To check the well-being of dogma, heresy is indispensable
José Carlos Mariátegui
NEOLIBERALISM… OVERSOLD? PRELIMINARY THOUGHTS
By June 2016, an official edition of the International Monetary Fund (IMF) magazine Finance & Development published an article titled ‘Neoliberalism: oversold?’ written by three economists belonging to this organization (Ostry, Loungani and Furceri, 2016). In their article, they voice ideas that are often omitted in the dominant ideology of neoliberalism.
These ideas have often been associated with the conservative governments of Reagan and Thatcher. The analysts avoid linking neoliberalism ab origine with the so-called “Chilean miracle.”
It needs to be underlined that the neoliberal program came into being in Latin America through coup d’etats, beginning with that staged against the democratically elected socialist government of Salvador Allende, which was made possible by the United States-supported Condor Plan, as shown in declassified US documents. This ‘model’, after having been decreed manu militari in this region, was imitated in England and in the United States, and was later deployed globally.
The Finance & Development article opens once again points to the inherently authoritarian and undemocratic nature of neoliberalism practices, thought and theory from its very beginning to the present (see Wacquant, 1999; Biebricher, 2018: 79-108). The article recognizes that the neoliberal agenda has brought “benefits” to the world including higher rates of international growth and competition; the expansion of global trade, which the authors claim “rescued” millions of people from poverty and has transferred technology to developing countries; and great efficiency in the services that are offered. Nevertheless, the authors point out that there are unfulfilled promises associated with neoliberalism.
The reactions to the article were swift. The Financial Times published an editorial titled “Inappropriate Mea Culpa of Neoliberalism” which says, “It gives succour to oppressive regimes around the world which also position themselves as crusaders against neoliberalism but subjugate their populations to inefficient economic policies and extreme inequality using the full power of the state.”
Among the kaleidoscope of reactions, Dani Rodrik wrote, “What the hell is going on? … The IMF joins in the critique of neoliberalism.” The prominent leftist author Naomi Klein asked, “The IMF admits that neoliberalism is a failure. So, all the billionaires it created are going to give back their money, right?”[1]
But has the IMF actually “joined in” on the criticism of neoliberalism? What is the scope and the ideological and practical significances of these “criticisms”?
To begin with, it is necessary to clarify that the article’s viewpoints are not new. They are part of the most recent and current tendency of neoliberal discourse, which reinforces the continuity of neoliberal capitalism although under a new version or a «new synthesis.» This shift in neoliberal discursive practices from “dogmatic” and “fundamentalist” market positions to other neoliberal perspectives in which the market is fundamental have recently been called: (neo) regulated liberalism (Watkins 2010), new neoliberalism (Puello-Socarrás, 2008a, 2015b, 2020; Puello-Socarrás, Castiglioni and Fernández, 2015; Davies, 2016; García Linera, 2017; Acosta and Cajas, 2017; Dardot and Laval, 2019)[2].
Beyond the nuances, these neoliberal twists have shown themselves to be illustrative of the nature of this Class Transnational Political Project, which aims at the construction of a Market Society -not only an “economy”- within the framework of a competitive order of free enterprise as declared since the “birth of neoliberalism,” which can be dated back to the Walter Lippman Colloquium (1938) and the Mont-Pèlerin Society (1947) and onwards (see Hartwell, 1995; Reinhoudt and Audier, 2018)[3]. Therefore, as we will see, not only the axis of deregulation, but the growing need for market regulation by the state turns out to be two faces of neoliberalism, crucial to understanding its intellectual formulations and its practices in the 21st century.
The “critiques” of neoliberalism constitute a way to integrally consolidate this political project and these events are not signaling landmark changes or ruptures. The apparent criticisms of neoliberalism would be, in the best of cases, in the words of Misoczky, a domesticated criticism that does not put at risk the order of capital in a period of revisionism within neoliberalism that must be highlighted, theoretically and politically.
After several years of mobilizations in portest to neoliberalism being demonstrative (in various frequencies and intensities), especially in Latin America, social and popular resistance movements were able to put forth a regional anti-neoliberal neoliberalism. Even in the first years of the 21st century, they were able to promote both anti-capitalist perspectives and alternative viewpoints. These alternatives to the neoliberal development model included: Post-developmental (see Escobar, 2005 and Quijano, 2014); civilizing paradigms of “Buen-vivir-Bien” (Good-living-Good) such as Summa qamaña, Summa kawsay, Ñande reko (see Yampara and Temple 2008); and Grassroots socialism (see Fals-Borda, 2013).
NEOLIBERAL CRITICISMS OF NEOLIBERALISM: THESIS AND EVIDENCE
Thesis # 1. Far from verifying the “end” of neoliberalism or by “bitter predictions” from different enthusiastic pundits from various intellectual circles, now again exacerbated by the article by Ostry et al.[4], and despite debating in an unprecedented crisis, neoliberalism neither fades nor weakens. In contrast, neoliberalism continues to deepen globally and consolidates itself as the political economic project of late capitalism, which is currently in force today.
The construction of a market society at the global level continues to be the utopia of the world’s elite. As Mirowski (2013) shows, the current global capitalist crisis and more recent shocks to the market (e.g. financial, socio-environmental), rather than undermining socially and ideologically neoliberalism, have paradoxically reinforced it.
Paraphrasing Fredric Jameson, S. Žižek (2003: 7) is right when he points out that for most ordinary people: “Today … it seems easier to imagine the “end of the world” than even the most modest change in the mode of production, as if liberal capitalism were somehow a “natural element of nature” that will somehow survive, even under a global ecological catastrophe.”
Instruments of neoliberalism such as the latest generation of Free Trade Agreements: Trans-Atlantic (United States and European Union) or Trans-Pacific (United States and eleven countries belonging to the Pacific Ocean Basin) or agreements such as the Pacific Alliance, are illustrative of this fact, even during the so-called “Trumponomics” (see Puello-Socarrás, 2017).
Thesis # 2. In the past as in today, the supposed criticisms of neoliberalism, especially those from organizations such as the IMF (as well the World Bank, the Inter-American Development Bank, most recently the World Economic Forum), are not critical. Certainly, this critical neoliberalism of neoliberalism does not even attempt to challenge the effects it has caused in the past, aptly described as a “social holocaust” (Max-Neef 2015). Such shrewd diatribes must be interpreted as resilient discursive strategies within neoliberalism, a way of regenerating – in the words of F. Bergsten (2011) – their “battered image”, both in the ideological and practical sense. [5] Three key arguments confirm the trend discussed in the previous thesis.
GLOBAL FINANCIAL CRISIS AND “NEW” CRITICISM OF THE FREE MARKET
No leader in the world today who belongs to the global powers, whether it be North American or European, or who comes from elite circles in the so-called emerging countries or nations considered underdeveloped, that has not pronounced “criticism” against neoliberalism. These critical observations have been made by some who have dogmatically and dutifully promoted the neoliberal economic agenda and the socio-political projects of the past. Some examples of this are paradigmatic.
For Peer Steinbrück, German Finance Minister (2005-2009): “Laissez-faire capitalism” and the idea that “markets should be liberated from regulation as much as possible are erroneous and dangerous arguments” (EUObserver, 26 September 2008). Global financial markets have become “monsters” -suggested Steinbrück- following an earlier statement by Horst Köhler, the former managing director of the IMF (2000-2004) when he officiated as President of the Federal Republic of Germany. In the words of Köhler (Financial Times, May 15, 2008), it was necessary to “civilize” the markets through “the more decisive action of governments” or, in the words of Köhler (Financial Times, May 15, 2008), through “greater regulation”.
The idea of a free but “civilized” market was, at the same time, responded to by another German: Joseph Ratzinger (Pope Benedict XVI) in the Encyclical Letter: Caritas in Veritate (2009)[6]. Today is an insistent appeal “against” neoliberalism, by the Argentine Jorge Bergoglio, current Pope Francisco. Controversies, concerning this matter, have had to be clarified publicly by the Vatican, through his right hand, Cardinal Reinhard Marx. This discursive line, “catho-neoliberalism” (see Puello-Socarrás 2015 and 2014a), turns out to be one of the most open expressions on the neoliberal claims of neoliberalism: to recreate a Social Market Economy (SME) at a global level, a route in which The Vatican and German Chancellor Angela Merkel concur historically with Milton Friedman and Augusto Pinochet.
Gordon Brown, former British Prime Minister, proposed that 2008, “… finally marked the end of the age-old dogma of unbridled free market.” French President Nicolas Sarkozy, who is closely identified with neoliberalism also pronounced, “… the idea of the omnipotent market without rules and political intervention is far-fetched. Self-regulation is over. The laissez-faire economic model is finished. The omnipotence of a market that is always right, is over” (Liberation, 26 September 2008). Fellow Frenchman IMF and Managing Director Dominique Strauss-Kahn (2011) at a conference in Washington, said: “The Washington Consensus belonged to the past.”
Barack Obama inaugurated his presidential mandate in the US by saying:
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched. But this crisis has reminded us that without a watchful eye, the market can spin out of control
(Barack Obama”s Inaugural Address 2009 quoted by Steger and Roy, 2010:1)
While the Nobel Prize for Economics, Joseph Stiglitz asserted at that time:
The globalization agenda has been closely linked to market fundamentalists: who promote the ideology of free markets and financial liberalization. In this crisis, we see that the most market-based institutions of the most market-based economies are falling apart and are running to help from the state. Everyone is now saying that this is the end of market fundamentalism. In this sense, the Wall Street crisis is to market fundamentalism what the fall of the Berlin wall was for communism: it tells the world that this mode of economic organization is unsustainable.In the end, it will be said, that this model does not work…
(Stiglitz, 2008) [emphasis added]
In the same vein, but now in the midst of the pandemic shock, Stiglitz continues to insist that
After all, the 2008 financial crisis discredited neoliberalism, with its belief in unfettered deregulation; and the subsequent euro crisis demonstrated that austerity under such conditions does not work. It is clear that neoliberalism has led to lower growth, higher inequality, and all of the social and political consequences that we have seen in recent years. Now, the pandemic has put the final nail in neoliberalism’s coffin, revealing an economy utterly lacking in resilience and a state left incapable of responding effectively to a crisis.
(Stiglitz, 2020)
The American political scientist Francis Fukuyama who, a few decades ago, had condemned The End of History (of humanity!) under neoliberal capitalism and its institutions, proposed:
(…) a certain version of capitalism has collapsed … Between 2002 and 2007, as the world enjoyed a period of unprecedented economic growth, it was easy to ignore those European socialists and Latin American populists who denounced the US model as «cowboy capitalism.» But now that the engine of that growth, the American economy, has derailed and threatens to sink the rest of the world with it. Worse, the culprit is the American model itself: under the mantra of less government …”
(Fukuyama, 2008) [emphasis added]
In the context of hard-fought struggles against neoliberalism during the turn of the millennium, several Latin American and Caribbean governments took the motto of “capitalism in earnest”, converging with the imprint of the discursive practices of the central countries that were previously recorded.
Early in 2003, Argentine president Néstor Kirchner explained to the Buenos Aires Stock Exchange:
The plan is to build a serious capitalism in our country, with clear rules in which the state plays its role intelligently to regulate, to control, to be presentwhere it is necessary to mitigate the evils which the market does not repair itself, placing a balance in society that allows for the normal functioning of the country…
(Kirchner, 2003) [emphasis added]
As a prelude to the G-20 meetings in 2011, the B-20 (Businessmen”s Congress) was held in Cannes (France), Néstor Kirchner”s wife, Cristina Fernández de Kirchner insisted:
What I am proposing is to return to capitalism in earnest, because what we are experiencing, ladies and gentlemen, is not capitalism. This is a total financial anarcho-capitalism, where nobody controls anyone… Please let”s regulate to whom we need indeed to regulate.
(Fernández de Kirchner, 2011)
These criticisms of neo-liberalism found both sympathy within Uruguay, often remarked upon by former president of the Republic, José “Pepe” Mujica (see Percy, 2015)[7]; as with the neo(liberal)developmental ideology of the Brazilian Workers” Party during the governments of Luiz Inácio “Lula” Da Silva and Dilma Rousseff (see Iasi, 2012).
All these statements, however, can be best understood in their proper context and dimensions when the actual motivation behind them is considered: exposed to refresh the «battered image» of neoliberal capitalism and present it as a less fundamentalist (dogmatic) version. To this end, it has been necessary to criticize the “unbridled”, “anarchic”, “deregulated”, “monstrous” market, but at the same time, continue supporting the existence of another (presumed), “regulated”, “civilized”, one etc. Second: to move away from the ab origine profile of neoliberalism by promoting its continuation under a “third way” version, in which it sees state (or governmental) regulation as crucial. These entreaties strongly deny any possibility of validating state interventionism (Keynes) or the modalities of state (socialist) Planning. These kinds of statements also demonstrate the neoliberal recognition that the market economy is neither “omnipotent” (all-powerful) nor perfect; nevertheless, the conviction remains the same that the market must be the “omnipresent” (i.e., it must always be present) in all social dynamics – not only in economic matters, as is often thought – in spite of imperfect competition that is today accepted as part of market logic.[8]
Both of these motivations have been reiterated both in discourse and practice in the midst of global transit, from the deregulated neoliberalism of the past (the Anglo-American model) to the (new) regulated neoliberalism of the present[9].
This shift is ideologically and theoretically backed by less fundamentalist versions of historical neoliberalism, far removed from the “American (Anglo) model” closer to the heterodox foundations of Austro-German (and recently, Italian) roots, including the Social Market Economy, which could be summarized synthetically around two basic lemmas: i) Freie Wirtschaft, starker Staat (“Free Economy, Strong State”); and, ii) So viel Markt wie möglich; So viel Staat wie nötig (“As much market as possible and as much state as needed”) (see Puello-Socarrás 2008a and 2015a).
And it should not be forgotten that the long-term neoliberal project, identified with that fundamentalist more dogmatic version of neo-liberalism, to which Stolowicz (2017) recently named as “demolition-stabilization” phases- was conceived around a Social Market Economy (SME), of which had as methods in vivo ab origine Chile in the times of Pinochet, as was made evident in one of the many epistolary exchanges between the southern dictator and the pater putative of neoliberalism, Milton Friedman:
The fundamental economic problem of Chile clearly has two aspects: inflation and the promotion of a healthy social market economy … The biggest mistake, in my opinion, was to conceive the state as the solver of all problems, of believing that it is possible to manage the money of others well. [10]
(Friedman, 1998: 591) [Emphasis added; Italics do not belong to the text]
A NEW NEOLIBERALISM UNDER CONSTRUCTION: OPERATORS AND INTELLECTUALS
To date, there is an emerging but relatively consolidated contingent of neoliberal critics of neoliberalism.
From various individual and collective loci: multilateral organizations (including the International Monetary Fund!), research centres, universities, think tanks, and particularly world-renowned personalities, the so-called (new) money-doctors, the task of ideological regeneration of late neoliberalism continues unabated.
An analysis of the academic and intellectual spheres offers an opportunity to understand and try to explain the most recent developments in neoliberalism.
Immaterial production is crucial in the process of systematically hiding contradictions in capitalism (ideological alienation according to Marx and Engels). In its current stage: the neoliberal model, in which socio-economic imbalances and conflicts are exacerbated (e.g. levels of inequality, poverty, pauperization, etc.), ideological mystification and fetishism are conditio sine qua non for reproduction of the system as a whole.
The gradual dismissal of orthodox forms of neo-liberalism can be seen in certain intellectual profiles, especially in Nobel Prize winners in contemporary economics. Their actions do not only influence fields of thought in the abstract in universities, epistemic communities or in the imagination of public opinion. They are one of the crucial ideological mediations with real and concrete effects in different institutional orientations: references and instruments in the field of public (economic and “social”) policies; organizational designs, etc.
Some cases are demonstrative of what is being argued in this article.
US Scientist Elinor Ostrom, the first woman to win the Nobel Prize in economics in 2009, and a critic of American neoclassical orthodoxy is one of the main promoters of entrepreneurship and homo redemptoris theories, arguments originally developed by the Austrian neoliberals! (see Puello-Socarrás 2008: 81-131; Eagleton-Pierce 2016: 56-61).
Governing the Commons (Ostrom 2011), inspired by the theories of F.A. Hayek, baptized as the father of neoliberalism, has gained diffusion and great acceptance, even among sectors of the academic left in Latin America. This is true even though Ostrom”s proposals suggest a veil of governance or “private management for the common good” (i.e., the commodification of communal territories and goods), through the construction of “new” public-private spheres: social spaces that operate based on market logic, but supported and, above all, “regulated” by the state.
For this reason, several authors highlight that Ostroms theories points to the development of a conception of “the common” without community, that is: without communal ties (Federici and Caffentzis, 2013). Whether through denial or destruction of the communal, this kind of governance for common goods would reinforce a type of contemporary neoliberalism applied to these areas[11] (see Puello-Socarrás and Jiménez, 2020; Puello-Socarrás 2012, 2015c).
French economis Jean Tirole, who was awarded the Nobel Prize in Economic Science in 2014, reinforces the same discursive line of Ostrom.[12] Tirole has called for the construction of a “regulated” neoliberalism as a way to reinvigorate the neoliberal dynamics of markets in the midst of the capitalist crisis currently in force:
The market economy has been and will be the engine of growth and welfare of nations. But in order for it to function well, the market economy needs regulation to alleviate certain market failures and restore good accountability [sic] of economic actors.
(Tirole, 2008) [emphasis added]
For competition to flourish, Tirole says, it is fundamental that there be clear rules of play and independent regulators, since “without a strong regulator, there is no effective liberalization” (Tirole, 2005), warning that state or governmental actions on markets (regulation) should be temporal. They are only justified momentarily, and “in cases” where the markets fail, that is to say: when they do not work “correctly” (as former US President G.W. Bush asserted in the midst of financial crash of 2007-2008).
On the other hand, the academic technocrat Joseph Stiglitz -also a Nobel Laureate of economics in 2001- personifies paradigmatically the type of ideological operatives to which we are referring. For several years, Stiglitz has been seen by U.S. and world public opinion as a “critic of neoliberalism.”[13]
Stiglitz (1998) who authored the Post-Washington Consensus, a proposal that was seen as in opposition to the Washington Consensus (a policy Decalogue that is simply one of the many expressions of the neoliberal project, different only in degree and magnitude), continued to reaffirm, with some nuances, the pre-eminence of market logic. Which was an argument in line with his most recent thoughts and actions. It must be recognized that Stiglitz’s discursive zigzagging and his way of presenting certain issues to non-specialist audiences tend to be confusing.
For example, Stiglitz is recognized as one of the strongest opponents of the Free-Trade Agreements: Trans-Atlantic and Trans-Pacific, trade deals that the U.S. government promotes, which he qualifies as a “farce”, because in his opinion, these commercial agreements, “… usually place commercial interests above other values … [that] should be non-negotiable” (Stiglitz,2013).
At first glance, this position looks like a criticism of the neo-liberal model advanced by his government; however, Stiglitz clarifies later:
If the negotiators were to create a genuine free trade regime in which the views of ordinary citizens were at least as important as those of business lobbies, I might feel optimistic, in the sense that the outcome strengthens the economy and improves social welfare. However, the reality is that we have a targeted trade regime, which puts forward business interests, and a process of negotiations that is neither democratic nor transparent.
(Stiglitz,2013)
As an Anglo-Saxon saying goes: the devil is in the details. Here we see criticisms of the “guided” free trade regime. The farce, however, is to claim the need of an «authentic» version, or a pure free market trade agreement. Stiglitz has on other occasions reaffirmed his affinity with with the postulates of heterodox neoliberalism (“the second school”, according to his words), through his criticisms of neoliberal orthodoxy (“the first school” that he considers heirs of Adam Smith), but only to legitimatize the neoliberal project of market capitalism:
For 200 years, there have been two schools of thought about what determines the distribution of income – and how the economy functions. One, emanating from Adam Smith and 19th-century liberal economists, focuses on competitive markets. The other, cognizant of how Smith”s brand of liberalism leads to rapid concentration of wealth and income, takes as its starting point unfettered markets” tendency toward monopoly. It is important to understand both, because our views about government policies and existing inequalities are shaped by which of the two schools of thought one believes provides a better description of reality.
(Stiglitz, 2016) [emphasis added]
Indeed, in an interview with The New Herald (reproduced in Spanish by El Colombiano), Stiglitz stated, in an ideological line identical to that previously asserted by Francis Fukuyama:
I am a critic of the way in which certain versions of capitalism have been implemented … I believe that unrestricted capitalism, the deregulation that was one of the axes of American capitalism since the beginning of the Reagan presidency, is an era that has arrived to its end…
(Stiglitz quoted by Oppenheimer 2009)
Stiglitz continues:
Strictly speaking, the United States does not have what could be called a pure capitalist system: we have been socializing losses and privatizing profits. We have all kinds of government intervention, but unfortunately this is generally an intervention designed to help the banking sector, pharmaceutical companies, and various special interests. It”s a kind of charity system for corporations. So what I have advocated is a purer form of market economy, which does not focus its protection on companies, but on people.
(Stiglitz quoted by Oppenheimer 2009) [emphasis added]
In summary, in agreement with the Vatican, Merkel, Friedman and Pinochet, Stiglitz is of the same line of argument as other heterodox neoliberal currents, which have strongly criticized the deregulation and debauchery of markets – thus the mentioned adjectives monstrous, unbridled, without limits, and monopolies. This critical neoliberal thinking of neoliberalism defends the state presence and function to guarantee the maximum (“genuine”) freedom of the markets[14].
These discourses have found expression in more and more sophisticated works of contemporary economic theories, such as currents of the new neoclassical-Keynesian synthesis (see Puello-Socarrás 2008a), also referred to as the new Keynesians.
The intellectual, ideological and technocratic role played by emerging theories of this type have been fundamental in reinforcing – this time in the academic field – the neoliberal critiques of neoliberalism.
The so-called new Keynesians should not be confused with their “references” to Keynes. The true neoliberal convictions of their theoretical Frankenstein – “bastard Keynesianism” as Joan Robinson (1962) once called the first neoclassical synthesis made by the Nobel laureate in economics, J. Hicks in the 1930s, finally published by P. Samuelson- appear for all to see:
(…) What differentiates this synthesis from the neoclassical synthesis of the first post-war period is that its neoclassical features are even more accentuated, since they incorporate most of the monetarist theoretical developments and new classics … [citing Argadoña, Gamez and Mochón, Astarita continues] “the new Keynesians have no in-depth differences with the new classics … insofar as the origin of inflexibility is sought not in institutional or sociological factors, but in the imperfect competition of markets …».
(Astarita, 2008: 199) [emphasis added]
NEOLIBERAL CRITICS OF NEOLIBERALISM IN ACTION
No one should be surprised by the IMF”s Ostry et alt. According to “Rethinking macroeconomic policy” (2010), a paper from the IMF staff and led by the new Keynesians (like Oliver Blanchard), it was established the general principles of the “new framework” for the Macroeconomic policy, to face short-, medium- and long-term crises.
It is here that the new IMF criticisms were inaugurated and made official and are considered today as “old neoliberalism”, which we have already commented upon. [15]
In an attempt to present themselves as in act of contrition to the conventional thinking held at that moment by the IMF, this document proposed the “revision” of its central axioms, the well-known neoliberal dogmatic and the «pre-crisis» (before 2007-8) consensus, the guiding enthusiasm for deregulation.
Nevertheless, the IMF continued to argue that the thinking and set of pre-crisis axioms had been “effective and correct” because after all, since the mid-2000s, “it was not foolish to think that better macroeconomic policy would… move towards greater macroeconomic stability”. But “then the crisis came”, and making those policy choices proved to be ineffective and was incapable of managing the emerging challenges (Blanchard et al., 2010).
Subsequently, the key words became: regulation[16] (remember J. Tirole); and governance[17] (let”s not forget E. Ostrom). This IMF revisionism has spread and consolidated over several publications and IMF-sponsored events.
Among the main revisionists and revisions can be found in: a) Staff discussion note (April, 2013) by Olivier Blanchard, Giovanni Dell”Ariccia and Paolo Mauro: «Rethinking Macro Policy II: Getting Granular» (Blanchard et al., 2013), a publication that continues with conferences and which was inaugurated in 2011 (Macro and Growth Policies in the Wake of the Crisis) whose title reflects the same objective of “rethinking” macroeconomic policy: i) First steps and early lessons (2013) [18] and ii) Progress or confusion (2015), where the directors of the International Monetary Fund (Dominique Strauss-Kahn, Christine Lagarde), IMF Economic Adviser and Research Director Olivier Blanchard, along with the technocratic and academic worlds -in the majority from the United States implicated themselves directly or indirectly with the IMF[19].
All these venues of enunciation have been key to the reinforcement of the ideological shift in macroeconomic policy in neoliberal thinking. In addition, they developed the original ideas and instruments which found expression in Rethinking macroeconomic policy (Blanchard et al., 2010).
Many of the champions of the old IMF creed considered the need to learn from this crisis – another spectacular crisis in the history of modern capitalism – and, for the first time, to review its theoretical and practical assumptions. This shift, however, does not intend to undo the status quo underpinned by neoliberalism, which is now in full force, but proposes a new version, a supposedly novel synthesis in the form of state-regulated neoliberalism. [20]
At the end of the day, and in connection with the heresies of Ostry et al., the IMF itself, through its chief economist, Maury Obstfeld, has come to clarify this situation in a bulletin titled with careful precision: “Evolution, not revolution: Policy in the IMF”:
The Fund has long tried to build on its experiences in the field and on new research to improve its effectiveness…That process has not fundamentally changed the core of our approach, which is based on open and competitive markets, robust macro policy frameworks, financial stability, and strong institutions. But it has added important insights about how best to achieve those results in a sustainable way.
(Obstfeld, 2016) [emphasis added]
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NOTES
[1] Referring to the Financial Times, Rodrik and Klein were taken from the article: ‘La crítica del FMI al neoliberalismo levanta polvareda’ of the blog Jaque al Neoliberalismo (visited on Monday, June 6, 2016).
[2] While authors such as Lazzarato (2013: 102) note that the neoliberal shift consists of the ‘transition from Ordoliberalism to American neoliberalism’, this shift which is alluded to runs an inverse itinerary: from orthodox (Anglo-American) visions to heterodox (Austro-German, even Italian) neoliberalism. Besides noting the displacement of discursive practices in this sense (Fukuyama, Stiglitz, etc.), recent analyses confirm this interpretation (Mirowski, 2013: 83-84). For example, Blyth, explained that the ‘disputed present’ in the idea of austerity notes:
‘(…) austerity could be consolidated as a peculiarly German way of organizing the economy, that is until it became a guiding principle of design on which the European project would be structured … The Austrian school would also become a kind of beach head for Americans eager to recharge their batteries with new arguments in favour of austerity’.
Blyth (2014: 203) [personal emphasis]
[3] More than a question of pure economy or pure economy understood as an isolated dimension or a sector, neo-liberalism must be conceived as a political project of (late) capitalist society. The competitive order based on free enterprise can be understood as a «Market Society»: exacerbated commodification of all spheres of life (see Puello-Socarrás, 2008a).
[4] Central-left politics, both European and South American, have raised the hypotheses of ‘imminence.’ In any case, this is an unsustainable thesis based on the trends seen in the empirical historical facts, even if it is ideological-political, of this expected event. ‘Oversold neoliberalism’ has led to all kinds of opportunism. The Guardian, for example, has interpreted instantly (naively?) that today ‘we are witnessing the death of neoliberalism – from within’ (Chakrabortty, 2016). Another statement, signed by the Argentine Institute for Economic Development (IADE), is equally striking; encouraged by the surprise (‘incredible but true’), they took advantage of the controversy raised by the position of Ostry et al. to convince others that:
‘Starting in 2003, Argentina took another course. Essentially, it was a policy opposed to the IMF’s ‘recommendations’ …In the year 2015, the avatars of politics gave the electoral victory to Mauricio Macri and with that, the return of neoliberal ideology to the arena…’ (IADE, 2016: 2).
This statement is made deliberately without outlining those policies of the ‘Kirchner era’ (former Argentinian presidents Nestor Kirchner and his wife Cristina Fernández during 2003-2015), were clearly aligned and in line with the (new) neoliberal postulates of the International Monetary Fund ‘realism’ in the 21st century. Certainly, one of the paradigmatic examples is the reform of the Organic Charter of the Central Bank of the Argentina Republic (BCRA) (see Gambina, Puello-Socarrás and Castiglioni, 2012).
[5] This suggestion was made recently by the founder of the Institute for International Economics (now Peterson Institute), the cradle of the Washington Consensus in 1989. Through ‘policy recommendations’ before the US Congress, the Peterson Institute proposed which should be the ‘new’ role of the IMF during an economic crisis, among other things:
‘… provide expeditious and persuasive policy advice and help design and implement economic reform programs’ anticipating that such reform programs would involve ‘a balance between painful policy adjustments that necessarily affect short-term and transitional economic growth and necessary financial support’.
(Truman quoted by Puello-Socarrás, 2010).
[6] In Caritas in Veritate (chapter three: “Fraternity, economic development and civil society”):
‘(…) the market is the economic institution that permits encounter between persons, inasmuch as they are economic subjects who make use of contracts to regulate their relations as they exchange goods and services of equivalent value between them, in order to satisfy their needs and desires (…) What is needed, therefore, is a market that permits the free operation, in conditions of equal opportunity, of enterprises in pursuit of different institutional ends. Alongside profit-oriented private enterprise and the various types of public enterprise, there must be room for commercial entities based on mutualist principles and pursuing social ends to take root and express themselves. It is from their reciprocal encounter in the marketplace that one may expect hybrid forms of commercial behaviour to emerge, and hence an attentiveness to ways of civilizing the economy…’.
(Caritas in Veritate, Points 35, and 38)
[7] ‘The campaign ensured the continuity of the government and of the economic policies of predecessor Tabaré Vásquez. For Mujica these policies are summarized in the idea of achieving a ‘capitalism in earnest’ based on the assumption of ‘decent societies’ and in the economy to maximize productive forces. On many occasions he has stated that he rejects consumerism but assumes that it is the engine of economic growth’ [personal emphasis] (Percy, 2015).
[8] There are many examples of this. Exactly two years ago, the IMF’s June 2015 issue of Finance & Development published the article: ‘What’s Capitalism’ (Jahan and Mahmud 2015), where it was accepted that, ‘Free markets may not be perfect, but they are probably the best way to organize an economy.’
[9] This change has had powerful effects, for instance, on the structural and functional scope of the (old) state public administration (apparatus, organizations, and institutions). The idea of a regulatory state has been uncritically promoted since the 1970s under notions such as the modest State (Crozier, 1992), the post-bureaucracy (Barzelay and Armajani, 1998) of the 1980s-1990s and today, and reformist phenomena such as (New) Public Management (see Bozeman, 1998:21). These expressions are, fundamentally and as well described by O. Guerrero (2004), neoliberalism in contemporary ‘public administration’ (see Puello-Socarrás, 2008b; Mirowski, 2013:87).
[10] Letter dated April 21, 1975.
[11] Another example of this emerging type of public policy instruments is the Public-Private Partnerships promoted by the World Bank Group. Although politically motivated, technical balances show relative success (or failure), by the way Quite limited, after several years of global application (see Engel, Fischer and Galetovic, 2014).
[12] J. Tirole forthcoming publication (October 2017) will be titled: Economics for the Common good (Princeton University Press).
[13] One of the intellectual reactions to the financial shock and deepening global crisis since 2007 was the creation of the Institute for New Economic Thinking (INET), a think tank founded and funded by George Soros, Paul Volcker, David Rockefeller, the Malcolm Hewitt Wiener Foundation, the Alfred P. Sloan Foundation, the Carnegie Corporation of New York, and Stiftung Mercator. The INET advisory board involves several nobel laureates in economics as George Akerlof, James Heckman, James Mirrlees, Amartya Sen, A. Michael Spence, and Joseph Stiglitz.
[14] These are the fundamentals present in A. Müller-Armack’s definition of the Social Market Economy in 1956 where he acknowledges as co-founders W. Eucken, F.A. Von Hayek and W. Röpke (the latter who coined for the first time the term: ‘neoliberalism’. The quote is long but illustrative:
‘… The representatives of the social market economy share with neoliberalism the conviction that old liberalism while correctly recognizing the functional importance of competition, they left aside social and sociological problems. Unlike old liberalism, its purpose is not the reinstatement of a laissez-faire economy; instead, its objective is a novel synthesis. Similarly, the concept of social market economy is precisely differentiated from an interventionist economic policy that mixes elements of centralized state planning with other market economy ideas until a mutually blocking of those elements which contradict each other, ultimately, interfering with economic growth.
(Müller-Armack, 1956: 17) [emphasis added]
[15] This discussion was developed within the framework of the Conference: ‘Macro and Growth Policies in the Wake of the Crisis’ (March 2011) and then take part of a book edited by Blanchard, Romer, Spence and Stiglitz: In the Wake of the Crisis (see Blanchard et al., 2012).
[16] Colombian technocratic scholar, Jose Antonio Ocampo, one of the speakers at the IMF conference to which we make mention and who has historically been identified with the heterodox positions of neoliberalism, offers a good understanding on what ‘regulation’ means. Referring to the capital account, it indicates that the regulations should be designed: ‘… speed bumps rather than permanent restrictions … This is true for any prudential regulation. Authorities always have to see how the market evolves and adjust regulations to make them more effective ‘(Ocampo, 2011: 5), that is to say: ‘interventions’ or ‘coups’, or ‘meddling’, are never permanent and are done always accordance to the needs of the market. Oliver Blanchard inaugurated this same conference by saying: ‘The crisis has clearly shown both the limits of markets and the limits of government intervention…’, a phrase that states exactly what constitutes ‘regulation’.
[17] Stiglitz (2012) stresses the need of ‘good governance’.
[18] Discussions will be part of the book edited by Akerlof, Blanchard, Romer and, once again: Stiglitz titled: What Have We Learned? Macroeconomic Policy after the Crisis (see Akerlof et al., 2014).
[19] The list is extensive, however, attention should be called to several names for the frequency attendance at IMF conferences and for the role they have played in neoliberal critiques of neoliberalism: John Williamson (rapporteur for the Washington Consensus in 1989) and Adam Posen (both By the Peterson Institute for International Economics), George Akerlof (Universities of California and Berkeley, and IMF), David Romer (Universities of California and Berkeley), Stanley Fischer, Nouriel Roubini, Jose De Gregorio, Jose Antonio Ocampo, Dani Rodrik and The Nobel laureate in economics: Michael Spence, Jean Tirole and, of course, Joseph Stiglitz.
[20] As IMF Managing Director, Dominique Strauss-Kahn (2011) reinforced this idea: ‘In formulating a new macroeconomic framework for a new world, the pendulum will shift – at least a little – from the market to the state, and from an environment relatively simple to a relatively more complex one … it should also devote more attention to social cohesion’. Rethinking the ‘new framework’ for macroeconomic policy must be interpreted within the IMF’s neoliberalism ideology. This does not imply that fundamental ideas have changed; only a few lines and instruments of policy were qualified. For example, the so-called economic stabilization, ‘the heart of the neoliberal development strategy since the middle of the century and carried out in the era of structural reforms, continues intact today:
‘… Going forward, a level of fiscal adjustment required … it will be formidable … The policy implications for the next or the next two decades is that, when cyclical conditions permit, a large fiscal adjustment is necessary, and if Economic growth is rapidly recovering, it should be used to substantially reduce debt-to-GDP ratios instead of financing increases in spending or tax cuts’.
(Blanchard et al., 2010)