Libertarians--Food For Thought

The other day I presented Karl Polanyi’s critique of Neo-liberalism, or Libertarianism, if you will. The prevalence of this magical form of economic thinking is one of the key problems for the US generally, in that it has led us into the economic hole where we continue to dig. It is also a key shibboleth for many so-called conservatives. Here is the core of Polanyi’s critique:

Karl Polanyi’s failed revolution The liberal world order is collapsing once again

This leads on to the third level of Polanyi’s critique, which dismantled the orthodox liberal account of the rise of capitalism. Precisely because there is nothing natural about the market economy, which actually represents an attempt to disrupt the natural order of societies, it can never emerge spontaneously — nor can it self-regulate. On the contrary, the state was needed to enforce changes in social structure and human thinking that allowed for a competitive capitalist economy. The proclaimed separation of state and market is an illusion, Polanyi said. Markets and trading in commodities are a part of all human societies, but in order to create a “market society”, these commodities have to be subject to a larger, coherent system of market relations. This is something that can only be accomplished through state coercion and regulation.

“There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course,” he wrote. “Laissez-faire was planned… [it] was enforced by the state.” Polanyi wasn’t just referring to the “enormous increase in continuous, centrally organised and controlled interventionism” needed to enforce the logic of the market, but also to the need for state repression to counter the inevitable reaction — the countermovement — of those bearing the social and economic costs of disembedding: families, workers, farmers and small businesses exposed to the disruptive and destructive forces of the market.

In other words, the support of state structures — to protect private property, to police the dealings of different members of the ruling class with each other, to provide services that are essential for the reproduction of the system — was the political prerequisite for the development of capitalism. And yet, paradoxically, market liberalism’s need for the state to function is also the main reason for its enduring intellectual appeal. Precisely because pure self-regulating markets cannot exist, its advocates, such as contemporary libertarians, can always claim that capitalism’s failures are due to the lack of truly “free” markets.

And yet, even Polanyi’s ideological enemies, neoliberals such as Hayek and Mises, were perfectly aware that the self-regulating market is a myth. …

In Polanyi’s vision the human economy should be “embedded” in society, “subordinated to local politics, customs, religion and social relations. Land and labour, in particular, were not treated as commodities but as parts of an articulate whole — of life itself.” I concluded with this:

Interestingly—and I wish I had saved the citation—I read recently that the nub of the Neocon case against China is that China competes unfairly, i.e., in non-market ways. The Chinese view is that their economy exists for the good of the Chinese people, rather than the other way around. That means that the functioning of the economy should not resemble a casino, a la Wall St., but should be part of a harmonious whole. That sounds, not coincidentally, like the Confucian ideal that Xi has sought to propagate—with some significant success. It also resembles Putin’s efforts to resurrect the Russian spiritual heritage. It was also the ideal of Catholic social thought. The road back will not be easy.

Now, today Glenn Diesen, Alexander Mercouris, and Alastair Crooke had a wide ranging discussion (Tensions Between Israel & the US - Alastair Crooke, Alexander Mercouris & Glenn Diesen). I recommend it all—all hour and a quarter—but for our purposes I’ve transcribed the final few minutes, which play into this contrast between Neoliberalism/Libertarianism and the path that Russia and China are pursuing. We begin with Mercouris disparaging the notion that America and the West can force China to stop making so much stuff while they “reindustrialize”:

AM: I can say that this is another massive problem. It wouldn't just take 20 years to rebuild factories. Industry requires planning. You have to build infrastructure. You have to completely reorganize your entire managerial outlook. You'd have to rewrite all the economic textbooks. It would be an impossible thing, conceptually, for the Europeans of today--and the Americans of today--to do. If they try they will fail. It won't work because they don't know how to do it.

AC: You know there was that extraordinary discussion between Xi and Putin some years ago. Xi was giving his reasons why he thought the Soviet Union had failed, and he said: 'You stopped believing in your own principles and you succumbed to nihilism, and nihilism has sunk you.' He was saying, in effect, 'You went down the Western route and that was your big mistake. That's what really did you in.' And Putin turned around and he said to Xi: 'You are absolutely right, and that's why we so much admire your model and how you've managed to keep economic creativity but within the framework of national needs.'

There are China and Russia together saying, 'Thank God you didn't follow the American and the Anglo model'--the Anglo model rather than the European model, because it was particularly an Anglo-Saxon construct evolving back in the 19th century. We in the West all think the Russians and Chinese have made this huge mistake by abandoning the Western liberal economic, the Adam Smith type of model--and they have abandoned it--but the Russians and Chinese see it the exact opposite way: 'Thank God,' says Xi to Putin, 'that you've given up on that model, because that's the only way to save yourself now.'

GD: I was thinking when you spoke earlier about something Kissinger wrote in 2014 when The Crisis began to break out with Russia. He wrote that if we consider Russia to be a great power--which we should--then the focus should be on how to learn to coexist and harmonize our interests with them and effectively walk away from this idea that security is advanced by defeating Russia. That this is something we have to abandon. And I think this is also why it's more important to have an honest discussion about China. China is obviously a great power, but if Iran also fits within this category now then the old idea that if we can only have a regime change or if we can just defeat them through a proxy then things will go back to normal is not a very good approach to security anymore as this new multi polar order emerges.

AC: Eventually the West--and America principally, I suppose--has to come to a negotiation about what is the North Atlantic national interest and the modus vivendi with the Heartland--security and economic interest, the whole of central Asia. Russia touched on this in 2021--and of course it's unacceptable to the United States today and to Europe today--but sooner or later there's got to be a discussion about how to have some sort of modus vivendi between the Rimland and the Heartland in terms of their security needs and their economic interest. But it's a long way off, unfortunately.

You’ll notice that I included the final part that combines the idea of “security needs” along with “economic interest.” That’s not a coincidence, because behind this lies the idea that Neoliberalism/Libertarianism is essentially an imperial ideology. So …

Ben Norton @BenjaminNorton

The US is raising tariffs on Chinese electric vehicles from 25% to 100% (after our billionaire oligarch overlord demanded them). "Free trade" was always a myth. Economic powers only preach it after establishing hegemony. When they lose dominance, they return to protectionism.

11:00 AM · May 11, 2024

Ben Norton

@BenjaminNorton

This is ahistorical nonsense. Every advanced economy developed through significant state intervention.

Alexander Hamilton invented the developmental state. Economist Ha-Joon Chang showed how virtually all Western governments relied heavily on tariffs and infant industry protection until they developed.

Japan’s MITI oversaw robust industrial policy, describing its own model as a "plan-oriented market economy system". Japan's powerful zaibatsu and keiretsu conglomerates were always inextricably linked to the state.

South Korea's Park Chung Hee industrialized with 5-year plans and state-owned banks. The government helped create the massive chaebol oligopolies.

The state has always been dominant in Singapore, whose economy relies on a base of state-owned enterprises. The Singaporean government is the controlling shareholder in companies that make up 37% of the country's total stock market capitalization.

Rich countries only preach the myth of "laissez-faire" after they develop through state intervention and protectionism. (The UK itself is the textbook case.)

Now that the US has lost its economic hegemony, it no longer pretends to care about "free markets". Instead, Washington is returning to protectionism and industrial policy, in a desperate attempt to compete with China (see: the Inflation Reduction Act and Chips Act).

However, there is one huge difference: to become rich, the West also relied on colonial pillage and primitive accumulation through imperialism and slavery -- unlike China, which has risen peacefully, and has created a true alternative.

4:26 AM · May 10, 2024

The quest to attain and retain hegemony, coupled with the entitled profligacy hegemony encouraged the ruling class to indulge in, led to :

Falling of a Cliff: the $34 Trillion Elephant in the Room is Too Big to be Ignored

While the US government keeps playing games, the world is actively preparing for an economic crisis; and we should too

LENA PETROVA, CPA

The US national debt is quickly approaching $35 trillion, and there is no end in sight to the reckless spending. Since June 2023, the US debt has been rising by $1 trillion every 100 days.

Source: Peter Peterson Foundation https://www.pgpf.org/national-debt-clock

Kristalina Georgieva, the head of the International Monetary Fund (an entity that has been a product of US economic and foreign policy since it was founded in 1944 via the Bretton Woods), finally admitted that the exponentially increasing interest expense on national debt is “mind boggling”.

It is clear that things must be on the verge of a massive collapse when even the IMF starts to admit the obvious. …

…

There is no denying the fact that surging national debt puts an immense burden on future generations whose standard of living will gradually decline as the US government is unable to afford the same level of social investments than it once made with ease. The bad news for those of us who might not care about the future generations’ wellbeing is that reckless spending has already affected us: look around and you will notice the aging infrastructure, increasing poverty, social division unseen in decades, increasing crime rates across the country and so on.

We got to this point by the pursuit of empire, the need to fuel the Military Industrial Complex (and so much more) while trying to buy the quiescence of the populace through welfare and debt that we pushed off on the rest of the world through inflation. What can’t go on forever comes to an end.