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WHENEVER some public figure declares in shocked tones that we are governed by a ‘socialist’ government, I can’t help chuckling.
Really? This government owns the means of production, and has banished private property? I don’t think so.
What they’re really saying, of course, is that this government has only toyed with the idea of buying in completely to the whole neoliberal model, as described by Jonathan D Ostry et al, in their rather startling article in the International Monetary Fund’s June issue of Finance and Development, entitled Neoliberalism: Oversold?:
“The neoliberal agenda […] rests on two main planks. The first is increased competition - achieved through deregulation and the opening up of domestic markets, including financial markets, to foreign competition. The second is a smaller role for the state, achieved through privatization and limits on the ability of governments to run fiscal deficits and accumulate debt.”
South Africa has deregulated in some areas – agriculture is one long-standing example – and not in others. We went from being one of the most tightly-controlled financial systems in the world in the 1980s to a pretty liberalised set-up. We have not privatised nearly as much as many wanted, and some attempts – for example, to privatise water provision – have met with fierce opposition. It’s hardly socialism, but it’s also not the perfect neoliberal state.
I do think that there’s a rather semantic element that confuses people’s thinking sometimes: the fact that we provide a social grant to many people does NOT make us socialist – given the extent of our social network, we’re still a long way off even being a social welfare state (one in which the state takes primary responsibility for the welfare of its people in terms of education, health and the like).
The IMF article only looks at a couple of specific aspects of the neoliberal agenda (removing restrictions on the movement of capital across borders, and austerity), but it’s meaningful: thinkers at the heart of one of the great proponents of neoliberalism are taking a good, clear-eyed look at the theory and how it holds up in practice.
Financial openness appears to increase risks of financial crises: “Since 1980, there have been about 150 episodes of surges in capital inflows in more than 50 emerging market economies; […] about 20 percent of the time, these episodes end in a financial crisis…” and “In addition to raising the odds of a crash, financial openness has distributional effects, appreciably raising inequality […] Moreover, the effects of openness on inequality are much higher when a crash ensues.”
What about austerity – paying down a country’s public debt by raising taxes or cutting expenditure, or both? If you’re a country that can live with the debt (think UK), perhaps not. The authors conclude that austerity policies hurt demand, which therefore worsens unemployment. A simple and surely intuitive conclusion – tax people so they have less to spend, and cut expenditure which is creating employment, et voila.
“In sum, the benefits of some policies that are an important part of the neoliberal agenda appear to have been somewhat overplayed.”
Yup. The authors go on to call for a “more nuanced view of what the neoliberal agenda is likely to be able to achieve”. Three cheers for that.
Driven by ideologues like Margaret TINA (there is no alternative) Thatcher and Reagan, the neoliberal agenda was adopted by many around the world with the exact same semi-religious fervour that socialism evoked. (It was turbo-charged by the fact that the only alternative to neoliberalism, communism, crumbled so spectacularly in 1989.)
What this meant was that, if you were caught critiquing any aspect of neoliberalism, you were blasted as a heretic and excommunicated. Just as you would be on the Left, if you ever let an inkling of doubt about the Gospel According to Marx surface. Both systems of thinking required that you take on the whole thing holus-bolus, or wander in the wilderness unheard.
It’s had a stultifying effect, in my view, banishing debate. There’s plenty of evidence that some aspects of socialism do work; just as some aspects of the neoliberal agenda work. But they don’t work the same in all countries, or in all circumstances.
Why do some privatisations work and others fail with dramatic consequences? How come the USA’s Golden Years of prosperity were also years in which there was a top marginal rate of tax in the 90s, and social welfare policies firmly in place? What went wrong in Chile, poster-child for the neoliberal school? What went right in Denmark, routinely one of the top five happiest countries in the world?
There’s a rising buzz of voices mulling over the experiences of the last 30 years, during which the neoliberal agenda has become the sine qua non of economists, policymakers and commentators who appear “to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution”, as George Monbiot puts it.
That those voices are now coming from the heart of the neoliberal establishment is a good thing: it may mean that we can cast off the shackles of economic correctness, left and right, and start really thinking about the economy we’re transitioning to, which is already showing strong signs of being quite different to the industrial economy these systems were built to explain.
*Mandi Smallhorne is a versatile journalist and editor. Views expressed are her own. Follow her on Twitter.
