How to think like a neoliberal

How to think like a neoliberal

Kean Birch (York University, Canada)

Most years I teach a course on neoliberalism. I end the first class with a game in which I auction off the course grades to the students. First, I offer A-grades to the top 20% of bidders, B-grades to the next 20%, C-grades to the next 40%, and fails to the bottom 20%. Then I split the auction into two rounds to provide students with some chance to spread their bets. For each round I ask them to write down, secretly, their bids. Finally, I reveal the winners and losers. There is one proviso to all this, however, students can only use the cold, hard cash they have in their pockets to make their bids. Of course, I don’t actually sell students their grades, but rather use this mock auction as a way to show how markets can – and often do – work, even in unusual circumstances.

My aim, in getting students to bid for their grades, is to show how we can create markets for everything and anything in life; for education, for work, for relationships, for crime, etc., etc., etc. We can, literally, find ways to sell anything, if only we think hard enough about it – and we have to remember many people are thinking hard about just these sorts of things. Street lighting, often presented as the quintessential public good, could be marketized, if we so desired, through some newfangled socio-technical system combining night-vision goggles and crime prevention payments, for example. All that is required, to be simplistic about it, is working out what to monetize (e.g. personal safety re street lighting) and then finding some way to construct a market around it. Market construction, obviously, entails a social and technical arrangement, highlighting the need to appreciate the materiality of markets.

While I might enjoy the mental exercise of forcing students to think about how their lives are already, and could be increasingly, determined by markets, I find it useful for myself because it forces me to think like a neoliberal. I am rarely forced out of my comfort zone, as it were, when it comes to my own work. Generally, for example, I write for an audience that adheres to the same set of normative assumptions as I do (e.g. ‘neoliberalism is bad’). Consequently, I don’t have to think about neoliberalism – or anything else I disagree with – in anything less than negative terms. However, it is, from time to time, helpful to subsume ourselves in the things we contest.

For me, there are at least three ways we might think like a neoliberal: (a) like Friedrich Hayek, (b) like Milton Friedman, and (c) like Gary Becker. While neoliberalism has a more convoluted intellectual history and epistemology than my reference to these three leading figures would suggest, what I might call ‘modern neoliberalism’ – or the version most dominated by the ‘Chicago School’ – is largely driven by these thinkers. Each of them, in turn, had a distinct vision of the good society, which was underpinned by their own particular – or maybe peculiar – market-based epistemology.

First Hayek: from books like Road to Serfdom and Constitution of Liberty, it’s evident he saw markets and collective planning as largely irreconcilable ways to order society. Hayek conceived of markets as a process of discovery, where the market not only reveals prices but also (re)forms the subjectivity of its participants – see Dardot and Laval’s (2014) The New Way of the World for more on this. We are constantly learning, adapting and spontaneously creating social order – but only in a certain way. In this epistemology and normative framework – as Philip Mirowski emphasizes in his book Never Let a Serious Crisis Go to Waste (2013) – there is no reason for us ever to develop knowledge beyond ourselves, as that is all we need to know. Interestingly, this led Hayek to emphasize the importance of the law to markets, especially common law, which he argued had evolved towards a private form of law. In this sense, Hayek’s evolutionary epistemology reflects his conservative position (i.e. we’re building on the past on our way to a future market society) despite his denials otherwise.

Second Friedman: in his popular work, like Capitalism and Freedom, Friedman stressed the origins of freedom in market choice. In his view, markets are the only mechanism that enables us to act freely because they enable us to choose what we really want without some external constraint (e.g. government). We can, therefore, choose freely whatever is in our own interests. Here Friedman’s vision and epistemology are based on the view that society is not currently ordered via markets because markets are distorted by an external force (i.e. government). Friedman made a major normative assumption that there is such a thing as a perfectly working market and, more importantly, that we’re currently not in it; normatively, the attainability of a perfect market was, moreover, necessary to his epistemology.

Third Becker: perhaps the most interesting of the three, Becker’s position was that we can understand all social life through the lens of the market (e.g. education, crime, marriage, etc.). This comes out clearly in his Bank of Sweden Award (aka ‘Nobel’ Price in Economics) lecture from 1992. It is also evident in the more recent work of people like Steven Levitt, of freakonomics fame. In his ‘Nobel’ lecture, Becker argued that “individuals maximize welfare as they conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic”. Becker’s perspective is interesting because it comes closest to assuming that everything is already a market and, therefore, there is no need to work towards a society in which perfect markets determine our decisions. We’re already there, according to Becker.

I think it is useful to focus on Becker’s perspective as it has profound epistemological and normative implications for understanding neoliberalism. Most importantly, it means we don’t have to assume that there is something like a perfect market – with the attendant contradictions this entails – and that we don’t need to construct or pursue the institution of said perfect market. It is already with us, to all intents and purposes. Every decision and choice can be conceived as a market decision, a finely honed calculation of the benefits and costs of every action we take.

On the one hand, Becker’s epistemic position is necessary if neoliberals don’t want to have to rely on the assumption that there is such a thing as a perfect market somewhere down the road if only we struggle onwards in our journey to finding it – but then find that it’s always over the next hill, or around the next corner. There is no reliance on the normative linchpin of a perfect market or evolution towards market society, as with Friedman and Hayek. Consequently, we can consider all social decisions to already be market decisions, from when to marry and divorce through decisions to commit crime or not to whether to smoke – the last of these is merely a weighing up of your preference for smoking against good health. As Colin Crouch outlines in Strange Non-death of Neoliberalism (2011) everything can have and/or has to be given a price from this market perspective or it would fail as an epistemology – all things have to be comparable in order for us to be able to make our market decisions, so everything has to be conceived as having a price that can be compared with other prices. While Becker’s perspective might avoid some of Hayek and Friedman’s normative assumptions, it entails other serious implications.

On the other hand then, Becker’s position is deeply problematic, practically and normatively. As Paul Treanor points out in his discussion of neoliberalism, if we accept that everything has a market price – that is, the market is expanded to include all social activities – then the benefits of markets are only ensured with the intensification of these market transactions (i.e. frequency, speed and shortened duration) since the market is only efficient if it’s able to re-price everything constantly under conditions of market competition. As should be evident, if we constantly have to negotiate and renegotiate every transaction – by which neoliberals like Becker mean every action in life – then we end up entangled in an impossibly complex arrangement and number of constantly changing contracts (i.e. each transaction is a contract we need to negotiate, monitor and enforce). The increasing costs of these contracts – or ‘transaction costs’ in the parlance of economists like Ronald Coase – militate against ever doing anything in life; we are simply left arguing about contracts with each other. The only solution to this conundrum is to institute standard or boilerplate contracts – think of the end user license agreements (EULA) we sign all the time when we download software, sign up to new bank accounts, and so on – which raises a series of other problems I discuss in a forthcoming article in the journal ephemera: theory & politics in organization. Simply put, these include anti-competitive practices engendered by overly complex standard contracts (e.g. cellphone contracts we can’t easily, if at all, compare with one another); the replacement of negotiated market interactions with non-negotiated contractual arrangements (e.g. we don’t get to choose not to sign a EULA and still get the product or service we need or want); and the construction of privately made law by businesses (e.g. through the dominance of business perspectives in contract law).

I want to finish by returning to the auction I hold for students in my course on neoliberalism. While I highlighted how thinking like a neoliberal leads to certain contradictions and problematic assumptions in the discussion above, it is much easier to do so using the auction game. I mention two here, but there are, undoubtedly, more. First, the rule that the students can only use the money in their pockets illustrates the differential capacities of people to benefit from market systems, in that our starting positions determine, largely speaking, where we end up. Second, in buying their grades the students come to realize that turning everything into a market transaction ends up destroying the very thing they want; that is, the intrinsic value of their grade and, ultimately, their degree. If we all know that grades and degrees are for sale then we all know they are worthless and we will treat them as such. Some things simply cannot be priced, no matter how hard we think of ways to do just that.

 

Kean Birch is an assistant professor in the Business and Society Programme at York University, Canada. His new book, We Have Never Been Neoliberal: A Manifesto for a Doomed Youth, was recently published by Zero Books.

 

 

15 Comment responses

  1. Avatar
    July 08, 2015

    you talk about markets for ages and never mention the concept of externalities? Markets fail if there are externalities. Every first year econ undergrad knows that. Get you econ 101 straight and then write about markets.

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    • Avatar
      July 14, 2015

      I will try harder in the future to repeat back what gets taught in Econ 101, because that is (by definition obviously) the only way, and certainly the only correct way, to define, represent and conceptualize economic activity.

      However, before I do so, it’s worth thinking about a couple of things …

      How does orthodox economics define markets and market failure? The funny thing is that most Econ 101 textbooks fail to define what a market is in any rigorous way (and Austrian economists would disagree with that definition anyway, because it’s a static definition). It is usually defined (if at all) as something like a number of buyers and sellers who come together to exchange goods and services. Market failure then is simply the failure of a market to exist in a particular situation (I think Phil Mirowski is the one to make this point). An externality then, in this sense, is only something that has not been turned into a market yet. As I tried to illustrate in the article, anything and everything can be turned into a market if we have the right socio-techical arrangements. Frequently, however, creating a market destroys the value of the thing we wish to promote.

      This might be of further interest (especially the last section): http://antipodefoundation.org/2015/04/07/critical-dialogue-birch-christophers/

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  2. Avatar
    July 16, 2015

    Teaching malleable students how markets work using a paradigm where the market does not apply might be a good way to teach them how severely biased are opinions about liberalism, and in fine, how critical one must be when hearing folks talking about economical concepts from a political perspective. Funny as well how you minimize Hayek and Friedman views to focus on a deformed Becker’s perspective. Pedagogical matters often have epistemic issues, but I guess students are used to it.

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    • Avatar
      July 17, 2015

      Not sure I quite understand what you’ve written, but I’m guessing that it’s something like:

      1) I am biased against (neo)liberalism
      2) Markets can’t be applied to all situations
      3) People shouldn’t talk about economic concepts from a political angle
      4) Hayek and Friedman are as important as Becker (who I misrepresented)

      In response:

      1) Not really: more simply I don’t actually think (neo)liberalism is “real” thing (just written a book on the topic, in fact – plug, plug!). There are too many contradictions, etc to actually think (neo)liberalism exists as imagined by either its proponents or critics
      2) Maybe: but as I said, we could probably construct a market for anything with the right social and technical arrangements; moreover, we can probably apply a market logic to anything if we so chose (just think of Coase’s problem of social cost as an example of this)
      3) Disagree: economics is too important to leave to technocrats, as situations like Greece should amply demonstrate. If we step back from political analysis of economic concepts then we are falling into the trap of assuming that economics is a positive science rather than social science replete with double hermeneutic, self-fulfilling prophecy, and/or performative implications
      4) Sure: but as I pointed out, Hayek and Friedman base their perspectives on a normative assumption (i.e. we must work towards a market utopia), while Becker simply assumes we can analyze everything as a market already … and that is more interesting to think about

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  3. Avatar
    July 21, 2015

    HOW NOT TO THINK LIKE A NEOSOCIALIST

    A light-hearted Summer (Northern Hemisphere) discussion as to whether normative assumptions (populism) are superior to common sense (neoliberalism) when it comes to running an economy

    “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Adam Smith

    “Capitalism requires not defence but celebration. Its achievement in creating high and rising living standards for the masses without sacrificing personal liberty speaks for itself. It is the instrument which people in all societies and stages of economic development instinctively use to escape from want and enrich one another by exchange.” Arthur Seldon ‘Capitalism’

    “Like ecclesiastical dignitaries such as Pope Francis [many people] seem to take it for granted that were it not for those rapacious neoliberal capitalists everybody would have more than enough money. Reminding them that, until capitalism started upsetting the old order, only a tiny handful of people could hope to enjoy a modicum of comfort, is considered to be malignantly reactionary.” James Nielson ‘Buenos Aires Herald’

    “Nobody.” Paul Seabright (two years after the breakup of the Soviet Union, the economist was quizzed by a senior Russian official who was visiting the UK: “Please understand that we are keen to move towards a market system but we need to understand the fundamental details of how such a system works. Tell me, for example, who is in charge of the supply of bread to the population of London?”)

    It is hard to see the point of the classroom pantomime with which Kean Birch introduces the topic of neoliberalism (above). As he points out himself, the commodity for sale is valueless so no one who “thinks like a neoliberal” would bid anything at all for it. But, as an aside, should market concerns influence education? Judging from the “we are the 99%” website, many among the unsanitary rabble that decided to “Occupy Wall Street” could have benefitted from injecting a spot of neoliberalism into their own choices. They often appear to be authors of their own misfortune, some having spent a fortune on recreational arts degrees which qualified them for nothing but rendered much employment beneath what they perceived to be their dignity. Let us hope Kean Birch’s students fare better.

    Professor Lawrence “Laurie” Taylor, who presents a joint BBC Radio 4/Open University programme ‘Thinking Allowed’ http://www.bbc.co.uk/programmes/b006qy05 , reports that “what is neoliberalism?” is one of the questions asked most frequently by listeners. They would search in vain for an answer here, as the author takes us on a whirlwind tour of the conflicting positions of a trio of what he evidently regards as archetypal reprobates. It is, essentially, a rehash of the old Marxist idea that there’s an economic motive for everything if you gloze hard enough. As early as 1944, George Orwell pointed out that “the word Fascism has now no meaning except in so far as it signifies ‘something not desirable'” http://orwell.ru/library/articles/As_I_Please/english/efasc and a similar fate seems to have befallen “neoliberalism.” The recession of the 1930s prompted early, largely self-styled, “neoliberals” to suggest that some degree of government intervention would improve the performance of the market but this usage declined. After WWII, vast swathes of the economies of many countries, some otherwise liberal and democratic, were nationalised or generally fell under government control and by the 1980s a new generation was asking the opposite question: whether exempting commercial operations from market discipline is advisable. Here in Britain, for example, we had long been told that telecommunications is a “natural monopoly” so must be run by the state. It took Post Office Telephones over six years to connect my parents’ home in the 1950s and the network was then so expensive that domestic usage averaged about three minutes per day (US companies often regarded local calls as too cheap to meter). These humongous, self-serving bureaucracies inflicted a “triple whammy” on the country: they provided vital services in a dismally inefficient fashion, cost the customer vastly more than was necessary, but, nevertheless, often ran at such a loss that they represented a millstone around the collective neck of the taxpayer. Innovation was all but unheard of and any investment had to come at the expense of other public services. Those who suggested reform were designated “neoliberals” but this time by those whose “normative assumptions” (the word occurs quite often above so note that it is defined by the dictionary as “an emotional expression without cognitive content”) include a belief that a great part of the life of the individual should be dictated by “collective” forces. I propose to revive another 1930s term – neosocialist – to describe such people although, as with neoliberal, this embraces a spectrum of ideology.

    The present Greek debacle illustrates this dilemma well and is a vindication of George Santayana’s assertion that “those who do not learn history are doomed to repeat it.” In 1979, Britain had a bloated public sector sucking the life-blood out of the economy, unions hijacked, like those in Greece today, by demagogues with all but plenipotentiary power who saw their members as cannon-fodder in a Trotskyite class-war, and a Chancellor (economy minister), Dennis Healey, who had borrowed more than all his predecessors, peace and war, combined. The country had gone cap-in-hand to the IMF and debt and unemployment continued to rise inexorably. Margaret Thatcher’s subsequent “neoliberal” restructuring was painful, and even provoked violence from “the enemy within,” but by the end of the 1980s the economy had been returned to the people and the trade unions to their members. Had reforms been delayed or diluted, the consequences would certainly have been as dire as may now be seen in the Hellenes. Maggie understood well the stupidity of trying to spend yourself out of trouble using other people’s money. According to Joseph Stiglitz and Yanis Varoufakis, the solution to the Greek crisis is not to reform the economy on free-enterprise lines but to bloat the state still further, dish out free electricity, and mire what’s left of the private sector ever deeper in the middle income trap. Astonishingly, it is literally true that it would be cheaper to send passengers by taxi than by state-owned Greek railways ( http://www.bbc.co.uk/programmes/p02wrj9c ) but, even though private capital is on offer to salvage some of the network, the leftists refuse to contemplate any change. They assert that the “dignity” of the Greeks includes an absolute “sovereign” and “democratic” right to demand unlimited largess from taxpayers (AKA “vultures” and “terrorists”) in other countries. This is to be spent sustaining the highest pension bill in the EU (as a proportion of GDP) and 40 is still regarded as a perfectly respectable retirement age if you’re being paid from money purloined by the government. What could possibly go wrong?

    Historically, capitalism has sometimes been rejected totally. At one point, forty percent of the world’s population languished under some form of socialism and a hundred million people were slaughtered to bring this about. The discipline of the market was replaced the discipline of gulags, Volkspolizei, and the Stasi-trained MINIT of the Cuban Interior Ministry. “From each according to his ability to each according to his need” proved not to be self-assessment – do what you feel like and help yourself to anything you fancy – as both were to be decided by some bloated apparatchik: “Do as you’re told and you’ll get what you’re given.” With the “means of production” in the hands of a self-serving bureaucracy which not only lacked the feedback of the market but had, in any case, little personal interest in production, “what you’re given” proved to be very meagre indeed. While commerce would appear to be somewhat instinctive, having arisen, as Seldon points out, independently many times throughout history (“I’ll swap you a flint arrowhead for five of your fish.” “Make that three fish …”) , collectivised regimes were never intended for human beings. Rather, the people had to be reshaped to fit the ideology, if necessary using a sledge hammer. As prominent British Communist Party member Peter Sedgwick said in ‘Psychipolitics’ (1955), “Whatever Socialism may bring, we can at least be sure of the final refutation of that basic and most absurd component of “psycho-politics”: “You Can’t Change Human Nature”” https://www.marxists.org/archive/sedgwick/1955/xx/psychopolitics.htm . Those, like myself, who detest such regimes, see nothing “normative” about our position. We have observed the alternatives to “muddling-through” in the consensual fog of liberal democracy and have sound, pragmatic, reasons to reject them. To plagiarise Churchill’s assessment of democracy: no one pretends that the market is perfect or all wise. Indeed, it has been said that it is the worst way to run an economy except for all the others that have been tried from time to time.

    I have been criticized in these virtual pages for insisting that the critics of capitalism, the new neosocialists, should leave the magic-realism of their “comfort-zones” and confront how its rejection has played out in practice. But I make no apology for this “get back to Russia, Commie” approach, as it has been described. Let us imagine that Seabright’s Russian visitor had arrived during the Soviet era and taken the idea of a sandwich shop home to Vladivostok. He finally gets this neoliberal innovation past several social and commercial committees and the real fun begins. One further committee decides how many shops are needed and where they should be located while another chooses the people whose rations should include use of the establishments and on which days and at which time (allowing people to choose their own diet is, of course, neoliberal and incompatible with collectivism). Other groups decide the fillings and directives go to the bakers, their millers, their collective farms, their fertiliser and fuel suppliers … . Note that the political orientation of the government is irrelevant here. If the feedback of the market is rejected, some other mechanism is needed. Nor is this satirical, as, I must assume, is Kean Birch’s suggestion that the neoliberal purchase of a sandwich must involve hi-frequency trading (although, obviously, prices of many things vary a few percent on a daily basis, which might prompt us to change our supplier). Even in the late 1950s, Soviet General Secretary Khrushchev was still convinced that the superior efficiency of his planned economy would “bury” the chaotic liberalism of the West. When the Soviet Union finally collapsed, it was planning the production of some twelve and a half million separate items. And was short of most of them. (to be continued)

    Reply

    • Avatar
      July 24, 2015

      Troll, troll, troll, troll …

      Reply

    • Avatar
      May 27, 2016

      The reference to the causes (pension age and size of public sector) of the ‘Greek crisis’ is, to say the least superficial…

      Reply

      • Avatar
        May 29, 2016

        I didn’t consider an in-depth analysis of the Greek debacle strictly relevant here but I have discussed it in, for example, the British Independent and the Madrid daily El Pais. But I would have thought, “superficially,” that an economy in which half the employed population works (supposedly) directly for the state and half the remainder have no client other than the state might have a few shortcomings. Here in the UK, Railtrack, with debts of more than GBP 40 billion and rising, is clearly a fiscal black hole into which an unlimited proportion of our national wealth might squandered but it hasn’t quite reached the stage at which it would actually be cheaper to send everyone by taxi (as I point out above). Varoufakis, much admired by Jeremy Corbyn, has a solution. If the German’s work hard, pay their taxes honestly, and run the public sector efficiently, then the Greeks need do none of these things. The real victims here are those who lent money in good faith and have been clobbered by a massive fraud. As John Calvin Coolidge Jr. would assert, the Greeks have “rented the money” so it’s entirely reasonable for them to account for it.
        Basically, the Greeks want all the advantages of capitalism in general and the euro in particular without any of the discipline. Good luck with that one!
        In more general terms, it has clearly escaped the attention of almost every contributor to this publication that, far from capitalism “grinding the faces of the poor,” the world’s most impoverished are inexorably drawn to the most neoliberal parts of the planet: Europe, North America, Australia, etc. Even within Europe, they are camped at the glorious socialist end of that wretched pipe, desperate to reach austerity-ridden, Thatcherite Britain.
        So, “how not to think like a neoliberal”? Well, Jeremy might give us a few pointers. As I write, Lufthansa has just cancelled its service to the country with the largest oil reserves in the world because, apparently, they have no money. Back in 1999, when the present “Bolivarian” administration assumed power, Venezuela was self-sufficient, and even a net exporter, of most of the products that are now all but unavailable there. Oil prices are several times higher today than they were then, so this can hardly be a cause of the debacle. During his leadership bid last year, Jeremy Corbyn asserted, of a country that Amnesty calculates has even more political prisoners than Cuba: “When we celebrate, and it is a cause for celebration, the achievements of Venezuela, in jobs, in housing, in health, in education, but above all its role in the whole world as a completely different place, then we do that because we recognise what they have achieved.” It might be “superficial” to point out that their main “achievement” in health is to run out of AIDS medication but it gives us some idea of London as Caracas-on-Thames. If a Labour victory looks at all likely, it might be a good idea to lay in a few toilet rolls.

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  4. Avatar
    July 21, 2015

    (continued)
    Time to leave my own, liberal, “comfort zone” and tackle the Monty Python question: what has neoliberalism ever done for us? Much of the world is poor. Very poor. Grindingly poor. Hand to mouth poverty is seldom caused by capitalism but rather, as Seldon would assert, by its absence. Since 1990, globalisation has lifted hundreds of millions – perhaps more than a billion – people out of abject poverty but much remains to be done. While some success has been achieved in meeting the UN Millennium Development Goals, it is significant that the figures have been rather flattered by China’s switch to a market economy, although that idea might not commend itself to the neosocialists. The twin pillars of communism are authoritarianism and terror so, as command economics drove the regimes in Russia and China into their fiscal death-throes, their caudillos were confronted with a choice. In the Soviet Union, Gorbachev seemed genuinely to be under the delusion that if he took away the terror the people would continue to tolerate socialism. Meanwhile, in China, Deng Xiaoping concluded that, if he ditched the socialism but kept the terror the red aristocracy could continue to enjoy a five-star lifestyle indefinitely. Well, we all know how that panned out. Global poverty has an interesting effect on local statistics. The current legal minimum wage for an adult over 21 in the UK is £6.50 per hour or roughly £50 for an eight-hour day. This works out at just over twelve thousand pounds per annum which, many people are surprised to learn, puts the poorest of our full-time workers in the world’s top ten percent income-wise ($18,000 in the US). There are criteria, such as the soon to be discarded two-thirds median local income, by which these earners are considered poor but these serve mainly to illustrate the general level of prosperity in the UK. Incidentally, it has just been announced that the rate is to be increased in stages to nine pounds by the end of the decade, which is rather more than seventeen grand pa. Given the current paroxysm of populism in Greece and elsewhere in Europe, it is worth comparing this with the situation in Venezuela, where the movement began and may be observed in its most highly-developed form. So-called “Twenty-first Century Socialism” has led to a rejection of neoliberalism and its creeping replacement by Fidel Castro’s “sea of happiness” ( http://www.eluniversal.com/opinion/150718/in-the-sea-of-happiness although quite why “happiness” requires the second-highest murder rate in the world is never explained http://www.eluniversal.com/nacional-y-politica/150711/runaway-crime ). When the present regime took over in 1999, the country was prosperous and self-sufficient – even a net exporter – in most staple commodities, such as rice and coffee. Today, although it has been estimated that inflation will top 200% this year it is difficult to calculate as many of these items are no longer routinely available, even by import, for inclusion in the assessment. Last century, Venezuela had a vibrant manufacturing sector, a reliable infrastructure including roads, oil upgrading, and electricity supply, and an average homicide rate for the region. It had many social problems but nothing the revenues from the largest oil reserves in the world couldn’t cure. The exchange rate as I write is 597 bolivars per dollar which means that, with oil at five times the turn-of-the-century price, the Venezuelan minimum monthly wage, which few exceed, of 7,422 bolivars is worth just $13. This is the lowest in Latin America, even including Cuba! Worse is to come. The government is burning up what remains of its currency reserves, now down to sixteen billion, at the rate of half a billion dollars a week. In a recent ‘cadena’ (literally, “chain” – a broadcast carried compulsorily by all media) President Maduro cried, “Congratulations [Greek] Prime Minister Tsipras! Congratulations to the people of Greece that have said NO to the International Monetary Fund and the vampires of the international banking system!” Obviously, it was constraints of time that prevented him from mentioning that in June alone he had borrowed more than a billion SDRs from the IMF (a SDR is worth roughly $1.4) and that he had already put his country in hock to this “vampire” to the tune of more than $2.3 billion (out of the $3.5 billion “bailout” it has made available). The Bolivarians have, their own privations notwithstanding, managed to fund a branch-office in Iberia called “Podemos” while the leaders of Syriza are keen to pay homage to the movement’s South American roots. Sadly, however many failures are accumulated by those who reject the free market, the only thing the neosocialists conclude is that special factors were the problem in each case. And they are undaunted by their inability to point to a single success.

    Returning to our British £50 per day minimum-wage worker: what can he/she get for the money? Well, one of more than a dozen different, brand-new cars can be purchased for less than £100 per month (one for £75) while knuckling-down for three days will net an automatic washing machine from a well known catalogue store (prize-winning blogger Yoani Sanchez has reported that, when toothbrushes are sporadically available in Cuba, they cost three days at the serf-income rate). The same shop will sell you a high-definition TV or a Lumix DMC-TZ35 camera for two days work. I have one of the latter (to avoid charges of “product-placement” I should stress that capitalism has made many other, excellent, cameras available within this price bracket) and the artefact tells us much about the workings of this neoliberalism. It slips easily into the pocket, images at around 16 MP, and has a 20X Leica zoom lens with optical stabilization. It will shoot high-definition video, albeit with mono sound, and, in short, no twentieth-century billionaire ever possessed anything remotely comparable. As Joseph Stiglitz (nothing “neo” about his association with the Socialist International) never tires of telling us, some people are very rich indeed but, in fact, almost all of the world’s purchasing-power is in the hands of the masses. It is the latter that dictate the direction of the economy and, in particular, ensure that the privileges of the few – from cine-cameras to ski holidays – are eventually extended to the ordinary worker. I took home £100 per month in 1970, when a colour TV cost more than £350. As a reasonably well paid professional, I could have rented a set for £8 per month – a month’s net salary per annum. It is the neoliberal market, not demand from plutocrats, that has brought the price down.

    In the UK, housing is the exception that tests the rule. For nearly a century the budget end of the market has been dominated by a heavily subsidised state sector which has driven out the kind of large-scale entrepreneurial investment that has transformed the rest of the economy. While 1930s Labour Party grandee Herbert Morrison may never have admitted publicly to his intention to “build the Tories out of London,” much of this ruinous public expenditure has certainly been politically motivated. Today, thanks to this barrier to free market competition, a depressingly large part of the private rented sector is left to spivs and buy-to-let amateurs. In many countries people are happy to rent homes and invest their money in other parts of the economy but in Britain the obsession is to “get on the housing ladder.” Nothing will improve until the government leaves the market alone. Who should be in charge of the supply of houses to the population of London? Nobody.

    Finally, what of Stiglitz? This publication has devoted an entire issue to the “ideology of envy” but according to a report published on July 16th by the independent British microeconomic research Institute for Fiscal Studies, the substantial gap which opened here between rich and poor in the 1980s has been closing since the early 1990s. The difference between the incomes of the top and bottom deciles (the “90:10 ratio”) is now at its lowest in more than 25 years http://www.ifs.org.uk/publications/?sorting=newest&q=&year_published%5Bstart%5D=&year_published%5Bend%5D=&author=&page=1& . But there remains the legendary one percent who are reputed to own half the world’s wealth? Again, the figures are made stark by the poverty of much of the planet and have little relevance within a developed economy. Depending on the definition of “wealth,” simple arithmetic suggests this group averages liquid assets of around half a million GB pounds apiece which, invested at 3%, would yield a pre-tax income of £15,000 pa – less than the proposed minimum UK wage. Distributed among the remaining 99%, this would provide about forty pence per day, or not quite enough to retrieve one article a week from behind the New Left Review paywall. Even if these figures are wildly inaccurate. and the “one percent” are all GBP multimillionaires, it must be clear that redistribution can make little difference to the masses. A few percent of the minimum wage at most, in the UK. Back in the 1970s, Chancellor Dennis Healey announced he would “squeeze the rich till the pips squeak!” This foray into the hinterlands of the Laffer curve had a predictably disastrous effect on investment and growth while yielding nothing by way of revenue. Yes, Joe, here in the UK, we can claim to have “been there,” “done that,” and barely escaped with sufficient cash to “buy the t-shirt.”

    Oscar Wilde famously said “A cynic is a man who knows the price of everything and the value of nothing,” but many people are unaware that he continued, “And a sentimentalist … is a man who sees an absurd value in everything and doesn’t know the market price of any single thing.” History shows that if we ignore the cost of the things we value, be it in blood or treasure, we do so at our peril.

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    • Avatar
      July 24, 2015

      You win! I can’t possibly respond to all that!

      Reply

      • Avatar
        July 29, 2015

        Chuckle! I’m sure you’re far too busy. Why not set it as a challenge to your students? I suggest an essay: Describe in detail an economic system that has been proved IN PRACTICE (!) to be more effective than neoliberalism in meeting the needs and aspirations of the masses. I’m sure our esteemed Moderator, who protects us all from trolls, will find room for the best.
        But my main reason for responding is to draw your attention to a recent piece of research by the London School of Hygiene & Tropical Medicine, which shows that street lighting does not reduce crime: http://www.sciencedaily.com/releases/2015/07/150728194934.htm . You might care to comment on this?

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        • Avatar
          July 29, 2015

          … or I can refer you to previous comments and the original article.

          I don’t actually think that there is such as thing as (neo)liberalism which has provided all the benefits you assume. As I suggest in the original article, it is impossible to actually be (neo)liberal, if it is defined as using the market to organize our societies (which it generally is). As a result, there has never been a (neo)liberal regime as such because it would entail the annihilation of most of the things people value (e.g. we’d need to end any notion of national identity and open up our borders to the free movement of all people). Moreover, there has never been a (neo)liberal regime because all our systems of government (or governance) entail a mish-mash of various regimes (e.g. feudal – UK still have a monarchy, aristocracy, etc.; liberal – UK has private property rights; social democractic – UK has a welfare state, etc.; totalitarian – UK has business organizations run through autocratic command structures; etc., etc.). It is not clear that your analysis contains nuance (e.g. what led you to label me a “Neosocialist” when I had said nothing at all endorsing socialist political tenets? Was it a rhetorical flourish based on your own assumptions about my political background because I disagreed with something you hold dear?)

          Re street lighting, here is a quote from the link you gave:

          “Study co-author Professor Shane Johnson of UCL Security and Crime Science, said: “The study findings suggest that energy saving street lighting adaptations have not increased area level crime in the neighbourhoods studied. This is very encouraging but it is important to note that it does not mean that this will be the case under all conditions, and so changes to lighting should be managed carefully.””
          – First, note the “does not mean that this will be the case under all conditions” that you did not include in your use of the study too make your point (nuance is needed).
          – Second, the study does not and cannot study what would happen IF street lighting was reduced; e.g. would crime etc. then increase because people got used to it?

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    • Avatar
      May 27, 2016

      May I just point out that the British worker you speak of probably lives in London where the average price of a house is £556350. If they were working 5 days each week it would take every penny of their pre tax earnings for 42.8 years in order to pay off an interest free mortgage. As for the car that is available for under £100 per month you seem to have forgotten the deposit of several thousand pounds.

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      • Avatar
        May 29, 2016

        I couldn’t afford to buy a house in Kensington, either, which is one reason I don’t live there. The “British worker” you speak of is free to choose his/her domicile.
        As for the necessity to accumulate capital in order to enjoy the benefits of capitalism, I couldn’t agree more. Ten to fifteen percent of the population is supposed to comprise this new-minted “precariat” and be unable to save but even many of their nightmares, such as the state of the washing machine, would have been blissful dreams to earlier generations. I was in my teens before my family possessed either a washing machine or a TV (Richer Sounds presently has a HD 23-inch machine for £100). For the remaining 85%, a teenager with a Saturday job could put fifty quid a month into a tracker fund which would yield the deposit for a new car within a few years (or allow the second hand runabout Dave Cameron has just bought for his wife to be purchased outright) and, if continued, be worth several hundred grand by retirement.

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