Neo-liberalism

Voltex

Does Ireland need a party that represents the neo-liberalistic view of how an economy should be organised?

ciaranlong

I don't think so. If anything we need to be doing more regulation - well certainly in the financial sector. We're already part of a massive (free) trade bloc by virtue of our membership in the European Common Market. And our government spending isn't giving us the services that we need, such as something similar to the NHS in the UK. That said, I certainly don't think that income taxation rates should be raised. But it would be nice to try and somehow emulate the NHS.

Manach

My own inclination is less regulation to allow institutions to fail more easily instead of being propped up by the state. However beyond that opinion, would there be an accepted definition of what the core theory of Neo-liberalism entails?

ezra_pound

You mean like Lehman brothers?

ezra_pound

We've kind of gone through the whole neo-lib experience and found out the end result- period of massive growth, asset price bubbles, major expansion of financial institutions, major deleveraging, a flood of dubious financial products, followed by a financial implosion, major recession, institutions which are too big to fail being bailed out by the taxpayer, and an asset price crash.

Are you for real?

ezra_pound

Voltex wrote: »

Does Ireland need a party that represents the neo-liberalistic view of how an economy should be organised?

Bertie aherns ff c.1997 - late 2007. The worm turned sometime in 2008.

Did you learn nothing from the last few years of trying to recover from the brink of economic oblivion?

two wheels good

Manach wrote: »

My own inclination is less regulation to allow institutions to fail more easily instead of being propped up by the state. However beyond that opinion, would there be an accepted definition of what the core theory of Neo-liberalism entails?

It wasn't excessive regulation which led to the banks being "propped-up" now was it? Or the insurance companies in the past

FISMA

ciaranlong wrote: »

If anything we need to be doing more regulation

More regulation, without enforcement of the regulations currently there, is pointless.

If you do not enforce a regulation, then do not bother having it.

ezra_pound

FISMA wrote: »

More regulation, without enforcement of the regulations currently there, is pointless.

If you do not enforce a regulation, then do not bother having it.

Sure. What unenforced regulations are you referring to?

gesler

Voltex wrote: »

Does Ireland need a party that represents the neo-liberalistic view of how an economy should be organised?

Can you expand on this? maybe just a few paragraphs on what you think neo liberalism is and how this would be put into practice in the economy (Irish)

goose2005

Voltex wrote: »

Does Ireland need a party that represents the neo-liberalistic view of how an economy should be organised?

We have three.

Permabear

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ciaranlong

Manach wrote: »

My own inclination is less regulation to allow institutions to fail more easily instead of being propped up by the state. However beyond that opinion, would there be an accepted definition of what the core theory of Neo-liberalism entails?

I agree that institutions should be allowed to fail in some circumstances. That is real capitalism, and that is exactly what happened in the UK (well to one institution) when they went about implementing their special resolution regime for their financial services sector in 2009. (Notably, we are still waiting for something similar in the EU). Without following such an approach (as in the UK), there is a massive risk for moral hazard - that is, that banks will just make the same mistakes as they did in the past.

However the absence of capitalism in the above scenario is less the fault of regulation I would argue, and more to do with the scourge of "corporatism". That is, where corporations (such as banks) grow to a huge size (perhaps considered "too big too fail") and as a result wield an undue influence on the state. The "State" also has a lot to answer for in such a scenario though. And I think it is quite telling how the EU has prioritised its (banking) corporations over its citizens ever since the Crisis started.

P.S. On Wikipedia (if you will accept that as a source), neo-liberalism is defined as advocating "extensive economic liberalization (i.e. the lessening of regulation), free trade, and reductions in government spending in order to enhance the role of the private sector in the economy."

ezra_pound

ciaranlong wrote: »

I agree that institutions should be allowed to fail in some circumstances. That is real capitalism, and that is exactly what happened in the UK (well to one institution) when they went about implementing their special resolution regime for their financial services sector in 2009. (Notably, we are still waiting for something similar in the EU). Without following such an approach (as in the UK), there is a massive risk for moral hazard - that is, that banks will just make the same mistakes as they did in the past.

However the absence of capitalism in the above scenario is less the fault of regulation I would argue, and more to do with the scourge of "corporatism". That is, where corporations (such as banks) grow to a huge size (perhaps considered "too big too fail") and as a result wield an undue influence on the state. The "State" also has a lot to answer for in such a scenario though. And I think it is quite telling how the EU has prioritised its (banking) corporations over its citizens ever since the Crisis started.

P.S. On Wikipedia (if you will accept that as a source), neo-liberalism is defined as advocating "extensive economic liberalization (i.e. the lessening of regulation), free trade, and reductions in government spending in order to enhance the role of the private sector in the economy."

Surely regulation is the only way to prevent such financial institutions growing too big!

sarkozy

ciaranlong wrote: »

I agree that institutions should be allowed to fail in some circumstances. That is real capitalism, and that is exactly what happened in the UK (well to one institution) when they went about implementing their special resolution regime for their financial services sector in 2009. (Notably, we are still waiting for something similar in the EU). Without following such an approach (as in the UK), there is a massive risk for moral hazard - that is, that banks will just make the same mistakes as they did in the past.

However the absence of capitalism in the above scenario is less the fault of regulation I would argue, and more to do with the scourge of "corporatism". That is, where corporations (such as banks) grow to a huge size (perhaps considered "too big too fail") and as a result wield an undue influence on the state. The "State" also has a lot to answer for in such a scenario though. And I think it is quite telling how the EU has prioritised its (banking) corporations over its citizens ever since the Crisis started.

P.S. On Wikipedia (if you will accept that as a source), neo-liberalism is defined as advocating "extensive economic liberalization (i.e. the lessening of regulation), free trade, and reductions in government spending in order to enhance the role of the private sector in the economy."

What 'institutions'? Institution is just a word to describe " any persistent structure or mechanism of social order governing the behaviour of a set of individuals within a given community" that is considered important.

In any discussion of neo-liberalism and its relationship to 'institutions', not specifying the institutions to which you are actually referring is irresponsible and pointless.

Permabear

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conorh91

Permabear wrote: »

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How should they do that? By restricting the size and growth of private corporations? The IMF says a lot of things. Some more sensible than others.

Permabear

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conorh91

Permabear wrote: »

This post had been deleted.

Nothing to do with what I said.

Do you believe the IMF is incorrect when it says that post-crisis reforms have failed to solve the too-big-to-fail problem?

Not quite. A better way of making a similar point is that Governments have no business in trying to solve the problem in the first place. The only way you can solve "too big to fail" is by restricting companies from growing and engaging in inherently sound commercial activities.

Permabear

This post has been deleted.

ciaranlong

sarkozy wrote: »

What 'institutions'? Institution is just a word to describe " any persistent structure or mechanism of social order governing the behaviour of a set of individuals within a given community" that is considered important.

In any discussion of neo-liberalism and its relationship to 'institutions', not specifying the institutions to which you are actually referring is irresponsible and pointless.

Good point. To clarify, I meant to write "corporations" as opposed to "institutions". So my bad.

Valmont

Not too long ago I read an article by Stuart Hall (who died last February) titled The Neo-Liberal Revolution. Needless to say, I'm not convinced that the modern concept of neo-liberalism is very coherent or in line with the political landscape we live in.

Hall explains the leading ideas of the neo-liberal model as follows: "It sees the state as tyrannical and oppressive. The state must never govern society, dictate to free individuals how to dispose of their property, regulate a free-market economy or interfere with the God-given right to make profits and amass personal wealth". If we interpret the past forty years of Irish and English politics (I live in England) as being a part of a growing neo-liberal trend, and we acknowledge that a leading idea of neo-liberalism is 'seeing the state as tyrannical and oppressive' (Hall) then we simply have to explain why, if neo-liberals are running the show, the state employs more people than it did forty years ago, provides welfare to more people (taking pop. inc into consideration), and has higher tax rates than it did forty years ago, and why it has more power than it did forty years ago (look no further than the new Anti-Social Behaviour, Crime and Policing Bill for evidence of its scary new powers to crush dissent in England).

Hall also paraphrases another leading idea of neo-liberalism: "State-led ‘social engineering’ must never prevail over corporate and private interests", not realising that what we have today is the corporations and the state working in perfect unity to engineer us all towards their various ends which again is hard to see coming to pass if the classical liberal tenets he lists are really the leading ideas of the neo-liberal agenda.

Given these contradictions, to my eyes, Hall is simply conflating classical liberalism with our current brand of state capitalism. Margaret Thatcher is largely to blame for this conflation (which seems ingrained in the ideology of the left) due to her constant 'free-market' rhetoric. Ignoring Thatcher's endless classic liberal pamphleteering, the facts of history speak for themselves: state spending during Thatcher's government rose an average of 1.1% every year. Again, how can we blame classical liberalism when many of its tenets were not even adhered to by Thatcher?

One major point which stuck out at me during my several readings of this paper: economic ignorance. Let me illustrate, on page 724, Hall states, referring to the egalitarian spirit, that many people ask: ‘Why should public-sector workers bail out the bankers who caused the crisis in the first place and have never had it so good?'. Let's look at the facts: the 'public sector' by definition feeds off the wealth created in the private sector; it is, in essence, in a constant state of being 'bailed out' by the tax-payer. Hall himself explicitly acknowledges this on pg. 708 saying that 'dynamic capitalist' growth is needed to create the wealth to distribute in the first place. So to talk of the 'public sector' bailing anyone out is ludicrous.

All in all, my general point of argument is against Hall's blaming the free-market (or the ideals contained within the concept of the free-market) for any of the current ills of society. The free-market is simply the voluntary interactions between every one us, buying and selling, volunteering and dancing, you name it. When this organic process is grabbed, controlled, and directed by the state (Thatcher and Reagan are a part of this, as are most politicians) it by definition ceases to be a free-market, it becomes (and has done) a state-directed market, fundamentally no different to those established by the Nazis, or by the Soviet Union (they just chose to harness the productive power of their citizens toward other ends).

The classic liberals saw that state control over and direction of the economy under any banner, whether capitalist or communist, will necessarily result in a larger state, a poorer populace, more war, and less wealth for everyone except politicians and their cronies in business. Trying to paint our current system as classic liberal and slyly renaming it 'neo-liberalism' is a totally futile attempt by leftist intellectuals to whitewash not only history but our current economic and social reality.