SILENCE FROM THE NEOLIBERAL CHOIR

By Mario Soares and - - Reprint | | Print |

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LISBON, Jan 1 2008 (IPS) - Where have all the neoliberals gone? A few months ago they were clamouring relentlessly for \”less government\”and \”more privatisation\”, no government intervention, no ethical rules, and even fewer public services. For them the paramount goals were cutting taxes and letting the market work its magic without interference of any kind, writes Mario Soares, ex-president and ex-prime minister of Portugal. In this analysis, the author writes that American capitalism in its financial-speculative phase, guided by neoliberal ideology and fortified by the collapse of the communist regimes, carried the US up to the gates of financial catastrophe and economic recession. Now its negative effects have spread across Europe and are beginning to poison the rest of the planet. Will the US Treasury plan stabilise the American economy or only provide short-term relief? The means adopted by various countries and the subsequent reactions of the economic actors have generated little more than violent fluctuations and instability, and thus it is not yet possible to answer this question. However, there can be no doubt that a long-term solution would have to go much farther, beginning with reform of the financial-speculative sector through regulation and controls, a crackdown on tax havens, the introduction of strict ethical norms and social and environmental goals, and finally, as French president Sarkozy said, \”Those responsible for causing this crisis should be put in jail\”.

As for privatisations, the neoliberals support it across the board: from healthcare (“socialist” intervention), social security, water, cemeteries, mail, transportation, security (even in wartime situations, like Iraq, where private companies have taken over certain security functions).

Politicians who strayed from the neoliberal creed were treated like lepers, or an archaeological curiosity from a past age. The fashion was absolute freedom to make profits, all the more so with of speculation or conflicts of interest -“politicians in business, or business in politics”- and fiscal paradises. Thus doing business and making money became the supreme value of the so-called free societies; the market was theologised as the deus ex machina of progress; and liberal democracy, bit by bit, was sliding towards plutocracy.

And what about the poor, the manual labourers, farmers, salary workers, and those referred to as the “middle class” in the old days? Leave them to their fate, the neoliberals would say, to sort it out according to the laws of natural selection, a sort of law of the jungle in which the strong (the rich) devour the weak (the poor). The bleeding hearts could dedicate themselves to charity to alleviate the chronic inequality -an activity that does not harm the financial system and does good to the soul.

And so it was that American capitalism in its financial-speculative phase, guided by neoliberal ideology and fortified by the collapse of the communist regimes, carried the United States up to the gates of financial catastrophe and economic recession. Subsequently its negative effects have spread across Europe and are beginning to poison the rest of the planet.

In just a few weeks the neoliberal ideology has gone bust in theory and in practice. Because they had no idea how to intervene, feeling that it was impossible, the economists have fallen silent or advised caution or various half measures for the gravely ill patient.

The results are plain to be seen: banks and other financial institutions on the verge of bankruptcy are calling for help from the government (no doubt the vilest heresy for the neoliberals) as if it were a natural disaster, like hurricane Katrina. And who will foot the bill, when failing companies flee or look the other way? The state, of course. That’s the logic behind the plan of US Treasury Secretary Henry Paulson, which involves in injection of up to 700 billion dollars. But can Paulson stabilise the economy of the superpower, or will his plan only provide short-term relief of the effects of the crisis?

The means adopted by various countries and the subsequent reactions of the economic actors have generated little more than violent fluctuations and instability, and thus it is not yet possible to answer this question. However, there can be no doubt that a long-term solution would have to go much farther, beginning with reform of the financial-speculative sector through regulation and controls, a crackdown on tax havens, the introduction of strict ethical norms and social and environmental goals, and finally, as French president Nicholas Sarkozy, who must seem like an extremist to the neoliberals, said, “Those responsible for causing this crisis should be put in jail”.(END/COPYRIGHT IPS)