Thanks to Peter Coyote:

A must read on our current economics

“It is through the newspapers and TV channels that the
socially destructive notions of a small group of
extremists have come to look like common sense.”

The Guardian UK
By George Monbiot
Tuesday 28 August 2007

A cabal of intellectuals and elitists hijacked the
economic debate, and now we are dealing with the
catastrophic effects.

For the first time the UK’s consumer debt exceeds the
total of its gross national product: a new report
shows that we owe £1.35 trillion. Inspectors in the
United States have discovered that 77,000 road bridges
are in the same perilous state as the one which
collapsed into the Mississippi. Two years after
Hurricane Katrina struck, 120,000 people from New
Orleans are still living in trailer homes and
temporary lodgings. As runaway climate change
approaches, governments refuse to take the necessary
action. Booming inequality threatens to create the
most divided societies the world has seen since before
the first world war. Now a financial crisis caused by
unregulated lending could turf hundreds of thousands
out of their homes and trigger a cascade of economic
troubles.

These problems appear unrelated, but they all have
something in common. They arise in large part from a
meeting that took place 60 years ago in a Swiss spa
resort. It laid the foundations for a philosophy of
government that is responsible for many, perhaps most,
of our contemporary crises.

When the Mont Pelerin Society first met, in 1947, its
political project did not have a name. But it knew
where it was going. The society’s founder, Friedrich
von Hayek, remarked that the battle for ideas would
take at least a generation to win, but he knew that
his intellectual army would attract powerful backers.
Its philosophy, which later came to be known as
neoliberalism, accorded with the interests of the
ultra-rich, so the ultra-rich would pay for it.

Neoliberalism claims that we are best served by
maximum market freedom and minimum intervention by the
state. The role of government should be confined to
creating and defending markets, protecting private
property and defending the realm. All other functions
are better discharged by private enterprise, which
will be prompted by the profit motive to supply
essential services. By this means, enterprise is
liberated, rational decisions are made and citizens
are freed from the dehumanising hand of the state.

This, at any rate, is the theory. But as David Harvey
proposes in his book A Brief History of Neoliberalism,
wherever the neoliberal programme has been
implemented, it has caused a massive shift of wealth
not just to the top 1%, but to the top tenth of the
top 1%. In the US, for instance, the upper 0.1% has
already regained the position it held at the beginning
of the 1920s. The conditions that neoliberalism
demands in order to free human beings from the slavery
of the state: minimal taxes, the dismantling of public
services and social security, deregulation, the
breaking of the unions; just happen to be the
conditions required to make the elite even richer,
while leaving everyone else to sink or swim. In
practice the philosophy developed at Mont Pelerin is
little but an elaborate disguise for a wealth grab.

So the question is this: given that the crises I have
listed are predictable effects of the dismantling of
public services and the deregulation of business and
financial markets, given that it damages the interests
of nearly everyone, how has neoliberalism come to
dominate public life?

Richard Nixon was once forced to concede that “we are
all Keynesians now.” Even the Republicans supported
the interventionist doctrines of John Maynard Keynes.
But we are all neoliberals now. Margaret Thatcher kept
telling us that “there is no alternative”, and by
implementing her programmes Clinton, Blair, Brown and
the other leaders of what were once progressive
parties appear to prove her right.

The first great advantage the neoliberals possessed
was an unceasing fountain of money. US oligarchs and
their foundations, Coors, Olin, Scaife, Pew and
others, have poured hundreds of millions into setting
up thinktanks, founding business schools and
transforming university economics departments into
bastions of almost totalitarian neoliberal thinking.
The Heritage Foundation, the Hoover Institute, the
American Enterprise Institute and many others in the
US, the Institute of Economic Affairs, the Centre for
Policy Studies and the Adam Smith Institute in the UK,
were all established to promote this project. Their
purpose was to develop the ideas and the language
which would mask the real intent of the programme, the
restoration of the power of the elite, and package it
as a proposal for the betterment of humankind.

Their project was assisted by ideas which arose in a
very different quarter. The revolutionary movements of
1968 also sought greater individual liberties, and
many of the soixante-huitards saw the state as their
oppressor. As Harvey shows, the neoliberals coopted
their language and ideas. Some of the anarchists I
know still voice notions almost identical to those of
the neoliberals: the intent is different, but the
consequences very similar.

Hayek’s disciples were also able to make use of
economic crises. An early experiment took place in New
York City, which was hit by budgetary disaster in
1975. Its bankers demanded that the city follow their
prescriptions: huge cuts in public services, smashing
of the unions, public subsidies for business. In the
UK, stagflation, strikes and budgetary breakdown
allowed Thatcher, whose ideas were framed by her
neoliberal adviser Keith Joseph, to come to the
rescue. Her programme worked, but created a new set of
crises.

If these opportunities were insufficient, the
neoliberals and their backers would use bribery or
force. In the US, the Democrats were neutered by new
laws on campaign finance. To compete successfully for
funding with the Republicans, they would have to give
big business what it wanted. The first neoliberal
programme of all was implemented in Chile following
Pinochet’s coup, with the backing of the US government
and economists taught by Milton Friedman, one of the
founding members of the Mont Pelerin Society. Drumming
up support for the project was easy: if you disagreed,
you got shot. The International Monetary Fund and the
World Bank used their power over developing nations to
demand the same policies.

But the most powerful promoter of this programme was
the media. Most of it is owned by multimillionaires
who use it to project the ideas that support their
interests. Those ideas which threaten their interests
are either ignored or ridiculed. It is through the
newspapers and TV channels that the socially
destructive notions of a small group of extremists
have come to look like common sense. The corporations’
tame thinkers sell the project by reframing our
political language (for an account of how this
happens, see George Lakoff’s book, Don’t Think of an
Elephant!). Nowadays I hear even my progressive
friends using terms like wealth creators, tax relief,
big government, consumer democracy, red tape,
compensation culture, job seekers and benefit cheats.
These terms, all invented or promoted by neoliberals,
have become so commonplace that they now seem almost
neutral.

Neoliberalism, if unchecked, will catalyse crisis
after crisis, all of which can be solved only by
greater intervention on the part of the state. In
confronting it, we must recognise that we will never
be able to mobilise the resources its exponents have
been given. But as the disasters they have caused
unfold, the public will need ever less persuading that
it has been misled.

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