When the inmates run the asylum

Now, for those of you who have "drunk the (neoliberal) Kool-Aid", so to speak. I'm sure you've got your undies in a knot over how I can just slough off things you so dearly believe in. My point is simple: each of the 10 items I listed as central to a neoliberal world view are, at bottom, nothing but beliefs, articles of faith, if you will, because they have no justifiable basis in reality. None of them are true. None of them are facts. They are, simply stated, just things you believe.

So, for the anal-retentive types among you, my point-by-point refutation:

1. Individuals act solely in their own self-interest.
   Please explain altruism to me. Provide any evidence that, say, evolutionarily speaking cooperation is not advantageous.
2. This self-interest is "enlightened".
   What does "enlightened" mean in this context? How does everyone looking out for him/herself automatically become "for the good of all"?
3. Markets should be free.
   What does "free" mean? If left to their own devices, where is the historical evidence that markets work to the benefit of the majority, not the minority?
4. Deregulation is desirable.
   See previous point.
5. Allowing private interests to dominate over government interests leads to more efficiency in the market.
   What does "efficiency" mean? Name one privatized sector in which public services are being provided at costs lower and more people are served with fewer resources than if the government were doing it.
6. Social spending is wasteful.
   Since social spending is, by definition, for the good of all, define "wasteful" in this context. Explain how spending $3bn on food stamps, for example, is "worse" than providing companies with $4 billion in tax breaks and subsidies.
7. Trade liberalization benefits all.
   Any evidence whatsoever would be appreciated.
8. When the owners of capital benefit, everyone benefits.
   If neoliberalism works, why do we have wealth/income inequality in the first place?
9. Those who capitalize more, deserve more.
   Based upon which criteria?
10. Property rights take precedence over all other rights.
    Why? Why is property so important to begin with?

In other words, where are the facts to back up the assertions? Where is the evidence to support the principles? If you can't show it, I am perfectly justified in thinking that these are not things that "are", rather they are simply things that you believe.

The fruits of delusion

The most extensive and exacting look at Friedman's and The Chicago School of Economics' approach has been presented by Naomi Klein in her eminently readable book The Shock Doctrine. She traces the path of influence and implementation of Friedman's and neoliberalism's activities over the past 40+ years, starting withe Chile, moving on to Argentina, Bolivia, Poland (post Solidarity Movement), Russia (and Yeltsin), South Africa, the Asian "tiger economies", through Thatcherism, Reaganism, up to the financial crash of 2008. I'm not saying that this isn't a controversial book. It is. But, it's well documented, well argued, and, in the end, pretty much on target.

Practically every principle or precept that neoliberalism holds to be true fails to hold up in reality. Free markets don't exist, but it's not that they haven't been free enough. Instead, we see that without massive government intervention (for example, as in Iraq), markets are not capable of organizing themselves. Without regulation, businesses, left to their own devices, will seek protected markets, government subsidies, and monopoly status to protect their interests, not the greater good. It turns out, in practice, that self-interest is anything but enlightened, rather Gecko's maxim, "Greed is good", prevails. Yes, a few benefit -- greatly, even outrageously -- but most of us are left by the wayside.

Yes, the neoliberal program has been forced through again and again, and the result is always the same: unfree markets, dictatorial governments, the widespread abuse of human and other rights, oppression, destruction, and, if necessary (or not), war to provide the shock that is needed to ... well, it is not clear what the real goal is. The non-violent, non-military, non-CIA-induced regime-change applications of the theory, say, in the UK or USA, has produced nothing more than rising unemployment, demonization of the poor, and a wealth inequality unparalleled in the history of the world. If there has ever been a failed mode of thought, this is it, yet it lives, thrives and is perpetuated, in particular in organizations such as the World Bank and International Monetary Fund. The (now discredited) policy of austerity is their non-military application of their principles. The Greeks are the latest victims, but, I can assure you, they will not be the last.

If so many lives were not at stake, we could afford ourselves the luxury of intellectual refutation, as Sheldrake's case against science demonstrates. These principles of neoliberalism, however, are not mere intellectual postulates. It is possible, rather easily, I might add, to demonstrate clearly how incredibly inapplicable any one of these "dogmas" are. Not a single one holds true. Not a single one is supported by any real-life evidence. Not a single one is defensible on realistic or real-life ethical grounds, but they are the New Gospel of Salvation.

Those who believe, however, are those who benefit from such ideas. Those who believe have access to the power brokers and law makers worldwide. Those who believe are responsible for the pain, suffering and even death of so many innocent human beings. If there has ever been a system of faith, a system of belief, a "religion" that broaches no other, neoliberalism is it.

References
Klein, Naomi (2007) The Shock Doctrine: The Rise of Disaster Capitalism, Picador, New York.

More on economics' delusion

It should be becoming clearer that this science of economics is a bit difficult to pin down. A lot of what happens in the world and what happens to all of us depends on what economics says should be. It would be worthwhile then, in parallel to Sheldrake, to identify those precepts of economics that are driving policy and law makers these days. Here is my suggested list ... those things that "economics" asserts to be true:

1. Individuals act solely in their own self-interest.
2. This self-interest is "enlightened".
3. Markets should be free.
4. Deregulation is desirable.
5. Allowing private interests to dominate over government interests leads to more efficiency in the market.
6. Social spending is wasteful.
7. Trade liberalization benefits all.
8. When the owners of capital benefit, everyone benefits.
9. Those who capitalize more, deserve more.
10. Property rights take precedence over all other rights.

If in fact economics (and granted, this is the currently dominant, neoliberal version of the subject that we are considering) is a science, even only a descriptive one, then we should be able to find evidence in our experienced reality that bears out these principles. So the question is: can we? I think even a cursory review of the list reveals they're not even close.

What I've described in those 10 points above is more or less the position that Milton Friedman advances in his seminal text, Capitalism and Freedom, the "Bible" of Neoliberal Economic Theory. This is the text that drives most of what has been happening from the policy side since the early 1970s. There should be a good body of evidence in support of these principles. Is there?

Unfortunately, the answer is a resounding "no". Not a shred.

But wait, you say, where and when has any of this been "tested", in any sense of the word? And to that I can only respond: in too many places and in too many ways, but that's a subject for next time.

References
Friedman, Milton (2002/1962) Capitalism and Freedom, 40th anniversary edition, with the assitance of Rose Friedman, The University of Chicago Press, Chicago & London.

The economics delusion

The unexpected question (and the implied answer) were a bit surprising, I know. Every once in a while, a writer needs to wake up his or her reader. Good morning (or afternoon or evening or whatever, depending on when you are). We need to dig a little deeper.

The English philosopher R.G. Collingwood once defined "science" in a rather simple and straightforward way. He said that science is "a body of systematic or orderly thinking about a determinate subject-matter" (p4). Thinking systematically, in turn, is "answering questions intelligently disposed in order. The answer to any question presupposes whatever the question presupposes. And because all science begins with a question (for a question is logically prior to its own answer) all science begins with a presupposition" (p63).

I like this definition for two reasons. First, it certainly allows us to look at economics as a science (and the definition is equally applicable to the natural sciences as well). Second, it emphasizes (and reinforces) the point I have been making and that Sheldrake presented so forcefully, namely that all sound thinking starts with assumptions (and it would do us well to be aware of what these are).

When seen as systematic thinking, we can see what economics is up to. They should be able to develop theories, even if they can experiment with them, that can be used to explain what's going on around us. Those of us who were forced into economics classes in the course of our schooling and those who take an interest in more than sports have come to know some of the general principles that economics proposes: supply-and-demand (high demand, high prices, for example); too much money in circulation equals inflation; and more, but our experience also shows us that these principles (which economists like to pass off as "laws", which they aren't) don't always work. Anyone who thinks that gasoline prices, for example, are driven by supply-and-demand, is out of touch with reality. I've seen prices vary by as much as 10 euro cents per liter between 9:00 am and 2:00 pm. What we all drive to work but don't have to go home? No, it's the little things that give it away.

It turns out that economics, then, spends most of its time developing (mathematical) models that describe what is going on around us. My question is, just how helpful is that? I'm not convinced they are very helpful at all. All that economic commonsense that most of us were exposed to just doesn't seem to reflect what is really going on. Oh sure, the economists would like us to believe that the world has become so much more complicated that it's hard keeping up with reality. Truth be told, though, their models are just that models. Reality ... well, that's whole other story ... as any of us living there can tell you.

It's here that we see the weakness of Collingwood's definition, that is true, but it's the best one we have right now. There is systematic thinking about a subject matter going on. The problem is, however, that the thinking about the subject matter has little, if anything, to really do with the experience of the subject matter. In other words, it would seem that economics may have simply said adieu to reality. If that's the case, who cares if it is a science or not?

So it is to that, and its consequences, that we will turn to next time.

References
Collingwood, R.G. (1998/1940) An Essay in Metaphysics, Revised edition, with an Introduction and additional material edited by Rex Martin, Clarendon Press, London.