Neoliberalism’s Slippery Slope

It is a fair statement that no American has influenced the modern world as much as Milton Friedman (American economist, 1912-2006).

Freidman, as one of the founders of neoliberal thought, and theory, in the late 1940s, became synonymous with “monetarism” and eventually with “neoliberalism,” and as follows, significantly, very significantly, his theory spread all across the earth from the shores of Melbourne to Sri Lanka to Cape Town to Cape Horn to Tokyo; it’s a neoliberal world.

Socialism and collectivism are dead.

Thus, as a way forward for society at large, nation-states have become increasingly subservient to the forces of neoliberalism as the dicta of free markets and privatization and commoditization of everything from parking meters to people takes root around the world.

This remarkable politico-socio-economic revolution has effectively reverted humankind back to the era of serfdom as today’s wealth defines the strata of society along the same lines as feudalism during the Middle Ages (1066-1485) with very little space available at the top.

Regarding the genesis of neoliberalism, Milton Friedman, in one of his early treatises, said this about a new way forward, a new world order:

Neo-liberalism would accept the nineteenth century liberal emphasis on the fundamental importance of the individual, but it would substitute for the nineteenth century goal of laissez- faire as a means to this end, the goal of the competitive order. It would seek to use competition among producers to protect consumers from exploitation, competition among employers to protect workers and owners of property, and competition among consumers to protect the enterprises themselves. The state would police the system, establish conditions favorable to competition and prevent monopoly, provide a stable monetary framework, and relieve acute misery and distress. The citizens would be protected against the state by the existence of a free private market; and against one another by the preservation of competition.1

As such, the effects of neoliberalism and the thoughts of Milton Friedman influence everybody in daily life. There is no escaping him, a man whom I personally met in a private setting. He is surprisingly small in stature, but as soon as he sits at a table full of people, he becomes a gigantic figure, towering over all because of his readily apparent depth of intelligence and wisdom. When he spoke, it was as if time stopped.

As it happened, Friedman’s theory inspired politicians, prompted by wealthy donors, to realize how beneficial neoliberalism could be for their own special interests. Thus, neoliberalism was removed from the womb of theory and placed into the hardcore world of politics.

PM Margaret Thatcher crystalized the doctrine of neoliberalism with one simple sentence: There is “no such thing as society, only individual men and women.”

Thereon, President Reagan initiated “the largest tax cut in history.” Corporate taxes were dramatically reduced, and the top personal tax rate was cut from 70 to 28 percent. Thus, the groundwork was laid for the rich to become much, much, much richer under cover of the “trickle down theory,” meaning, if the upper classes kept more, and more, and more after-tax income, they’d invest more in businesses that create more new jobs.

But, the “trickle down theory” has been a “gush up theory” whilst jobs and wages in America have stagnated, and it’s not necessary to discuss the resultant wealth effect since everybody is aware of that.  But, it is fair to say it’s been “off the charts.”

To this day, the “Friedman effect” has come to dominate world political/economic thought, and interestingly, as an aside (tongue-in-cheek), observers of classic oil paintings claim John Singer Sargent’s 1917 oil portrait of John D. Rockefeller, seated with his arms folded across his lap, appeared brighter once Ronald Reagan took office. After all, it was Mr. Rockefeller who said, “The growth of a large business is merely survival of the fittest.” Lo and behold, Mr. Rockefeller was a “founder” of the University of Chicago, where Milton Friedman joined the faculty in 1946.

Thus, the stage was set for the spread of neoliberalism, a profound and far-reaching reversal of collectivism: “And so began the momentous shift towards greater social inequality and the restoration of economic power to the upper class.” 2

Perniciously, and predictably, as for average taxpayers, Reagan’s neoliberalism tipped the scales of governmental finances underwater; during his presidency America became the largest debtor nation on Earth, which, over time, perversely works to the benefit of the elite, wealthy class, as mountains of debt, a responsibility of all taxpayers, supplanted their former 70% personal tax rate.

That change in taxation policy, which was meant to “starve the beast,” instead brought in its wake record indebtedness to the nation-state, setting the stage for a turbulent financial agenda, and the rest of that story is history.

As it happens: “It could also be that the US ruling elite calculates it can survive a global fiscal crisis in good shape and use it to complete its agenda of total domestic domination.” 3

Recessions change perceptions. Recessions/depressions are brutal for an average family of four, but merely a speed bump for the one percent. In point of fact, recessions knock the daylights out of workers, scaring them whilst attenuating their participation in the engine of the national economy. Recessions bust both unions and wages.

Meanwhile, the elite pick up the pieces at fire sale prices, e.g.; only within the past couple of years major NY hedge funds purchased large swaths of residential housing all across the country at cents on the dollar. Those same houses were the homes of shattered families from the Bursting Housing Bubble of 2007-09, which, in large part, was precipitated by crafty mortgage financing schemes by some of the same parties that picked up the pieces.

“In so far as neoliberalism values market exchange as an ethic in itself, capable of acting as a guide to all human action… It holds that the social good will be maximized by maximizing the reach and frequency of market transactions, and it seeks to bring all human action into the domain of the market.” 4

Even parking meters have entered the domain of the market. Several years ago the City of Chicago privatized its parking meters. Ever since, meter rates went up as much as four-fold (oh, please!), resulting in an embarrassment of riches, as some meters, unable to hold so much change, jammed along with other problems, like failed receipts. Chicagoans protested but to no avail. The city’s 36,000 parking meters belong to a private group, which paid the city a measly $1.2 billion (equivalent to approximately $1.20 per meter per day for a 75-year lease during the Daley administration. Today, almost the entire one-time payout of $1.2 billion to the city is gone from its coffers, and what do they really have to show for it?

In retrospect, the purchase/sale of Chicago’s parking meters may have been a bargain (do parking meters in Chicago bring in more than $1.20/day?) for the private hedge fund group as Mayor Daley caved in to the abyss of the “shock doctrine” syndrome, as described by Naomi Klein in her excellent book, The Shock Doctrine, The Rise of Disaster Capitalism (Knopf Canada, 2007), which argues the point that Milton Friedman’s free market policies are advantageously rushed through former governmental bureaucracies when a nation-state’s citizens are subject to shock from disasters, upheavals, or invasion. Thus, when people are most vulnerable, the table is set for privatization of state assets; look south in the EU.

According to Molly Ball, “The Privatization Backlash”, The Atlantic, April 23, 2014:

The vogue for privatizing government began in the Reagan years… when an ascendant conservative ideology painted the public sector as a callous and sluggish bureaucracy and the private sector as inherently more innovative and efficient. The trend accelerated in the ’90s, and today, Cohen estimates that $1 trillion of America’s $6 trillion in annual federal, state, and local government spending goes to private companies.

Thus, by way of privatization, ordinary taxpayers not only lose a former asset they paid for via taxes, they end up paying the piper; i.e., the private entity that purchases the public asset at rock bottom prices now charges much higher rates for services. As it happens, ordinary taxpayers are shafted, and shafted again. After a while, it starts to hurt.

As it goes, Milton Friedman’s neoliberalism has become a hydra monster that manipulates the purchase of pubic assets during times of duress in the interests of privatization for profit. However, maybe the issue should really be whether or not the public good is not better served on a “collective basis” rather than via privatization, especially for basic necessities in life, like water. And as such, the privatization free market-oriented modus operandi has left a nasty trail around the world.

As for one example among many, many, many, lots and lots, the “Bolivian Revolts” against privatization of water by large foreign multinationals in Cochabamba and in El Alto eventually chased off the multinationals. At the time, privatization brought much, much higher water prices to the market, pricing out common people that could no longer afford regular ole drinking water, proving there are a no limits to neoliberalism’s free market, less-government privatization soap opera.

It is doubtful Milton Friedman intended for his theory to result in a lop-sided society with all the economic benefits funneled into the pockets of a few thousand people. Meeting him personally, he came across as an affable man without pretension. It is doubtful he cared all that much about accumulation of tons of wealth. He did not live that type of lifestyle.

Whereas neoliberalism is, in large measure, focused on wealth creation via dismemberment of collectivism, leaving nation-states to flop like a fish on shore with ill-defined notions of providing for the commonweal.

So far, massive levels of public debt, replacing lost tax revenues and lost state-ownership revenues, have been the only solution by nation-states whilst the advocates of neoliberalism pocket more, and more, and more of the available capital in society, all of which would make John D. Rockefeller, circa 1900, proud, recalling his fondness for survival of the fittest.

Neoliberalism Challenged

As the world turns, rancid governmental entities with paralyzed citizens are not necessarily locked into the dictates of neoliberalism’s numerous schemes. There are those who believe in a better way.

One such individual is Robert David Steele, former marine and former CIA officer and former second-ranking civilian Marine Corps intelligence official extraordinaire. He has written handbooks on Open Source Intelligence for NATO, the US Defense Intelligence Agency and the U.S. Special Operations Forces.

Nowadays he’s most likely classified as a scalawag by the CIA, but Steele champions an open society, and he heads up the Open Source Solutions Network, Inc. in pursuit of an open source paradigm. This, he believes, will alter, if not abolish, the foundations of capitalism’s neoliberalist tendencies.

Mr. Steele spoke at the Libtech Conference in New York City in May 2014, as follows:

“Drawing on the principles set out in his latest book, The Open-Source Everything Manifesto: Transparency, Truth and Trust (North Atlantic Books, 2012), he told the audience that all the major preconditions for revolution – set out in his 1976 graduate thesis- were now present in the United States and Britain.” 5

The neoliberal problem, according to Steele:

Power was centralized in the hands of increasingly specialized ‘elites’ and ‘experts’ who not only failed to achieve what they promised but used secrecy and the control of information to deceive the public into allowing them to retain power over community resources that they ultimately looted.

Intellectually, Steele and Naomi Klein are on common ground. Similar to Klein, Steele argues that capitalism is inherently predatory and destructive, for example:

Over the course of the last centuries, the commons was fenced, and everything from agriculture to water was commoditized without regard to the true cost in non-renewable resources. Human beings, who spent centuries evolving away from slavery, were re-commoditised by the Industrial Era.

Steele claims that society in general, the five billion-plus people in the world who are not part of the elite, need to re-take their lives and their planet and its resources back into the common:

Sharing, not secrecy, is the means by which we realize such a lofty destiny as well as create infinite wealth. The wealth of networks, the wealth of knowledge, revolutionary wealth- all can create a nonzero win-win Earth that works for one hundred percent of humanity. This is the ‘utopia’ that Buckminster Fuller foresaw, now within our reach.

As for the present, and the future, Steele foresees dystopia:

I see five major overlapping threats on the immediate horizon. They are all related: The collapse of complex societies, the acceleration of the Earth’s demise with changes that used to take 10,000 years now taking three or less, predatory or shock capitalism and financial crime out of the City of London and Wall Street, and political corruption at scale, to include the West supporting 42 of 44 dictators. We are close to multiple mass catastrophes.

He expects revolution:

When we have a scandal so powerful that it cannot be ignored by the average Briton or American, we will have a revolution that overturns the corrupt political systems in both countries, and perhaps puts many banks out of business. Vaclav Havel calls this ‘The Power of the Powerless.’ One spark, one massive fire.

His most intriguing premise is that the one percent (1%) is simply not as powerful as they, and we, assume them to be, to wit:

The collective buying power of the five billion poor is four times that of the one billion rich according to the late Harvard business thinker Prof C. K. Prahalad – open source everything is about the five billion poor coming together to reclaim their collective wealth and mobilise it to transform their lives. There is zero chance of the revolution being put down. Public agency is emergent, and the ability of the public to literally put any bank or corporation out of business overnight is looming. To paraphrase Abe Lincoln, you cannot screw all of the people all of the time. We’re there. All we lack is a major precipitant – our Tunisian fruit seller. When it happens the revolution will be deep and lasting.

Robert David Steele, a visionary who was born the year after Milton Friedman delivered his famous paper about neoliberalism, has experienced the up cycle of capitalistic neoliberalism to its present-day apogee. He’s a believer in “cycles” because he now foresees a ruinous pathway ahead for neoliberalism, slipping and sliding from its peak, the down cycle.

But, why aren’t the patsies; i.e., ordinary taxpayers, who are subjected to neoliberalism’s privatization duplicity, already up in arms?

Postscript:

In the Soviet Union, capitalism triumphed over communism. In this country, capitalism triumphed over democracy.
— Fran Lebowitz, NYC author and social critic

  1. “Neo-Liberalism and its Prospects” by Milton Friedman, February 17, 1951. []
  2. David Harvey, A Brief History of Neoliberalism, Oxford University Press, 2005. []
  3. Ibid. []
  4. Ibid []
  5. Nafeez Ahmed, The Open Source Revolution is Coming and it Will Conquer the 1%- ex CIA Spy, The Guardian, June 19, 2014. []

Robert Hunziker (MA, economic history, DePaul University) is a freelance writer and environmental journalist whose articles have been translated into foreign languages and appeared in over 50 journals, magazines, and sites worldwide, like Z magazine, European Project on Ocean Acidification, Ecosocialism Canada, Climate Himalaya, Counterpunch, Dissident Voice, Comite Valmy, and UK Progressive. He has been interviewed about climate change on Pacifica Radio, KPFK, FM90.7, Indymedia On Air and World View Show/UK. He can be contacted at: rlhunziker@gmail.com. Read other articles by Robert.