Global Crisis: Neoliberal’s scapegoat?GENERAL CONSIDERATIONS ON NEOLIBERAL MAINSTREAM VALUES RELATED TO THE ACTUAL CRISIS.

Isabella D’AdamoMay,2015

THE ACTUAL GLOBAL ECONOMIC-POLITICAL SYSTEM: global stability vs global instability

ACTORS OF GLOBAL GOVERNANCE: THE COOPERATIVE TEMPORAL FIX

THE SINS OF THE CAPITAL ACCUMULATION: A TURNING POINT FOR ACCUMULATIN AND INEQUALITY

ALTERNATIVES

“The (scapegoat) ritual consisted of driving into the wilderness on which all the sins of Israel had been laid. The high priest placed his hands on the head of the goat, and this act was supposed to transfer onto the animal everything likely to poison relations between members of the community. The effectiveness of the ritual was the idea that the sins were expelled with the goat and then the community was rid of them.”Rene’ Girard- I See Satan Fall like Lightning (2001)

Source: Oxfam, 2009

THE ACTUAL GLOBAL ECONOMIC-POLITICAL SYSTEM: global stability vs global instability.

LIBERAL INTERNATIONALISM (Jonsson,2014)

COMPETITION: INCREASE OF INTERATIONAL ORGANIZATION

FREE MARKET: REMOVAL OF TRADE BARRIERS

COOPERATION: PROLIFERATION OF DEMOCRACY

Global Governance is held by USA power.

Optimistic blueprint by the EFFICIENT MARKET HYPOTESYS able to satisfy different and complex interests among States. (Gill,2012)

Cooperation fosters to

GLOBAL DEMAND OF GLOBAL COMMODITIES SECURITIES

GLOBAL SUPPLY OF MARKET COMMODITIES. (Lysandrou, 2013)

Cooperation among States as mean of economic development is the only path to follow in order to prevent another global conflict led by Neoliberal Model. (Radice,2011)

HORTODOX POINT OF VIEW (Gill,2012; Radice,2011): THE COOPERATION AMONG STATES PULLS TO:

CAPITALISTIC ACCUMULATION BECAUSE OF THE FACILITY OF CAPITAL FLOW;

BY COOPERATION IT IS BEEN POSSIBLE TO SPREAD MACROECONOMIC INTERVENTIONS AIMED TO

-PRIVATIZATION OF STATE ENTERPRISES;-DEREGULATION OF FINANCIAL MARKETS;-GLOBALIZATION OF FINANCE;-ATTACKS TO TRADE UNION RIGHTS;-LESS ATTENTION AND ACTION ON POVERTY AND UNEMPOLOYMENT ISSUES.

REALIST POINT OF VIEW:

HEGEMONIC STABILITY THEORY (HST)

STATE IS THE ONLY GLOBAL ACTOR:

IT IS SELF INTERESTED;SEEKS FOR RELATIVE ADVANTAGE Pessimistic blueprint:

The anarchic scenario is avoided by cooperation among competitive states that act in diplomatic way;

A global governance cannot exist in this scenario.

Ios allow a peaceful coexistence.

ACTORS OF GLOBAL GOVERNANCE: THE COOPERATIVE TEMPORAL FIX.

The actual economic and political global system marks out solid global growth, low inflation and abundant liquidity by the power of cooperation among international institutions.

THANKS TO?

Through the intercession of the “high priest”. His aim is to place his hands, symbol of power, on the head of the goat, the actual global economic-system, in order to transmit on it the community negatives and give sense to the sacrifice: the crisis.

THE HIGH PRIEST.

Are considered as International Organizations (IOs) -each States, -International Monetary Fund (IMF), -World Bank (WB), -Organization for Economic Cooperation and Development (OECD) ,- North Atlantic Treaty organization

(NATO) - European Central Bank (ECB), - UE, - G20, - Paris Club,- London Club, - World Economic Forum (WEF), - World Trade Organization (WTO)

TEMPORAL FIX (Gill,2012, Harvey,2009)

Their role rose as working-response to the 1970s crisis (overproduction +inflation +low consumption), by:

-supporting internal demand;-fostering mass expanding productivity;-extending markets through the introduction of new credit and debt mechanism.

global governance institutions succeeded in containing catastrophic rises in unemployment and falls in international trade occurred during the global crisis of the 1930s (Radice,2011)

Has the Neoliberal model managed to forecast the actual crisis?

Neoliberal point of view. The recession occurred in 2001 can’t forecasts a global crisis

The loss of confidence between banks is resolvable only by a financial intervention (Gill,2012).

-central bank $17 trillion estimate intervention action aimed to peg the system (Gill, 2012)

There is no need for a State intervention because (Gill,2012; Harvey,2009):

-MARKETS ARE SELF-CORRECTING:

-THE ECONOMIC SYSTEM IS FLEXIBLE ENOUGH FOR CALCULATE THE OF THE SYSTEM AS A WHOLE.

-NEOLIBBERAL METHOD IS THE ONLY ONE ABLE TO CREATE NEW MARKETS ALL AROUND THE WORLD THANKS TO THE UNEVEN GEOGRAPHICAL DEVELOPMENT

2009

The think-tank of mainstream economists, bankers and academics convened by the British Academy wrote a letter in response to the Queen’s visit at the London School of Economics in November 2008 when she asked reasons for the global crisis.

“ The failure to foresee the timing,[…] was principally a failure of the collective imagination of many bright people,[…]

to understand the risks to the system as a whole.” (Gill,2012)

THE SINS OF THE CAPITAL ACCUMULATION: the ‘malignant influences” (Lysandrou,2011)

neoliberal economists located the causes of the crisis into:

the permissive behaviour of banks:

that where performing weak lending standards,

inadequate risk assessment

and excessive leverage

optimistic strategies engaged to verify the neoliberal efficient market hypothesis have failed (Krugman,2009).

financial failures of the system are caused not because of a macroeconomic stability financial budget, but because of intrinsic neoliberal principles (Lysandrou,2011)

1. treatment of securities as commodities

2. treatment of inequality

Treatment of securities as commodities

the most demand of security the less is the capacity to cope and guarantee them for an increasing number of investors that are going to take the lower borrowing costs related to such supply.

the role of investors in the growth of subprime products

Treatment of inequality

Based on the assumption that subprime financial product are granted to subjects that cannot access to market rate of interest because of their background bad history in payment, it fosters the demand of this credit among households that are not interested in the securitization of it.

So… why this behaviour is then possible?

Whereas the only reason is that this kind of financial product is considered as a suitable form of storage for high net worth individuals (HNWI) equal to the 0,1% of population holding the 10% of financial claims of the world’s governments and large corporations (Lysandrou, 2011)

The accumulation of such a wealth amount of global liquidity is actually due to the division of global capital system production; on one hand the west, were all the financial and consumerist activities are set, on the other the developing countries considered as commodities for exploitation in raw material production.

According to Lysandrou,2011

The scapegoat’s purification then is possible only by Austerity • fiscal regulation able to prevent more speculation, and so doing tries to use this “pharmacon” to safe capital

system at its very critical end-point (Gill, 2012).

source: http://leftunity.org.

Are there other alternatives to the zombie neoliberalism scenario (Brenner et al,2010)?

Lysandrou’s Three-point Tax Action Plan. (2011)

1. Prevent tax avoidance by closing down tax heaven. 2. Harmonization of tax structures to prevent ant exploitation of

differences between them. 3. Re-alignment of taxes: it is needed to distribute taxes into a progressive

rather than regressive basis.

@ Prevent future crises;@ Help finance the resolution for the present crisis; -expansion of the supply of governments bonds to high level;-avoid deep cuts in key areas of government expenditureBy Coordinated action among national governments.

”

“The current socio-ecological crisis urges to overcome capitalism’s senseless growth through the means of social dépense.

D’ALISA ET AL, 2015. (ADBUSTERS 2015)It relates to a public expenditure that in strictly economic sense is unproductive. In order to make political the idea that slow down and rescue individuals from their “illusionary and meaningless privatized lives”.

A degrowth society would have to build new institutions to choose in a collective way how to dedicate its resources to basic needs on the one hand, and different forms of dépense on the other.

To lead the political economy to sacred interests.

Degrowth Society

References

Brenner, N., J. Peck, and N. Theodore. (2010). “After Neoliberalization?” Globalizations 7, no. 3: 327–45Charrette, J. and Sterling-Folker J. (2014), Realism. In Weiss and Wilkinson (2014), International Organization and Global Governance, London and New York: Routledge.D’Alisa et al.,2015, Degrowth a Vocabulary for a new era. In Adbusters,2015, volume 23, no.3.Forsythe, D. (2014), Neoliberal Institutionalism. In Weiss and Wilkinson (2014), International Organization and Global Gill, S. (2012), Leaders and Led in an Era of Global Crises. In S. Gill (Ed.), Global Crises and the Crisis of Global Leadership (pp. 23-37). Cambridge: Cambridge University Press.Girard,R.(2001). I see Satan fall the lighting. Web-site source <http://girardianlectionary.net/res/iss_12-scapegoat.htm>Harvey, D. (2005). A brief history of neoliberalism. Oxford, Oxford University Press.Harvey, D. (2009), The Enigma of Capital, Oxford: OUP. Electronic Book via Leeds Beckett University Library web-site.Jönsson, C. (2014), Classical Liberal Internationalism. In Weiss and Wilkinson (2014), International Organization and Global Governance, London and New York: Routledge.Lysandrou, P. (2011), Global inequality, wealth concentration and the subprime crisis: A Marxian commodity theory analysis. Development and Change, 42(1), 183-208.Radice, H. (2011), Cutting government deficits: economic science or class war?, Capital & Class vol.35 no.1, pp 125-37.