Outlining the failure of neoliberalism, Joseph Stiglitz now outlines how the dominant ideology of neo-capitalism since the 1980s is being abandoned in favor of a new socialism, and a 'neo-Keynesianism'...
Joseph Stiglitz, a Nobel Prize winning economist, has a new book outlining how neoliberalism has failed, focusing on the dangers now posed by the Euro.The growing critique of monopoly capitalism that has swept the USA in recent years is part of an international understanding that so-called "neoliberalism" (actually, the latest jargon defending rapacious capitalism) is either dead or dying. But as those critiques of capitalism grow and expand, we need to remind our younger generation that the critique of capitalism has been around for a long time, and that the tentacles of monopoly capitalism, while most dramatic at the workplace, are wrapped around every aspect of human life. And while it may still be too early in the development of this latest critique of monopoly capital to re-read the studies (going all the way back to Karl Marx's Capital) of how capitalism has always functioned to enhance the wealth and power of the "one percent", the new economists challenging the "neoliberal consensus" will be helping in that project, both in the USA, in the "developed" world, and (as they have often been leading us) from the so-called "developing" world.
In that context, we cannot allow the general critique to leave out how ruthlessly monopoly capital, under the guise of "reform," has devastated public schools.
One of the most glaring bits of white supremacist blindness in the recent and still growing critique of "neoliberalism" is that it almost always ignores the systematic sabotage of the nation's urban public schools by corporate "reform" people. The sabotage began, as many have noted, under Ronald Reagan with the publication of "A Nation at Risk" and has continued, with bipartisan support, through the presidencies of George H. W. Bush, Bill Clinton, George W. Bush and Barack Obama. Those who continued criticizing "No Child Left Behind" (the corporate reform program of George W. Bush) went silent when a far worse program, "Race To The Top", was put into place by Arne Duncan, whose seven years as U.S. Secretary of Education constituted a prolonged attack on public schools in general, but particularly on urban public schools serving working class children, many (and in some cities, most) of whom were children of color.
Recently, Business Insider, always worth reading, published an analysis of the end of "neoliberalism" focusing on the work of economist Joseph Stiglitz.
Nobel Prize-Winning Economist Stiglitz Tells Us Why 'Neoliberalism Is Dead'
Will Martin, August 18, 2016, Business Insider
Joseph Stiglitz, who won a Nobel Memorial Prize in economics in 2001 for his work on information asymmetry, has been one of neoliberalism's biggest critics in recent years, and he says the "neoliberal euphoria" that has gripped the world since the 1980s is now gone.
Joseph Stiglitz, the Nobel Prize-winning economist and former adviser to US President Bill Clinton, says the consensus surrounding neoliberal economic thought has come to an end.
Speaking with Business Insider after the launch of his latest book, "The Euro: How A Common Currency Threatens the Future of Europe" — which argues that the fundamental flaws with the euro and the broader European economy are causing huge problems for the continent and risk leading to its downfall — Stiglitz argued that neoliberalism, the dominant school of economic thinking in the West for the past 30 years or so, is on its last legs.
Since the late 1980s and the so-called Washington Consensus, neoliberalism — essentially the idea that free trade, open markets, privatization, deregulation, and reductions in government spending designed to increase the role of the private sector are the best ways to boost growth — has dominated the thinking of the world's biggest economies and international organizations like the International Monetary Fund and the World Bank.
The policies of Ronald Reagan and Clinton in the US and Margaret Thatcher in the UK are often held up as the gold standard of neoliberalism at work, while in recent years in Britain George Osborne and David Cameron's economic policies continued the neoliberal tradition.
Since the 2008 financial crisis, however, there has been a groundswell of opinion in both economic and political circles to suggest that the neoliberal consensus may not be the right way forward for the world. In the past few years, with growth low and inequality rampant, that groundswell has gained traction.
Stiglitz, who won a Nobel Memorial Prize in economics in 2001 for his work on information asymmetry, has been one of neoliberalism's biggest critics in recent years, and he says the "neoliberal euphoria" that has gripped the world since the 1980s is now gone.
Asked by Business Insider whether he thought the economic consensus surrounding neoliberalism was coming to an end, Stiglitz argued: "I can talk about this from the point of view of academia or even in policy circles. In academia, I think it has pretty well become rejected.
"The young students are not interested in establishing that neoliberalism works — they're trying to understand where markets fail and what to do about it, with an understanding that the failures are pervasive. That's true of both micro and macroeconomics. I wouldn't say it's everywhere, but I'd say that it's dominant.
"In policymaking circles I think it's the same thing. Of course, there are people, say on the right in the United States who don't recognize this. But even many of the people on the right would say markets don't work very well, but their problem is governments are unable to correct it."
Stiglitz went on to argue that one of the central tenets of the neoliberal ideology — the idea that markets function best when left alone and that an unregulated market is the best way to increase economic growth — has now been pretty much disproved.
"We've gone from a neoliberal euphoria that 'markets work well almost all the time' and all we need to do is keep governments on course, to 'markets don't work' and the debate is now about how we get governments to function in ways that can alleviate this," he said.
In other words, Stiglitz says: "Neoliberalism is dead in both developing and developed countries."
Stiglitz is not alone in his belief that neoliberalism has its problems, though his argument that the consensus is "dead" is somewhat more forthright than those of many others. In a blog post in May, three economists from the IMF — long one of the greatest champions of the neoliberal consensus — questioned the efficacy of some aspects of it, particularly when it comes to the creation of inequality.
"The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting," Jonathan Ostry, Prakash Loungani, and Davide Furceri argued. "There is now strong evidence that inequality can significantly lower both the level and the durability of growth."
"There are a lot of people thinking the same thing at this point, that basically some aspects of the neoliberal agenda probably need a rethink," Ostry told the Financial Times on the day the blog was published, adding: "The crisis said: 'The way we've been thinking can't be right.'"
The decline of neoliberalism
The decline of neoliberalism is also evident in the UK, where austerity has reigned since the accession of the Conservative Party to government in 2010. Prime Minister David Cameron and Chancellor of the Exchequer George Osborne presided over a period of record fiscal-deficit reduction created through a six-year programme of austerity.
But since Cameron resigned following the UK's vote to leave the European Union, fiscal stimulus in the UK has started to gain traction once again as a viable means of stimulating growth. It is widely expected that Philip Hammond, the new chancellor under newly installed Prime Minister Theresa May, will announce some form of fiscal easing at the Autumn Statement — which will come at some point before the end of the year (last year's was in late November). As Business Insider's Oscar Williams-Grut argued in mid-July, "Britain's age of austerity could be over."
Across the Atlantic, both US presidential nominees, Hillary Clinton and Donald Trump, both favouring expanded government borrowing to fund infrastructure projects.
As Randall W. Forsyth argued in Barron's magazine last week:
"We are all Keynesians now, President Richard Nixon famously declared after his New Economic Plan was unveiled in 1971. The notion seems to be echoing now, with the two major parties' presidential candidates calling for increased government spending, notably for infrastructure projects."
Neoliberalism may not be completely dead, as Stiglitz argues, but it is certainly being challenged from many angles.
By: Rev Apostle Joseph TOUBI
failure of neoliberalism and move to new socialism
REGRESSIONS OF THE ECONOMIC THOUGHT AND COLLAPSE OF CIVILIZATIONS
Since November 2016 the worldwide economy seems to undergo a shortage of the American Dollar which is the reference “money” used in the overall globalized finance and in the world global economy. This state of artificial scarcity results in the rate increasing of US Dollar against other important currencies. One would have rather expected a drop of the US Dollar rate, taking into consideration the downfall of the price of oil and raw materials as well, which are most of all traded in US Dollar.
Why is the US Dollar becoming apparently scarce, at a time village dwellers need less of it for the trade of their oil and raw materials, while deflation threatens the leading industrial countries of the world?
It is at this juncture that your fifteen years old last born daughter, who lives in the Mecklenburg-West Pomerania and who had studied a little bit of economics will bring out again to you her good old Quantity Theory of Money and explain that it is necessary to separately consider the quantity of US Dollar in circulation in the world and it’s velocity in the world; an approach the economists often forget.
Let’s give an ear to the advice of your fifteen years old last born daughter who lives in the Mecklenburg-West Pomerania and separately examine both parameters mentioned above, starting with the quantity of American Dollar in the world.
To start, your eighteen year old daughter who lives in the Rhineland-Palatinate and has studied accountancy will tell you that thanks to an unbelievable regression of the thought, no genuine “money” exists in the world, but rather debt which, once produced by commercial banks, allows the debtor (public or private debtor) to disseminate a mean of payment within the national or world economy.
No debt, no “money”; and the “money” is entailed into the world only by debt. Now in the United States, the Federal Reserve System (FED) has already exhausted its watering of Quantitative Easing (Q.E) and cannot go further, because the massive Quantitative Easing of the FED resembles more and more to counterfeit “money” and in addition to this it has achieved no economic recovery.
So, after having organized the artificial breathing of systemic banks, systemic investment funds and systemic insurance companies, all of which are in a state of advanced clinical death, the FED does no more have the means for launching new Quantitative Easing in favor for example of foreign central banks so as to provide them the US Dollar needed by the worldwide economy.
The total debt of the United States, including public debt and private debt is absolutely unfathomable and even the FED does not know its precise figure. It is said to be above 63 000 billions USD, more than the total M3 aggregate of USD, meaning clearly that such a debt will never be repaid! Moreover, do not rely on that African American, a real Hollywood star deprived of spirit, who still haunts for a few weeks again the White House (we are in December 2016), to give you the precise figure of the American total debt. Café’s slogans such as “Yes we can”, stand to him as a sufficient vision of the world, just like the folk dances are referred at as “culture” by the African Africans.
To draw the conclusion on the Quantity of USD in the world, United States do no more have the means to create mountains of additional debts which will bring forth additional means of payment the worldwide economy highly needs. To copy a little bit the neoliberals, let’s say that it is a truly scientific conclusion. The time therefore has come for the United States to slow down the speed in their role of means of payment providers to the worldwide economy, because in case this country fails to do so, it will assuredly collapse under an already unfathomable debt burden.
A minimum of isolationism and introspection is now a scientific need for this country and one remains voiceless in front of the regression of the thought that leads billions of citizens (including economists!) to think that it is Donald TRUMP, who might have invented the need for a return of the United States to an unavoidable deglobalization and to a questioning of this planetary liberalism based on the US Dollar.
When the United States, already crushed by a huge debt, are continuously and unceasingly requested by the feudal neoliberal worldwide system to grant additional means of payment to the world economy; that is additional debt, all what they can do now is to choose one or another of the following two logic options:
1- Option No 1: Multiplying wars all over the world, so as to freely plunder for decades, oil, mines, gas and various minerals from other countries, in order to compensate the amazing debt mountain by assets acquired free of charge. Accountants easily understand this equation called in accountancy “balance of the double-entry book keeping”. The only way to survival for this heavily indebted country is to permanently hit many other countries around the world and steal their wealth otherwise it will collapse because there won’t be enough assets acquired free of charge to balance the unfathomable debt. Suppose that you have a debt of 25 000 USD and no asset at all. Obviously you are bankrupt. But if now thy old aunt Rose gives thee for free her jewels worth 40 000 USD you are no more bankrupt. Is not it? You can just sell old aunt Rose’s jewels, reimburse thy debt and still have 15 000 USD left in thy pocket. The issue is that the United States have no old aunt Rose and are therefore compelled to permanently acquire assets free of charge all around the world through war. This is the root of the need to secretly build a global empire though GOD The LORD JESUS CHRIST has forbidden such foolishness in the Book of Daniel.
2- Option No 2: Going back to isolationism and dismantling all the global neoliberal economic system which is compelling the country to unceasingly provide additional mountains of US Dollar to the neoliberal globalized economy; which additional mountains of USD comes from additional mountains of debts. This second option is a peaceful one and it leads to the dismantling of the current international monetary system which is based on a permanent injection of new US Dollar coming from new debt.
In front of these two options, history teaches that United States are a nation originally built upon the pre-emption of millions of people stolen from Africa. This debt of blood has never been paid by the United States meanwhile the Bible teaches that blood illegally shed (as a matter of fact, illegally in GOD’s mind and not according to human fashioned laws) loudly cries for avenge all through millenaries. Led by his instinct, Donald TRUMP has foreseen that the world is undergoing a real mutation and therefore has chosen to place his country on the track of peaceful option number 2, so as to stop the continuous production of additional blood debt. And by an incredible regression of the thought, huge crowds of people, including economists and fake week-end pastors, stood up to condemn TRUMP. The blunt language and nonsense speeches of TRUMP will not nullify the fact that this man seems to have instinctively understood that the world is changing and by so doing, deserves a complete dismantling of the today’s international monetary and financial order based on the US Dollar.
Throughout the planet, there is already too much US Dollar, that is too much debt created by the United States. I can henceforth notice your amazement, because you think, if the rate of the US Dollar rises, it means the Dollar is lacking. At this juncture, you may be tempted to just give up and conclude that one should let the US Dollar rate increase. Hence will you discover that magic does not function in the field of economics. An increase of the rate of US Dollar will sharpen commercial conflicts between United States and China, push upwards customs duties in the United States, slow down the Chinese economy and that of countries exporting to the United States and completely kill the countries living on oil and raw materials exportation. What to do then, since the solution is not to be found on the side of the quantity of US Dollar in the world?
Your last born daughter hereby reminds you that it is time to examine the velocity of the US Dollar in the world.
If you pour down a billion US Dollar in a village and a single inhabitant keeps it all for him alone, you’ll understand that the trade of the entire village will crumble and the villagers will become poor (except the sick kleptomaniac who seized for him alone, the entire means of payment). By an incredible regression of the thought, the economists had never put themselves this mere simple question: who actually makes “money” to circulate, thus actually creating the money’s velocity? The answer to this mere simple question is obvious. Only the labor factor can actually cause the “money” to efficiently circulate.
The capital factor doesn’t know how to do this. And this, for two main reasons well studied in economics: the absorptive capacity and the Dutch disease. The kleptomaniac financial capital which requires two digits return on capital, while the world’s GDP hardly grows at 3% per year has since more than fifty years, confiscated the “money” at a global scale and has concentrated “money” into the hands of a world elite of darkness which, constrained by its limited absorptive and digestion capacity, had deployed multiple tax havens in order to avoid any fair wealth sharing. But because tax havens do not have tanks to store these mountains of “money” gathered by Babylon the great, our elites of darkness are therefore compelled to pour their excess “money” into bubbles that burst out one after another. Babylon the great is currently 0.01% (and not 1%) of the world population, holding more wealth than the remaining 99.99% of people of the world.
Since the human individual is limited, this 0.01% of the world population has neither the intellectual means, nor the physical means to make all the rational investment and management decisions which should enable “money” to quickly and efficiently circulate over the world. A fair allocation of “money” in favor of the labor factor is now a necessary necessity all around the world. Such is the ultimate condition for a quick and well conducted ( yes conducted by the visible hand of intelligent States and governments) birth of a billion new investors around the world.
Political democracy is nothing without monetary and financial democracy. Rebalancing the share of profits and income between labor factor and capital factor will enable the labour factor to efficiently implement “money” velocity and it is this “money” velocity achieved by the labor factor that will definitely and structurally absorb deflation and revive the global GDP growth. Yes as you see “money” velocity is an unmatchable tool which surpasses by far this stupid interest rates manipulation policy conducted by all central banks around the world. You increase interest rates (as many are urging FED to do) then you block economic growth and invite deflation. But you increase “money” velocity and behold you chase away deflation without increasing interest rates, thus enabling economic transactions to develop, meaning GDP growth. That is what the monetary and financial democracy shall do.
Pilling up and blocking the whole world capital into the hands of a feudalism of darkness which not knowing what to do with such huge stock of “money” repeatedly initiates and inflates bubbles which explode one after another and permanently suck countries blood via the financing of public debt, inevitably causes deflation and economic crisis (disappearance of economic transactions) as it is usefully shown by the Quantity Theory of Money that all have forgotten to meditate afresh. Yes if “money” is confiscated by a handful of priests of darkness then thy neighbor won’t by a house. Thy aunt won’t buy bread at the bakery. You won’t send thy son to university and the owner of a construction company won’t feel like investing…
The Quantity Theory of Money states that for a given amount of “money”, if you slow down the velocity of the said “money”, as it is the case when the “money” is concentrated into the hands of few satanic priests of darkness, then, a decrease of the average price level must compensate. If the prices remain high while the priests of darkness confiscate mountains of “money” then a decrease of the volume of transactions on goods and services must compensate and behold a new friend named stagflation comes and dwells in thy house.
Is not this generalized deflation resulting from the quasi-zero velocity of the "money" confiscated by the tiny feudalism of darkness that has been threatening the industrialized countries for a decade?
Is this not the reason for the inefficiency of Abenomics in Japan? To function well capitalism needs a billion capitalists generated by monetary and financial democracy otherwise there won’t be any “money” velocity to be expected.
And if there is no circulation of capital then no riches trickling from the top to the bottom of the social ladder, no promotion possible for the overwhelming majority of individuals who are born at the bottom of the ladder.
Abenomics as well as Q.E have concentrated huge quantities of capital into the hands of the tiny kleptomaniac elite of darkness whose absorptive capacity is overwhelmingly exceeded and this has resulted into a quasi-zero velocity of “money” which nullifies the huge quantity of “money” injected and causes deflation and economic crisis. The Quantity Theory of Money invites us now to consider the great challenge of all the civilizations: the velocity of “money” which the labor factor alone can achieve.
One will need a true change of paradigm and initiate a new monetary and financial democracy that directly put into the hands of the labor factor the huge quantities of “money”. The spontaneous trickling of riches from the top to the bottom of the social ladder is the chimera which has until now justified the concentration of “money” into the hands of the capital factor which precisely cannot make the capital to circulate. It is time to throw away this chimera.
Increasing the velocity of “money” within the worldwide economy implies true political actions aiming at putting huge masses of injected “money” not into the hands of the capital factor but directly into the hands of the labor factor. Behold the monetary and financial democracy stretching its redeeming hand to us before the final collapse comes.
You may certainly be asking yourself where to start the implementation of the monetary and financial democracy?
It is here that your thirty years old first born daughter living in the Schleswig-Holstein explains to you that the world elite of darkness which has confiscated the “money” has well noticed that given its limited investment and management capacity, all its bubbles explode one after another and has tried to escape this curse by overwhelmingly investing “money” in the financing of public debt. Yes public debt is the supreme refuge of the tiny feudalism of darkness which is repeatedly drowned under huge amount of fresh “money” generously provided by central bank’s Quantitative Easing (Q.E).
Eureka, the Countries enjoying sufficient "political democracy" quickly list in their public debts all claims belonging to the 0.01% which is richer than 99.99% and declare these claims null and void. This will immediately restore public finance, enrich the citizens and launch public investments, private investments and economic recovery.
Such a solution is above all desirable since many States are technically in bankruptcy. Furthermore, the countries enjoying enough “political democracy” set a ceiling to the income of the financial capital. Above this ceiling (Two or three times the growth rate of the GDP for instance), the surplus of big companies’ return on equity is transferred to citizens by the means of tax cuts on labor factor, public investments and additional income granted to those excluded from the Babylonian financial feudalism. In addition to all this, the central banks hereby launch new and revolutionary Q.E: the helicopter of Ben BERNANKE directly dump huge amount of fresh “money” into the hands of the labor factor, that is into the hands of populations and complete this action by requiring simultaneously that financial feudalism pay back at least part of the previous Q.E implemented in their favor without any tangible result concerning GDP’s growth and deflation erasing.
At this juncture, we can hear the pretended economists and the so called bankers and financial experts shrieking at the top of their voices and claiming that such measures will hinder free enterprise. By an incredible regression of the thought, our neo-liberal economists have forgotten to include the human being in their equations of “economic science”. Among billions of human beings who will receive this additional income under the new paradigm will emerge millions of persons that will save and invest in order to become new capitalist entrepreneurs. Do you need a proof? Quite simple. All trough the earth, surveys carried out by credible institutions will tell you that in any given country SMEs has a number one problem: lack of funding. And the same surveys will tell you that employment is mostly from these SMEs and not from gigantic corporate companies and financial institutions. Get it?
Is not it good, monetary and financial democracy? Yes the 0.01% is victim of its limited absorptive capacity, suffers from Dutch disease and it must be helped by the monetary and financial democracy.
How did the human thought regress to the point of admitting that a tiny financial feudalism should increase its wealth by a rate ranging from 25% to 30% per year (Return On Equity of course) while the overwhelming majority of the population would be satisfied with an overall growth of the GDP not exceeding 3% per year?
The global financial feudalism is trying to invent and impose on us a strange capitalism without capitalists, characterized by a motionless quantity of “money” which paralyzes any hope of progress for mankind.
This can only lead to the revolt of the scarlet coloured beast against mystery Babylon the mother of harlots and abominations of the earth that is to the return to this old Marxist-Leninist revolution that the global financial feudalism is secretly and strangely longing after. Why is the financial feudalism of darkness so much insisting on awaking in thy spirit the taste of this Marxist-Leninist revolution? The answer is mere simple: mystery Babylon wants to deprive you of any dispensation of freedom. Your final imprisonment in darkness and satanism is its ultimate goal and the confiscation of “money” on a global scale is just the mean used to push you toward this rebellion of the scarlet coloured beast named Marxist-Leninist revolution. You know the famous dialectic of the thesis (the global confiscation of "money" by the global financial feudalism) and the antithesis (your revolt long awaited by the elites of darkness) that combine into a final synthesis (worldwide Marxist-Leninist revolution) which deprives you of all freedom and subjects you to the dictatorship of a world antichrist who, of course, will claim to finally solve the problems of mankind.
When Apostle Paul, through three missionary journeys, laid the Judeo Christian foundations of the West and the East, he achieved by so doing the death of all the spiritual and natural feudalisms of the world and announced the resurrection of the New Born Individual who is Master over Satan, Master over the kingdom of darkness and Master over all the antichrists. Yes it is time to stop being afraid of getting free from Satan and darkness.
Shalom to all the people of the earth!
Rev. Apostle Joseph TOUBI
josetoubi@yahoo.com