RSN Fundraising Banner
FB Share
Email This Page
add comment

Monbiot writes: "The model is dead; long live the model. Austerity programs are extending the crises they were meant to solve, yet governments refuse to abandon them."

The gap between the rich and the poor continues to grow. (photo: ALAMY)
The gap between the rich and the poor continues to grow. (photo: ALAMY)

Our Economic Ruin Means Freedom for the Super-Rich

By George Monbiot, Guardian UK

31 July 12


Cameron and Osborne's neoliberal agenda promised prosperity for all, but created a totalitarian capitalism that feeds on crisis.

he model is dead; long live the model. Austerity programmes are extending the crises they were meant to solve, yet governments refuse to abandon them. The United Kingdom provides a powerful example. The cuts, the coalition promised, would hurt but work. They hurt all right – and have pushed us into a double-dip recession.

This result was widely predicted. If you cut government spending and the income of the poor during an economic crisis, you are likely to make it worse. But last week David Cameron insisted that "we will go on and finish the job", while the chancellor maintained that the government has a "credible plan, and we're sticking to it".

Two questions arise. The first is familiar: why has the public response to this assault on public life and public welfare been so muted? Where are the massive and sustained protests we might have expected? But the other is just as puzzling: where is the economic elite?

Surely the corporate class and the super-rich – the only people the government will listen to – can see that these policies are destroying the markets on which their wealth relies? Surely they can see that this scorched-earth capitalism is failing even on its own terms?

To understand this conundrum we should first understand that what is presented as an economic programme is in fact a political programme. It is the implementation of a doctrine: a doctrine called neoliberalism. Like all such creeds, it exists in its pure form only in the heavens; when brought down to earth it turns into something different.

Neoliberals claim that we are best served by maximising market freedom and minimising the role of the state. The free market, left to its own devices, will deliver efficiency, choice and prosperity. The role of government should be confined to defence, protecting property, preventing monopolies and removing barriers to business. All other tasks would be better discharged by private enterprise. The quest for year zero market purity was dangerous enough in theory: distorted by the grubby realities of life on earth it is devastating to the welfare of both people and planet.

As Colin Crouch shows in The Strange Non-Death of Neoliberalism, the state and the market are not, as neoliberals insist, in perpetual conflict. Instead they have united around the demands of giant corporations.

When the state cuts regulation and social provision, business is enriched. It uses this wealth to trample on the doctrine that enriched it. Through campaign finance, networking and lobbying, big business recruits the state to champion its interests. In Britain corporations lobbied for privatisation programmes that replaced public monopolies with private ones. They also persuaded the government to create hybrid schemes (like the private finance initiative) that guarantee state funding for business. In the US, giant corporations persuaded Congress to remove the key regulations governing auditors and the banks. This led first to the Enron and WorldCom scandals, then the financial crisis.

Big business has used its power to persuade the state to let it keep dumping its environmental costs on the rest of us. It has vitiated anti-trust laws. It has excluded new entrants to the market (through its advertising budgets and distribution networks); and become big enough to prevent its own exit even when it fails (note the bailout of the banks). These are results of neoliberal policies of the kind that Cameron is applying, but they are sharply at odds with the predictions neoliberals made of how free markets would behave.

Above all, the neoliberal programme has closed down political choice. If the market, as the doctrine insists, is the only valid determinant of how societies evolve, and the market is dominated by giant corporations, then what big business wants is what society gets. You can see this squalid reality at work in Cameron's speech last week. "We have listened to what business wants and we are delivering on it. Business said, 'We want competitive tax rates,' so we are creating the most competitive corporate tax regime in the G20 and the lowest rates of corporation tax in the G7 …". What about the rest of us? Don't we get a say?

The neoliberal hypothesis has been disproved spectacularly. Far from regulating themselves, untrammelled markets were saved from collapse only by government intervention and massive injections of public money. Far from delivering universal prosperity, government cuts have pushed us further into crisis. Yet this very crisis is now being used as an excuse to apply the doctrine more fiercely than before.

So where is the economic elite? Counting the money it has stashed in unregulated tax havens. Thirty years of neoliberalism have allowed the super-rich to detach themselves from the lives of others to such an extent that economic crises scarcely touch them. You could see this as yet another market failure. Even if they are affected, the rich are doubtless prepared to pay an economic price for the political benefits – freedom from democratic restraint – that the doctrine offers.

A programme that promised freedom and choice has instead produced something resembling a totalitarian capitalism, in which no one may dissent from the will of the market and in which the market has become a euphemism for big business. It offers freedom all right, but only to those at the top. your social media marketing partner


A note of caution regarding our comment sections:

For months a stream of media reports have warned of coordinated propaganda efforts targeting political websites based in the U.S., particularly in the run-up to the 2016 presidential election.

We too were alarmed at the patterns we were, and still are, seeing. It is clear that the provocateurs are far more savvy, disciplined, and purposeful than anything we have ever experienced before.

It is also clear that we still have elements of the same activity in our article discussion forums at this time.

We have hosted and encouraged reader expression since the turn of the century. The comments of our readers are the most vibrant, best-used interactive feature at Reader Supported News. Accordingly, we are strongly resistant to interrupting those services.

It is, however, important to note that in all likelihood hardened operatives are attempting to shape the dialog our community seeks to engage in.

Adapt and overcome.

Marc Ash
Founder, Reader Supported News

+32 # Richard Raznikov 2012-07-31 17:10
'Austerity' has never been expected to 'solve' problems except for the wealthy... it is not designed to help countries deal with economic difficulties but to expand those difficulties and enslave the populations. It was and is designed to usurp a country's natural resources and leave its people in hock forever to the bankers. That's the point of it. These 'economic crises' are manufactured by the banks, just as they were in the U.S.

Why Americans don't grasp this is simple: we are a thoroughly brainwashed population which actually believes the nonsense the media calls 'news'. People elsewhere are catching on –– Greece, Spain, maybe others.

The western world is owned by these corporate criminals. That is also one reason for the faked 'wars of liberation' designed to overthrow dissenting voices in the arab world.
+10 # SMoonz 2012-07-31 17:30
End the Fed.
+8 # DPM 2012-07-31 22:33
+3 # JSRaleigh 2012-08-01 04:34
Quoting DPM:

+4 # brux 2012-07-31 23:05
To me the question is … is what we are seeing real or engineered?

The author asks rightly way the markets are still up … and I think this is what makes it all fake. I believe the markets are being maintained artificially high to keep the capitalist class happy so they do not turn against the austerity program aimed at everyone else.

The market has its ups and down but mostly it has remained at or near alltime highs … don't you wonder why or how?

I think the only way a small number of people can control a very large number of people is to manipulate the very reality of the country, and that is what is happening how.

The other day they wrote about there being 21 trillion dollars stashed away offshore. There are huge stashes of cash from the black market, drugs, prostitution, trafficking, etc, and just a little of this money would be needed to keep the stock market afloat, just stepping in to buy when things seem to be going down.

The elections, at least 2000, and most likely 2004 were rigged to put in Republicans.

Bush is no idiot, or at least his advisors are not, so why did he cut taxes when the country was 6 trillion dollars in debt in 2000?

I believe firmly we are in desperate need of political reform in America before we get a worldwide totalitarian state that is anything but compassionately conservative.
+1 # thomachuck 2012-08-01 09:40
Bush is no idiot (but to be on the safe side, the GOP will keep him away from their convention). If he had not been under the total influence of the unholy combination of Rumsfeld, Cheney, and Wolfowitz, he would have had a chance of making wiser choices than warring with Iraq (a criminal act, in my opinion.) Bush did barely anything in domestic policy except put two wars on our collective credit card and hand the drug industry a massive windfall with Medicare D.
+4 # angelfish 2012-08-01 01:11
Knowledgeable people just got tired of shoveling sh*t against the Tide! People who are so convinced that they are right, leave NO room for the possibility that, oh, gee, just maybe they might be WRONG! History will NOT be kind to them. Sadly, that doesn't help the rest of us! Then again, there are an awful lot of lemmings lately, who will blindly follow what they WANT to follow and will not EVER be swayed by actual FACTS to avoid the cliff they're being taken over. I, for one, will NOT go quietly!
+4 # xflowers 2012-08-01 07:51
Remember Orwell: "Freedom is Slavery"

Their freedom is our slavery.
+1 # Kootenay Coyote 2012-08-01 07:57
& in Canada, the right-wing Federal government is on the same plunge to the bottom.
+1 # thomachuck 2012-08-01 09:34
No pride in saying this but I fear we will beat you there under our present House of Representatives .
+3 # Terrapin 2012-08-01 08:54
"Neoliberals claim that we are best served by maximising market freedom and minimising the role of the state. The free market, left to its own devices, will deliver efficiency, choice and prosperity. "
How much longer is this totally discredited line of CRAP going to be sold?
"Scorched Earth Capitalism" indeed ... FreeMarketCapit ali$m is the biggest economic SCAM ever.
0 # HowardMH 2012-08-01 09:32
Until there are two hundred thousand really, really pissed off people on Capital Hill (all at the same time) raising some serious hell absolutely nothing is ever, ever going to happen to these totally bought and paid for by the richest 50 people in the world that are becoming more and more powerful with each passing rigged election thanks to the stupid people.

The US is headed for disaster thanks to all the Millions and Millions of IDIOTS that have not got a Clue what is really going on with our government and there are a whole lot of IDIOTS out there.
+1 # thomachuck 2012-08-01 09:32
Well presented argument, but I risk exhibiting some lack of sophistication here. What is being labeled as neoliberism fits the description of reactionary conservativism as I learned it long ago. Terminology can be hazardous to your sanity. Still, well presented arguments.
+1 # Buddha 2012-08-01 17:08
Actually, the "corporate class and the super-rich" see no such problems with neo-liberalism at all. After all, while these tax and trade policies may be decimating the middle-class and economies of the developed world, it IS leading to huge economic growth and a rise of a "middle-class" in countries where our multi-nationals sent our jobs, China, India, etc. There are billions of newly "affluent" customers in China and India to make profits from, right? And in many cases, those profits earned overseas are sheltered, and hence more beneficial than profits earned in their home nation. This is part of the whole "decoupling" between Main St and Wall St., where it seems more and more that our multinationals can continue to profit while the developed world's economies implode. In the 1800's, our Robber Barons still "gave back" to our economy, because it was in their interest to have a highly educated work force and workers affluent enough to buy the goods that they were producing. Not any longer.

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.