Saturday, May 7, 2022

David Harvey: The Main Achievement Of Neoliberalism Has Been To Redistribute Wealth

There is great need for us to understand neoliberalism. We need to know how it is that our nation and our planetary sisters and brothers have landed on this precipice where preventable and horrifying suffering and death is epidemic and where all of life on Earth is imperiled. And we need to share what we are learning. Again and again. Molly

This Is a Crucial Time

Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade.

Neoliberalization has meant, in short, the financialization of everything.There was unquestionably a power shift away from production to the world of finance.

The assumption that individual freedoms are guaranteed by freedom of the market and of trade is a cardinal feature of neoliberal thinking, and it has long dominated the US stance towards the rest of the world.

Planning and control are being attacked as a denial of freedom. Free enterprise and private ownership are declared to be essentials of freedom. No society built on other foundations is said to deserve to be called free. The freedom that regulation creates is denounced as unfreedom; the justice, liberty and welfare it offers are decried as a camouflage of slavery. 

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Neoliberal theorists are, however, profoundly suspicious of democracy. Governance by majority rule is seen as a potential threat to individual rights and constitutional liberties. Democracy is viewed as a luxury, only possible under conditions of relative affluence coupled with a strong middle-class presence to guarantee political stability. Neoliberals therefore tend to favour governance by experts and elites.

What the US evidently sought to impose by main force on Iraq was a state apparatus whose fundamental mission was to facilitate conditions for profitable capital accumulation on the part of both domestic and foreign capital. I call this kind of state apparatus a neoliberal state. The freedoms it embodies reflect the interests of private property owners, businesses, multinational corporations, and financial capital. Bremer invited the Iraqis, in short, to ride their horse of freedom straight into the neoliberal corral.

Beyond the speculative and often fraudulent froth that characterizes much of neoliberal financial manipulation, there lies a deeper process that entails the springing of ‘the debt trap’ as a primary means of accumulation by dispossession. Crisis creation, management, and manipulation on the world stage has evolved into the fine art of deliberative redistribution of wealth from poor countries to the rich. I documented the impact of Volcker’s interest rate increase on Mexico earlier. While proclaiming its role as a noble leader organizing ‘bail-outs’ to keep global capital accumulation on track, the US paved the way to pillage the Mexican economy. This was what the US Treasury–Wall Street–IMF complex became expert at doing everywhere. Greenspan at the Federal Reserve deployed the same Volcker tactic several times in the 1990s. Debt crises in individual countries, uncommon during the 1960s, became very frequent during the 1980s and 1990s. Hardly any developing country remained untouched, and in some cases, as in Latin America, such crises became endemic. These debt crises were orchestrated, managed, and controlled both to rationalize the system and to redistribute assets. Since 1980, it has been calculated, ‘over fifty Marshall Plans (over $4.6 trillion) have been sent by the peoples at the Periphery to their creditors in the Center’. ‘What a peculiar world’, sighs Stiglitz, ‘in which the poor countries are in effect subsidizing the richest.”   

What the neo-conservatives do is to change the ‘peculiar ways’ in which such questions enter into debate. Their aim is to counteract the dissolving effect of the chaos of individual interests that neoliberalism typically produces. They in no way depart from the neoliberal agenda of a construction or restoration of a dominant class power. But they seek legitimacy for that power, as well as social control through construction of a climate of consent around a coherent set of moral values.

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Volcker and Thatcher both plucked from the shadows of relative obscurity a particular doctrine that went under the name of ‘neoliberalism’ and transformed it into the central guiding principle of economic thought and management.

Thatcher forged consent through the cultivation of a middle class that relished the joys of home ownership, private property, individualism, and the liberation of entrepreneurial opportunities.

The management of the New York fiscal crisis pioneered the way for neoliberal practices both domestically under Reagan and internationally through the IMF (international monetary fund) in the 1980s. It established the principle that in the event of a conflict between the integrity of financial institutions, on one hand, and the well-being of the citizens on the other, the former was to be privileged. It emphasized that the role of the government was to create a good business climate rather than look to the needs and well-being of the population at large.

Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalization as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévy, after careful reconstruction of the data, have concluded that neoliberalization was from the very beginning a project to achieve the restoration of class power.

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The main substantive achievement of neoliberalism has been to redistribute rather than to generate wealth and income.

Capitalists behave like capitalists wherever they are. They pursue the expansion of value through exploitation without regard to the social consequences.

The net worth of the 358 richest people in the world was then found to be 'equal to the combined income of the poorest 45 per cent of the worlds population 2.3 billion people.

Capitalism will never fall on its own. It will have to be pushed. The accumulation of capital will never cease. It will have to be stopped. The capitalist class will never willingly surrender its power. It will have to be dispossessed.

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The central values of civilization are in danger. Over large stretches of the earth’s surface the essential conditions of human dignity and freedom have already disappeared. In others they are under constant menace from the development of current tendencies of policy. The position of the individual and the voluntary group are progressively undermined by extensions of arbitrary power. Even that most precious possession of Western Man, freedom of thought and expression, is threatened by the spread of creeds which, claiming the privilege of tolerance when in the position of a minority, seek only to establish a position of power in which they can suppress and obliterate all views but their own. The group holds that these developments have been fostered by the growth of a view of history which denies all absolute moral standards and by the growth of theories which question the desirability of the rule of law. It holds further that they have been fostered by a decline of belief in private property and the competitive market; for without the diffused power and initiative associated with these institutions it is difficult to imagine a society in which freedom may be effectively preserved.

People must get active; go outside; get moving. This is a crucial time. You know, massive wealth and capital haven't budged one bit, so far. We have to give it a huge push if we want to see something different in our society. We need to create mechanisms and forms of organization which reflect the needs and wants of society as a whole, not just a privileged-oligarchic class of individuals. 

 David Harvey  
From A Brief History of Neoliberalism 
 

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