a good series of videos on neoliberalism
Here's a post copied across from my Facebook page to share more widely.
Today I've watched the first three videos to date in an ongoing series from BarakalypseNow on YouTube covering Neoliberalism.
Watch the series here.
The first video is a little basic, but the others get more in-depth. I was glad to see that among much else, the second touched on the failure of Bretton Woods to adopt Keynes' idea of an International Currency Union (ICU) and associated bank and institutions. This would have established a supranational currency which would allow the redistribution of surpluses from high-surplus areas to high deficit areas, without simultaneously having to pursue a perhaps contradictory national economic agenda.
Instead the dollar, tied to gold, became the reserve currency. And while the US remained a surplus nation the system worked. But by 1971 that was unsustainable and Nixon announced the dollar was no longer convertible to gold. Gold prices leapt, followed by other primary commodity prices. Inflation and unemployment grew, a combination that became known as stagflation.
The US solution was to reverse the flow of money. Formerly US surpluses flowed to deficit nations, now global surpluses must flow to the US. Therefore the US must increase its competitiveness and set interest rates that would attract capital flows. To increase competitiveness labour costs were squeezed, and oil prices encouraged to rise. As the US had its own oil reserves it was less affected than Europe or Japan by such price rises. Interest rates were pushed from 6 percent in 1971 to 21.5 percent ten years later.
This reversal of the flows of money to the benefit of the US, allowing it to run a deficit economy with no downsides, is what Yanis Varoufakis terms 'The Global Monotaur'.
It's easy to see how with Keynes' ICU in place the US wouldn't have had to take the steps it did, instead allowing itself to accept redistributed surpluses from elsewhere in the world. And in the wake of the financial crisis of 2008 it was suggested the idea could be revived: by Zhou Xiaochuan, the governor of the People's Bank of China in 2009, where he also said that a national currency was unsuitable for the role; by a UN report "Experts on reforms of the international monetary and financial system" in the same year; by the IMF in a study in 2010; and by the IMF's then managing director Dominique Strauss-Khan in a BBC interview in 2011.
But as we know such a thing never emerged. Instead we've had a doubling-down of neoliberal policies exploiting populist sentiments, despite those policies being the cause of the crisis and most people's precarity in the first place. After 40 years of prolonged attacks beginning with Thatcher and Reagan, and continuing under Blair, Clinton and Obama, as well as the Tories and Republicans you'd expect we now have governments bent on demolishing the last of the postwar consensus. This despite the fact that it worked. My parents and most of their friends were the first in their families to go to university, they benefitted enormously from free healthcare, and had opportunities (not to mention peace and stability) undreamt of by their parents and grandparents.
You'd think after two world wars and the great depression brought about by uncontrolled laissez-faire capitalism, economic liberalism, people might be a bit more circumspect about unleashing the same forces on the world again. But apparently not.
Anyway, I'm grateful for the second video introducing me to the work of Karl Polanyi, and his idea of embeddedness. The notion, to paraphrase the video, that until around the start of 19th century markets were embedded in society, social relations, religious and other institutions, and traditions of reciprocity and redistribution. But with industrialisation market liberalism argued that all these should be subordinate to the free market, which was seen as a self-regulating mechanism.
This is a necessarily abbreviated and simplified version of this history and ideas covered, from someone who is a layperson in these matters. I'd recommend seeking out the work of people who actually know what they're talking about to shed more light on anything here. In particular, as a start you can find more information at the links in the videos, and at the following pages and any links provided there:
Yanis Varoufakis & The Global Minotaur
John Maynard Keynes' ICU & Bancor
Karl Polanyi
Embededness
Today I've watched the first three videos to date in an ongoing series from BarakalypseNow on YouTube covering Neoliberalism.
Watch the series here.
The first video is a little basic, but the others get more in-depth. I was glad to see that among much else, the second touched on the failure of Bretton Woods to adopt Keynes' idea of an International Currency Union (ICU) and associated bank and institutions. This would have established a supranational currency which would allow the redistribution of surpluses from high-surplus areas to high deficit areas, without simultaneously having to pursue a perhaps contradictory national economic agenda.
Instead the dollar, tied to gold, became the reserve currency. And while the US remained a surplus nation the system worked. But by 1971 that was unsustainable and Nixon announced the dollar was no longer convertible to gold. Gold prices leapt, followed by other primary commodity prices. Inflation and unemployment grew, a combination that became known as stagflation.
The US solution was to reverse the flow of money. Formerly US surpluses flowed to deficit nations, now global surpluses must flow to the US. Therefore the US must increase its competitiveness and set interest rates that would attract capital flows. To increase competitiveness labour costs were squeezed, and oil prices encouraged to rise. As the US had its own oil reserves it was less affected than Europe or Japan by such price rises. Interest rates were pushed from 6 percent in 1971 to 21.5 percent ten years later.
This reversal of the flows of money to the benefit of the US, allowing it to run a deficit economy with no downsides, is what Yanis Varoufakis terms 'The Global Monotaur'.
It's easy to see how with Keynes' ICU in place the US wouldn't have had to take the steps it did, instead allowing itself to accept redistributed surpluses from elsewhere in the world. And in the wake of the financial crisis of 2008 it was suggested the idea could be revived: by Zhou Xiaochuan, the governor of the People's Bank of China in 2009, where he also said that a national currency was unsuitable for the role; by a UN report "Experts on reforms of the international monetary and financial system" in the same year; by the IMF in a study in 2010; and by the IMF's then managing director Dominique Strauss-Khan in a BBC interview in 2011.
But as we know such a thing never emerged. Instead we've had a doubling-down of neoliberal policies exploiting populist sentiments, despite those policies being the cause of the crisis and most people's precarity in the first place. After 40 years of prolonged attacks beginning with Thatcher and Reagan, and continuing under Blair, Clinton and Obama, as well as the Tories and Republicans you'd expect we now have governments bent on demolishing the last of the postwar consensus. This despite the fact that it worked. My parents and most of their friends were the first in their families to go to university, they benefitted enormously from free healthcare, and had opportunities (not to mention peace and stability) undreamt of by their parents and grandparents.
You'd think after two world wars and the great depression brought about by uncontrolled laissez-faire capitalism, economic liberalism, people might be a bit more circumspect about unleashing the same forces on the world again. But apparently not.
Anyway, I'm grateful for the second video introducing me to the work of Karl Polanyi, and his idea of embeddedness. The notion, to paraphrase the video, that until around the start of 19th century markets were embedded in society, social relations, religious and other institutions, and traditions of reciprocity and redistribution. But with industrialisation market liberalism argued that all these should be subordinate to the free market, which was seen as a self-regulating mechanism.
This is a necessarily abbreviated and simplified version of this history and ideas covered, from someone who is a layperson in these matters. I'd recommend seeking out the work of people who actually know what they're talking about to shed more light on anything here. In particular, as a start you can find more information at the links in the videos, and at the following pages and any links provided there:
Yanis Varoufakis & The Global Minotaur
John Maynard Keynes' ICU & Bancor
Karl Polanyi
Embededness
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