John Buell

How Does Corporate Neoliberalism Survive?

How has modern neoliberal capitalism, with its penchant for financial deregulation, subsidies for the rich and well placed, and market “freedoms”— enforced by state power through union busting, repression of dissidents, and a compliant media — been able to survive the worst crisis since the Great Depression?

1. Paradoxically it has survived in part because neoliberalism has not yet been able to finish its project. Unemployment compensation, social security, and food stamps prevented a complete rupture of the social fabric, unlike the case in Greece and Spain. And regardless of how morally corrosive the bailout of banks has been, it was a better alternative than allowing their complete collapse.

2. The US was fortunate enough not to be on the gold standard and to have the world’s reserve currency. The Federal Reserve could buy risky bonds and the Treasury could fund a stimulus package without fear of default. However much nonsense conservatives may utter, we are not Greece. The latter does not issue its own currency. The US does and has no possibility of default unless it makes such a suicidal choice. Indeed, the world financial collapse had the paradoxical effect of driving capital to the US markets, still the deepest and safest in the world. This pushed long- term treasury bonds to historically low rates of interest. (As the demand for bonds increases, their yield decreases.)

3.Neoliberalism has been sustained in part by its own fictional horror story. Although automatic stabilizers and a modest “stimulus package” kept unemployment from rising to Great Depression levels, resistance to any genuine full employment program was fierce. Neoliberals both here and in Europe have been able to carve a narrative into the social fabric: Deficit spending leads to hyperinflation. Thus seventies inflation, really a consequence of OPEC and the breakdown of the world financial system, is attributed to government deficits. European neoliberals chime in with a story that has become unquestioned orthodoxy in Europe. Weimar overspending led to hyperinflation, which in turn issued in the Nazis. But in fact hyperinflation under Weimar was a consequence of political breakdown caused by the punitive terms of Versailles and was followed by extreme austerity, and depression. The Nazis were a minor political party until austerity had broken the social fabric.

4.Both in the US and in Europe, race and nationalism continue to play crucial roles. Prior to World War I, socialists in Europe argued that come a war, working class citizens in European states would identify with their fellows around the continent and would refuse to fight. Soon they died by the hundreds of thousands and became staunch supporters of the draconian Versailles Treaty and continuing austerity. Today as Greek Finance Minister Yanis Varoufakis has pointed out, Germans are enthralled by the fable of the hard working ants (Germans) and the slothful, lazy grasshoppers (Greeks). Add to this the bitterness following German occupation of Greece during WWII and it is easy to see why there is as yet no transcontinental left movement aiming to reverse austerity. Here in the US the racial bitterness is every bit as stark. “Welfare mothers” and the black family structure function as coded scapegoating for an economy that demands ever more of working and middle class citizens. Thus we have the spectacle of white male police officers, often engaged in contentious negotiations with their superiors or the bankruptcy judges over pensions and salaries, killing and otherwise demeaning poor racial minorities and breaking up Occupy demonstrations. White privilege has been a successful wedge issue that has blunted Populism, Progressivism, the New Deal, and Sixties anti-war politics.

5.Neoliberals are in for the long haul. Philip Mirowski’s Never Let a Good Crisis Go to Waste details the way in which this movement has responded to prior crises. Neoliberals are the most determined of revisionist historians. Thus neoliberals downplay the existence of bubbles. When they pop, government regulation is blamed. And finally newer market friendly regulation is promised as the answer.

6. American exceptionalism, the sense that we are a chosen people and potent strands of Evangelical Christianity have coalesced and helped intensify both the emotional and intellectual attachment to corporate capitalism. Smoothly functioning markets are seen as gifts of God or manifestations of His divine providence. The anger of corporate elites toward liberals and of socially conservative evangelicals resonates in ways that intensify hatred and inspire fierce political activism.

7. Neoliberalism is etched into every day life. –The media are replete with that staple of American culture, the Horatio Alger story. Lotteries and the daily stock market report are the modern media version of Horatio Alger.

8.The current campaign finance system, where money is treated as speech and is therefore not to be regulated, may be seen as both a symptom and a cause of the evolving neoliberal political economy. This campaign system may itself be regarded as the privatization of politics. Not surprisingly it further entrenches the neoliberal agenda.

James Madison once worried that in a Republic a majority coalition hostile to private property might coalesce. Instead money in politics has created opposite, a coalition committed to upward redistribution and environmental and finance deregulation that may threaten even those at the very top. That political system itself has become more oligarchic as voter id laws and other practices have made it harder for minorities to vote. In addition, gerrymandering at the state and local level loads the dice in favor of the most affluent, who in turn use this power to reinforce and strengthen their hand.

These intertwined narratives and practices could be source of pessimism, but these also suggest that movement on any one front can make moves on others easier. Religious leaders, even some from fundamentalist perspectives, are beginning to confront their fellow evangelicals. Downscaling movements are challenging the notion that markets and endless commodity expansion are keys to the good life. So- called free trade legislation has become an occasion to collaborate across borders. The best answer to the neoliberal hegemony is recognizing the sources of its dominance and continuous, collaborative work on all these fronts.

John Buell lives in Southwest Harbor, Maine and writes on labor and environmental issues. Email

From The Progressive Populist, July 1-15, 2015

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