Recently, US business press leader, the Project Syndicate magazine, has released a discussion titled «What Comes After Neoliberalism?»
The debate engaged renowned author Joseph Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, former chief economist of the World Bank, and chair of the US President’s Council of Economic Advisers, as well as some of his less-known though reputable colleagues.
One might say these are the best and the brightest who will hand you their reflections on neoliberalism and other things existent on a silver platter. And yet, the discussion exposed at least three features of their perception of reality, all of which we deem as truly indicative of how US "eggheads", as that country’s expert elite has long been branded, are able to adequately assess major changes taking place across the globe, including their own economic system called neoliberalism. This means that once they hide nothing "behind the scenes", their analytics will unlikely prompt the American leadership any sound decisions clamored and required by the present-day state of affairs nationwide.
This was all by trumpeted by authors of a recent report by Rand Corp., the United States’ leading think tank: "The United States is not yet demonstrating widespread shared recognition of societal challenges or determination to reform in key issue areas. There is no emerging consensus on the barriers to renewal that demand urgent action."
Therefore, without a viable plan to overcome the crisis, it is truly difficult for the Washington administration to formulate its economic policy. The process of shoveling the country's economy with trillions of dollars, which began under Trump at the height of COVID-19 and was continued by Biden, produced no desired effect. So, what next? And the American "eggheads" have made up their minds to try another tack and discuss what is about to happen after neoliberalism. By the way, let's "agree on terms" right away and propose a definition of neoliberalism from dictionaries.
The Great Russian Encyclopedia says the following: "Neoliberalism is a set of economic, socio-philosophical and political concepts that give priority to private interest, competition and property rights over the principles of social justice and evaluate the market, not constrained by state intervention, as the optimal mechanism for coordinating economic resources, preserving and realizing personal freedoms." In short, private interest and personal freedoms enjoy utmost importance, and the state should not interfere with private initiatives. Let's fix it.
And now we will turn to the Project Syndicate discussion, highlighting three features of these analytical assessments, as mentioned above. Quotes only:
— "The neoliberal era is not ending in the US, because over the long term, political success rests on a foundation of policy success, and the «post-neoliberal» policies embraced by Presidents Donald Trump and Joe Biden are not succeeding," writes Michael Strain, a Project Syndicate columnist. The passage lacks logic as neoliberalism is unlikely to defeat Washington's state policy by itself, and returning the previous "foundation" is somewhat sci-fi-esque. But they do have such views altogether…
— "What follows neoliberalism? A true free market <…> Our economy resembles capitalism as much as our political system resembles democracy – hardly at all. The core ideas of neoliberalism – often described as capitalism without state intervention – have repeatedly been debunked by volumes of research and simple reality: rising tides did not lift all boats, free trade did not usher in world peace, and markets were not necessarily more efficient than governments <…> From the beginning, neoliberalism was a Trojan horse. It promised market freedom but delivered the opposite: more laws, lawyers, subsidies, and, in the United States, the largest federal bureaucracy in the country’s history," writes Mehrsa Baradaran, a professor of law at the University of California, Irvine, specializing in financial regulation. Her spiteful comment is politically motivated but she does believe that everything will sort itself out one day: "What follows neoliberalism? A true free market." Sounds like a naive dream, doesn’t it?
— "Rising productivity and incomes were central to progress. As people grew richer, spending on both private-consumption and public goods increased. The private sector had plenty of incentive to keep improving productivity, develop new products, and otherwise fuel economic dynamism. The public sector also did its part, providing infrastructure (from water to transportation), strengthening education and training, enforcing safety standards, establishing realistic commercial codes, and more," philosophizes Anne Krueger, a former World Bank chief economist and former first deputy managing director of the International Monetary Fund, Senior Research Professor of International Economics at the Johns Hopkins University School of Advanced International Studies and Senior Fellow at the Center for International Development at Stanford University.
And yet, she doesn't say a word about reasons why "people grew richer". In general, the discussion saw none of these "gurus" highlight the topic of the "credit economy", which let many citizens rapidly grow rich due to… higher personal debts. Now this system is becoming increasingly unclaimed in the United States because citizens are afraid to generate new debts before paying off their old ones. That's why Trump and Biden are throwing trillions of dollars at people to support the purchasing power of their population that got simply accustomed to easy handouts.
But! The presidents have been thus making the US national debt soar, and the topic gets duplicated at a higher level, but the problem itself is still here to stay. But no one dares claiming that neoliberalism may only develop amid growing well-being of separate individuals, and the latter have long lost the habit of working and making their own living, while easily raising expenditures by attracting bank money. The term "borrowing back" appeared in the 1990s for the system of repaying debts to banks by obtaining loans from another ones. You close it at one place but it keeps growing elsewhere… Now that this party is sort of coming to an end, it no longer works to earn a lot with your own labor like it was in the 1950s as many highly paid productions left the United States for Asia. Thank you, grandpa Kissinger, who came up with this system in the 1970s…
— "This is not about providing corporate welfare, but about shaping markets, so that they are centered on stakeholder. (Now shareholders will answer for this attempt to take their profits away! — author’s note) <…> Addressing the challenges that lie ahead – most notably, the climate crisis — will require more sustained efforts to achieve «mission-driven government» (in the United States, they keep quibbling the semantics about "values" and "missions" amid an urgent necessity to develop a new economic policy to lead them away from disaster — author’s note) <…> The economy will not grow in a socially and environmentally desirable direction on its own. This will require a new social contract between the state and business, and between capital and labor. For example, governments can condition firms’ access to public funding – such as that included in the industrial strategies that a growing number of governments are embracing – on their behaving in ways that maximize public value," suggests Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, Founding Director of the UCL Institute for Innovation and Public Purpose and a co-chair of the Global Commission on the Economics of Water. What kind of daydreaming is that?
— "The neoliberal consensus has been overtaken by new concerns about geopolitics, national security, supply-chain resilience, climate change, and the erosion of the middle class <…> The constructive response, by contrast, tackles genuine social, economic, and environmental problems, aiming to repair the fissures created by neoliberal policies. It encompasses policies that create good jobs and restore the middle class, mitigate climate change through industrial policies and by phasing out fossil fuels, and rebalance the economy toward the needs of ordinary people, rather than large corporations or financial interests." A voice in the wilderness!
These are excerpts from Dani Rodrik, a professor of International Political Economy at Harvard Kennedy School, and President of the International Economic Association. Perhaps, if Trump returns to the Oval Office with his MAGA ideology, he will engage in industrial policy and "rebalance the economy toward the needs of ordinary people." This would symbolize rejection of neoliberalism. However, the US society is completely loose, and a harsh repressive regime alone seems capable of making it get back to work in the name of the nation. But Dani Rodrik says nothing about this, choosing silence on this kind of "drastic remedy" to cure the effects of neoliberalism.
And finally, what does world economy guru Joseph Stiglitz, say there? Here it goes: "The neoliberal agenda was always partly a charade, a fig leaf for power politics. There was financial deregulation, but also massive government bailouts <…> That it was a charade has now been made apparent by the US, which is providing huge subsidies to certain industries – essentially disregarding World Trade Organization rules <…> The end of neoliberalism, the recognition that some of the institutions created under its aegis are failing, and the new geopolitical realities provide us with a critical opportunity to rethink globalization and the rules that have underpinned it." In for a penny, in for a pound, but Stiglitz has only disclosed the diagnosis, without providing recommendations on what should be done after all. Well, he has at least articulated something… A bad scene: "neoliberalism is dead, and I'm still alive."
So, what are the "features" of these comments, which we mentioned in the first paragraphs of this piece? The first one is disregard of the credit system as major reason for US citizens’ welfare gain in the 1980s and 2010s. The second one is idle talk about "missions" and "values" as a demonstration of ineptitude among the current academics who know how to take the floor but cannot see into the essence of things as the failed Western education system only engages textualists prepped to speak the right words. And finally, has this "neoliberalism" ever really happened which involves committed debate if it turns out that businesses, even large ones, are no good for anything without government support? So, what is it all about — "neoliberalism" and "free market" or direct government subsidies and protectionism for the good of US corporations?
And this means that the so-called neoliberalism was a beautiful wrapping for the system when bank loans had been increasing the welfare of citizens over the course of decades, and corporations close to Washington enjoyed hundreds of billions of dollars in budget support to hold the ground in global markets. For this, by the way, the United States has been lambasting present-day China, which has adopted the American practice of state support programs.
The Western "eggheads" have lied again, referring as "neoliberalism" (i.e., the "new freedom") to a system with no hint at liberalism whatsoever, i.e. freedom of action beyond government or bank control. But it still sounds beautiful, doesn’t it?
