Absolute Deprevation

    

The Developed countries of the Northern Hemisphere have generated an unprecedented concentration of financial, technological, political, and military power over the past two decades. The gap separating the countries of the Northern Hemisphere (20% of world population) from the Southern Hemisphere (80% of world population) is wider than it has ever been in history. This has resulted in what has been described as the “dematerialization of production,” that is, the reduction of the use of natural resources per unit product or service. What is transpiring in the process is a permanent structural reduction of value in raw materials and a structural disadvantage in terms of trade between the Northern and the Southern Hemispheres (North and South). The outcome has resulted in a widening gap between the countries of these hemispheres, specifically with technology and vital natural resources. This investigation attempts to identify the sources of this ongoing crisis and some projections of this crisis into the near future.

According to the World Economic Forum (WEF) the world’s richest individuals have captured a disproportionate share of global wealth (valuable assets and items over and above income) over recent decades (See Appendix, World Economic Forum, Figure 9). Since 1995, the share of global wealth owned by billionaires rose from 1% to over 3%. Twenty-five years later, in 2020, the steepest increase on record in the share of global billionaire wealth took place in which the richest 10% now own 76% of all wealth on the planet. The poorest half of the global population owns 2%. And while the current global average income for an adult is $23,380, adjusted for Purchasing Power Parity, PPP (See Appendix PPP), this figure is skewed significantly toward the Western nations and does not explain the widening disparities between and within countries. Moreover, the WEF in December 2021, cautioned that national income levels are inaccurate predictors of inequality since high-income countries conceal their levels of poverty within the overall distribution of wealth. Low- and middle-income countries have less success in concealing this inequality since a smaller distribution of income reveals disparities more clearly than lager distributions. (See Appendix, World Economic Forum, Figures 1 and 6).[1]

The COVID-19 pandemic surge has accelerated economic inequality. The pandemic wiped out years of progress in reducing poverty and caused economic inequality to spike. According to Oxfam 99% of the global population are worse off as a result of the pandemic and more than 160 million people have been pushed into poverty. The ten wealthiest people in the world have doubled their wealth, Elan Musk, Jeff Bezos, Bernard Arnault, Bill Gates, Larry Elison, Larry Page, Sergey Brin, Mark Zuckerberg, Steve Ballmer and Warren Buffett (Oxfam Methodology Note, Inequality Kills, January 2022).

Russia’s war in Ukraine is deepening the gloom. Beyond the battlefield, the conflict has upended commodity markets and global supply chains driving up prices for energy and food. For developing countries that are highly dependent on fuel and food from Russia and Ukraine, the impact of the war will be devastating, according to International Monetary Fund Managing Director Kristina Georgieva, “To put it very simply, war in Ukraine means hunger in Africa,” (Ravi Agrawai, “War in the Ukraine Means Hunger in Africa,” Foreign Policy, http://foreignpolicy/.com/2022/03/23/imf-ukraine-war-russia-economic-impact-georgieva-gop/). Even before the war, the recovery of emerging-market and developing economies from the pandemic recession was weak, sending inequality between rich and poor countries back to levels last seen a decade earlier, the World Bank says (See Appendix, Lanker et al., Global Economic Prospects, 2020).

The Wealth Mismatch

The technological revolution has also produced the growing automation of productive labor and services diminishing the value and need for human labor per unit of product. This has led to a loss of the negotiating capacity of labor as opposed to capital, both in the North and the South. Within labor itself, manual labor forfeits value to technical-scientific labor. As a result, the “comparative advantages” of the South (i.e., raw material and labor) becomes static before the dynamic of modern technological production. Even the law of “diminishing returns,” is fundamentally altered. It is precisely because of the new technologies that this economic relationship is changed to “increasing returns.” This is how the technological revolution has distorted the “asymmetry” and obstacles to the weaker competitors with less technological capital and sophistication. 

Current United Nations reports reveal that throughout the world, the last decade has been characterized by the rise in inequality between the rich and poor, in terms of the North and South in which the richest fifth of the population controls 82.7 percent of the revenue; 81.2 percent of the world trade; 94.6 percent of commercial loans; 80.6 percent of internal savings and 80.5 percent of investment. If understood in terms of distribution, the current trend is untenable. This is equally so regarding resources. The rich countries of the North possess approximately one-fifth of the world population, but consume 70 percent of world energy, 75 percent of the metals, 85 percent of timber, and 60 percent of food.[2]  

The above research indicates that inequality is not a distortion of international capitalism as a hegemonic system. Global inequality, specifically between the North and the South is a systematic prerequisite of the system itself. Economic growth within this model simultaneously produces inequality and an acceleration of the increasing gap between the rich and poor. In 1960, the incomes for the wealthiest 20 percent were 30 times higher than those of the poorest 20 percent. In 1990, the gap between the rich and poor was 60 times higher. Moreover, the unequal distribution within the countries of both the North and the South, that is the reported incomes for the richest 20 percent of the world population, was 150 times higher than those of the poorest 20 percent. 

The UNDP indicates that global markets do not operate freely. The unequal relationship between the North and the South costs developing countries $500,000,000 annually, or ten times more than what is received as foreign aid. Furthermore, 20 of the 24 most industrialized nations are currently more protectionist than they were 20 years ago, although total market liberalization is imposed on the less developed countries. According to the General Agreement on Tariffs and Trade (GATT), only 7 percent of the world trade is in conformity with the principles of free trade.[3] The remainder is under what the UNDP defines as “administrative market.” Since 1970, the South’s role in international trade has fallen drastically from 3.8 percent to 1 percent for Sub-Saharan Africa and from 5.6 percent to 3.3 percent for Latin America and the Caribbean. The increasing marginalization is affecting over 2 billion people in the South who are increasingly marginalized. All of this has placed significant restrictions on natural resources to which the poor are radically dependent. 

The environment has also been negatively affected as a result of poverty. The most significant reason for the global environmental crisis has been the wasteful development system that benefits the 20 percent of humanity that consumes global resources and discards their waste in a contaminating manner. The “environmental crisis” is also affected by the poverty of the three-fourths of the global population which continues to dominate and stress the global economic systems. Add to this the “environmental debt,” along with the “social debt,” and the unprecedented international emigration (approximately 75 million people are dislocated as refugees each year as displaced persons or migrant workers), are the most significant reasons for instability in the post-Cold War era. The UNDP report, accordingly, recommends the creation of a Security Council of Development and the reform of the World Bank, the International Monetary Fund (IMF), GATT, and UN Programs with a view to ensuring improved administration and management of the world economy in the interests of all the countries and all peoples. In the midst of a environmental destruction the global community is experiencing greater polarization, instability, un-governability, and economic non-viability.

Today there exists a geo-economic hierarchy which controls and manages the concentration and centralization of the economic, political, technological, financial, and military power on a international global scale.[4] The restructuring of the transnational companies and banks has enabled them, on the basis of mergers, to diversify their activities while ensuring the flexibility of their accumulation. These new mega-conglomerates, organized around technological structures and scientific matrices, allow them great flexibility in adapting to the new demands, created to a large extent by themselves through their control of the mass media. The growing interdependence of economies and the international division of labor in the service of these mega-groups, together with the increased integration of the countries in the South, and in the East over the past thirty years, have transformed this geo-economic hierarchy of transnational capitalism into a select international group of elites that benefit from their mutual interests. 

International elites seek to develop mutual alliances and interdependent systems in order to prioritize their mutual interests. They seek to dominate a world economy and control international competition with the support of governments mutually interdependent. These would be the countries of the North whose interests align with North America, Europe, and now Saudi Arabia. These same elites are the those who define the “rules of the game” with respect to financing, production, and technology. Accordingly, the they have morphed into a “global parallel state’ in the service of their geo-economic and geopolitical interests. Multilateral organizations and even the United Nations (UN) lack the financial and political influence to control and implement democratic and equitable international development that would attempt to assist the South in competing economically. To a large extent, the International Monetary Fund (IMF) and World Bank are dependent upon this alliance for support and even funding. The international lending agencies, based within these countries, take on the role of system maintainers of the international bureaucracy that protects and preserves the logic of the dominant economic structure established by international capital and transnational corporations. Democratic reform is of little importance.    

Neoliberal and neoconservative theories constitute the legitimizing ideological impetus for the global elite. Neoliberalism, therefore, is not simply a neutral economic project, but rather a project of domestic and international relations in order to maintain social relations. The so-called “end of history” hides the real agenda of the world’s right-wing, given the collapse of the left, and the global weakening of the negotiating capacity of labor and of the South to effect change, even with the election over the past decade of progressive and leftist leaders in the South. This is because the right-wing control, not only the means of coercion to ensure their interests; they also control the ideological and religious front to reinforce their interests.[5]

To be clear, this is also accompanied by the manipulation of emotions through fear, i.e., the use of anachronistic cold war rhetoric of the international communist conspiracy to take over the world and with it, the establishment of a dystopian world of misery and oppression. Perhaps few right-wing ideologists could have stated it with such clarity as Zbigniew Brzezinski himself, a founding member of the Trilateral Commission and permanent advisor to various subsequent U.S. administrations when he sates, “. . . In the technocratic society, the direction taken will apparently be marked by the individual support from millions of uncoordinated citizens who easily will fall within the range of magnetic personalities who will effectively exploit the most efficient techniques for manipulating emotion and controlling reason …”[6]  

The restructuring of the axis of international accumulation conforms to, and demands, this ideological re-colonization of the New World Order. It is based on the neo-con doctrine of American Exceptionalism and the Project for New American Century (PNAC). Nevertheless, the tactics of elites also includes the use of Christian religions as a method to solidify ideological allegiance to international capital. Just as 500 years ago the conquest of America (then identified as the New World), required papal legitimation. Neither the protests of the Dominican missionaries articulated in the “Cry of La Espanola,” by Friar Antonio de Montesinos in 1511 on the Caribbean island of Hispaniola (Dominican Republic), nor the protests and prophetic roles of Bishop Bartolome de las Casas in Southern Mexico (Chiapas), and the first martyr of Latin America, Bishop Antonio Valdivieso in Nicaragua, together with “the majority of the friars of the Kingdom,” whom the Viceroy Toledo of Peru denounced before King Philip the Second ... were sufficient to end either the conquest of Spain or the colonial system itself. The same neo-colonization by the North of the South thus continues.[7] 

The creation of macro-planetary policies that authorize the global administration of the world in turn calls for a monopoly of planetary thinking that legitimizes the global monopoly of accumulation. Control of the media, by the North, is fundamental to guaranteeing the legitimacy needed to stabilize this global power. Research, knowledge, and even alternative thinking is a prerequisite for the new global restructuring. The perceived “crisis” of the universities and the tribulations of the research centers and NGOs that do not yield to this logic of capital and market, is a recurrent phenomenon the world over, even within the churches. As a result of the “economic Darwinism” engendered by neoliberalism and defined by people such as the late Pope John Paul II and Pope Francis I, as “savage capitalism,” demands a technological totalitarianism that maintains a system of technical apartheid in the South.[8] 

 

What Capitalism Is 

Capitalism in general terms is an economic system whose characteristics are shaped by private property, investment, risk, free-market pricing, and the absence - or least restrictive measures in general - of government coercion through regulation. Several of the hallmarks of any contemporary capitalist system remain consistent: (1) the private ownership of most property, including the private ownership of the means of production within the system; (2) the globally scaled organization of economic activity, including the participation of state and governments associated with the global capitalist system; (3) a higher ratio of financial assets to real ones, especially compared to other kinds of economic systems; (4) the tendency of people to earn their income either as salaried workers or as wage laborers; (5) impersonal markets facilitating the purchase and distribution of most goods and services; (6) an uneven distribution of wealth, accompanied by an ever-widening gap between rich and poor (7) the expansion of economies over time, with periods of decline and instability affecting all within the system; and (8) at all levels, whether national, provincial, state, municipal or local, governments actively participate in in the economy. Here in a contemporary capitalist structure, markets and their concomitant pricing systems require that people be free to engage in the ownership, utilization, and transference of their property and that people be free in order to participate through enforceable contracts with any willing counterparty.[9]

The reduction of the budget for higher education, the political control of the universities, the emphasis on primary education promoted by the universities, the emphasis on primary education promoted by the World Bank in the South cannot conceal the real purpose – to maintain the masses as technological and analytic invalids, incapable of understanding and changing the “technetronic society.” Nevertheless, the great capacity of neoliberalism has not been one of creating efficiency and growth, but one of destroying any alternative that does not respond to its market logic, or to profit as a driving force within society, and to the acceptance of the “opaque power” as an inevitability of the New Order. The New World order carries with it a New International Division of Knowledge in this era of technological revolution. The democratization of knowledge, therefore, will be one of the fundamental demands of an alternative order.

The application of raw power demands not only geo-economic hegemony, but also geo-cultural hegemony as well. Market ideology and automatism that postulates the capacity for solving the problems of poverty, unemployment, and ecological destruction by their own dynamic, carry with them the need for global homogenization and uniformity. The multiple and varied brands of products found anywhere in the world respond to a homogeneous productive and cultural system. The modeling of the market in this way dictates a modeling of the culture in which the homogenization and automatism of the market leave a future complete with promises but lacking any projects or prospects. 

Even concepts such as “development,” self-determination,” and “sovereignty,” become otiose. It is the culture of consumption and democracy based on the market, without a vision and project of society. Because they were breaking through this process of homogenization which started with the Reagan era, those countries which gave rise to new hopes, like Grenada, Nicaragua, and El Salvador in the 1980s, needed not only to be destroyed but also discredited and converted into a spurious hope of romantic peoples.   Today the “geo-culture of despair” and a deterministic “rational” theology of inevitability require global projection to facilitate homogenization of the new restructuring promoted by the new global power elite.[10] 

Despair guarantees stability for the dominator. The erosion of hope is a systemic necessity, as Brzezinski foretold. This form of nihilism of values that is the need to accept the inevitable has imposed itself on vast sectors of society, such as, intellectuals in Latin America, the Latin American church, and the political left itself. In fact, this nihilism could be the greatest legacy of neoliberalism. Short of hope, there is no reason for struggling for the quality of life, and daily survival is accepted as normal life. The effect is a culture of submission enables the global project to be reserved exclusively for capital, not labor, and the transnational power elite, not the masses. The geo-culture of despair is part of the nihilism of Nietzsche, and in the face of poverty, underdevelopment, and growing unemployment, and facing the threat of collective suicide due to the environmental crisis, does not propose alternatives, much less solutions, thus allowing the “invisible hand” of the market to decide the moral vision of the planet. 

In order to understand how to best transition from a neoliberal market economy to a socially just democratic political economy, an analysis of three major political economists and their theories need to be considered and the importance of an anarchic social-justice model that would maintain a perpetual position of advocacy, protest, and agitation for a democratic political economy. This would provide an analysis of the systemic cause of the US economic demise, resulting from a neoliberal economic arrangement manifested in market capitalism. Thus, defenders of capitalism have argued that democracy ought not be conflated with capitalism - that is, there is no necessary connection between capitalism and democracy while in the same breath they argue that freedoms, such as those of assembly, association, expression, and movement are necessary and, in fact, inseparable from the rights to life and property.

 

Neoliberalism

Today capitalism has morphed into neoliberalism. Four basic components give neoliberalism its form and can thus be described as an economic and financial policy in which radically free markets, and not states, (1) provide the best avenues for the distributions of services and goods in a global economy, which is best done through private market relations, (2) provide market-optimal solutions in which governments ought not intervene beyond their duty to secure property and the private ownership of it, (3) provide a venue for the privatization of government and public goods and services, and (4) hold that human interaction through markets is the only grounds for realizing true human freedom. Neoliberalism has become a theoretical mainstay within the social sciences and economics, and its popularity especially among neoliberal economists is that it serves to describe much of the structural changes in global economics since the international, political, and economic turbulence of the 1970s, after the decline of the “golden age” of capitalism and Keynesianism in a post–World War II setting. In all, neoliberalism persists namely because it expounds on the classical liberal sense that market forces, and individual liberty, will triumph over the state.

Added to the phenomenon of neoliberalism is the drive toward globalization. Although the term has numerous uses, globalization can best be described as (1) an economic agenda that traverses the world, promoting market economies and enhancing trade in the service of capital growth, (2) an ideology representing values, cultural norms, and practices, seen by some as a superior worldview and by some as cultural hegemony, (3) a corporate structure and mechanism that may supersede the rule of nation-states and challenge or even threaten democracy, (4) a global village, the consequence of vast cultural exchanges, communication technologies, transportation, migrations, and a wide array of global interconnections, including the globalization of ideas—for example, green ecology, deep ecology, de-growth—or (5) a grassroots globalization or globalization from below as witnessed in anti-globalization or prodemocracy movements emerging in resistance to economic and cultural globalization.

For purposes here, utilize definitions 1 through 3 of globalization as they apply to neoliberalism, while definitions 4 through 5 apply to what we argue is essential for a democratic political economy and a second bill of rights. Nevertheless, despite globalization’s broad and diverse meanings, the term generally refers to the economic and technological agenda that alters basic modes of cultural organization and international exchange in many parts of the world. Global monetary institutions and financial elites argue for the endless benefits from the exchange of capital on a global scale. This is best represented by President Barak Obama’s support of the Trans-Pacific Partnership. The TPP, as it is known, garners praise from Obama, business elites, and other neoliberals due to the increases in export commodities and trade, the participation in global wealth, and the stabilizing of democratic civic processes they are certain will come about should the partnership be enacted. Anti-globalization and prodemocracy voices, such as Bernie Sanders, and the Progressive wing of the Democratic Party, along with Donald Trump and some conservative elements in the Republican Party, argue that global financial institutions are reordering the flow of capital and wealth within a global and hegemonic economic regime that serves only the interests of the elite and rich and sends decent-paying jobs to developing countries in the Pacific Rim. These voices protest the TPP and potential devastation resulting from globalization, including ecological ruin, poorer working conditions, urban deterioration, and increased social violence. Of note is the status of refugees and asylum seekers who provide an economic windfall in the over economy.[11]

Social and political developments accompany economic globalization as governments restructure their services to gain access to the global economy. Needed public services - like electricity, water, public health, and transportation - are replaced or “privatized” by private companies and shareholders. The poor find it increasingly difficult to access privatized “public” services. With globalization come unintended consequences - many would say negative consequences: Values, attitudes, and worldviews are co-opted by globalization, and the allegedly value-neutral global market and specific cultures with particular values and practices can clash. Consider the Standing Rock Sioux Tribe’s resistance to construction of the Dakota Access Pipeline on sacred tribal land. Societies with public religious structures, values, and social patterns may be deeply challenged as they either absorb or resist the values embedded within the globalization process.

In the 1930s, neoliberalism began to challenge many nineteenth-century Anglo-Saxon philosophies throughout Europe, specifically with regard to a liberalized economy with completely self-regulating markets. The European countries in question, however, challenged the need to separate political and economic domains completely. This had been a fundamental assumption of their predecessors. Then, in the 1970s and ’80s, a neoliberalism emerged bearing many of the trappings of a nineteenth-century laissez-faire system from just decades earlier. Not only would this new form of neoliberalism have little in common with the grander historicity of the neoliberal movement in Europe, but the goal was an ideological doubling down on the dogmatic nature of capitalism. And this was supported by modern developed nation-states, elite international institutions, right-wing think tanks and media, and religious institutions.

In order to counter the stagflation of the 1970s, Margaret Thatcher championed neoliberal economic policies late in that decade, as did Ronald Reagan in the 1980s. This post–World War II breed of neoliberalism rejected the Keynesian style of demand management and state intervention. This new market-based global economics, actively promoted by both the Thatcher and Reagan administrations, pivoted on supply-side economics. This strain of neoliberalism diverged from the economic theory of the 1930s and was spread globally, in great part due to influence from the United States, the postwar hegemon. Neoliberalism’s most basic tenets have altered American and British welfare systems, affecting public policy, administration, and many apparatuses of the state. Through direct US involvement, institutions like the World Bank and the International Monetary Fund (IMF) have also deployed neoliberal tactics to shape the development of poorer nations; they widely prescribe privatizing public resources and implementing austere economic programs and even demand that changes be made to welfare before less-developed countries (LDCs) might be granted loans and other economic assistance. This is what experts describe as “disciplinary” neoliberalism, where extreme measures for consolidating governance within developing countries is hallmark.

Many differences exist between neoliberalism’s advocates and its detractors. Those who oppose neoliberalism signal its contribution to incredible instances of global inequality, economic asymmetries, growing unemployment, social and political alienation, environmental destruction, and cultural homogenization. In their crusade to illuminate the negative results of adopting neoliberalism, opponents of neoliberalism regularly point to the failures and injustices wrought by market fundamentalism, competition, deregulation, economic liberalization, and the destabilization wrought by privatization, among other undesirable consequences that especially plague developing countries. On the other hand, neoliberal apologists, who consider broadly unbridled competition to be superior to state-backed attempts at coordinating human productivity, insist on the economic supremacy of laissez-faire liberties, decrying any sort of public intervention. Yet market economies demand that states intentionally act, because economies do not arise from “natural” market forces; nature itself promotes no industry, markets, or law, all of which contribute to the common facility of property rights and ownership among states. That is, such things are not natural in essence; Thomas Hobbes promoted this idea centuries ago in Leviathan.

All of this notwithstanding, neoliberalism’s steadfast proponents cling to the chimeric idea that unrestrained market forces beget prosperity and peace - two requisite conditions, they claim, for human freedom. One theory of neoliberal transformation, the ceaseless commitment to liberalized governance and market reforms, is precisely what marks a shift from embedded liberalism - the post–World War II economic order established by the United States - to disciplinary neoliberalism, which corresponds to disciplinary measures imposed on states’ governments. Entities that lend money to these governments may enforce conditions to achieve their commitments to market-based policies or to preclude changes to those commitments by future governments and their state-sponsored regulatory reforms. Thus, violations of state sovereignty is endogenous to neoliberalism—as is perhaps the general degradation of individual civil liberties supposedly afforded, and protected, by the state.

Free-market fundamentalists may support institutions like the World Trade Organization, the World Bank, the IMF, or the Organization for Economic Co-operation and Development, as well as their operating norms. Nevertheless, these organizations and their protocols have greatly destabilized poorer countries, especially in terms of liquidity; consider the impact of fiscal-austerity programs, for example, aimed to recalibrate the macroeconomics of debtor nations. When considering the efficacy of these structural-adjustment policies, designed to liberalize trade and free the movement of capital, we must ask whom it is they most oppress and whom they most benefit.

 

Today institutions like the IMF recognize that the deleterious effects of neoliberal transformations on millions of people around the world. The observable cause and effect that belies the notion of separate economic and political and social spheres. The intense deregulation and privatization efforts of the former Soviet Union and Eastern European nations after 1989 - let alone the East Asian financial crisis of 1997 - mark enormous policy failures for neoliberalism. Developing nations have suffered the most from the neoliberal metamorphosis of the late twentieth and early twenty-first centuries: Their ecologies and biological systems have been depleted and destroyed. Their poor and their less-skilled women have born the most damaging effects. Several Marxist authors consider neoliberalism, globalization, and development nothing more than “imperialist exploitation” of labor in LDCs. Neoliberalism’s many critics lament structural-adjustment programs pushed by non-state entities like the IMF and the World Bank.

Neoliberalism’s proponents assume as a given that purely economic real-world processes exist. Yet to ignore that all economic policies have social and political impacts within and among states is unsophisticated to say the least. Neoliberalism’s champions might choose to ignore the political and social dimensions of economic activities, but their ignorance becomes impossible to maintain once the dysfunctional political interplay between super-industrialized states and the LDCs of the Global South brings into sharp relief the suboptimal realities in which capitalist markets regularly function. Today the United States most closely resembles a functioning neoliberal socioeconomic model. And so whether or not the 2008 economic and financial crisis marks a transition from the neoliberalism of the 1980s to a post-neoliberal era remains the question. Given that the 2008 crisis was the worst since the Great Depression, which took place more than seventy years and a world war ago, the question takes on some urgency.

Technological developments help the United States simulate a true neoliberal state. The country’s 1986 Federal Technology Transfer Act deregulated and privatized certain government activities in the name of better technology transfer. And the intervening years’ changes wrought by technology and science have done much to change the international economic arena (Kitching 2005). Neoliberalism no doubt played a significant role in the state’s decision to hand so much power in this case to the private sector.

The kinds of inflexible technology that preempt unalterably a particular form of political life. Immediately this brings to mind “On Authority,” Friedrich Engels’s celebrated essay, where he writes that “the automatic machinery of a big factory is much more despotic than the small capitalists who employ workers ever have been”; if the workers stop, production risks grinding to a halt. Additionally, in volume 1 of Capital, Marx lays the theoretical groundwork for understanding why a would-be neoliberal nation like the United States might want to produce a piece of legislation on technology that privatizes evermore state functions. Modern industry, writes Marx, employs technical means of eliminating “the manufacturing division of labor, under which each man is bound hand and foot for life to a single detail operation.” He continues, “the capitalistic form of that industry reproduces this same division of labor in a still more monstrous shape; in the factory proper, by converting the workman into a living appendage of the machine” For this reason, neoliberalism bears out Winner’s observation that central control by knowledgeable people acting at the top of a rigid social hierarchy [are] increasingly prudent.”

For all our understanding of the ways neoliberalism functions, no resounding agreement on definitions for neoliberalism or neoliberal globalization can be said to exist. Generally speaking, opponents of neoliberalism are politically left of center and often identify the same components of neoliberalism for criticism. For instance, they decry the destructive recalibration of the state according to market whim, or, for instance, they take issue with the privatization of trans-border governance. Indeed, neoliberalism’s main detractors speak on the state’s obvious role in establishing a transnational government system—which facilitated the emergence of a hierarchical order among states. In this process, states changed from distributive, administrative entities to competitive ones. Thus, it seems logical to consider the state the seedbed of neoliberalism, a tract of political and economic soil less-regulated markets are required to fully cultivate the long-held productive forces of capitalism.

Examining certain state-managed economies—namely, the Asian Tigers—we might conclude that when state involvement yields economic successes, less and less consideration should be given to the market. Assuming this is true in at least some cases, the question remains whether this conclusion is generalizable. Thus, we must ask whether or not the struggle for “development” actually corresponds to development’s orientation toward the market. Or does development depend on state-oriented economic action? Or perhaps it’s simply a matter of either effectual or ineffectual state economic policy and regulation. Ultimately, neoliberalism’s own failures have contributed greatly to its declining significance as an economic theory. Marxist scholar David Harvey, for example, treats neoliberalism as an ideological wave that has swept over the globe. Indeed, Marxists tend to view neoliberalism as ideologically powerful in its obfuscation of class relations. In the process, class relations have been mystified, and global wealth, concentrated and reversely funneled.

Despite the global social erosion incited by neoliberalism, class dynamics remain important, assuming new forms and adopting new meaning in the now-collapsing neoliberal world order. The Thatcher-Reagan species of neoliberalism has garnered much criticism. Apparently many LDCs have suffered great harm thanks to its implementation. As a result, its critics chiefly lament the damning effects of economic liberalization and deregulation; they signal the privatization of formerly public service. They acknowledge the global ascension of powerful financial institutions, which has wreaked havoc on government relationships with publics. They cite the adverse effects induced by the influx of capital in governmental frameworks, as well as the state’s increasing inability to uphold and maintain public policies due to individual isolation from social networks. Another issue to arise from welfare capitalism includes an increase in economic disparity within certain nations and among their classes. Despite neoliberalism’s inherent and persistent problems, the most important, post-2008 crisis question may not be whether the world has entered a post-neoliberal era but to what extent.

Appendix

World Economic Forum, World Inequality Report, Income and Wealth Inequality, December 10, 2021.

 

 

 

 

Historical Projections COVID-19, Lanker et al., Global Economic Prospects, 2020.

Purchasing Power Parities (PPPs)

 

PPPs are the rates of currency conversion that equalize the purchasing power of different currencies by eliminating the differences in price levels between countries. In their simplest form, PPPs are simply price relatives that show the ratio of the prices in national currencies of the same good or service in different countries. PPPs are also calculated for product groups and for each of the various levels of aggregation up to and including GDP. 

The calculation is undertaken in three stages. The first stage is at the product level, where price relatives are calculated for individual goods and services. A simple example would be a litre of Coca-Cola. If it costs 2.3 euros in France and 2.00$ in the United States then the PPP for Coca-Cola between France and the USA is 2.3/2.00, or 1.15. This means that for every dollar spent on a litre of Coca-Cola in the USA, 1.15 euros would have to be spent in France to obtain the same quantity and quality - or, in other words, the same volume - of Coca-Cola. The second stage is at the product group level, where the price relatives calculated for the products in the group are averaged to obtain unweighted PPPs for the group. Coca-Cola is for example included in the product group “Softdrinks and Concentrates”. And the third stage is at the aggregation levels, where the PPPs for the product groups covered by the aggregation level are weighted and averaged to obtain weighted PPPs for the aggregation level up to GDP (in our example, aggregated levels are Non-alcoholic beverages, Food…). The weights used to aggregate the PPPs in the third stage are the expenditures on the product groups as established in the national accounts. 

The major use of PPPs is as a first step in making inter-country comparisons in real terms of gross domestic product (GDP) and its component expenditures. GDP is the aggregate used most frequently to represent the economic size of countries and, on a per capita basis, the economic well-being of their residents. Calculating PPPs is the first step in the process of converting the level of GDP and its major aggregates, expressed in national currencies, into a common currency to enable these comparisons to be made. 

Ed Martin

Tubac, Arizona

Long Beach, California

June 6, 2024

 

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[1] Joe Myers, “Income and Wealth Inequality,” World Inequality Report, World Economic Forum, December 10, 2021; Patrick Henry, “Economic Inequality Has Deepened During the Pandemic. That Doesn’t Mean It Can’t Be Fixed,” World Inequality Report, World Economic Forum, April 7, 2022.

[2] See United Nations Statistics Division Development Data and Outreach Branch, United Nations, 2021; World Inequality Database, November 2020; United Nations Development Programme (UNDP), https://www.undp.org/content/undp/en/home.html, retrieved March 19, 2021.

[3] World Trade Organization (WTO), https://www.wto.org/english/res_e/statis_e/statis_e.htm, retrieved March 19, 2021.

[4] Mark J. Munoz, Advances in Geoeconomics, New York: Routledge, 2017; Klaus Soilen Solberg, Geoeconomics. Bookboon, London, 2012; Edward N. Luttwak, "Theory and Practice of Geo-Economics" from Turbo-Capitalism: Winners and Losers in the Global Economy, New York: HarperCollins Publishers, 1999.

[5] These tactics have become apparent with media propaganda efforts by right-wing neo-con politics and Christians, such as Evangelicals (700 Club) and Catholics (EWTN), funded by right-wing political action committees.

[6] Zbigniew Brzezinski, Between Two Ages: America’s Role in the Technocratic Era, Viking Press: New York, 1970, p. 13.

[7] Modern Latin America, 8^th Edition, “Timeline for Colonial Latin America, 1492-1824,” Brown University Library, Center for Digital Scholarship.

[8] “Capitalist Excesses Draw Fire from Pope, Pontiff Lauds ‘good things’ Achieved by Marxism in Rare Long Interview,” The Baltimore Sun, Frank P. L. Somerville, November 2, 1993; “A Conversation with the Pope” (John Paul II), Tampa Bay Times, Perspectives on the World, Jas Gaworski, July 6, 2006; “The Pope and the Savage Capitalism” (Pope Francis I), Finance News, Daniel Trevisani, May 22, 2013. The term “savage capitalism” was originated by Brazilian Archbishop Helder Camera.

[9] Louis Hyman and Edward E. Baptist, American Capitalism: A Reader, Simon & Schuster, 2014.

[10] Ronaldo Munck, “Postmodernism, Politics, and Paradigms in Latin America,” Latin American Perspectives 27(4), July 2000, 11-26.

[11] See Michael A. Clemens, “The Economic and Fiscal Effects on the United States from Reduced Numbers of Refugees and Asylum Seekers,” Oxford Review of Economic Policy 38(3), September 15, 2022, 449-486. Here Clemens demonstrates the economic effects of refugees and asylum seekers. International migrants who seek protection also participate in the economy. The policy of the United States to drastically reduce refugee and asylum-seeker arrivals from 2017-2020, demonstrates, according to Clemens, substantial and ongoing economic consequences. Clemens shows how ripple effects beyond the wages earned or taxes paid directly by migrants benefits the economy. The sharp reduction in US refugee admissions stating in 2017 costs the overall US economy at the present over $9.1 billion per year ($30, 962 per missing refugee per year, on average) and costs public coffers at all levels of government over $2.0 billion per year ($6,844 per missing refugee per year, on average) net of public expenses. Large reductions in the presence of asylum seekers during the same period likewise carry ongoing costs in the billions of dollars per year. These estimates imply that barriers to migrants seeking protection, beyond humanitarian policy concerns, carry substantial economic costs.