Arrogance
Where was the humility and caution and carefulness on the part of the ideologues who helped construct our international system?
“So there’s a striking contrast between (A) economists’ profound and shocking and disturbing arrogance and (B) the humility and caution and carefulness that you see from any responsible scientist.”
“And the consistent experimental dynamic is that ‘the designers seem to come out quite well, though the experimental subjects, who rarely sign consent forms, quite often take a beating’.”
“You can understand Americans’ ‘justified resentment and anger’ about what has happened to them—the GOP’s response has been to divert these emotions into poisonous cultural scapegoats and to weaponize these emotions back at the victims.”
“It’s hard to get your head around how remorseless and unapologetic the neoliberal experimentation has been—maybe a historical view makes it all less shocking.”
There’s a simple point that I rarely hear—the simple point is that the ideologues who helped construct our international system have displayed an arrogance that you wouldn’t ever find among responsible scientists.
It’s ultra-basic ethics that you don’t recklessly experiment on people—there’s a whole formal process that you have to go through in order to conduct research on human subjects. And just take a look at geoengineering—the scientists discussing this grim option urge that the most small-scale experiments should be undertaken so that geoengineering can be quickly called off if there are any negative side effects.
You can look at neoliberal programs and policies that have been implemented worldwide and you can point out the following five things:
(1) the economic theories are dubious
(2) the economic theories on based on slight—if any—empirical support
(3) the economists have arrogantly proposed large-scale changes regarding highly complex societies that they don’t understand
(4) the economists have arrogantly imposed these large-scale changes on highly complex societies that they don’t understand
(5) the effects have often been very harmful—this is the case regarding the IMF structural adjustment programs and regarding the neoliberal assault generally
So there’s a striking contrast between (A) economists’ profound and shocking and disturbing arrogance and (B) the humility and caution and carefulness that you see from any responsible scientist.
Longstanding Shenanigans
Noam Chomsky has been making this simple point for a long time—I took the following notes on a 1996 piece from Chomsky:
Paul Krugman has a survey article “devoted to ‘experiments’ of the kind to which New Zealand is subjecting itself, and their intellectual roots”—Krugman “makes five central points”
the “first point is that knowledge about economic development is very limited”—Krugman “recommends ‘humility’ in the face of the limits of understanding” and recommends “caution about ‘sweeping generalizations’”
the “second point is that, nevertheless, sweeping generalizations are constantly offered by policy intellectuals and planners (including many economists)”—these sweeping generalizations “provide the doctrinal support for policies that are implemented, when circumstances allow”
the third point is that “the ‘conventional wisdom’ is unstable, regularly shifting to something else, perhaps the opposite of the latest phase—though its proponents are again brimming with confidence as they impose the new orthodoxy”
the fourth point is that “it is commonly agreed in retrospect that the policies didn’t ‘serve their expressed goal’” and that the policies “were based on ‘bad ideas’”
the final point is that there are undoubtedly instances where “‘bad ideas flourish because they are in the interest of powerful groups’”
this final point “has been a commonplace at least since Adam Smith condemned the mercantilist theories designed in the interests of the ‘merchants and manufacturers’ who were ‘the principal architects’ of Britain’s policies, mobilizing state power to ensure that their own interests were ‘most peculiarly attended to’ however ‘grievous’ the impact on others, including the people of England”—there’s “impressive consistency” to this phenomenon
the situation in New Zealand “breaks no new ground”—the benefits “‘rapidly accrued to the corporate sector’” that had a clear influence in designing the policies in question
“The ‘bad ideas’ may not serve the ‘expressed goal,’ but they typically turn out to be very good ideas for their proponents. There have been quite a few experiments in economic development in the modern era, and though it is doubtless wise to be wary of sweeping generalizations, still they do exhibit some regularities that are hard to ignore. One is that the designers seem to come out quite well, though the experimental subjects, who rarely sign consent forms, quite often take a beating.”
regarding an experiment that the British carried out on the population of India, “the experiment can hardly be written off as a failure”—it was “a ‘bad idea’ for the subjects, but not for the designers and local elites associated with them”
that “coincidence has recurred with curious regularity until the present day”—the “consistency of the record is no less impressive than the flights of rhetoric” about democracy and capitalism and science and about the latest “‘economic miracle’”
the “most recent example is Mexico”—the “house of cards” collapsed in December 1994 in accord with the predictions from “observers who chose not to watch what was happening through the distorting” ideological prism
in “the 18th century, the differences between the First and Third World were far less sharp than they are today”—you can ask which countries developed, which countries didn’t develop, and whether we can “identify some operative factors”
outside Western Europe, “two regions developed”, namely the US and Japan—these are “the two regions that managed to escape European colonization”
“Japan’s colonies are another case, in no small part because Japan, though a brutal ruler, did not rob its colonies but developed them, at about the same rate as Japan itself.”
regarding Eastern Europe, Europe “began to divide” in the 1400s—the West developed and the East became “its service area”, the “original Third World”
the “divisions deepened into early” in the 20th century—Russia then “extricated itself from the system”
“the USSR did undergo significant industrialization, as did its satellites”—this was despite “Stalin’s awesome atrocities and the huge destruction of the two World Wars”
regarding the USSR, the “documentary record reveals” that “the great fear of Western planners was that its economic growth would allow it to catch up with the West and that the ‘demonstration effect’ would induce others to pursue a course of ‘economic nationalism’”
with “the Cold War over, most of Eastern Europe is returning to the status quo ante”—“regions that were part of the industrial West are regaining that status, while typical Third World structures are being restored in the traditional service areas”
“it seems that development has been contingent on freedom from ‘experiments’ based on the ‘bad ideas’ that were very good ideas for the designers and their collaborators”—the “ability to fend off such measures does not guarantee economic development, but does seem to have been a prerequisite for it”
“How did Europe and those who escaped its clutches succeed in developing?”
it “seems exceptionless” that success has been based on radical violation of “approved free market doctrine”—that “conclusion holds from England to the East Asian growth area today, surely including the United States”
regarding Japan’s success, “a group of prominent Japanese economists point out that they rejected the neoclassical economic counsel of their advisers”—the economists conclude that “defiance of orthodox economic precepts was a condition for the Japanese miracle”
regarding “Japan’s former colonies”, the “first extensive study of the U.S. Aid mission in Taiwan discovered that the U.S. advisers and Chinese planners” disregarded “the doctrines and the orders from Washington”
putting “the details aside, it seems fairly clear that one reason for the sharp divide between today’s First and Third World is that much of the latter was subjected to ‘experiments’ that rammed free market doctrine down their throats, while today’s developed countries were able to resist such measures”—attempts “to violate the rules have often elicited extreme violence, under Cold War pretexts when they were available, others when they were not”
it’s “a bit hard to keep a straight face” when intellectuals praise the free market—such “posturing may pass in the doctrinal institutions, but would simply elicit ridicule in the corridors of power, corporate or state”
the Reaganites extolled “the glories of the market to the poor at home and the service areas abroad while boasting proudly to the business world” about their anti-market interventions—Newt Gingrich “sternly lectures 7-year old children on the evils of welfare dependency while winning the national prize in bringing federal subsidies to his rich constituents, thanks to such paragons of free enterprise as Lockheed, the major employer in his district, and others like it”
“all understand very well that democracy is a nuisance to be ignored as long as possible, and that free enterprise means that the public pays the costs under various guises, bearing the risks if things go wrong, while profit is privatized”—“in pursuit of these ends, decision-making is to be transferred as much as possible from the public arena to unaccountable private tyrannies, and ‘locked in’ by treaties that undermine the potential threat of democracy”
in the US, it’s “no longer possible to produce the euphoric predictions about the benefits that NAFTA will surely bring, so it is now tacitly conceded by sophisticated elites that the advocates of NAFTA were lying all along”—the “main goal of NAFTA, we can now concede, was not to achieve the highly touted wonders of ‘trade’ and ‘jobs,’ always illusion, but to ensure that Mexico would be ‘locked in’ to the ‘reforms’ that had made it an ‘economic miracle’ (for U.S. investors and Mexican elites)”
“the United States is not alone in its conceptions of ‘free trade,’ even if its ideologues lead the cynical chorus”—the “doubling of the gap between rich and poor countries from 1960 is substantially attributable to protectionist measures of the rich, the UN Development Report concluded in 1992”
the “practices persist through the Uruguay Round, the 1994 UNDP report observes, concluding that ‘the industrial countries, by violating the principles of free trade, are costing the developing countries an estimated $50 billion a year—nearly equal to the total flow of foreign assistance’—much of it publicly-subsidized export promotion”
“To illustrate with a different measure, a recent study of the top 100 transnationals in the Fortune list found that ‘virtually all appeared to have sought and gained from industrial and/or trade policies [of their home government] at some point,’ and ‘at least 20…would not have survived as independent companies if they had not been saved in some way by their governments.’”
regarding Lockheed, “Gingrich’s favorite cash cow” was “saved from collapse by $2 billion federal loan guarantees provided by the Nixon administration”—“New Zealand breaks no new ground as its libertarians bail out Electricorp when it gets in trouble”
it seems “fairly clear” that “the approved doctrines are carefully crafted and employed for reasons of power and profit”—the same thing was true “in the days of Smith and later Ricardo”
“It is the poor and defenseless who are to be instructed in the stern doctrines of market discipline.”
from “the origins of the industrial revolution, there have been repeated efforts to implement within the industrial societies themselves the kinds of ‘experiments’ imposed elsewhere, but with only limited success”—“the social contract that has been gained by popular struggle is once again under attack, primarily in the Anglo-American societies”
“The new experiments, as always, are accompanied by confident proclamations, which merit all the respect they deserved in the past.”
given “how little is understood”, we should evaluate neoliberal ideology with care, caution, “due attention to the rationale of the argument (such as it is)”, and due attention to “the lessons of past and present history”—regarding historical lessons, we should recognize “the cynicism of the intellectual discourse intended to veil” the unprincipled reality
we can “reasonably anticipate that what is right for the people of the United States (or India, or New Zealand,…) will only by the remotest accident conform to what is preferred by the ‘principal architects of policy,’ for much the reasons that Adam Smith understood very well”
So neoliberal ideology is highly functional for elite goals even though power disregards neoliberal ideology in practice.
And the consistent experimental dynamic is that “the designers seem to come out quite well, though the experimental subjects, who rarely sign consent forms, quite often take a beating”.
What About the Consent Forms?
I found it neat that Chomsky’s 30 June 2022 piece actually links to my own 18 June 2022 piece—it’s good to see that Chomsky found my own piece useful.
I took the following notes on the Chomsky piece:
“Harvard economists Anna Stansbury and Lawrence Summers attribute the sharp concentration of wealth in the past 40 years primarily to the assault on labor, initiated by Reagan (and Thatcher in the U.K.), carried forward in Clintonite neoliberal globalization”—this anti-labor assault has given US elites “a stronger grip” on “the policy agenda”, but the “decline of functioning democracy is not limited to the U.S.”
“The impact on the social order of 40 years of bitter class war—the operative meaning of ‘neoliberalism’—is starker in the U.S. because of the relative weakness of the social protections that are the norm elsewhere, even such elementary matters as maternal care, found everywhere apart from the U.S. and a few Pacific islands.”
the “most dramatic of these social failures is the scandalous privatized health system, with almost twice the costs of comparable societies and some of the worst general outcomes”—regarding the health system, it’s “startling” to look at specific “illustrations” of the dysfunction from which America’s “rich are spared”
“One recent study found that the ‘fragmented and inefficient’ U.S. health care system was responsible for 212,000 COVID deaths in 2020 alone, along with over $105 billion in extra medical expenses in addition to the nearly $440 billion of extra expenses in normal years, all avoidable with universal health care.”
regarding the lack of social protections in the US, these “deficiencies go back many years, despite the very substantial improvements of the New Deal policies that have been under neoliberal attack”—regarding the neoliberal attack, the “pandemic has brought to light starkly the lethal nature of the business model that has been imposed during these destructive years”
the business model’s lethal “outcome is aptly described by political economist Thomas Ferguson”—Ferguson says that it will take time for us to recognize the dimensions of what Covid actually did to the US and the UK and “many developing countries”
ideologues “whose arrogance far exceeds their understanding have played a very dangerous game with the international social order for the past 40 years, not for the first time in human history”—the beneficiaries “who gave the orders” may “exult about their short-term gains, but they too will rue the havoc they have wrought”
the “Republican Party has been going off the rails ever since Newt Gingrich took control of Congress in the Clinton years”
the “Texas Republican Party, which is at or near the radical extreme of the GOP, has just called virtually for secession”—its “June 2022 Convention determined that Biden ‘was not legitimately elected,’ so Texas is free to ignore decisions of the federal government”
“Going further, the Texas Republican Party condemns homosexuality as an ‘abnormal lifestyle choice,’ calls for schools to teach that life begins at birth, and roundly condemns any restriction on guns, arguing that those under 21 are ‘most likely to need to defend themselves’ and may need to quickly buy guns ‘in emergencies such as riots,’ while claiming that red flag laws violate the due process rights of people who haven’t been convicted of a crime.”
some “70 percent of Republicans hold that the 2020 election was stolen and that Trump is the legitimate president”—half of Republicans “believe that ‘top Democrats are involved in elite child sex-trafficking rings’”
regarding the GOP, a “large majority think that ‘the Democratic Party is trying to replace the current electorate with voters from poorer countries around the world,’ and there are other fantasies that would be hard to believe in a normal country”—that’s “the Republican voting base, after half a century of refinement of the Nixon” strategy of using racism to get votes in the South
the GOP is dedicated to the “class war of the neoliberal years”
the GOP diverts “the justified resentment and anger”—that that class war has elicited—into “‘cultural issues’” that the GOP can exploit politically
regarding the GOP’s pursuit of class war under the cover of these distractions, “the new GOP was pushing an open door”—by “the 1970s, the Democrats had pretty much abandoned concern for working people and the poor, openly becoming a party of affluent professionals and Wall Street: the Clintonite party managers and the kind of people who attended Obama’s lavish parties”
so the Democratic “leadership found their own more moderate ways to join the class war”
that’s “the leadership”—the “public, as usual, has not been silent”
on “the Democratic side, there has been a revival of New Deal-style social democracy, sometimes beyond, invigorated by the impressive work of Bernie Sanders”—on “the Republican side it has, unfortunately, descended to a form of Trump worship, reminiscent to an extent of the Hitler worship of 90 years ago”
So we’ve seen “40 years of bitter class war” thanks to dangerous and arrogant ideologues who are useful to elite interests—this neoliberal experimentation has been a disaster for people.
You can understand Americans’ “justified resentment and anger” about what has happened to them—the GOP’s response has been to divert these emotions into poisonous cultural scapegoats and to weaponize these emotions back at the victims.
Brittle Social Systems
Thomas Ferguson says—in an interesting 2022 piece in the latest issue of The International Economy—that we’ll eventually understand just how much Covid overwhelmed brittle social systems. I took the following notes:
“the pandemic shined a terrible, unforgiving light on how fragile a globalized world really is”
social systems are “fatally brittle” due to demand-oriented production, due to offshoring, and due to transnational supply chains—it’s also relevant that firms have “degraded workers into external contractors with lower wages and fewer benefits”
there was—as “the pandemic spread and transnational supply chains broke down”—an overwhelming “cumulative impact” due to “more than a generation of steady government cuts”
regarding the cuts, governments had reduced taxes, safety nets, education, “and—above all—health care”
regarding the US and the UK and “many developing countries”, Ferguson thinks that “we will eventually recognize that the pandemic actually broke their social systems”
“the true dimensions of the havoc the pandemic wrought” will “stand out more clearly” as “pandemic relief fades from memory” and as “the gruesome toll of delayed deaths, long Covid, substance abuse, and mental health problems climbs higher and higher”—Covid wrought havoc “not least on the U.S. labor force”
“But right now, most governments are in denial. As in 1919 or 1945, they are nourishing hopes of going ‘back to normalcy.’”
we see—in the developing world and “most of the developed world”—that “anti-system political groups and parties are gaining strength”, that riots are burgeoning like in Sweden, and that “tumultuous” mostly right-wing political movements are burgeoning like in Germany and Austria
So Covid’s “gruesome toll” will illuminate just how “fatally brittle” neoliberalism has made various countries’ social systems. Experiments have consequences on people’s lives—that’s why it’s unethical to experiment on people with wild abandon.
It’s hard to get your head around how remorseless and unapologetic the neoliberal experimentation has been—maybe a historical view makes it all less shocking.
One bold quote only, and don’t have it begin with “So”. So is a conclusion, not a beginning.
Thanks for the great summaries of neoliberal development policies and for Tom Ferguson's rethinking of what really happened to the health systems during Covid.