by
Geoff Mann
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[...] It has never been interested in upsetting capitalism or its key institutions. If the UAW had its way, the Long Boom would have been Longer, ideally Eternal. [...]
unexpectedly droll
[...] the crisis that ended the good ol' days of the Long Boom was a distributional struggle. Orthodoxy almost never says this explicitly, but it is right there in its account of the history of capitalism. This struggle had two fronts: (1) a struggle between labour and capital over the distribution of income--an increasingly empowered labour-force wanted more of it; (2) a struggle between nationally based capitalists over the distribution and control of productive power and international market share. One might also add: (3) conflicts between highly developed rich countries and resource-rich but less powerful countries. [...]
really important
you can even view the OPEC oil price increases of the 70's through the lens of (3)
[...] It put capital back on top of the political economic hierarchy--it had never really been usurped, but it had been forced to cater to the rabble--by choosing domestic conflict management option (b) above: clamp down by reducing government spending, raising interest rates, suppressing wages and benefits, and tightening up the supply of money and credit in circulation. This hurt capital in the short term, and support among business people for this radical economic restructuring was by no means unanimous, but in the long term it was one of the most brilliant moves it ever made. This turn to inflation control marks the consolidation of the neoliberal capitalist state in the industrialized world.
One of the more common paths this transition took--in Canada, the US, and the UK among others--had three basic steps:
- [...] the government [...] tried to inflate and/or stimulate the way out of it [...] By the early 1970s, increasing inflation proved this tactic ineffective on its own.
- By around 1972 or 1973 [...] they made inflation against the rules, via wage and price controls like those used during World War II [...] union commitments to reduce wage demands and employer commitments to keep prices from rising at such rapid rates. This did not work, and pleased no one.
- In the mid- to late 1970s, the state gave up trying to please both sides, abandoned labour and small business, and embraced finance-friendly Chicago-style economic policy: jacking interest rates and slashing government spending.
The best known example of step 3is the so-called Volcker coup of 1979-83. Paul Volcker was appointed chairman of the Federal Reserve [...] at the end of Jimmy Carter's single presidential term, and remained through most of Reagan's term of office. The Volcker coup is best described as the use of US monetary authority to squash inflation no matter how many jobs, how many social services, or how much human welfare it cost. [...]
the reason for choking inflation: to protect the global value of US dollar, which was needed to maintain American geopolitical influence (e.g., if the dollar kept dropping, OPEC countries could stop using it)
[...] Nixon's attempt to inflate his way out of crisis was not only directed at domestic problems. He was also effectively trying to export inflation, and reduce the real value of the US foreign debt [...]
[...] bond yields also have a massive impact on domestic interest rates. Domestic bands will lend to local enterprises only at rates competitive with what they can earn by investing their money elsewhere. If they are confident they can get 12 percent return on their money buying bonds, they are going to need a lot of convincing to lend to a local firm for less.
obvious once you think about it but worth keeping in mind
[...] during the crisis that led to the Volcker coup [...], US interest rates skyrocketed, and other nations had to follow suit, just to prevent international finance from dropping their currencies and bonds in favor of those of the US--and in the process killing non-US exchange rates and economies. So, with the Volcker coup, the rest of the world had to raise their rates to comparable levels, meaning the Fed's vicious recessionary monetary policy rapidly diffused across the globe.
One of the better-known results of this process was the Latin-American debt crisis. [...]
Latin-Am: interest rates went up way too much; some countries had to default
- Liberalization (drop tariffs, subsidies, capital controls, export restrictins, etc.)
- Privatization (sell state holdings, which in many cases are substantial)
- Stabilization (allow currency to float at its "natural" [usually lower] exchange rate)
As this outline of the neoliberal policy package shows, neoliberalism is [...] a description of at least two powerful and intertwined contemporary economic dynamics: globalization and financialization. Neoliberalism can be understood as the historical conjuncture, and political legitimization (via both coercion and consent) of these two processes. Globalization is the integration of the international economy via trade. The original version of liberalism certainly involved globalization, but without the kind of financialization we have today with _neo_liberalism--or at least, back then, finance played a different and subordinate role as investor in productive enterprise.
[...] this definition of neoliberalism is helpful since it allows us to [...] understand the differences between what is sometimes called the "first era of globalization"--British free trade imperialism in the nineteenth century--and what we call globalization today (by which we mean something more specifically neoliberal).
the conditions are those that must be met for receiving an IMF loan
he describes the IMF as one of the most important frontline institutions for neoliberalism
[...] Neoliberalism is not just about getting rid of rules, or "deregulation." Removing tariffs, capital controls, currency pegs, restrictions on foreign ownership, and so forth are all essential elements of neoliberal regulatory programs, abolishing rules that limit firms' opportunity to maximize short-term returns. But states and firms and international institutions need not only to eliminate rules, they must also create new ones, imposing, extending, or deepening regulatory or legal structures where they were previously underdeveloped or nonexistent. For example, countries the world over have established intellectual property rights regimes for everything from medicinal plants to corporate logos, often where no such legal frameworks existed before. That is not deregulation by any stretch of the imagination. Jamie Peck and Adam Tickell were among the first to point out these complexities in "actually existing neoliberalism," which they label "roll-back" (deregulation) and "roll-out" (reregulation). Neoliberalism has always involved both.
the IP stuff especially
[...] only an understanding of dynamics behind the 1970s crisis of capitalism can make sense of what has happened since in the realm of finance capital. We must reject the popular idea that the rise of finance (or any other economic change of the 1970s) is an unprecedented restructuring of innovation in economic dynamics, unrelated to what came before. Instead, we can only explain the drastic changes brought about by financialization--a central component of the phenomena associated with neoliberalism--if we put it in the context of the post-World War II economy in the developed world.