This is indeed a great piece. As a former EU official, I can personally testify the level of inconsistency and hypocrisy between the EU purported policies on SDGs and the actual implementation of its economic and foreign policy.
In Milanovic’s text there is an element which is missing: the true supporters of globalisation as a means of economic efficiency must also be true supporters of protecting individuals and their fundamental freedoms throughout the world. One needs that to have a true level playing field on that aspect, otherwise the economic game is rigged. China is the perfect example. So I believe that the abandonment of globalisation started not only with Obama’s sanctions and tariffs but also with JW Bush’s actions in the Middle East and with the US support of the worst regimes in the world. I do not need to make a list, you know them all.
Exactly! While "we" were technologically dominant, arguing in favor of tariffs, industrial policies etc. was a consequence of the lack of knowledge. Once "others" become at least as technologically good as us, if not better, government intervention in the economy becomes not only acceptable but also necessary. Free trade while we are winning, protectionism when we start losing.
Thank you. I think this is a well-argued, comprehensive and objective piece. It's difficult to see how you could be accused of supporting Trump given what was in the previous piece about Trump's victory and what you've written elsewhere. It's quite possible to simultaneously hold the position of not celebrating neoliberalism, pinpointing its demise in Trump's inauguration, and proposing no normative view about the ensuing events. The description of the abandonment of neoliberal polciies in the international arena here is quite accurate: protection of technology and IP; tariffs; industrial policy; economic coercion; trade blocs; ending the free movement of labour. The end of most of the tenets of neoliberalism shows it has run its course in practice.
Neoliberalism has, indeed, objectively been under question since at least 2008. The ascendance of not only Trump but other statists and protectionists signals its demise. I agree that the rising isolation and rejection of immigration into Europe - supposedly the bastion of liberalism - is clear confirmation of neoliberal decline.
What replaces it is anybody's guess, and i'm slightly sceptical about those on the left who suggest that somehow there might be a Mont Pelerin moment when a coherent progressive ideology emerges. Incoherence and fragmentaiton are more likely. The supposed free-marketeers will continue to pay lip-service. The plutocrats and billionaires will talk about the free market when it suits but will keep seeking political power.
One caveat to the story that neoliberalism is dead, though, is that its adherents dominate the international institutions. It's difficult to convey exactly how pervasive it is in the IMF, World Bank, WTO, OECD and parts of the UN, as well as many governments. Everyone's been brought up on it and defaults to neoliberal-type views -- and I mean at junior to mid-level as well as the top brass. Although there are exceptions, many of these people won't change their minds soon. The doctrine has become ingrained as common sense over many decades. Without a coherent alternative it's unlikely to be dislodged soon.
«One caveat to the story that neoliberalism is dead»
I think differently about that because I have different understanding of reaganism/"neoliberalism", which I think at essence is the political alliance of "whig" investors and executives and "tory" middle class workers to redistribute upwards from the lower classes via lower labor costs and higher asset prices:
* There are two main right-wings: "tory" nationalist ("first estate" and "second estate") rooted in rentier (usually land) interests and "whig" globalists ("third estate") rooted in industrial (usually manufacturing) interests, which fought each other hard in the 19th century in Europe.
* The "tories" conservatives fought to preserve institutions in which they had greater power, the "whigs" radicals fought to replace them with markets in which they had greater power.
* Classic "whig" liberalism was about "free markets" and "free trade" but still usually within "spheres of influence" and it was against rentierism (e.g. against the "Corn Laws" in England).
* In the 1970s and 1980s the "whig" upper class decided to fight back against social-democracy and "invented" reaganism which was about a roll-back of the New Deal, in particular with the aim to wreck the labor unions, cut wages, pensions and social insurance to minimize taxes and maximize profits.
* The problem of the "whig" reaganistas was that most voters were workers and did not want to have their wages and pensions and social insurance cut. However reaganism triumphed in elections despite that, how was that possible?
* The "whig" reaganistas discovered (thanks to an english think-tank) that workers who owned however modest properties, shares, cars thought of themselves as "petty bourgeois" and voted for "tory" policies. It also turned out that in practice what really mattered to most "petty bourgeois" voters was property as their profits from property were much bigger than their losses from lower wages, pensions and social insurance.
So for me neoliberalism is not quite classic liberalism in being solely about free markets and free trade: it is a political alliance between the "whig" upper class (investors and executives) and the "tory" middle class (small property owners and secondarily stock based pension account owners). It is mix of classic "whig" liberalism and classic "tory" conservativism. It has also helped that many "whig" upper class also ended up having large investments in property and finance so have become in large part rentier "tories" themselves.
Note: consider the colossal bailouts in recent recessions, the classic "whig" attitude to them exemplified in Bagehot's principles has been completely inverted: enormous lending only to deeply bankupt corporations at nugatory interest rates collateralized by toxic paper.
This alliance is tendentially globalist, but the goal is to enrich the "whig" upper class and the "tory" middle class at the expense of the lower classes and maintain their power in the markets and the institutions, by any means, and principles do not matter except for propaganda.
«its adherents dominate the international institutions. [...] Although there are exceptions, many of these people won't change their minds soon. The doctrine has become ingrained as common sense over many decades.»
However self-regarding these people are they are usually well aware that they are not principals but "sponsored" hired help and they will change their minds quickly if their "sponsors" change policies or they will be quickly replaced with other "sponsored" hired help more consonant to the new policies. "personnel is policy" is something that the principals know very well.
«The growth of the investor class -- those 70 per cent of voters who own stock and are more opposed to taxes and regulations on business as a result -- is strengthening the conservative movement. More gun owners, fewer labor union members, more homeschoolers, more property owners and a dwindling number of FDR-era Democrats all strengthen the conservative movement versus the Democrats. [...] But going into November, what actually saved it for the Republicans was the investor vote, which went heavily R. Why? One, they didn't blame Bush for the collapse of the bubble.
They were mad at having lower stock prices and 401(k)s, but they didn't say Bush did this and that caused this. Secondly, the Democratic solution was to sic the trial lawyers on Enron and finish it off. No no no no no. We want our market caps to go back up, not low. [...] The 1930s rhetoric was bash business -- only a handful of bankers thought that meant them. Now if you say we're going to smash the big corporations, 60-plus percent of voters say "That's my retirement you're messing with. I don't appreciate that". And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher. And in 2002, voters said, “We're sorry about the seals and everything but we really got to get the stock market up.»
In England it is mostly property profits that made thatcherism popular:
«a carpenter [...] bought his council house in Devon in the early 80s for £17,000. When it was valued at £80,000 in 1989, he sold up and used the equity to put towards a £135,000 fisherman’s cottage in St Mawes. Now it’s valued at £1.1m. “I was very grateful to Margaret Thatcher,” he said.»
Thanks for your thoughtful comment. I don't find much to disagree with in your comments on neoliberalism. I certainly agree that it's more than classical liberalism, in that the state actively cultivates private property and states allegiance to the market although in reality serves specific class interests.
On whether the neoliberals in international institutions will change their minds quickly: I'm not so sure. I agree that many of the hired help will blow with the prevailing ideological winds, but many are indoctrinated with a belief in so-called free markets as taught to them in their postgrad mainstream economics or possibly business-school educations.
It's hard to suddenly start believing in industrial policy when it contradicts everything you've ever been taught, and what decades in the job has inculcated in you. Maybe not so much for the juniors, but many of the senior staff who hold the power will be die-hard neoliberals who don't give up so easily.
So at very least, there'll be a long period of inertia, and if no coherent ideology or change in education comes along to replace neoliberalism, it'll persist for some time. These institutions -- and I should add central banks to the list of international organisations -- have quite a lot of power.
A highly instructive case study is the Washington Consensus, which persisted for many years after it was declared dead in around the early 2000s. I'd argue that it's been in full effect until quite recently. Little in the conditions of IMF bail-outs has changed.
«It's difficult to see how you could be accused of supporting Trump given what was in the previous piece about Trump's victory and what you've written elsewhere.»
There is a very important word that matters here: "objectively". If someone says similar things as Trump/Putin/Xi/... or explains support of Trump/Putin/Xi/... as having in part a rational base, then even without any subjective intent to support Trump/Putin/Xi/... they are "objectively" on the side of Trump/Putin/Xi/... because they "amplify" their arguments. The only way to avoid being "objectively" on their side is to attack them and attack whatever they do or say or even everything they have not done or said but is useful to pretend they have done or said.
George Orwell, "Unpublished preface to Animal Farm", 1945:
“One of the peculiar phenomena of our time is the renegade Liberal. Over and above the familiar Marxist claim that ʻbourgeois libertyʼ is an illusion, there is now a widespread tendency to argue that one can only defend democracy by totalitarian methods. If one loves democracy, the argument runs, one must crush its enemies by no matter what means. And who are its enemies? It always appears that they are not only those who attack it openly and consciously, but those who ʻobjectivelyʼ endanger it by spreading mistaken doctrines. In other words, defending democracy involves destroying all independence of thought.”
If neo-liberalism is replaced by global sustainable development led by BRICS and its partner countries, that would be a great outcome. I think that is indeed possible. If only the Financial Times and its journalists see that, they might be able to help the West be part of this global sustainable development project.
One thing i agree with Dr Branko is that Trump is an endogenous variable - that means a net outcome of our current broken & dysfunctional political and economic system. The mainstream thinking mostly regard Trump as an exogenous variable by blaming the Russians or by cursing him as a fate of election lottery which turned out to be unfavorable. But the cause of Trump & social phenomenon he entails have deeper endogenous roots in today's very system. But mainstream thinkers continue to treat him as an outside invader who has come to destroy the system.
Regarding Neoliberalism, i concur much with Yanis Varoufakis on this. What we have today is not really Neoliberalism, it's something else. And Varoufakis describes it as Technofeudalism. Concept of Neoliberalism as a self sustainable system broke down in 2008. Hyper-financialization & transnational financial institutions were the heart & lungs of Neoliberal system. But this system failed spectacularly in 2008 and died. Since then what we have is a zombie system which was resuscitated/reanimated by trillions of bailouts and infusion into these financial institutions by central banks and treasuries of the western governments, most prominently America. So the financial institutions upon which neoliberalism operated since 2008 are zombies. This itself was a greatest scandal & corruption of 21st century which people conveniently ignore.
Now here i strongly agree with Varoufakis as he says that when something bad is dying, it's not necessary that something better will replace it. Technofeudalism in all regards is even more malignant than Neoliberalism. Without any exaggeration, the election of Trump appears to me as 'lights are going out' moment in the western world. I have no illusion about Trump. He's the most disturbed, incompetent and malignant human being on earth right now. There's nothing good that will come out of Trump regime. Only chaos and destruction of all kind - social, political, geopolitical, economic, cultural, ecological - he will degrade everything in not just America but the whole world. And the plutocrats that financed him will meddle in other nations to subvert them as well. The present system, global order is undoubtedly bad & dysfunctional but what's coming with Trump is far worse. Lights are going out in America.
Indeed, but also a buffoon: pretending to be serious he argued in not so many words that the government of which he was a minister was entitled "because democracy" to have an unlimited (in both amount and time) overdraft at the European Central Bank.
For this amazing "insight" he was celebrated! BTW I wish I had an unlimited overdraft at the ECB too, but I do not feel that I am entitled to it nor I have been celebrated for wishing it.
'....has never been achieved for political reasons' globalisation in a nutshell. Its always been about exercising power, which is why the idea of economics being politically 'neutral' is a sham devised by its winners. The Peter principle meant 'The West' only ever preached globalisation for mercantalist reasons using free trade as the means and intellectual justification of extracting wealth from the Global South (global trickle down if you will). But with wealth now trickling east, initial conditions have changed, so time to tweak the rules and restore order, with the West's hypocrisy laid bare for all to see. Has anything much really changed?
Neo-liberalism is just an ideology - it should never had been taken seriously. The simple rule for all other countries is: 'Do not listen to what the Americans say, look at what they do!'
The threat of China comes from the fact that it is a socialist society and not a capitalist one, therefore configuring an existential threat to capitalism, whose core is in the First World (but specifically in the USA).
But there are many historical movements involved in the loss of universality of the West.
1) During the First Cold War, the capitalist world had to invent the "middle class" as the new universal human being (substituting the "high cultured" aristocratic man of the Belle Epoque) in order to fight socialism in the propaganda front. This maneuver was an astouding success -- to this day, the peoples of the West still firmly believe the middle class is the backbone of capitalism -- but it came at a mortal cost: capitalism, in order to function properly, must only have two classes: capitalists and workers (as demonstrated by Marx). The middle class, whose characteristic is be an unproductive worker who receives well beyond its subsistence levels, is a parasite to capitalism in the long term. The creation of the middle class is the USSR's greatest deformation of the capitalist world, its great legacy of the First Cold War;
2) After the dissolution of the USSR, there was an euphoric period in the capitalist world called the End of History (1992-2008), a period where the middle class ossified and entrenched itself as the de facto clerical class (the "experts") of modern capitalism. This closed the door to all possibility of positive change (revolution) in the West. But since this is all built upon the lie of the End of History, the dominant doctrine of neoliberalism must be kept alive, like a religious, sacred text, among the members of the middle class (elected politicians also became members of the middle class, because they became de facto professional politicians under the direct service of capitalists; gerontocracy);
3) The contradiction became insustainable because a) the crisis of 2008 was evidence capitalism is in irreversible decline (that it was in its descendant phase was already visible to the greatest philosopher of the Cold War and End of History, István Mészáros, since at least 1995) and b) China is indeed socialist, being a full-fledged Marxist-Leninist (Stalinist) State, whose Party (the dreaded and feared by the West, the Communist Party of China), which demonstrated the Stalinist system could indeed be reformed and saved, and carry on the historical mission laid down by Lenin in 1917.
Now, what will the capitalist world do? It seems it is trying a last desperate attempt to reverse entropy and go back to its golden age, which was the 19th Century. But here the problem is the middle class itself, which has to be eliminated (capitalist dekulakization) but now manages the administrative and ideological machinery of capitalist society. But some reforms are being done, e.g. automation of middle class jobs (AI), the elimination of women's rights related to reproduction, the legalization of children labor (in some states of the USA), etc.
》The threat of China comes from the fact that it is a socialist society and not a capitalist one, therefore configuring an existential threat to capitalism, whose core is in the First World (but specifically in the USA). 《
I think you're missing the point here. I'll try to state that better (in my opinion), but I know very little about China, so I'm pretty sure that I'll miss some important point(s) too. And I hope someone who understands China better will correct me.
Current China has plenty of private property, so one could argue that it's sufficiently capitalist and not really socialist (unless you want to split hairs about the differences between socialist and communist). But the main thing is that China is a collectivist society. USA and other advanced western countries are liberal societies.
Liberalism is an ideology which has an individual at its center and communism is an ideology which has a collective (class) in its center.
And there has to be a clash between the two of them. During the first cold war there was a significant clash between capitalism and communism, but that, the way I see it, was not the core. The core of the conflict was the clash between liberalism and collectivism.
The communism lost because it could not compete on the economy front, so China (and others) have learnt that lesson and introduced sufficient amount of capitalist economy to enable them to compete. And that was extremely successful.
So we are where we are.
Another difference between USA and China is that most of USA leadership wanted to export their liberal ideology to the rest of the world, while China does not. Xi is always stressing "socialism with Chinese characteristics", (not just "socialism") which I take to be the strong signal about absolutely no intention to force that system on the rest of the world.
That makes China far more competitive on the market for potential allies. Trump, who's not an idiot, is trying to do the same (America first, which is totally not exportable because you can't seriously expect that other countries would adopt "America first" as their guiding principle). Mr Milanović wrote more about that some time ago, so I'll stop here.
You are correct when you state that, from the point of view of Humanities abstract theory (Economics, Sociology, and so on), we could be splitting hairs on what is socialism and what is capitalism forever.
But there is no ambiguity from the point of view of History: China is a socialist nation-state. That's what all of its surviving documents tell us and the archaeological evidence (the evidence outside the written and recorded documents) does not indicate this plethora of documentation is wrong in this regard (i.e. there is no historical discontinuity that indicates, sometime, China became not-socialist).
Put into rigorous scientific terms: there is no reason for scientific historians to doubt China's (New China, the PRC) is lying about its own definition of “Market Socialism with Chinese Characteristics”, nor that it is lying about the definition of its hegemonic party as “Marxist-Leninist”. From the opposite direction: any argument to the contrary can be accommodated by scientific History as a political-ideological dispute by a specific class of ideologues with very specific, clearly identifiable, agendas and motivations.
In other words: from the point of the science of History, we can easily explain (by overwhelming evidence) why China is socialist and we can easily explain (by decisive evidence) why a certain class or cabal of ideologues (here it doesn't matter if they are professors, academic creatures or not) feel the urge and the existential necessity to try to convince the world China is not socialist -- but we cannot scientifically demonstrate the opposite case (i.e. that China is the one trying to convince the world, falsely, that it is socialist, while the aforementioned class of ideologues are illuminating the masses by telling that China is not socialist).
PS: evidently, China is not a communist nation-state. A communist nation-state is a contradiction in terms, since communism, by definition (as per Marx, the founder of the modern conception of the term), is stateless stage of humanity. “Communist” is merely the name of the party (as was the case of the Soviet Union, which never claimed was a communist country, but a socialist one), not the description of the system.
The sword that cuts this Gordian Knot has a well known name: "rules based international order". Of course, there not being any document to pinpoint said rules, they probably change like the sandunes in the desert.
The main goal is to keep certain polities (the proponders) in power and enrich their elites, preferably by allowing them to extract as much wealth from the rest of the newoliberalized, globalized economies. It is easier to extract wealth from others' work than to run competitive businesses yourself.
And it is not only that Bretton Woods and economic principles are dead. International law built around avoiding war crimes and genocide is dead. US finds actions in Sudan for instance that are considered genocide and crimes of war, but refuses to see worst actions of Israel as such in Gaza.
The loadstar to all is is the prime directive guiding US elites: to be the hegemon, to have full spectrum dominance around the world. And Trump is being sucked in this black hole now. See the claims for Canada, Greenland, Panama Canal! Some might say it is in fact a retrenchment and consolidation and a switcheroo: leave Europe but get Canada and Greenland as a pacifier and molifier. What about China and Taiwan and Southeast Asia?
Somebody said that in fact China is preparing not to take back Taiwan, but to use Taiwan as the anvil over which the US claim to hegemony will be crushed. Possibly so. Ukraine has already inflicted major cracks in the pillars of said hegemony and image of power.
«the Financial Times has been misleading its readers into believing, or not noticing, that most of the neoliberal establishment has actually abandoned the principles of globalization which the very same people have been defending before, for some 20 or more years. The Financial Times has, in my opinion, failed to do so because of its strident anti-China policy and obsession with China’s success.»
It is hard for me to believe that B Milanovic really thinks that the “principles of globalization” were actually principles and not simply tactical choices in the pursuit of more power and wealth for USA based investors and executives!
Those investors and executives (and their "sponsored" supporters in politics, the media, universities) are strongly results oriented and to achieve the results they want they will adopt whichever principles are most useful for that, and they all know very well this famous principle of professional practice:
“If you’re weak on the facts and strong on the law, pound the law. If you’re weak on the law and strong on the facts, pound the facts. If you’re weak on both, pound the table.”
USA investors and executives have a main principle: "winners do whatever it takes". If it takes globalization for them to win, then it globalization is great, if it takes splitting *again* the global market in two ("first world" and "second world") to contain and isolate a rival, that is what will happen.
«why we are currently in the situation where the rules do not exist anymore. They are being treated in an entirely ad hoc manner: a certain set of rules are being used in one country or in one set of countries and other rules are being used in another set of countries.»
That has never been different! It is just that which countries were in the "first world" and which ones were in the "second world" changed a bit: for 20-30 years Russia and China were perceived as USA vassals and therefore admitted to the "first world" via the WTO, and now being perceived instead as rivals they have been put back into the "second world" (where for while only Korea-North, Cuba, Iran, Iraq, Lybia, Venezuela were mainly left).
USA policy has been entirely consistent for a very long time, the USA government has always applied "sanctions" against its perceived rivals or rebels, a measure of "free trade" is only allowed to vassals. It is a bit subtler form of England's old "Imperial Preference" policy.
«the neoliberal establishment has actually abandoned the principles of globalization [...] All of this is justified on the grounds of national interest. This is not an illegitimate position»
Lord Palmerston, foreign secretary of the english empire, already candidly and pithily stated in 1848 that “We have no eternal allies and we have no perpetual enemies. Our interests are perpetual and eternal and those interests it is our duty to follow.”
The same for principles as for allies and enemies.
«USA based investors and executives! [...] to achieve the results they want they will adopt whichever principles are most useful for that»
As an example similar to "free trade"/"globalization" there is "representative democracy": the experience of USA investors and executives in the USA itself is that representative democracy works well for them as representatives are easily and cheaply "sponsored" and allowing a small degree of flexibility and modest self-rule as to the details is more convenient than imposing full rule from above (which can be still imposed "shock and awe" style if needed). Given such experience in the USA it is not a surprise that USA investors and executives like to spread it abroad too.
I have never understood your obsession with the need for consistent ideology.
On the one hand I very much doubt that consistent ideology is theoretically possible. If I were a mathematician I'd try to prove that assertion formally. And if successful I'd be able to watch with amusement and glee how the proof does not change anyone's opinion or behavior.
On the other hand, it has always seemed to me that getting rid of ideology was desirable. Because when the bullshit meets reality, reality wins. And that hurts very much if at some point you started to believe your own bullshit. Getting other people to believe in ideology can be beneficial for the prophet, of course.
Then I had this weird idea that economic theories and ideologies for economists and their customers (politicians, mostly) serve the same purpose as astrology does for ordinary people. They can provide a psychological cruch which makes it easier to survive in chaotic and uncertain world. They most definitely can provide the means to avoid personal responsibility for the decisions. The science says so, the experts say so, the ideological consensus says so, so we were just following order^H^H^H^H best practices.
Astrology is currently out of fashion (in intellectual circles, at least), so it's very hard to create some great disaster with that crutch because a lot of people won't take you seriously and won't follow.
But science, science has authority. And if you use a crutch that looks like it's in line with the current understanding of science, there's no end to the damage you can do.
the world and its institutional components operate using consistent ideology aka paradigms. they cause errors and harm, but they are replaced with other paradigms built by networks of practitioners who see anomalies. pragmatism is very important to this contention and advance, the ability to escape the crutch of the paradigm's explained logic ... and build a new one
"It is common for sociological discussions of ideology to begin by acknowledging, if not bemoaning, the plurality of different ways of using the term 'ideology' (Eagleton 1991). Marx and Engels used it to denote the most abstract conceptions that populate an imaginary world of ideas independent of material life; later Marxists often used it to denote a conspiratorial ideational wool pulled over the eyes of the masses; political scientists use it to denote packages of positions, often believed to be unifiable in a single preferred optimal state, and, of course, many of us use it to denote the beliefs, attitudes and opinions of those with whom we disagree." (from "What is ideology?" by John Levi Martin)
And you say that the ideology is just another name for a paradigm?
The ideology will make people take a stand and fight (first with words, then with other things). The paradigms will not.
Having a paradigm to orient oneself in a complex world is practically common sense and having a consistent paradigm is a common wish, but ideology is not just a paradigm.
Paradigms replaced by other paradigms may also seem like common sense in this age when everyone has intuitive understanding of the concept called "progress" (which did not exist as such before 17th century), but, may I ask, which practicioners are replacing them?
In the case of Washington consensus it seems to me that people replacing it are not the practicioners of economy (who, in the common sense paradigm, should be the ones replacing it). Instead, the practicioners of power are abandoning it without bothering with the replacement paradigm or ideology because they have no use for it at present time.
Which leaves economists somewhat stranded because the demand for their fables has just disappeared, but such is life (or the whim of the market, for those who think that the market knows best). There's always astrology.
I would have said rather an organized religion with the neoclassical orthodoxy and academy as its priesthood -- dedicated to justifying current economic arrangements and issuing normative judgements on behalf of their paymasters (the oligarchs) as priests have done since time immemorial on behalf of the palace complex.
A conspiratorial ideational wool pulled over the eyes of the masses? But there is a chicken and egg problem there.
Did the priests find their religion independently of the paymasters and their rewards or after they have figured out that there were rewards for those who wanted to preach the party line?
The former are true believers and the later are opportunists. I suppose they very well know who is who amongst them and they probably don't like each other very much.
Treating them as if they were one and the same isn't very beneficial for the revolutionaries.
I wasn't thinking here so much of the individual motivations as the institutional ones, which in any case are the ones transmitted across generations, no?
I would think the notion of ideology is more consistent than you think, and you are simply playing at semantic games in an attempt to dismiss it. But to what end? I'm open to being wrong, but one would suspect to unclutter your own model of "how the world works," or ideology, and so nobody can disagree.
I'd even go as far as to state getting rid of ideology is impossible and a foolhardy desire. Being free of ideology is like being free of ever being wrong. Of course everyone is, everyone has their blinders, and I'd be sincerely concerned for anyone who believed they didn't.
I think the theory with the post World War 2 order was that as countries traded more there would be less wars and more liberal democracy. There is evidence of that (the USSR traded oil, but when it hit a wall in the mid-1980s the country became less authoritarian. And China is more liberal and free than under Mao. But the desire that countries would become less war-like was more or less done for after Russia started its war with Ukraine. I think the Financial Times is more like, "This experiment did not work as well as we thought, time to rethink it." Which is healthy rather than some crazed ideologue that thinks 10 percent tariffs will reorder the world economy. Tariffs are way lower than they were pre-FDR so neoliberalism has not died. Trade blocs were part-and-parcel of the Neoliberal Order (NAFTA, EU, Bi-lateral agreements, Mercosur, and I think I may be missing a trade block in West Africa). Industrial lead development indeed has made a comeback, but that is a triumph of liberalism that it can adjust, unlike what happened under paleo-left views. Economic coercion and free migration of labor were always part of the Neoliberal order, and were even worse pre-World War 2. So I think you are finding inconsistencies that are not there and adjustments in thinking that show an intellectual health of Neoliberalism rather than even more glaring inconsistencies of the paleo-left/Marxism or greater incoherence (see Paul Krugman's recent writing on Chinese economic management).
What you seem to have missed in the above is that the main area in which inconsistencies are identified is between how practice is shifting in the developed world and what is still being preached to the developing world.
So no there is no problem with ideas changing. The problem is with the leading countries changing their views while still imposing policies on weaker countries they frankly admit have not worked for them domestically. That is more than inconsistency, it is open hypocrisy, a major issue for any ruling ideology.
I also can't find the part of Branko's post where he moves from criticising the hypocrisy of late neoliberalism to arguing that the US should adopt Marxism as its new ruling ideology? It must be there because otherwise the last part of your comment would be a bizarre non sequitur.
It seems that you are responding not to the above post, but to a different, much less interesting article.
The one thing I will give you is that the use of the term "trade bloc" in the above is a bit vague, and covers arrangements most neoliberals would have no theoretical problem with in addition to ones they usually oppose. I believe Branko is referring specifically to politically motivated trade blocs, like for example COMECON rather than free trade agreements like NAFTA, and making an analogy between the former and friendshoring.
I mean tariffs are still way down and a lot of developed countries let developing countries slide by allowing them. Japan still has a ton of trade barriers and did when it developed after World War 2. Was that a horrendous hypocrisy? I doubt it. We let Argentina have a bunch of dumb tariff policies for decades. Just because Millei is finally doing away with them for air fryers is not some grand hypocrisy of the EU.
If Branko is going to say that late neoliberalism is some grand hypocritical ideology can we say the same about any "left" ideology he is still wedded to? We can and it is fair game. No I am responding to his post by hoisting him by his own petard you silly!
I think "Neoliberals" were always down with "trade blocs" since so many "trade blocs" came about during the Golden Era of Neoliberalism. I think the EU was politically motivated. And there are probably two camps of Neoliberals regarding trade blocs, the majority who are cool with trade blocs and a much smaller group who are agains them and any trade restrictions. I think there is imprecision in how Branko lumps all of the Neoliberals together, from Paul Krugman to Larry Kudlow...
RE: Tariffs, would you care to explain how exactly what you say diverges from what Branko's statement in the original post that under the terms of the neoliberal order "tariffs are sometimes considered a necessary evil but in principle the instrument that should be discouraged and used as rarely as possible"? Again, you seem to be arguing against a total strawman- the original post is right there! You clicked on it, how hard can it be to just read it closely?
The whole point is that during the neoliberal period the general trend was for tarrifs to be "way down" following the leadership of the US, but then during the Trump administration tariffs were starkly increased because the US like a stroppy child decided that the game wasn't working out in its favour anymore. The Biden administration rather than rolling back these policies and making Trumpism an aberration decided to keep many of these tarrifs, and now with Trump 2.0 they'll rise yet again in complete contravention to the previous decades of preaching of tarriffs being a necessary evil to be used as rarely as possible.
Your examples of Japan and Argentina are again more of the same. These countries are given a pass, but then countries like Rwanda that in principle one would expect to be given special treatment as a "necessary evil" to support their development are slapped with retaliation when they erect tarriffs on imports of second hand clothing to protect their nascent textile industry. The system is ad-hoc and inconsistent, applying one rule for me and mine, and another for thee. Or to put it another way, it is hypocritical.
RE: your attempt at hoisting the author by his petard- right... I didn't mention this in my original reply as there were many incorrect things in your post and I have limited time, but you say "unlike what happened under paleo-left views"- you seem to think that "paleo-leftism" means stalinism which it certainly doesn't. So pointing to the stagnancy of eastern bloc socialist ideologies is really not a "gotcha". That's the whole idea of the "paleo-" part, returning back to the spirit of the french revolution as an alternative to the dead-ends of orthodox marxism leninism as practiced in the eastern bloc and the post-1960s western new left. Those ideologies are not the same and hence your claim came across as a strange non sequitur.
I think Branko is looking at the US and Trump (and to a lesser extent Biden) and over-extrapolating that everyone in the West is cool with tariffs now. Japan and Argentina are big exceptions to the rule! Japan is a big country. Also the US has had high tariffs on clothes in general for years. It is ironic that you used that example since that is one where at least the US has had high tariffs for forever. No I never mentioned Stalinism in my post. Yeah Branko has mentioned he is "paleo-left" but seems to be all over the place, with as many internal contradictions and what-not as Neoliberalism or the hypocrisy it supposedly embodies. I mean it is easy to say, "oh paleo-leftism does not mean all of these actual left-wing economic policies from the 20th Century" and just do some weird hand-waving to the ideals that were quickly discarded during the French revolution. I mean what economic policies were actually implemented during the French Revolution other than getting rid of those of the Ancient Regime? Economic management of France during the late 1700s/early 1800s was not great according to the bond rates France was paying!
The defense of the current reversal on liberalism by saying that tariffs in the 1930s were higher than today, and industrial policies were more widespread in the 1950s than now is honestly besides the point. My main issue is the following. Liberal mainstream already abandoned globalization at least several years ago, and did this for basically geopolitical reasons: because Asia did well, and China doing well represents a geopolitical challenge. But the mainstream never accepted openly what they did. So, now, Trump comes as a very convenient excuse to blame on him something they have already done themselves & which in reality they support.
Yes, hypocrisy. If wealth trickled down as neoclassical economics say would we still have it? This is Kalecky’s (correct) critique as to why Keynesianism wasn’t sustainable in the long run. They got rid of it because it worked (re-distributed wealth rather than concentrating it). Globalisation is being abandoned for the same reasons.
I don't think the liberal mainstream supports 60 percent tariffs on China. Does the EU support it? Does Japan? You know, major liberal democracies? I think the liberal mainstream regarding US tariffs on China is as follows, "Biden didn't want to seem weak on China so he kept Trump's tariffs with a lot fewer waivers. And he did do a few strategic tariffs on products that are typically protected (cars). Probably should have dropped Trump's tariffs and done the more "security" tariffs earlier." I don't think that weakens International Organizations saying to Argentina, "Guys, you need to get your inflation rate under 10 percent."
In addition, & quite importantly, even if one totally disagrees with my chronology of the abandonment of neoliberal globalization & whether it was good, bad, inevitable, or whatever the problem that I mentioned remains: what are the economic policies that the international organizations are going to suggest to the Rest of the World now? They are in complete disarray.
For example, I remember from the Alejandro Toddaro development economics textbook of the late 1990s (a somewhat notable development economist) that pushed-back on the Neoliberal hyms or a completely statist-model of economic development, but argued that East Asian Tigers found a good mix of state and market interventions. This was in China's development infancy though. Also I remember Joe Stiglitz pushing back against Neoliberal orthodoxy back in the 1990s as part of the World Bank. You may have known him then so you would know better if he was a real outlier of the World Bank over the last 40-50 years...
Yeah you would know better than I about what international organizations say to low and middle income countries. Maybe they have always been for or against export lead-growth in manufacturers (East Asian Tiger model that China more or less developed)? I know at the very least that development economists have given differing advice (follow East Asian Tigers, go full Neoliberal, work on institutions, empower women.) My impression is that World Bank and IMF now focus more on building institutions/state capacity and empower women and support more "green" or "sustainable projects" than emphasize the Neoliberal hymns you cite. That movement away from the Neoliberal hymns began though in the late 90s, when China was still in its development infancy.
* My understanding is that our blogger is arguing that "the west" for a while adopted a principled "free trade" policy, supporting free trade whether with friend or foe, and then switched away from it while continuing to preach that principle, leaving "the west" without consistency between principles and policy.
* I reckon that "the west" never adopted a principled "free trade" policy, as the policy was always "free-ish trade but only within the USA sphere of influence", but rather the USA government thought that their sphere of influence expanded for perhaps 10-15 years to include Russia and China (but not Cuba, Iran, Venezuela, and other "sanctioned" foes). The "Cold War" continued, but against a much smaller set of foes.
* However I agree that "the west" continues to preach a principle inconsistent with policy, except I think the preaching was never consistent with actual policy, not just recently.
* As an aside, I guess that a major part of the reason why the USA government was anyhow keen on "free trade" within their sphere of influence was that the USA oligarchs were determined to export as many jobs as possible from the USA, and to import as many workers as possible, to "moderate" wage "inflation", while countries like Mexico, India, etc. have strict and harshly enforced "local jobs for local voters only" policies.
This article must be published in the Financial Times.
Since the 2008, economic crisis it is quite clear what the main principles of neoliberalism are:
1. The privatization of profits.
2. The socialization of losses.
3. Free trade/ tariffs adjusted depending on the ability of the west is able to technologically compete with other players
I think that after that crisis the liberalism has lost any credibility.
This is indeed a great piece. As a former EU official, I can personally testify the level of inconsistency and hypocrisy between the EU purported policies on SDGs and the actual implementation of its economic and foreign policy.
In Milanovic’s text there is an element which is missing: the true supporters of globalisation as a means of economic efficiency must also be true supporters of protecting individuals and their fundamental freedoms throughout the world. One needs that to have a true level playing field on that aspect, otherwise the economic game is rigged. China is the perfect example. So I believe that the abandonment of globalisation started not only with Obama’s sanctions and tariffs but also with JW Bush’s actions in the Middle East and with the US support of the worst regimes in the world. I do not need to make a list, you know them all.
Exactly! While "we" were technologically dominant, arguing in favor of tariffs, industrial policies etc. was a consequence of the lack of knowledge. Once "others" become at least as technologically good as us, if not better, government intervention in the economy becomes not only acceptable but also necessary. Free trade while we are winning, protectionism when we start losing.
Thank you. I think this is a well-argued, comprehensive and objective piece. It's difficult to see how you could be accused of supporting Trump given what was in the previous piece about Trump's victory and what you've written elsewhere. It's quite possible to simultaneously hold the position of not celebrating neoliberalism, pinpointing its demise in Trump's inauguration, and proposing no normative view about the ensuing events. The description of the abandonment of neoliberal polciies in the international arena here is quite accurate: protection of technology and IP; tariffs; industrial policy; economic coercion; trade blocs; ending the free movement of labour. The end of most of the tenets of neoliberalism shows it has run its course in practice.
Neoliberalism has, indeed, objectively been under question since at least 2008. The ascendance of not only Trump but other statists and protectionists signals its demise. I agree that the rising isolation and rejection of immigration into Europe - supposedly the bastion of liberalism - is clear confirmation of neoliberal decline.
What replaces it is anybody's guess, and i'm slightly sceptical about those on the left who suggest that somehow there might be a Mont Pelerin moment when a coherent progressive ideology emerges. Incoherence and fragmentaiton are more likely. The supposed free-marketeers will continue to pay lip-service. The plutocrats and billionaires will talk about the free market when it suits but will keep seeking political power.
One caveat to the story that neoliberalism is dead, though, is that its adherents dominate the international institutions. It's difficult to convey exactly how pervasive it is in the IMF, World Bank, WTO, OECD and parts of the UN, as well as many governments. Everyone's been brought up on it and defaults to neoliberal-type views -- and I mean at junior to mid-level as well as the top brass. Although there are exceptions, many of these people won't change their minds soon. The doctrine has become ingrained as common sense over many decades. Without a coherent alternative it's unlikely to be dislodged soon.
«One caveat to the story that neoliberalism is dead»
I think differently about that because I have different understanding of reaganism/"neoliberalism", which I think at essence is the political alliance of "whig" investors and executives and "tory" middle class workers to redistribute upwards from the lower classes via lower labor costs and higher asset prices:
* There are two main right-wings: "tory" nationalist ("first estate" and "second estate") rooted in rentier (usually land) interests and "whig" globalists ("third estate") rooted in industrial (usually manufacturing) interests, which fought each other hard in the 19th century in Europe.
* The "tories" conservatives fought to preserve institutions in which they had greater power, the "whigs" radicals fought to replace them with markets in which they had greater power.
* Classic "whig" liberalism was about "free markets" and "free trade" but still usually within "spheres of influence" and it was against rentierism (e.g. against the "Corn Laws" in England).
* In the 1970s and 1980s the "whig" upper class decided to fight back against social-democracy and "invented" reaganism which was about a roll-back of the New Deal, in particular with the aim to wreck the labor unions, cut wages, pensions and social insurance to minimize taxes and maximize profits.
* The problem of the "whig" reaganistas was that most voters were workers and did not want to have their wages and pensions and social insurance cut. However reaganism triumphed in elections despite that, how was that possible?
* The "whig" reaganistas discovered (thanks to an english think-tank) that workers who owned however modest properties, shares, cars thought of themselves as "petty bourgeois" and voted for "tory" policies. It also turned out that in practice what really mattered to most "petty bourgeois" voters was property as their profits from property were much bigger than their losses from lower wages, pensions and social insurance.
So for me neoliberalism is not quite classic liberalism in being solely about free markets and free trade: it is a political alliance between the "whig" upper class (investors and executives) and the "tory" middle class (small property owners and secondarily stock based pension account owners). It is mix of classic "whig" liberalism and classic "tory" conservativism. It has also helped that many "whig" upper class also ended up having large investments in property and finance so have become in large part rentier "tories" themselves.
Note: consider the colossal bailouts in recent recessions, the classic "whig" attitude to them exemplified in Bagehot's principles has been completely inverted: enormous lending only to deeply bankupt corporations at nugatory interest rates collateralized by toxic paper.
This alliance is tendentially globalist, but the goal is to enrich the "whig" upper class and the "tory" middle class at the expense of the lower classes and maintain their power in the markets and the institutions, by any means, and principles do not matter except for propaganda.
«its adherents dominate the international institutions. [...] Although there are exceptions, many of these people won't change their minds soon. The doctrine has become ingrained as common sense over many decades.»
However self-regarding these people are they are usually well aware that they are not principals but "sponsored" hired help and they will change their minds quickly if their "sponsors" change policies or they will be quickly replaced with other "sponsored" hired help more consonant to the new policies. "personnel is policy" is something that the principals know very well.
«workers who owned however modest properties, shares, cars thought of themselves as "petty bourgeois" and voted for "tory" policies.»
In the USA ownership of guns also has that effect... Here is famous right-wing political strategist Grover Norquist explaining:
http://www.enterstageright.com/archive/articles/0903/0903norquistinterview.htm
«The growth of the investor class -- those 70 per cent of voters who own stock and are more opposed to taxes and regulations on business as a result -- is strengthening the conservative movement. More gun owners, fewer labor union members, more homeschoolers, more property owners and a dwindling number of FDR-era Democrats all strengthen the conservative movement versus the Democrats. [...] But going into November, what actually saved it for the Republicans was the investor vote, which went heavily R. Why? One, they didn't blame Bush for the collapse of the bubble.
They were mad at having lower stock prices and 401(k)s, but they didn't say Bush did this and that caused this. Secondly, the Democratic solution was to sic the trial lawyers on Enron and finish it off. No no no no no. We want our market caps to go back up, not low. [...] The 1930s rhetoric was bash business -- only a handful of bankers thought that meant them. Now if you say we're going to smash the big corporations, 60-plus percent of voters say "That's my retirement you're messing with. I don't appreciate that". And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher. And in 2002, voters said, “We're sorry about the seals and everything but we really got to get the stock market up.»
In England it is mostly property profits that made thatcherism popular:
https://www.theguardian.com/society/2022/jun/29/how-right-to-buy-ruined-british-housing
«a carpenter [...] bought his council house in Devon in the early 80s for £17,000. When it was valued at £80,000 in 1989, he sold up and used the equity to put towards a £135,000 fisherman’s cottage in St Mawes. Now it’s valued at £1.1m. “I was very grateful to Margaret Thatcher,” he said.»
Thanks for your thoughtful comment. I don't find much to disagree with in your comments on neoliberalism. I certainly agree that it's more than classical liberalism, in that the state actively cultivates private property and states allegiance to the market although in reality serves specific class interests.
On whether the neoliberals in international institutions will change their minds quickly: I'm not so sure. I agree that many of the hired help will blow with the prevailing ideological winds, but many are indoctrinated with a belief in so-called free markets as taught to them in their postgrad mainstream economics or possibly business-school educations.
It's hard to suddenly start believing in industrial policy when it contradicts everything you've ever been taught, and what decades in the job has inculcated in you. Maybe not so much for the juniors, but many of the senior staff who hold the power will be die-hard neoliberals who don't give up so easily.
So at very least, there'll be a long period of inertia, and if no coherent ideology or change in education comes along to replace neoliberalism, it'll persist for some time. These institutions -- and I should add central banks to the list of international organisations -- have quite a lot of power.
A highly instructive case study is the Washington Consensus, which persisted for many years after it was declared dead in around the early 2000s. I'd argue that it's been in full effect until quite recently. Little in the conditions of IMF bail-outs has changed.
«It's difficult to see how you could be accused of supporting Trump given what was in the previous piece about Trump's victory and what you've written elsewhere.»
There is a very important word that matters here: "objectively". If someone says similar things as Trump/Putin/Xi/... or explains support of Trump/Putin/Xi/... as having in part a rational base, then even without any subjective intent to support Trump/Putin/Xi/... they are "objectively" on the side of Trump/Putin/Xi/... because they "amplify" their arguments. The only way to avoid being "objectively" on their side is to attack them and attack whatever they do or say or even everything they have not done or said but is useful to pretend they have done or said.
George Orwell, "Unpublished preface to Animal Farm", 1945:
“One of the peculiar phenomena of our time is the renegade Liberal. Over and above the familiar Marxist claim that ʻbourgeois libertyʼ is an illusion, there is now a widespread tendency to argue that one can only defend democracy by totalitarian methods. If one loves democracy, the argument runs, one must crush its enemies by no matter what means. And who are its enemies? It always appears that they are not only those who attack it openly and consciously, but those who ʻobjectivelyʼ endanger it by spreading mistaken doctrines. In other words, defending democracy involves destroying all independence of thought.”
If neo-liberalism is replaced by global sustainable development led by BRICS and its partner countries, that would be a great outcome. I think that is indeed possible. If only the Financial Times and its journalists see that, they might be able to help the West be part of this global sustainable development project.
One thing i agree with Dr Branko is that Trump is an endogenous variable - that means a net outcome of our current broken & dysfunctional political and economic system. The mainstream thinking mostly regard Trump as an exogenous variable by blaming the Russians or by cursing him as a fate of election lottery which turned out to be unfavorable. But the cause of Trump & social phenomenon he entails have deeper endogenous roots in today's very system. But mainstream thinkers continue to treat him as an outside invader who has come to destroy the system.
Regarding Neoliberalism, i concur much with Yanis Varoufakis on this. What we have today is not really Neoliberalism, it's something else. And Varoufakis describes it as Technofeudalism. Concept of Neoliberalism as a self sustainable system broke down in 2008. Hyper-financialization & transnational financial institutions were the heart & lungs of Neoliberal system. But this system failed spectacularly in 2008 and died. Since then what we have is a zombie system which was resuscitated/reanimated by trillions of bailouts and infusion into these financial institutions by central banks and treasuries of the western governments, most prominently America. So the financial institutions upon which neoliberalism operated since 2008 are zombies. This itself was a greatest scandal & corruption of 21st century which people conveniently ignore.
Now here i strongly agree with Varoufakis as he says that when something bad is dying, it's not necessary that something better will replace it. Technofeudalism in all regards is even more malignant than Neoliberalism. Without any exaggeration, the election of Trump appears to me as 'lights are going out' moment in the western world. I have no illusion about Trump. He's the most disturbed, incompetent and malignant human being on earth right now. There's nothing good that will come out of Trump regime. Only chaos and destruction of all kind - social, political, geopolitical, economic, cultural, ecological - he will degrade everything in not just America but the whole world. And the plutocrats that financed him will meddle in other nations to subvert them as well. The present system, global order is undoubtedly bad & dysfunctional but what's coming with Trump is far worse. Lights are going out in America.
Varoufakis is very intelligent and thank you for regurgitating his thoughts for us.
«Varoufakis is very intelligent»
Indeed, but also a buffoon: pretending to be serious he argued in not so many words that the government of which he was a minister was entitled "because democracy" to have an unlimited (in both amount and time) overdraft at the European Central Bank.
For this amazing "insight" he was celebrated! BTW I wish I had an unlimited overdraft at the ECB too, but I do not feel that I am entitled to it nor I have been celebrated for wishing it.
'....has never been achieved for political reasons' globalisation in a nutshell. Its always been about exercising power, which is why the idea of economics being politically 'neutral' is a sham devised by its winners. The Peter principle meant 'The West' only ever preached globalisation for mercantalist reasons using free trade as the means and intellectual justification of extracting wealth from the Global South (global trickle down if you will). But with wealth now trickling east, initial conditions have changed, so time to tweak the rules and restore order, with the West's hypocrisy laid bare for all to see. Has anything much really changed?
Yup -- "gunboat diplomacy" never really went away, did it?
Neo-liberalism is just an ideology - it should never had been taken seriously. The simple rule for all other countries is: 'Do not listen to what the Americans say, look at what they do!'
Good advise about all politicians and nations. Talk is cheap....
The threat of China comes from the fact that it is a socialist society and not a capitalist one, therefore configuring an existential threat to capitalism, whose core is in the First World (but specifically in the USA).
But there are many historical movements involved in the loss of universality of the West.
1) During the First Cold War, the capitalist world had to invent the "middle class" as the new universal human being (substituting the "high cultured" aristocratic man of the Belle Epoque) in order to fight socialism in the propaganda front. This maneuver was an astouding success -- to this day, the peoples of the West still firmly believe the middle class is the backbone of capitalism -- but it came at a mortal cost: capitalism, in order to function properly, must only have two classes: capitalists and workers (as demonstrated by Marx). The middle class, whose characteristic is be an unproductive worker who receives well beyond its subsistence levels, is a parasite to capitalism in the long term. The creation of the middle class is the USSR's greatest deformation of the capitalist world, its great legacy of the First Cold War;
2) After the dissolution of the USSR, there was an euphoric period in the capitalist world called the End of History (1992-2008), a period where the middle class ossified and entrenched itself as the de facto clerical class (the "experts") of modern capitalism. This closed the door to all possibility of positive change (revolution) in the West. But since this is all built upon the lie of the End of History, the dominant doctrine of neoliberalism must be kept alive, like a religious, sacred text, among the members of the middle class (elected politicians also became members of the middle class, because they became de facto professional politicians under the direct service of capitalists; gerontocracy);
3) The contradiction became insustainable because a) the crisis of 2008 was evidence capitalism is in irreversible decline (that it was in its descendant phase was already visible to the greatest philosopher of the Cold War and End of History, István Mészáros, since at least 1995) and b) China is indeed socialist, being a full-fledged Marxist-Leninist (Stalinist) State, whose Party (the dreaded and feared by the West, the Communist Party of China), which demonstrated the Stalinist system could indeed be reformed and saved, and carry on the historical mission laid down by Lenin in 1917.
Now, what will the capitalist world do? It seems it is trying a last desperate attempt to reverse entropy and go back to its golden age, which was the 19th Century. But here the problem is the middle class itself, which has to be eliminated (capitalist dekulakization) but now manages the administrative and ideological machinery of capitalist society. But some reforms are being done, e.g. automation of middle class jobs (AI), the elimination of women's rights related to reproduction, the legalization of children labor (in some states of the USA), etc.
》The threat of China comes from the fact that it is a socialist society and not a capitalist one, therefore configuring an existential threat to capitalism, whose core is in the First World (but specifically in the USA). 《
I think you're missing the point here. I'll try to state that better (in my opinion), but I know very little about China, so I'm pretty sure that I'll miss some important point(s) too. And I hope someone who understands China better will correct me.
Current China has plenty of private property, so one could argue that it's sufficiently capitalist and not really socialist (unless you want to split hairs about the differences between socialist and communist). But the main thing is that China is a collectivist society. USA and other advanced western countries are liberal societies.
Liberalism is an ideology which has an individual at its center and communism is an ideology which has a collective (class) in its center.
And there has to be a clash between the two of them. During the first cold war there was a significant clash between capitalism and communism, but that, the way I see it, was not the core. The core of the conflict was the clash between liberalism and collectivism.
The communism lost because it could not compete on the economy front, so China (and others) have learnt that lesson and introduced sufficient amount of capitalist economy to enable them to compete. And that was extremely successful.
So we are where we are.
Another difference between USA and China is that most of USA leadership wanted to export their liberal ideology to the rest of the world, while China does not. Xi is always stressing "socialism with Chinese characteristics", (not just "socialism") which I take to be the strong signal about absolutely no intention to force that system on the rest of the world.
That makes China far more competitive on the market for potential allies. Trump, who's not an idiot, is trying to do the same (America first, which is totally not exportable because you can't seriously expect that other countries would adopt "America first" as their guiding principle). Mr Milanović wrote more about that some time ago, so I'll stop here.
You are correct when you state that, from the point of view of Humanities abstract theory (Economics, Sociology, and so on), we could be splitting hairs on what is socialism and what is capitalism forever.
But there is no ambiguity from the point of view of History: China is a socialist nation-state. That's what all of its surviving documents tell us and the archaeological evidence (the evidence outside the written and recorded documents) does not indicate this plethora of documentation is wrong in this regard (i.e. there is no historical discontinuity that indicates, sometime, China became not-socialist).
Put into rigorous scientific terms: there is no reason for scientific historians to doubt China's (New China, the PRC) is lying about its own definition of “Market Socialism with Chinese Characteristics”, nor that it is lying about the definition of its hegemonic party as “Marxist-Leninist”. From the opposite direction: any argument to the contrary can be accommodated by scientific History as a political-ideological dispute by a specific class of ideologues with very specific, clearly identifiable, agendas and motivations.
In other words: from the point of the science of History, we can easily explain (by overwhelming evidence) why China is socialist and we can easily explain (by decisive evidence) why a certain class or cabal of ideologues (here it doesn't matter if they are professors, academic creatures or not) feel the urge and the existential necessity to try to convince the world China is not socialist -- but we cannot scientifically demonstrate the opposite case (i.e. that China is the one trying to convince the world, falsely, that it is socialist, while the aforementioned class of ideologues are illuminating the masses by telling that China is not socialist).
PS: evidently, China is not a communist nation-state. A communist nation-state is a contradiction in terms, since communism, by definition (as per Marx, the founder of the modern conception of the term), is stateless stage of humanity. “Communist” is merely the name of the party (as was the case of the Soviet Union, which never claimed was a communist country, but a socialist one), not the description of the system.
The sword that cuts this Gordian Knot has a well known name: "rules based international order". Of course, there not being any document to pinpoint said rules, they probably change like the sandunes in the desert.
The main goal is to keep certain polities (the proponders) in power and enrich their elites, preferably by allowing them to extract as much wealth from the rest of the newoliberalized, globalized economies. It is easier to extract wealth from others' work than to run competitive businesses yourself.
And it is not only that Bretton Woods and economic principles are dead. International law built around avoiding war crimes and genocide is dead. US finds actions in Sudan for instance that are considered genocide and crimes of war, but refuses to see worst actions of Israel as such in Gaza.
The loadstar to all is is the prime directive guiding US elites: to be the hegemon, to have full spectrum dominance around the world. And Trump is being sucked in this black hole now. See the claims for Canada, Greenland, Panama Canal! Some might say it is in fact a retrenchment and consolidation and a switcheroo: leave Europe but get Canada and Greenland as a pacifier and molifier. What about China and Taiwan and Southeast Asia?
Somebody said that in fact China is preparing not to take back Taiwan, but to use Taiwan as the anvil over which the US claim to hegemony will be crushed. Possibly so. Ukraine has already inflicted major cracks in the pillars of said hegemony and image of power.
«the Financial Times has been misleading its readers into believing, or not noticing, that most of the neoliberal establishment has actually abandoned the principles of globalization which the very same people have been defending before, for some 20 or more years. The Financial Times has, in my opinion, failed to do so because of its strident anti-China policy and obsession with China’s success.»
It is hard for me to believe that B Milanovic really thinks that the “principles of globalization” were actually principles and not simply tactical choices in the pursuit of more power and wealth for USA based investors and executives!
Those investors and executives (and their "sponsored" supporters in politics, the media, universities) are strongly results oriented and to achieve the results they want they will adopt whichever principles are most useful for that, and they all know very well this famous principle of professional practice:
https://quoteinvestigator.com/2010/07/04/legal-adage/
“If you’re weak on the facts and strong on the law, pound the law. If you’re weak on the law and strong on the facts, pound the facts. If you’re weak on both, pound the table.”
USA investors and executives have a main principle: "winners do whatever it takes". If it takes globalization for them to win, then it globalization is great, if it takes splitting *again* the global market in two ("first world" and "second world") to contain and isolate a rival, that is what will happen.
«why we are currently in the situation where the rules do not exist anymore. They are being treated in an entirely ad hoc manner: a certain set of rules are being used in one country or in one set of countries and other rules are being used in another set of countries.»
That has never been different! It is just that which countries were in the "first world" and which ones were in the "second world" changed a bit: for 20-30 years Russia and China were perceived as USA vassals and therefore admitted to the "first world" via the WTO, and now being perceived instead as rivals they have been put back into the "second world" (where for while only Korea-North, Cuba, Iran, Iraq, Lybia, Venezuela were mainly left).
USA policy has been entirely consistent for a very long time, the USA government has always applied "sanctions" against its perceived rivals or rebels, a measure of "free trade" is only allowed to vassals. It is a bit subtler form of England's old "Imperial Preference" policy.
«the neoliberal establishment has actually abandoned the principles of globalization [...] All of this is justified on the grounds of national interest. This is not an illegitimate position»
Lord Palmerston, foreign secretary of the english empire, already candidly and pithily stated in 1848 that “We have no eternal allies and we have no perpetual enemies. Our interests are perpetual and eternal and those interests it is our duty to follow.”
The same for principles as for allies and enemies.
«USA based investors and executives! [...] to achieve the results they want they will adopt whichever principles are most useful for that»
As an example similar to "free trade"/"globalization" there is "representative democracy": the experience of USA investors and executives in the USA itself is that representative democracy works well for them as representatives are easily and cheaply "sponsored" and allowing a small degree of flexibility and modest self-rule as to the details is more convenient than imposing full rule from above (which can be still imposed "shock and awe" style if needed). Given such experience in the USA it is not a surprise that USA investors and executives like to spread it abroad too.
Precisely. Trump has never been the disease -- he is merely one of its morbid symptoms ...
I have never understood your obsession with the need for consistent ideology.
On the one hand I very much doubt that consistent ideology is theoretically possible. If I were a mathematician I'd try to prove that assertion formally. And if successful I'd be able to watch with amusement and glee how the proof does not change anyone's opinion or behavior.
On the other hand, it has always seemed to me that getting rid of ideology was desirable. Because when the bullshit meets reality, reality wins. And that hurts very much if at some point you started to believe your own bullshit. Getting other people to believe in ideology can be beneficial for the prophet, of course.
Then I had this weird idea that economic theories and ideologies for economists and their customers (politicians, mostly) serve the same purpose as astrology does for ordinary people. They can provide a psychological cruch which makes it easier to survive in chaotic and uncertain world. They most definitely can provide the means to avoid personal responsibility for the decisions. The science says so, the experts say so, the ideological consensus says so, so we were just following order^H^H^H^H best practices.
Astrology is currently out of fashion (in intellectual circles, at least), so it's very hard to create some great disaster with that crutch because a lot of people won't take you seriously and won't follow.
But science, science has authority. And if you use a crutch that looks like it's in line with the current understanding of science, there's no end to the damage you can do.
the world and its institutional components operate using consistent ideology aka paradigms. they cause errors and harm, but they are replaced with other paradigms built by networks of practitioners who see anomalies. pragmatism is very important to this contention and advance, the ability to escape the crutch of the paradigm's explained logic ... and build a new one
"It is common for sociological discussions of ideology to begin by acknowledging, if not bemoaning, the plurality of different ways of using the term 'ideology' (Eagleton 1991). Marx and Engels used it to denote the most abstract conceptions that populate an imaginary world of ideas independent of material life; later Marxists often used it to denote a conspiratorial ideational wool pulled over the eyes of the masses; political scientists use it to denote packages of positions, often believed to be unifiable in a single preferred optimal state, and, of course, many of us use it to denote the beliefs, attitudes and opinions of those with whom we disagree." (from "What is ideology?" by John Levi Martin)
And you say that the ideology is just another name for a paradigm?
The ideology will make people take a stand and fight (first with words, then with other things). The paradigms will not.
Having a paradigm to orient oneself in a complex world is practically common sense and having a consistent paradigm is a common wish, but ideology is not just a paradigm.
Paradigms replaced by other paradigms may also seem like common sense in this age when everyone has intuitive understanding of the concept called "progress" (which did not exist as such before 17th century), but, may I ask, which practicioners are replacing them?
In the case of Washington consensus it seems to me that people replacing it are not the practicioners of economy (who, in the common sense paradigm, should be the ones replacing it). Instead, the practicioners of power are abandoning it without bothering with the replacement paradigm or ideology because they have no use for it at present time.
Which leaves economists somewhat stranded because the demand for their fables has just disappeared, but such is life (or the whim of the market, for those who think that the market knows best). There's always astrology.
I would have said rather an organized religion with the neoclassical orthodoxy and academy as its priesthood -- dedicated to justifying current economic arrangements and issuing normative judgements on behalf of their paymasters (the oligarchs) as priests have done since time immemorial on behalf of the palace complex.
A conspiratorial ideational wool pulled over the eyes of the masses? But there is a chicken and egg problem there.
Did the priests find their religion independently of the paymasters and their rewards or after they have figured out that there were rewards for those who wanted to preach the party line?
The former are true believers and the later are opportunists. I suppose they very well know who is who amongst them and they probably don't like each other very much.
Treating them as if they were one and the same isn't very beneficial for the revolutionaries.
I wasn't thinking here so much of the individual motivations as the institutional ones, which in any case are the ones transmitted across generations, no?
I would think the notion of ideology is more consistent than you think, and you are simply playing at semantic games in an attempt to dismiss it. But to what end? I'm open to being wrong, but one would suspect to unclutter your own model of "how the world works," or ideology, and so nobody can disagree.
I'd even go as far as to state getting rid of ideology is impossible and a foolhardy desire. Being free of ideology is like being free of ever being wrong. Of course everyone is, everyone has their blinders, and I'd be sincerely concerned for anyone who believed they didn't.
I think the theory with the post World War 2 order was that as countries traded more there would be less wars and more liberal democracy. There is evidence of that (the USSR traded oil, but when it hit a wall in the mid-1980s the country became less authoritarian. And China is more liberal and free than under Mao. But the desire that countries would become less war-like was more or less done for after Russia started its war with Ukraine. I think the Financial Times is more like, "This experiment did not work as well as we thought, time to rethink it." Which is healthy rather than some crazed ideologue that thinks 10 percent tariffs will reorder the world economy. Tariffs are way lower than they were pre-FDR so neoliberalism has not died. Trade blocs were part-and-parcel of the Neoliberal Order (NAFTA, EU, Bi-lateral agreements, Mercosur, and I think I may be missing a trade block in West Africa). Industrial lead development indeed has made a comeback, but that is a triumph of liberalism that it can adjust, unlike what happened under paleo-left views. Economic coercion and free migration of labor were always part of the Neoliberal order, and were even worse pre-World War 2. So I think you are finding inconsistencies that are not there and adjustments in thinking that show an intellectual health of Neoliberalism rather than even more glaring inconsistencies of the paleo-left/Marxism or greater incoherence (see Paul Krugman's recent writing on Chinese economic management).
What you seem to have missed in the above is that the main area in which inconsistencies are identified is between how practice is shifting in the developed world and what is still being preached to the developing world.
So no there is no problem with ideas changing. The problem is with the leading countries changing their views while still imposing policies on weaker countries they frankly admit have not worked for them domestically. That is more than inconsistency, it is open hypocrisy, a major issue for any ruling ideology.
I also can't find the part of Branko's post where he moves from criticising the hypocrisy of late neoliberalism to arguing that the US should adopt Marxism as its new ruling ideology? It must be there because otherwise the last part of your comment would be a bizarre non sequitur.
It seems that you are responding not to the above post, but to a different, much less interesting article.
The one thing I will give you is that the use of the term "trade bloc" in the above is a bit vague, and covers arrangements most neoliberals would have no theoretical problem with in addition to ones they usually oppose. I believe Branko is referring specifically to politically motivated trade blocs, like for example COMECON rather than free trade agreements like NAFTA, and making an analogy between the former and friendshoring.
"That is more than inconsistency, it is open hypocrisy, a major issue for any ruling ideology."
It's Ha-Joon Chang's "Bad Samaritans" on steroids ...
I mean tariffs are still way down and a lot of developed countries let developing countries slide by allowing them. Japan still has a ton of trade barriers and did when it developed after World War 2. Was that a horrendous hypocrisy? I doubt it. We let Argentina have a bunch of dumb tariff policies for decades. Just because Millei is finally doing away with them for air fryers is not some grand hypocrisy of the EU.
If Branko is going to say that late neoliberalism is some grand hypocritical ideology can we say the same about any "left" ideology he is still wedded to? We can and it is fair game. No I am responding to his post by hoisting him by his own petard you silly!
I think "Neoliberals" were always down with "trade blocs" since so many "trade blocs" came about during the Golden Era of Neoliberalism. I think the EU was politically motivated. And there are probably two camps of Neoliberals regarding trade blocs, the majority who are cool with trade blocs and a much smaller group who are agains them and any trade restrictions. I think there is imprecision in how Branko lumps all of the Neoliberals together, from Paul Krugman to Larry Kudlow...
RE: Tariffs, would you care to explain how exactly what you say diverges from what Branko's statement in the original post that under the terms of the neoliberal order "tariffs are sometimes considered a necessary evil but in principle the instrument that should be discouraged and used as rarely as possible"? Again, you seem to be arguing against a total strawman- the original post is right there! You clicked on it, how hard can it be to just read it closely?
The whole point is that during the neoliberal period the general trend was for tarrifs to be "way down" following the leadership of the US, but then during the Trump administration tariffs were starkly increased because the US like a stroppy child decided that the game wasn't working out in its favour anymore. The Biden administration rather than rolling back these policies and making Trumpism an aberration decided to keep many of these tarrifs, and now with Trump 2.0 they'll rise yet again in complete contravention to the previous decades of preaching of tarriffs being a necessary evil to be used as rarely as possible.
Your examples of Japan and Argentina are again more of the same. These countries are given a pass, but then countries like Rwanda that in principle one would expect to be given special treatment as a "necessary evil" to support their development are slapped with retaliation when they erect tarriffs on imports of second hand clothing to protect their nascent textile industry. The system is ad-hoc and inconsistent, applying one rule for me and mine, and another for thee. Or to put it another way, it is hypocritical.
RE: your attempt at hoisting the author by his petard- right... I didn't mention this in my original reply as there were many incorrect things in your post and I have limited time, but you say "unlike what happened under paleo-left views"- you seem to think that "paleo-leftism" means stalinism which it certainly doesn't. So pointing to the stagnancy of eastern bloc socialist ideologies is really not a "gotcha". That's the whole idea of the "paleo-" part, returning back to the spirit of the french revolution as an alternative to the dead-ends of orthodox marxism leninism as practiced in the eastern bloc and the post-1960s western new left. Those ideologies are not the same and hence your claim came across as a strange non sequitur.
I think Branko is looking at the US and Trump (and to a lesser extent Biden) and over-extrapolating that everyone in the West is cool with tariffs now. Japan and Argentina are big exceptions to the rule! Japan is a big country. Also the US has had high tariffs on clothes in general for years. It is ironic that you used that example since that is one where at least the US has had high tariffs for forever. No I never mentioned Stalinism in my post. Yeah Branko has mentioned he is "paleo-left" but seems to be all over the place, with as many internal contradictions and what-not as Neoliberalism or the hypocrisy it supposedly embodies. I mean it is easy to say, "oh paleo-leftism does not mean all of these actual left-wing economic policies from the 20th Century" and just do some weird hand-waving to the ideals that were quickly discarded during the French revolution. I mean what economic policies were actually implemented during the French Revolution other than getting rid of those of the Ancient Regime? Economic management of France during the late 1700s/early 1800s was not great according to the bond rates France was paying!
The defense of the current reversal on liberalism by saying that tariffs in the 1930s were higher than today, and industrial policies were more widespread in the 1950s than now is honestly besides the point. My main issue is the following. Liberal mainstream already abandoned globalization at least several years ago, and did this for basically geopolitical reasons: because Asia did well, and China doing well represents a geopolitical challenge. But the mainstream never accepted openly what they did. So, now, Trump comes as a very convenient excuse to blame on him something they have already done themselves & which in reality they support.
Yes, hypocrisy. If wealth trickled down as neoclassical economics say would we still have it? This is Kalecky’s (correct) critique as to why Keynesianism wasn’t sustainable in the long run. They got rid of it because it worked (re-distributed wealth rather than concentrating it). Globalisation is being abandoned for the same reasons.
I don't think the liberal mainstream supports 60 percent tariffs on China. Does the EU support it? Does Japan? You know, major liberal democracies? I think the liberal mainstream regarding US tariffs on China is as follows, "Biden didn't want to seem weak on China so he kept Trump's tariffs with a lot fewer waivers. And he did do a few strategic tariffs on products that are typically protected (cars). Probably should have dropped Trump's tariffs and done the more "security" tariffs earlier." I don't think that weakens International Organizations saying to Argentina, "Guys, you need to get your inflation rate under 10 percent."
In addition, & quite importantly, even if one totally disagrees with my chronology of the abandonment of neoliberal globalization & whether it was good, bad, inevitable, or whatever the problem that I mentioned remains: what are the economic policies that the international organizations are going to suggest to the Rest of the World now? They are in complete disarray.
For example, I remember from the Alejandro Toddaro development economics textbook of the late 1990s (a somewhat notable development economist) that pushed-back on the Neoliberal hyms or a completely statist-model of economic development, but argued that East Asian Tigers found a good mix of state and market interventions. This was in China's development infancy though. Also I remember Joe Stiglitz pushing back against Neoliberal orthodoxy back in the 1990s as part of the World Bank. You may have known him then so you would know better if he was a real outlier of the World Bank over the last 40-50 years...
Yeah you would know better than I about what international organizations say to low and middle income countries. Maybe they have always been for or against export lead-growth in manufacturers (East Asian Tiger model that China more or less developed)? I know at the very least that development economists have given differing advice (follow East Asian Tigers, go full Neoliberal, work on institutions, empower women.) My impression is that World Bank and IMF now focus more on building institutions/state capacity and empower women and support more "green" or "sustainable projects" than emphasize the Neoliberal hymns you cite. That movement away from the Neoliberal hymns began though in the late 90s, when China was still in its development infancy.
To summarize some of my previous comments:
* My understanding is that our blogger is arguing that "the west" for a while adopted a principled "free trade" policy, supporting free trade whether with friend or foe, and then switched away from it while continuing to preach that principle, leaving "the west" without consistency between principles and policy.
* I reckon that "the west" never adopted a principled "free trade" policy, as the policy was always "free-ish trade but only within the USA sphere of influence", but rather the USA government thought that their sphere of influence expanded for perhaps 10-15 years to include Russia and China (but not Cuba, Iran, Venezuela, and other "sanctioned" foes). The "Cold War" continued, but against a much smaller set of foes.
* However I agree that "the west" continues to preach a principle inconsistent with policy, except I think the preaching was never consistent with actual policy, not just recently.
* As an aside, I guess that a major part of the reason why the USA government was anyhow keen on "free trade" within their sphere of influence was that the USA oligarchs were determined to export as many jobs as possible from the USA, and to import as many workers as possible, to "moderate" wage "inflation", while countries like Mexico, India, etc. have strict and harshly enforced "local jobs for local voters only" policies.