[OPE] Question about books that are sound introductions to economics

From: Jurriaan Bendien <adsl675281@telfort.nl>
Date: Tue Sep 28 2010 - 05:07:28 EDT

Neoliberalism is essentially an ideology that if the role of the state in
the economy is reduced, and if the scope of market forces, competition and
private initiative is increased, that economic growth will increase, so that
there will be more wealth and prosperity. According to this ideology, new
value is created by trade. It follows that if more opportunity for trade is
created, that more new value will be created.

Neoliberalism is called "neo" to distinguish it from classical 19th century
laissez-faire liberalism, and it followed an era (1935-1980) in which
economic interventionism by the state was considered progressive and
conducive of economic growth. What was behind the change in the ideological
consensus around 1980 was, that the 1970s recession put the relative power
of different fractions of the bourgeoisie to the test. The interests of the
multinational corporations won out.

Neoliberalism is not liberal, insofar as the deregulation of capital goes
together with the increased regulation of labour. More freedom for capital
means more unfreedom for labour, i.e. making labour more and more dependent
on capital. The function of the state becomes one of creating a suitable
"business friendly" national environment in which the multinationals can

The main contradiction of the neoliberal idea is, that promoting private
initiative and competition gives rise to all kinds of social conflicts and
tensions which must somehow be managed and kept in check by the state, which
requires more and more social controls on the behaviour of citizens. You
cannot very well promote intensified competition and intensified pursuit of
private interests without this causing a breakdown of social solidarity and
the rejection of social responsibilities or social obligations.

Faced with this contradiction, the reformist Left takes a clear stand
against market freedom and in favour of state intervention. The reason for
that is essentially that the social base of the reformist Left is among
public administrators, state functionaries and managers of public assets.
These people are faced with the unenviable task of picking up the pieces of
the social problems created by neoliberal deregulation, which leads them to
the conclusion that civil behaviour needs to be regulated more.

Neoliberalism is liberal for capitalists, insofar as it provides more
opportunities to expand business. But it is not liberal for workers and for
a fraction of the petty-bourgeoisie and professionals who are in a weak
business position, and who are outcompeted. It is often in their interest,
to seek protectionist policies from the state, because their income and
position depends on those policies.

Jurriaan (PS - I can add a few observations which I wrote for the wiki
article on "stateless society":)

In pre-modern states, i.e. states before the 14th century AD (though the
"modern" era may be considered to have begun earlier or later in different
parts of the world), the population paid tributes or taxes and provided
military personnel to the state, a state which decreed a certain civil
morality via laws and which occasionally also organized infrastructural
works. In general, however, the role of the state and its ability to
regulate social life was much more limited than it has been in later times.
With the further development of market capitalism, the scale of state
operations not only expanded, but also the state began to play a much bigger
role in the redistribution of income and wealth, and in the regulation of
trade. Up to the 20th century, for example, most ordinary wage earners still
did not pay income tax; at most they paid indirect taxes, and property tax
if they owned any significant assets. Peasants might pay a tax in kind (part
of their produce went to the state). State insurance schemes for the whole
population often did not exist at that time, and workers had to rely on
mutual societies, credit unions, charitable organizations etc. This began to
change (roughly) from the 1930s, when state unemployment taxes and social
security taxes were introduced, which were eventually combined or replaced
with payroll taxes. The state then began to provide social insurance and
services (such as health, welfare and education) on a much greater scale.

This development has had the historical result that, as shown for example by
economist Alan T. Peacock, state expenditure increased greatly, and that an
increasing fraction of the population has become dependent in very important
ways on the state for their income, and for state-organized services: both
employers who receive state contracts and subsidies, ordinary working people
who receive state benefits and services, and people who for one reason or
another cannot earn their own income. Not only does that mean that citizens
have begun to take a different attitude towards the state, but also that if
the state was to disappear, that large numbers of people would simply lack
income, jobs and access to services. For many of them, a "stateless society"
would mean, that they would be driven into absolute poverty. If the state
did not exist, then much of the social organization and infrastructure
people take for granted would break down. This has had a profound effect on
political ideologies, because increasingly people have a definite "stake" in
the state, as claimants of state expenditure and state services; and
therefore, in the absence of any clear alternative, they become more
interested in reforming the state, than in overthrowing it altogether -
because overthrowing it would mean that their own existence is directly
threatened. If they had to depend on corporations to supply essential
services, they would usually be unable to afford it. Anarchism is feasible
if it is possible to make a living quite independently of the state's
influence, but if it isn't, anarchism is unlikely to be very popular.

For most of the history of the state across six millennia, that very large
and direct effect of the state on people's lives existed only very rarely,
and if it existed, it typically affected only a part of the population, not
the whole population. One alternative might be, that workers became owners
or shareholders in the business they work for, so that they would rely much
less on the state, or not at all. But if they lack the funds to become
owners, this is difficult to achieve, unless a "takeover" of an enterprise
without compensation to the previous owner is accepted, and sufficient
guarantee exists that the enterprise will generate enough income in the
future to sustain them. If however that guarantee can be provided only by
the state, then the autonomy of self-managed enterprises is limited, and
they are not a real replacement for the state.

When we discuss the history of states, we have to keep in mind that in the
20th century the populations of different countries grew enormously. In the
United States, for example, the population in 1850 was about 23 million. By
1920 it had reached 106 million and at present it is about 309 million. In
the next hundred years, another 200-250 million could be added to that
figure. The population of Europe is about 830 million, of which about 501
million are in the European Union. The centralized political organization of
such large numbers of people is necessarily different from communities where
most ordinary citizens can have personal contact with their political
leaders. The large numbers in practice change the nature of political
organization, and therefore one should be careful with making comparisons to
the situation of states that existed, say, 150 years ago or earlier.

ope mailing list
Received on Tue Sep 28 05:10:52 2010

This archive was generated by hypermail 2.1.8 : Thu Sep 30 2010 - 00:00:01 EDT