The International Writers Magazine: Voodoo Economics
Spitting Into the Wind
There are a number of indications around that we are coming to the end of three decades of self-delusion and economic lunacy. During that period, since 1980, we have been following a single, narrow economic philosophy that goes by the name of neo-liberalism.
So strongly held has that philosophy been that anyone questioning it was inviting derision and questions about his or her sanity. Its tenets have been taken as self-evident, and its challengers were largely spitting into the wind. However, in recent years, particularly since the crash of 2008, an increasing number of people have begun to challenge the ‘greed is good’ philosophy. The wind has changed direction.
Throughout the three decades there have been academics, including economists, prepared to publish attacks on the direction being taken, but the number of books arguing the case against has risen significantly during the past year or so. By contrast, some academics who taught economics in our universities have been heavily criticised by their students for the narrowness of their teaching. It beggars belief that some economics graduates in Britain left university not having even heard of Keynes, one of Britain’s greatest economic brains.
The fundamental flaw in neo-liberalism is its narrowness of focus. Its adherents see ‘economics’ as a largely arithmetical process divorced from other aspects of human life such as society and politics. Consequently, they avoid, or perhaps don’t understand, the question of ‘what is the purpose of economic activity?’ The end product of a neo-liberal economy is undeniably a huge increase in inequality, with a few becoming enormously rich, while many are impoverished.
This begs the question, ‘why should society at large support such a system?’ This question is not based on envy, as is often alleged, but on the very principle underlying neo-liberal economics: self-interest. Why should people support a system that is patently against their self-interest? Or to broaden the question, why should people vote for a system that works against the self-interest of their children and their grand-children?
The long term effect of increasing inequality in society is to effectively destroy any sense of ‘society’. As the rich get richer they have no interest in maintaining features of our society on which the ‘losers’ in the lottery depend, such as schools and hospitals that are publicly run. To them, such things represent only a cost. With wealth comes power, and that power is inevitably used to dispose of such costs. The eventual deprivation of such necessities to a reasonable quality of life cannot be in the self-interest of the masses, or the ‘great unwashed’ as some consider them.
Such measures not only deprive people of services today, but close doors on any chance of social mobility. As the wealth gap widens the opportunities to bridge it diminish as it is compounded by the growing gap in education, health and access to information and influence. Eventually, if left unchecked, society, if we can still call it that, will revert to the position prevailing at the time of Dickens, and possibly further, to feudalism. How can that be in the self-interest of anyone other than members of the wealthy minority?
So, opposition to the direction being taken by neo-liberalism is not a sign of envy, but of a rational realisation that it is not in the self-interest of a great many people to support it. By tolerating it and voting for politicians actively supporting the philosophy, a large number of our citizens are committing economic and social suicide. That claim is no less true because of a temporary rise in Gross Domestic Product, a mathematical construct that tells us nothing about the condition of society generally. The signs of social fragmentation, the ‘dog eat dog society’, are all around us already, and will only worsen unless we change direction.
It is perhaps a sign of that rational realisation I mentioned, that we see increasing dissatisfaction with our professional politicians, whose devotion to the neo-liberal model leads them to impose austerity in an unbalanced way: a way that exacerbates the problem of growing inequality. The realisation is not confined to Britain, incidentally, but arises in a number of European countries, giving rise to support for nationalist parties. It is interesting to see Marine Le Pen winning hearts and minds in France, a country boasting a nominally socialist government. Hollande’s government contains several closet devotees of neo-liberalism.
At the heart of the neo-liberal approach lie a number of myths, notably that public ownership is less efficient and more costly than private ownership. After three decades of the privatisation of basic services the veracity of that claim has to be questioned. If efficiency is to be measured by quality of service over cost, there is no shortage of examples suggesting a worsening of service over rising costs. Growing numbers of people are coming to see the myth for what it is, a con.
Another item in the mythology is the devotion to individualism and private enterprise. That too is open to question, given the poor treatment of small business in Britain. When Quantitative Easing pumped funds into the banking system with the intention of increasing investment in British industry, the banks did not pass the benefit on, but built up their own balance sheets. Indeed, what is happening behind the veil of neo-liberal propaganda is the growing development of international corporatism.
Large swathes of the British economy are not owned and run by British entrepreneurs, but by international corporations. This phenomenon is not confined to Britain. The power of corporations is on the increase across the globe, with growing numbers of politicians at their beck and call. Does this matter? The answer depends on how one sees the process developing. I predict the eventual suppression of another icon of neo-liberalism, competition.
Despite bullshit to the contrary, corporations do not compete from choice, but from necessity. Some years down the track, assuming no deviation, the world’s economy will be dominated by a few huge corporations. When that happens, historical precedents suggest that they will find competition onerous, and will come to ‘arrangements’ to suppress it. Then, we shall be back to mercantilism, but this time with governments playing the subservient role. Oh, the irony of it.
Doubtless, I shall be dismissed as a ‘socialist’ for what I have said here, and so be it. How can I deny a label of such loose definition. It is a term about which there is little agreement, but I shall admit to one belief that will help my critics. I have seen a number of references to Margaret Thatcher, the mother of British neo-liberalism, as the greatest British Prime Minister in recent history. I disagree. My candidate for the title would be the man chosen by a poll in 2004, Clement Atlee.
© Tom Kilcourse Oct 20th 2014
Too Little Too Late?
It is remarkable, and amusing, to see the leaders of the two largest parties suddenly pronouncing on the need to control immigration: two parties that have ruled Britain since Adam was a lad, or so it seems.