Author Topic: The Neoliberalism Movement. Reagan, Thatcher, Clinton.  (Read 2098 times)


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The Neoliberalism Movement. Reagan, Thatcher, Clinton.
« on: July 28, 2009, 12:07:34 PM »
I am going to hope for the best, and hope this doesnt bring out some saw toothed discussion about "libruls' or any other such nonsense.

I think its fascinating that so many people are as unaware of the Neoliberal movement as were the Neoconservative movement.

I think that the overwhelming majority of the 'conservative' posters that are presently on the board are actually "neoliberals"

I also don't think that most people realize that the Presidency of Ronald Reagan caused the United States to go from the world's largest creditor nation to the worlds largest debtor nation in only 7 years.

United States

The Administration of Ronald Reagan governed from 1981 to 1989, and made a range of decisions that served to liberalize the American economy. These policies are often described as Reaganomics, and are often associated with supply-side economics (the notion that policies should appeal to producers, in order to lower prices, and therefore make products more affordable, rather than consumers, in order to cultivate economic prosperity).

During the remaining years of Reagan's tenure, the economy recovered and grew at an annual rate of 3.4% per year.[32] Unemployment dropped and inflation significantly decreased.[33] Average real wages were stagnant, however, as inequality began to grow for the first time since the 1920s. Some, like William Niskanen, would point out two facts in response, the first being that average compensation for workers (that is wages+fringe benefits) went up through the 80s, and that every quintile of society performed better during the 80s. The policies were derided by some as "Trickle-down economics,"[34] due to the significant cuts in the upper tax brackets. There was a massive increase in Cold War related defense spending that caused large budget deficits,[35] the U.S. trade deficit expansion,[35] and contributed to the Savings and Loan crisis,[36] In order to cover new federal budget deficits, the United States borrowed heavily both domestically and abroad, raising the national debt from $700 billion to $3 trillion,[37] and the United States moved from being the world's largest international creditor to the world's largest debtor nation.[38]

The state-centric approach to neoliberalism is not critical, but it concurs with the critical approach that neoliberal ideas are really just laissez-faire liberal prescriptions that overthrew Keynesianism. State-centric theorists hold that neoliberalism is "the attempt to reduce the role of the state in the market through tax cuts, decreases in social spending, deregulation, and privatization."[75] However, the state-centric approach argues that state actors were the political entrepreneurs who formulated neoliberalism – rather than, as critics of neoliberalism would claim, capitalist political organizations, and economists and economic departments, think tanks, and politicians all supported by class-conscious capitalists. State-centric theorists argue that neoliberalism spread because it fit the voters' preferences best; they disagree in this with the critical approach, which maintains that neoliberal framing and policies were propagated by well-heeled, highly organized political machines that insisted to the public, "There is no alternative". State-centric sociologist Monica Prasad (2006) further argues that neoliberalism became dominant where the (federal) tax structure was progressive, where industrial policy was "adversarial" to business, and where welfare was associated with the poor. She asserts this was the case in the U.S. and UK, relative to France and Germany. However, in France and Germany, taxation by the national government was regressive, industrial policy favored business, and the welfare state was widely recognized to benefit the middle class; consequently neoliberalism was not as favored by either business or the middle classes in these two countries as it was in the U.S. and the UK in particular. Prasad's analysis suggests that neoliberalism has been a corrective to policies that favored the working class over capitalist interests, and it was championed by autonomous state actors. However, most political sociologists would agree that only strained methodological choices would allow U.S. policy especially to be portrayed as favoring the working class over capitalist interests, even in the New Deal; state autonomy theses are generally very vulnerable to more class-sensitive historical research, especially in the case of the U.S.; and methodological choices, such as the omission of social democratic countries from her analysis, contribute heavily to Prasad's conclusions.

One of the differences between classical liberalism and neoliberalism is that while the former called for reducing the role of the state to a minimum and replace it by private capital the latter seeks to expand the role of private capital through the state, making it authoritarian and a dedicated facilitator of its interests. [76]

Opposition to economic liberalism

    * Anti-sovereignty: globalization and liberalization is argued by opponents to have subverted nations' ability for self-determination;[citation needed]
    * Exploitation: critics of neoliberal policies consider capitalistic economics to be exploitive;[citation needed]
    * Environmental costs: critics argue that neoliberalism leads to more transportation, and that more industrial production occurs in unregulated markets;[citation needed]
    * Negative economic consequences: Critics argue that neo-liberal policies produce inequality and deterioration in living standards without the improvements in efficiency which are predicted.
    * Increase in corporate power: some anti-corporate organizations believe neoliberalism, in difference to liberalism, changes economic and government policies to increase the power of corporations and large business and a shift to benefit the upper classes over the lower classes.[77]


"The standard neoliberal policy package includes cutting back on taxes and government social spending; eliminating tariffs and other barriers to free trade; reducing regulations of labor markets, financial markets, and the environment; and focusing macroeconomic policies on controlling inflation rather than stimulating the growth of jobs," reports economist Robert Pollin (2003).[78] Arising out of a rejection of the class compromises embedded in previous liberal political-economic policies, including Keynesian and Active Labour Market Policies (ALMPs), neoliberal theory, institutions, policies, and practices are not regarded as politically neutral by their opponents. Their criticisms of neoliberalism are often historical materialist, bringing economic inequality into sharper focus.

Economists remind us that free markets are theoretically efficient, not that they are considered fair by all people,[79] and this distinction is a foundation of the critique of neoliberalism. Opponents critique neoliberalism's alleged effects on wages, working class institutions, inequality, social mobility, working class well-being, health, the environment, and democracy.

Opposition and critics

Notable opponents to neoliberalism in theory or practice include economists Joseph Stiglitz, Amartya Sen, and Robert Pollin,[80] linguist Noam Chomsky,[81] geographer David Harvey,[82] and the anti-globalization movement in general, including groups such as ATTAC. Critics of neoliberalism and its inequality-enhancing policies argue that not only is neoliberalism's critique of socialism (as unfreedom) wrong, but neoliberalism cannot deliver the liberty that is supposed to be one of its strong points. Daniel Brook's "The Trap" (2007), Robert Frank's "Falling Behind" (2007), Robert Chernomas and Ian Hudson's "Social Murder" (2007), and Richard G. Wilkinson's "The Impact of Inequality" (2005) all claim high inequality is spurred by neoliberal policies and produces profound political, social, economic, health, and environmental constraints and problems. The economists and policy analysts at the Canadian Centre for Policy Alternatives (CCPA) offer inequality-reducing social democratic policy alternatives to neoliberal policies. In addition, a significant opposition to neoliberalism has grown in Latin America, a region that has been seen only limited implementation of neoliberal policies. Prominent Latin American opponents include the Zapatista Army of National Liberation rebellion, and the governments of Venezuela, Bolivia and Cuba.

Some critics view neoliberalism as both an economic and political project aimed at reconfiguring class relations in societies. They allege that many "core countries" middle class and "labor aristocracy" families have become constrained by the cascading costs created by the conspicuous consumption of goods and services encouraged in the system, as a result many are losing allotments of time once used for personal development, recreation, family, community, and citizenship as a result of lower wages and inflation coupled with a decrease in the amount of or opportunity for advanced formal education and/or training. Moreover, they claim workers have been so heavily disciplined by capital and the capitalist state that, as Alan Greenspan said, they are "traumatized" and unable to politically moderate capitalist aggression.[83] Daniel Brook's "The Trap: Selling Out to Stay Afloat in Winner-Take-All America" (2007) describes the anti-democratic effect of decreased middle class welfare.[84] The massive U.S. military-industrial complex adds an extra layer of repression to working class "traumatization," according to (Harvey 2005), making resistance and inequality-reducing policy innovation seem unfeasible to most workers. A "traumatized" working class allows the capitalist class absolute reign, which Harvey claims – citing the economic crises of 1873 and the 1920s – to be disastrous for economies around the globe, states, and working class people; though, he points out, on average capitalists were not negatively impacted by these crises.[85]

Critics of neoliberalism sometimes refer to it as the "American Model," which they claim promotes low wages and high inequality.[86] According to the economists Howell and Diallo (2007), neoliberal policies have contributed to a U.S. economy in which 30% of workers earn "low wages" (less than two-thirds the median wage for full-time workers), and 35% of the labor force is "underemployed"; only 40% of the working age population in the U.S. is considered adequately employed. The Center for Economic Policy Research's (CEPR) Dean Baker (2006) has argued that the driving force behind rising inequality in the United States has been a series of deliberate, neoliberal policy choices including anti-inflationary bias, anti-unionism, and profiteering in the health industry.[87] However, countries have applied neoliberal policies at varying levels of intensity; for example, the OECD has calculated that only 6% of Swedish workers are beset with wages it considers low.[88] John Schmitt and Ben Zipperer (2006) of the CEPR have analyzed the effects of intensive Anglo-American neoliberal policies in comparison to continental European neoliberalism, concluding "The U.S. economic and social model is associated with substantial levels of social exclusion, including high levels of income inequality, high relative and absolute poverty rates, poor and unequal educational outcomes, poor health outcomes, and high rates of crime and incarceration. At the same time, the available evidence provides little support for the view that U.S.-style labor-market flexibility dramatically improves labor-market outcomes. Despite popular prejudices to the contrary, the U.S. economy consistently affords a lower level of economic mobility" than all the continental European countries for which data is available.[89]

Critics of neoliberalism examine the political foundations of the neoliberal project as well as its economic foundations. One of the most famous moments in neoliberal political history occurred when then-U.S. President Ronald Reagan's advisers successfully lobbied for the deregulation of the thrift industry, by convincing Reagan that deregulation would lead to increased growth and investment. Reagan signed the deregulation bill in 1982, saying, "All in all, I think we've hit the jackpot." Columnist Joe Conason has argued that "The best reckoning of the costs of his benign intentions is a trillion dollars."[90] While Reagan and the United Kingdom's Margaret Thatcher laid the groundwork for working class demobilization, through eliminating collective assets by discounted sales to the private sector, enacting policies to diminish labor unions, and promoting militarization, other politicians have steadily continued the neoliberal tradition.

According to (Pollin 2003), neoliberalism under the U.S. Bill Clinton administration – steered by Alan Greenspan and Robert Rubin – was the temporary and unstable policy inducement of economic growth via government-supported financial and housing market speculation, featuring both low unemployment and low inflation rates. This unusual coincidence was made possible by the disorganization and dispossession of the American working class. Santa Cruz history of consciousness professor Angela Davis and Princeton sociologist Bruce Western have supported the position that the high rate (compared to Europe) of incarceration in the U.S.  – specifically 1 out of every 37 American adults is in the prison system  – heavily promoted by Clinton administration, is the neoliberal U.S. policy tool for keeping unemployment statistics low, while stimulating economic growth through the maintenance of a contemporary slave population and the promotion of prison construction and "militarized policing."[91] The Clinton Administration also embraced neoliberalism by pursuing international trade agreements that would benefit the corporate sector globally (normalization of trade with China for example). Domestically, Clinton fostered such neoliberal reforms as the corporate takeover of health care in the form of the HMO, the reduction of welfare handouts, and the implementation of "Workfare."[92]

(Harvey 2005) claims that neoliberalism is a global capitalist class power restoration project. Neoliberalism, he argues, is a theory of political-economic practices that dedicates the state to championing private property rights, free markets, and free trade, while deregulating business and privatizing collective assets. Ideologically, he suggests that neoliberals promote entrepreneurialism as the normative source of human happiness. Harvey also considers neoliberalization a form of capitalist "creative destruction," a Schumpeterian concept.[93] This indicates that while neoliberalism is a critical concept with a critique of capitalist class relations, it is not strictly a Marxist concept; the Marxist term for neoliberalism is "primitive accumulation."

Harvey (2000)[citation needed] claims that neoliberalism has become hegemonic worldwide, sometimes by coercion. Neoliberalism has had the support of large debt restructuring organizations such as the World Bank and the International Monetary Fund (IMF), which were encouraged to promote neoliberalism in order to revitalize capital accumulation. Opponents of neoliberalism argue that neoliberalism is the implementation of global capitalism through government/military interventionism to protect the interests of multinational corporations.


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Re: The Neoliberalism Movement. Reagan, Thatcher, Clinton.
« Reply #1 on: April 19, 2010, 08:30:31 PM »
I would add that the budgets were set by a Democrat controlled congress. Another point of contention would be that President Reagan, like president Obama inherited an economy in turmoil as well as an already mounting national debt.

As for Neoliberal, I am already convinced that I am more liberal than most who proclaim themselves liberal.
(Presuming that liberal equates to liberty)

"Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others." [Ambrose Bierce, "Devil's Dictionary," 1911]


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Re: The Neoliberalism Movement. Reagan, Thatcher, Clinton.
« Reply #2 on: April 19, 2010, 09:22:44 PM »
After actually reading the quoted text, (which I neglected to do prior to my previous post) What is being called neoliberalism by the author, I would have labeled neoconservative.

All these labels are tough to keep sorted, and the meanings keep shifting. Actually neoliberal does more accuratley describe the globalist free market movement.

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.  John Maynard Keynes

Economics is extremely useful as a form of employment for economists.
John Kenneth Galbraith
« Last Edit: April 19, 2010, 09:26:40 PM by buckethead »


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Re: The Neoliberalism Movement. Reagan, Thatcher, Clinton.
« Reply #3 on: April 20, 2010, 12:35:45 AM »
Basically, in Europe "liberal" always meant support of market-oriented policies.  So what we Americans call economic conservatism, the European Left calls neoliberalism.