyear in Amiens), you just shut it down and build a factory somewhere else. You can run a factory on the other side of the world because we’ve got the sort of cheap global communications we didn’t have in the 70s.

  18. Stigler,
    I was trying to understand Paul Mason.

    I’ve ordered a drone’s worth of LSD and will try again once received.

  19. Stigler…your job is to reconcile Mason’s analysis of the overarching factors with your reality….and you are not doing well so far, since you have not given a link to neo-liberal capitalism in your “heuristic” account.

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