I was intrigued by Madeleine Bunting’s article that featured on The Hindu/Guardian Newspapers last week. It revolves around the idea that neoliberalism is a corrupt mythology that is in tatters and the crisis of conviction is profound.
In the 90’s, during the technology boom, the entire financial world could not have afforded to ignore even the simplest comments made by one man. Alan Greenspan. The article claims that Alan Greenspan has wrote “the past decade has seen mounting global forces quietly displacing government control of economic affairs.” He blithely continued that the greatest danger facing the economy was that “some governments, bedeviled by emerging inflationary forces, will endeavor to reassert their grip on economic affairs.” As the financial crisis started unfolding, Alan Greenspan did a gigantic volte-face as he pleaded for government to do just that – reassert its grip in the form of the bail-out.
Friedrich Hayek, an influential Austrian economist, in his book (The Road to Serfdom), brought out the essence of neoliberalism. Friedrich Hayek is considered to be the father of a model of economic management which has made the mighty financial institutions collapse like a pack of cards.
Scary!! These are the people to whom the financial world looked up to for direction. Even more terrifying is the fact that this turmoil did not originate from a third world country. The common public is occupied with the daily grind of their simple lives, believing that the macro aspects of the world are being taken care of by the political and economic leadership. Well, this crisis has proved them wrong.
The senators are staging a spectacular drama by grilling the fat-cat CEOs to demonstrate that they are the protectors and saviors of the people. I wonder what these protectors and saviors were doing when complex financial instruments were developed in the name of innovation.
Karl Polanyi, with extraordinary prescience, warned that the crisis would come; he rejected the idea that the market is a “self-regulating” mechanism which can correct itself. There is no “invisible hand” such as the neoliberals maintain, so there is nothing inevitable or “natural” about the way markets work: they are always shaped by political decisions.
In the name of "Weapons and of mass destruction”, a meaningless war was waged against the so called “Islamic Terrorism” that was seen as a threat to the western civilization. A doomsday scenario that poses a far greater threat to the western civilization had been gaining momentum right next to Ground Zero, in Wall Street.
The author compares this corrupt mythology (neoliberalism) to that of the Aztecs. The scary ending is that, like that of the Aztecs, this collapse of the corrupt mythology may require a lot of human sacrifice.
The incident of the 45 year old Indian (in the US) killing all his family members (wife, three sons and mother-in-law) and himself is a poignant reminder of the beginning of just that.
Related Books
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1) The Great Transformation (Karl Polyani), published in 1944, an economic history which sets out to explain 1929, the Great Depression and rise of fascism.
2) One Market Under God (Thomas Frank) published in 2001, explains how neoliberalism entrenched its triumphalism into the political system of the U.S.
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