The Death Of Neoliberalism And Capitalism As We Know It

Beyond my initial reactions of shock, sadness, and horror at the results of last night’s elections, I thought back to a now-prescient post I put up last May where I talked about these waves of massive unrest and change that have swept across the globe at certain times. In that post, I was reminded of 1968 and Mark Kurlansky’s book that detailed the dramatic calls for change that knew no borders in that turbulent year. It is clear that we are witnessing another one of those waves once again, except this time it is clearly a reactionary one. We see it in the rise of the far right in Europe, Brexit, the election of Dutarte in the Philippines, the possible end of any hope for democracy in Hong Kong, and now the election of Donald Trump. Next year, both France and Germany will also have national elections and, at this point, you can almost be sure that the ruling order will be swept away by right-wing reactionary forces.

With this surge of reactionary forces, we are liable to see a rollback of most of the progressive gains of the last few decades. In the US, that will mean the repeal of Obamacare, the criminalization of abortion, and a crackdown on immigration and immigrants. At present, it is an open question whether other democratic rights, such as voting rights, and the rule of law will further erode. After the elections in Germany and France, the Euro and the Euro project is quite possibly headed for dissolution, throwing that continent into chaos and perhaps ending the concept of Western democracy as we know it.

Perhaps the greatest driver of this reactionary surge is the success and subsequent failure of neoliberalism over the last few decades. By neoliberalism, I mean the belief in free market economics accompanied by deregulation, the reduction or elimination of taxes or tariffs, and the privatization of what were once public functions. This neoliberal philosophy gave us trickle down economics and the push for “free trade” in the mistaken belief that it would raise the standard of living for all involved. And, on the whole, that may have, in fact, been true. This was its success. But the neoliberal philosophy never came to grips with the fact that, within individual countries, there would be clear winners and losers and it had nothing to offer to help ameliorate those differences. That was its fatal failure. In fact, in its aversion to government, it actively prevented any steps to resolve that problem. And it now appears that the neoliberal project will end because of its inability to deal with that fallout.

As the neoliberal era ends, the reactionary forces are offering increased tariffs and reduced global trade and immigration as a solution. But those policies will not bring back the jobs that have been lost and, in fact, as in the Great Depression, may actually exacerbate the problem they are trying to solve. Certainly, here in the US, the plan for the Trump government seems to be a continuation of the failed neoliberal policies but with an exclusion for trade and immigration. It is hard to see how that will satisfy the reactionary forces that have been let loose. On the other hand, progressive policies that might actually address the underlying problem have been firmly rejected precisely because they required government intervention.

With no other viable economic philosophy out there, the end of neoliberalism could very well mean the end of “capitalism” as we know it. Increasingly, the world has become and will continue to be dominated by a handful of oligarchies, supported by authoritarian governments, in various countries and sectors of global industry. Competition will decrease as these oligarchies collude with each other to extract the most from their rent-seeking. The functions of government will continue to shrink and the rage among the hordes of disgruntled and displaced workers will continue to build as no solution to their plight appears. Where it will end up is anyone’s guess. Perhaps that rage will strike out against the new order that is sweeping the globe, perhaps it will turn inward or outward or transform into submission. But it truly signifies a very dark and dangerous time ahead in the coming years.