More on Neoliberalism

Those who conflate libertarianism, or classical liberalism, with neoliberalism do so out of ignorance or out of a desire to obscure the distinction between free market/limited government principles and government/corporate enmeshment among power-mongers. Libertarian thought has never claimed that business people act honorably -- crooks can go into business. Libertarians, at least the libertarians associated with the Right, promote limited government, a separation of State and Economy. This doesn't mean regulatory capture, or no regulation. Regulation can take place in a free market without government intervention, except law and court intervention to punish fraud, theft and coercive abuse of power. The problem with statist regulation is that it has favored large corporations which can pay for the cost of compliance, whereas small businesses can't. There is also the problem of lobbying and regulatory capture in the present statist system. Government has become a feeding trough where wealthy interests come to get fed, Business/government arrangements attract the most unscrupulous people in society to play the hardball political game.

Our present government/corporate enmeshment is caused by a government which has gone beyond limitations and now manages the economy, except for small areas of commerce of little concern to the power mongers,i.e., the crumbs of the economy. With a limited government separated from the economy, government officials cannot sell or trade favors, because it won't have the power to do so. As I've said before, our problem is the battle over power, not wealth accumulation. In another post, I will once again write about how a free market can be regulated in the private sector.

Most people who make a lot of money realize they have enough at some point, and making more is not exciting -- what becomes exciting is power. When wealthy individuals with a power-hunger tendency can buy power, this is when we have problems of great wealth inequality. In a free market, there will be individuals who generate lots of wealth, but without power for sell, the game will change and extra wealth will be re-invested in the economy rather than spent to amass power and protection from competition. Most wealthy people also have a lot of creative energy, and if that energy can be channelled into charity or philanthropic efforts, this would be a much more useful to society than amassing power. A limited government and a free market will cut off avenues of power-seeking, and redirect energy over time to productive use. Many businesses get caught up in the Washington statist, power game simply because they have to play the game to survive and be competitive. If the corporate feeding trough is destroyed, these business people will direct their interests elsewhere.

Free competition will prevent those determined to gain power from creating coercive monopolies, and competiton will also place limits on how much wealth can be amassed. When a certain product or service becomes popular with consumers, other players will enter the game, thus spreading the wealth. The Left says these ideas have been discredited, but, to be honest, these ideas have never been fully implemented. Whatever Neoliberalism is, it's not libertarianism.

So, what is neoliberalism?

In Richard Peet's book, Unholy Trinity, he writes:

    The main opposition to Keynesianism came eventually not from the external threat of communism, as most histories have it, but from internal movements for "reform" started by neoliberals. Neoliberalism is an entire structure of beliefs founded on right-wing, but not conservative, ideas about individual freedom, political democracy, self-regulating markets and entrepreneurship.

Peet goes on to relate neoliberalism to classical liberalism, and justifies the "neo" by saying the neoliberals are applying classical liberal principles to modern circumstances, calling for deregulation and privatization of government programs. Then Peet relates neoliberalism to the ideas of Milton Friedman and Friedrich von Hayek.

Peet is describing the libertarian position -- limited government and a free market, but then Peet goes on to describe the actions of neoliberalism as anything but libertarian -- he writes about coercive actions of States to rig the economic game and enrich favored corporations. Peet is confusing classical liberalism (libertarianism) with State capitalism, corporatism and just plain American style statism in a mixed economy. Peet denounces libertarian ideas by assigning to them all the ills of government/corporate enmeshment.

The purpose of Peet's book is to reveal the rigged global economic game designed by the power elite within the IMF, World Bank and WTO. I too reject this type of globalization, but what has been created through statist methods has nothing to do with what Peet initially described as basic libertarianism. We can smell a smear job. First, set neoliberalism up as a revival of classical liberalism, then assign to the new liberalism all the problems created when power mongers in government and industry join together to increase both wealth and power for the elite actors.

This explains the current attack on the Koch brothers and the denigration of millionaires&billionaires and Wall Street, as if corporations and wealthy individuals have used classical liberal ideas to dominate the US government, the domestic economy and even the global economy. The new classical liberal corporate warriors slayed Keynesianism and conquered the world. After three or four stimulus efforts and calls from government to "invest" in education, infrastructure and green energy, I don't think Keynesianism has been slayed, or even scratched. Peet does say that Keynesianism will fail when tried again -- he has other plans.

The ideas of Reagan and Thatcher and Laffer were a blip on our statist journey, and with Reagan, government was more powerful after his eight years than before he was elected. How anyone who has paid attention to the increase in government power can blame classical liberal principles for the current situation is a mystery. The fact that regulations were captured and power players had free financial reign has nothing to do with classical liberal principles or libertarianism. A government which is limited and does not have power to sell cannot be bought. As I said in an earlier post -- our problem is not wealth accumulation by business people -- our problem is power accumulation, and this can only happen under a form of statism. Limited governments don't accumulate and sell power.

I will go further in the next post and describe the current condition of statism and how writers like Peet obscure the real problems to justify their progressive/socialistic solutions. I will show how a real free market discourages wealth accumulation by a few, and how a limited government helps prevent the human defect of power-hunger to run rampant.