Mick Brooks, writing for In Defence of Marxism poses the question, is "Neolberalism - dead or only sleeping?".   [MB]

It's a common misconception that Neoliberalism began on 09 September 1973 with Pinochet's - CIA supported - overthrow of the Allende government of Chile.

Neoliberalism represents a return to the economics of laissez faire which dominated the Industrial Revolution in late 18th and early 19th century Britain, and continued to be the accepted basis of economic policy up until 1945.

This assertion can be supported by comparing the classical economic policies of the 1931 National Government with those of the present ConDem coalition. [1]

Conversely, Keynes critique of the 1931 cuts in spending, supports Gordon Brown's position, namely that the current coalition's cuts are too early and too drastic. [2]

(Whether Keynes would have supported Brown's deficit spending during the so-called boom years is very a different matter.)

The larger point is that coalition cuts in spending represent a return to the policies of the 1931 government, which also suggests that neoliberalism is very much wide awake, and calling the shots.

Evidence in support of this assertion comes from the manner in which not only the UK, but also the EU Commission, is supporting cuts because this is what the markets are demanding.   [Blog]   [Euro]   [Osb]

The supporters of Keynes make a powerful riposte.  [3]  [4]

However, the fact remains that discussion of the causes and size of the current UK sovereign debt, and what measures, if any, should be taken to deal with it, were not discussed in the campaign leading to the election of 06 May 2010, a fact which provoked the IFS attack on the parties' failures to offer voters an 'informed choice'.

The cumulative failure of democracy was total.

No such thing as Society and the Third Face of Power

It is here where we collide with the wider attack on democracy - in which all parties have colluded - to deceive the voters about the end of any semblance of economic democracy after May 1979.

The switch to 'free market' dogma by Margaret Thatcher - subsequently supported by Tony Blair and Gordon Brown - ended the bipartisan social democracy of the post-1945 era, with its emphasis on the promotion of full employment and a 'cradle to grave' welfare state.

The story of the years since 1979 have been about the removal of these key planks, and the implementation of the Washington Consensus.

In particular, the emasculation of the trade unions - Article Six - was key in promoting the growing inequalies within the 'full monty' neoliberal regimes of Pinochet, Thatcher, Reagan, and subsequent US Presidents of both parties.  [GI]

The parallel attacks on welfare have created a situation in the USA where:

About one in 50 Americans now lives in a household with a reported income that consists of nothing but a food-stamp card ...   [NYT]

And in Britain where Iain Duncan Smith is considering a proposal for Job Centres to be allowed to offer food bank vouchers to people who are experiencing problems obtaining their benefits.   [GDN]   [IND]

The line of travel is back to Victorian Virtues with the dispossed divided into the 'deserving' and the 'undeserving' poor.

'Precarity'

To cut the crap, neoliberalism is social Darwinism in a new disguise; which should not surprise us as neoliberalism shares Friedrich Nietszche as its common ancestor with that other 20th century emblem of social Darwinism, Fascism.

A Neoliberal Repackaging of Social Darwinism    Neoliberal Fascism

Dividing people into the neoliberal equivalent of the Aryan 'master race' and the 'untermensch' is much more subtle than was its Nazi equivalent.

Just as Hitler's ideal being was the mythical Aryan figure of the master race, so neoliberalism's mythical hero is the autonomous individual - a sort of Nietszchean super-person who is at the forefront of the rejection of altruism and compassion - society - and whose only connection with other people is via the cash nexus.

To this end, government's function is to mould its citizens to seek autonomy:

Neo-liberalism must work to create the social reality that it proposes already exist ... a mentality of government "is not pure, neutral knowledge that simply re-presents the governing reality" ... instead, Neo-liberalism constitutes an attempt to link a reduction in state welfare services and security systems to the increasing call for subjects to become free, enterprising, autonomous individuals.

Mentality of Rule

There is a clue to neoliberalism's ideal human being in Pinochet's policy aim:

" ... to make Chile not a nation of proletarians, but a nation of proprietors."   [AP]

Back in the real world most people are not going to make it as 'proprietors', they will instead be employees and, since government must no longer pursue full employment - as we knew it in the 1950s - because it needs Keynesian economics, which needs high taxes, which the 'autonomous' are not prepared to pay.

To this end 'employees' must be prepared for 'precarity': risk and uncertainty.

What this means is quite simple: workers must expect to change jobs as firms rise and fall in the social Darwinist world of neoliberal capitalism.

This will involve periods of unemployment during which re-training to acquire new skills will be the name of the game.

The emphasis will be on competing with fellow failed-autonomists who are also trying to cope with the risk and uncertainty of a social Darwinist dystopia.

For the person next to you at the Job Centre, or on the training course, or at the job interview is expected to feel no more solidarity with your plight than you must feel for her.

You are alone.

And being alone, and in 'precarity', makes you much more vulnerable to symptoms of 'fight or flight'.

Fighters are more likey to turn to crime, flighters are more likely to suffer anxiety and/or depression, or something much worse. These groups are, in practice, intersecting circles.

Since Cartesian Dualism has sunk deep into the recesses of the Western mind, you will be treated as though your crime/suffering - like you unemployment - is your fault, and yours alone.

You are now a fully-fledged victim of the Washington Consensus.

You have become one of that notional third of 'society' who are useless. Blog

Unlike its Nazi cousin, neolberalism does not make the 'useless' wear yellow stars, or set up concentration camps - yet.

Its victims are a disparate group, and anyone could fall into one of the many categories, unemployment and/or illness being the most usual routes for people of working age. [NSTAS]

Social democracy took care of both these groups, but the corporate neoliberal media use people's fears of becoming useless by its 24/7 campaign against 'scroungers'.   [BS]

However, there are two groups of people who cannot defend themselves from falling into the useless category: deprived children and the frail elderly, the latter in particular are made to feel both helpless and useless, and a drag on the rest of society.

As yet, the sort of measures available under Hitler's Aktion T4 programme are a step too far even for the movers and shakers who meet at Davos each January.

But the fact remains that, for the neoliberal 'free' market theory to function effectively, it's essential to work towards the end of society, and to replace solidarity with ruthless competition.

But it not only the poor and the excluded who suffer under neoliberalism.

Neoliberalism pursues growth by the creation of fast-paced obsolescence, combined with the carefully crafted threat of being 'left behind' if one has not exchanged last month's 'must have' innovation, with this month's 'life changing' upgrade.

Worse, with the help of a vacuous celebrity, er, 'culture' the world of the market intrudes into the world of social norms, so that people - as well as products - become obsolescent: last-month's must-have; this month's cast-off.

I've delved into this further here.

What defines the 'good' society?

Having trashed democracy and society, neoliberalism has one last thing left to wreck: the environment.

And it's doing a great job, as the disaster in the Gulf of Mexico demonstrates:

Deepwater Horizon: "Drill, baby, drill"

Sarah Palin's exortation confirms the crucial importance of oil to the global economy.

It runs land vehicles, shipping, and aircraft, without which the just-in-time economy would collapse.

It helps to provide the artificial fertiliser which feeds a global population - which in 1950 was only 2.2bn - of 6,767,805,208 (31 Dec 2009)    WPS

Its manifold other uses are listed here.

Just as there are many who refute global warming, there are those who refute peak oil.

Steven J. Dubner's piece in the New York Times is emblematic, as are the blogs which refute his argument!

Self-evidently, the widening search for new oil fields is in itself an indicator of a resource becoming harder to access, as is evidenced by the upcoming drilling in the Arctic.    GDN

The oil industry suffers from the usual failings of corporate capital, summed up by blogger needbeer:

It is time to re-examine the concept of incorporation and limited liability and decide if this arrangement is in the best interest of society generally.

JH Kunstler recently summed up the nature of the corporation nicely: "...the fundamental character of corporations is sociopathic, insofar as their only express allegiance is to their shareholders, meaning they are devoid of any sense of the public interest..." now if one agrees with these thoughts, then one must ask why are we continuing to grant corporations so much power and control over our lives and our governments?    GDN

Of course, not all corporations are relying on robots working at sea and at a depth of 35,050 ft (10,683 m).   Wikipedia

So, you might think that extra care would have been taken to get it right. Apparently not:

Hayward told the Financial Times it was "entirely fair" to criticise BP for not being better equipped to fight a leak 5,000 feet (sic) below the surface.

"What is undoubtedly true is that we did not have the tools you would want in your toolkit," said Hayward in an interview with the FT ...

Guardian  Deepwater Horison

How the Sun King sank BP

Furthermore, the Telegraph was very concerned that the impact of the crisis would lead to higher costs and more regulation:

The long-term risk is in the potential for harsher industry-wide regulations, both in the US and other oil-producing nations ...

For example, the intense focus on the quality of the sunken rig’s safety valve – its blowout preventer – makes it likely that a more expensive remote activation button will become compulsory at a cost of $500,000 (£343,000) per well.

In addition to extra safety devices, there is expected to be more paperwork plus higher insurance premiums ...

... the bad publicity ... could well end the industry’s $36.5bn in tax breaks and hand subsidies over to eco-friendly wind or biofuel projects.

Edward Morse, an analyst at Credit Suisse, has estimated that a tightening of regulations will “potentially raise the cost of finding and developing a barrel of oil in deep water by 10pc to 15pc, or $5 to $10 a barrel. We don’t expect anything to impede drilling entirely, just delay it and potentially raise costs.” ...

Telegraph

Tax Avoidance, and tax breaks

Who could possibly want "harsher industry-wide regulations" when BP was reporting that the explosion had only caused a " ... very, very modest ... " oil spill?   Tel

That current costs were artificially low was confirmed by the New York Times.

The reality was a combination of convoluted tax-avoidance schemes and tax breaks for the oil industry ...

When the Deepwater Horizon drilling platform set off the worst oil spill at sea in American history, it was flying the flag of the Marshall Islands.

Registering there allowed the rig’s owner to significantly reduce its American taxes.

The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes.

At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.

With federal officials now considering a new tax on petroleum production to pay for the cleanup, the industry is fighting the measure, warning that it will lead to job losses and higher gasoline prices, as well as an increased dependence on foreign oil ...

According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry ...

NYT   Deepwater Horizon

Contrary to BP's propaganda about a "very, very, modest oil spill" the reality was quite different:

As many as 40,000 barrels (1.7 million gallons) of oil a day may have been gushing out from a blown-out Gulf of Mexico well, doubling many estimates ...   BBC

Or as Der Spiegel put it:

... according to some estimates, ten times more oil has leaked into the water than spilled from the Exxon Valdez when it struck an Alaskan reef in 1989.

So there is an element of impudence to the oil companies' berating politicians for the deepwater drilling moratorium.

But a fundamental reconsideration of our dependence on oil? Never. Large energy companies rely on humankind's greed for oil.

In fact the governor of Mississippi, Hayley Barbour, a Republican, considers the moratorium a far worse thing than the oil leak itself.

It is "not only bad for the region, it's bad for America," Barbour said ...

Hayley Barbour has support from others who believe there are more important matters than a swelling oil slick trashing the local environment:

A decision by Barack Obama to slap a block on deepwater exploration in the Gulf of Mexico has angered the energy industry and crisis-hit communities that rely on rigs for lucrative jobs ... In an open letter to Obama published in Louisiana's Thibodaux Daily Comet newspaper, local resident Stephen Morris vented fury at the drilling freeze: "If it was a knee-jerk response to everyone's anger about the continued leak and possible annihilation of southern Louisiana's way of life, you didn't think it through or your advisers are smoking way too much crack."

Guardian

Anger over Obama block on Gulf of Mexico oil drilling

Furthermore a friendly judge agreed, and was on hand to overturn the President's moratorium on drilling:

... Louisiana-based judge Martin Feldman ruled that Barack Obama's six-month drilling moratorium in the Gulf was unjustified because it assumed that all deepwater drilling was as dangerous as BP's.

The White House promised an immediate appeal ...

Meanwhile environmental groups have said Feldman's ruling may have to be rescinded because of the possible conflict of interests.

Feldman's most recent financial disclosure forms show that he was paid dividends from his shares in Transocean, the firm that owned the Deepwater oil rig that exploded in April killing 11 oil workers, prompting America's worst environmental disaster.

The forms, which relate to the calendar year 2008, also show that he sold shares in Halliburton, which was also involved in the disaster.

Feldman's other interests included Ocean Energy, Quicksilver Resources, Prospect Energy, Peabody Energy, Pengrowth Energy Trust, Atlas Energy Resources, and Parker Drilling ...

Guardian  23 June 2010

Judge ... had shares in the oil industry

A hole in the world

None of which would have surprised Naomi Klein, writing for The Guardian, evoking a much older world-view:

How long will it take for an ecosystem this ravaged to be "restored and made whole" as Obama's interior secretary has pledged to do?

It's not at all clear that such a thing is remotely possible, at least not in a time frame we can easily wrap our heads around.

The Alaskan fisheries have yet to fully recover from the 1989 Exxon Valdez spill and some species of fish never returned ...

This Gulf coast crisis is about many things – corruption, deregulation, the addiction to fossil fuels.

But underneath it all, it's about this: our culture's excruciatingly dangerous claim to have such complete understanding and command over nature that we can radically manipulate and re-engineer it with minimal risk to the natural systems that sustain us.

But as the BP disaster has revealed, nature is always more unpredictable than the most sophisticated mathematical and geological models imagine ...

Virtually all indigenous cultures have myths about gods and spirits living in the natural world – in rocks, mountains, glaciers, forests – as did European culture before the scientific revolution.

Katja Neves, an anthropologist at Concordia University, points out that the practice serves a practical purpose.

Calling the Earth "sacred" is another way of expressing humility in the face of forces we do not fully comprehend.

When something is sacred, it demands that we proceed with caution. Even awe.

If we are absorbing this lesson at long last, the implications could be profound ...

Guardian  19 June 2010

Deepwater Horizon

Such a pre-Enlightenment world view - which finds precious few supporters in a world of insane individualism - would not put BP off its next drilling venture in Alaska.

In what sounds like hubris of an utterly new dimension, the plan is even more complex than the Deepwater Horizon drill:

... about three miles off the coast of Alaska, BP is moving ahead with a controversial and potentially record-setting project to drill two miles under the sea and then six to eight miles horizontally to reach what is believed to be a 100-million-barrel reservoir of oil under federal waters.

All other new projects in the Arctic have been halted by the Obama administration’s moratorium on offshore drilling, including more traditional projects like Shell Oil’s plans to drill three wells in the Chukchi Sea and two in the Beaufort.

But BP’s project, called Liberty, has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea.

The reason: it sits on an artificial island — a 31-acre pile of gravel in about 22 feet of water — built by BP ...

Rather than conducting their own independent analysis, federal regulators, in a break from usual practice, allowed BP in 2007 to write its own environmental review for the project ...

... scientists and other critics say they are worried about a replay of the disaster in the Gulf of Mexico because the Liberty project involves a method of drilling called extended reach that experts say is more prone to the types of gas kicks that triggered the explosion on the Deepwater Horizon ...

NYT

BP Is Pursuing Alaska Drilling

After Oil Spills, Hidden Damage Can Last for Years

The oil spill is under control – now it's time to count the ecological cost

Biologists find 'dead zones' around BP oil spill in Gulf

Other examples of trashed environments are easier to keep out of the corporate media, such as the threat to the Kalahari.

Shale Gas from Lancashire

Peak Oil Links:

Key oil figures distorted ... whistleblower

Scraping the bottom of Earth's barrel

The Busby Report

The End of Globalization

The Oil Depletion Protocol

The Oil Drum

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The Third Depression

We are now, I fear, in the early stages of a third depression ...

... the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy.

Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history.

Unlike their predecessors ... today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer ...

... unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

... the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence ...

... there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors.

On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain ...

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs.

It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy?

The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

NYT  27 June 2010

It's 'negflation' that Britain really needs to worry about

[US] Recovery Slows With Weak Job Creation in June

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Fiscal conservatism may be good for one nation, but threatens collective disaster

"Appeasing the markets is like trying to reason with a crazy man ... "

What is unambiguously clear about the European economies, including that of the UK, is that if they all decide to cut their borrowing, slash spending and raise taxes, and do so at the same time, growth will be lower than it otherwise would have been ...

It a classic Keynesian paradox; what is good for one nation can be disastrous for all ...

What I detect as being especially dangerous in Europe right now are the cuts in the wages of public sector workers.

This so-called "internal devaluation" is based on the idea that prices and wages can both move down together.

Whether that happens or not, what will not move down is the value of the debts incurred by households ...

So, with a lower salary and the same mortgage and consumer debts, many families will, I fear, default ...

In these already highly indebted states, that could place much more stress on the banking system, and make the banks even more cautious and unwilling to extend credit, which would add another twist to the downward spiral ... the case for more cuts is weak.

Appeasing the markets is like trying to reason with a crazy man ...

Better to follow the right policy: supporting growth through higher spending on public investment and infrastructure, which will help the economy grow faster in the long term.

Independent  15 June 2010

The lunatics are back in charge of the economy and they want cuts, cuts, cuts

The Big Question: should Britain cut its deficit so fast and so deep?

The Chancellor is overplaying the scale of the black hole ...

Are the books really ... as bad ... as the coalition says?

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Keynes: During the Great Depression

Keynes's magnum opus, the General Theory of Employment, Interest and Money was published in 1936 ...

The work served as a theoretical justification for the interventionist policies Keynes favoured for tackling a recession.

The General Theory challenged the earlier neo-classical economic paradigm, which had held that provided it was unfettered by government interference, the market would naturally establish full employment equilibrium ...

Classical economists had believed in Say's Law, which, simply put, states that "supply creates its own demand", and that in a free market workers would always be willing to lower their wages to a level where employers could profitably offer them jobs ...

The General Theory argues that demand, not supply, is the key variable governing the overall level of economic activity.

Aggregate demand, which equals total un-hoarded income in a society, is defined by the sum of consumption and investment.

In a state of unemployment and unused production capacity, one can only enhance employment and total income by first increasing expenditures for either consumption or investment.

Without government intervention to increase expenditure, an economy can remain trapped in a low employment equilibrium – the demonstration of this possibility has been described as the revolutionary formal achievement of the work.

The book advocated activist economic policy by government to stimulate demand in times of high unemployment, for example by spending on public works ...

Wikipedia 

National Government: More Links

Ramsay MacDonald

Ramsay MacDonald - National Gov't

National Government

Great Depression in the United Kingdom

Of pride and a falling pound

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The Great Depression in the United Kingdom.

Emergency measures

In an effort to balance the budget and restore confidence in the pound, on the 10 September 1931 with Phillip Snowden still as Chancellor, the new national government issued an emergency budget, which immediately instituted a round of draconian cuts in public spending and wages. Public sector wages and unemployment pay were cut by 10%, and income tax was raised from 4s 6d to 5s in the pound[6] (from 22.5% to 25%). The pay cuts did not go down well however and resulted in a Mutiny in the Royal Navy.

These measures were deflationary and merely reduced purchasing power in the economy, worsening the situation, and by the end of 1931 unemployment had reached nearly 3 million.[7]. The measures were also unsuccessful at defending the gold standard, which the National Government had ostensibly been created to defend.

Because of the gold standard there was nothing to stop a flight of gold. At first the government tried to stop the flight by introducing punitive interest rates. However panic among international investors following the Mutiny, put renewed pressure on the pound, and on 21 September 1931 the government was finally forced to abandon the gold standard, and immediately the exchange rate of the pound fell by 25%, from $4.86 to $3.40. This eased the pressure on exporters, and laid the ground for a gradual economic recovery.

Also, in 1932 following the Ottawa Agreement Neville Chamberlain who had become Chancellor after the 1931 election, introduced tariffs on imports at a rate of 10% on all imports except those from the countries of the British Empire. The introduction of tariffs caused a a split in the Liberal Party, some of whom, along with Phillip Snowden withdrew support for the National Government.

Wikipedia 

Invergordon Mutiny

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