This is a provocative piece but I am not sure Trump is really a Neoliberal. He is for the welfare state as long as it is largely covering old white people. He likes tariffs which are not very Neoliberal. I think you are projecting ideas onto him that are not there. He simply wants the Fed to lower rates to goose the economy short-term and possible the $100 million bonds he bought over the last year or two. Also I think most people called for Central Bank independence to prevent inflation from going to double-digits or to Argentine levels. Working class people don't like high inflation either!
Agreed. I may add: Trump is not an optimist, he is preparing a putsch through reelection for the 3rd mandate coupled with control of DC, to make sure that there cannot be a repetition of January 6th, à l’inverse.
In that scheme, a docile FED is essential to shield the US economy from the obvious, and expected, markets fallout in the aftermath of the coup.
I am witnessing the sleepwalking of a huge democracy into dictatorship and nobody seems to be really concerned. I am flabbergasted
Agreed that this the right way to understand Trump but some subtle shading is needed. Remember fascism (I am not debasing the significance of the word) is capitalism in its extreme phase. This applies even more when capitalism is married to aggressive nationalism, which is where we are heading. So markets will become less important and the state will intervene more frequently in the allocation of resources to produce goods and services that promote national greatness but also in the distribution of income away from labor and towards owners of capital. The original neoliberals —including Hayek for all his talk of spontaneous order — would have approved.
What Branko is writing about is the total hypocrisy of neoliberals. They were in favor of the non-independent Fed as long as they were the ones to control it. So much for the technical strength of their arguments. BTW, as far as I understand, the article is not if the Fed should be independent or not.
I find the word "direct" to be the most interesting and under-explored word here. What strikes me as new and significant is the combination of an authoritarian political structure with an ambiguously technocratic policy body. Note that Trump does not want to eliminate the fed but rather make sure that it's experts are his experts, who can implement policies without institutional intermediation ("indepencence"). There is an interesting book by Bickerton and Accetti called "Technopopulism" that speaks about this *synthesis* of technocratic and populist political techniques - rather than the rote oppositions between democracy and independence that are implied in the (rather mediocre) historical literature on neoliberalism....
Reading this, I wonder if neoliberalism is still a doctrine or simply the name we give to any structure that advances without asking the electorate. Central banks insulated from politics, strongmen improvising power, global integration, national retrenchment… all seem to qualify. If so, maybe neoliberalism is not an ideology at all but the grammar capitalism uses when democracy is too fragile to speak for itself.
Wait till MAGA realise that the cuts to Medicaid (that they depend on) and proceeds of tariffs (which they pay) will be used to fund tax cuts for the rich. Despite of reports of neoliberalism's demise it's all awfully familiar.
Which leads us to, "...they were too skeptical about the ability of such politicians to remain in power. But Trump is not." I suspect Trump has a plan to retain power, regardless of whether MAGA kick-off or not.
Also recommend yesterday's substack by Anne Pettifor, "Technocrats as handmaidens to authoritarianism - Pt 1" as an excellent companion piece.
Well, yes and no. Competition, which predates ‘neoliberalism’ puts a bit of a spanner in this argument. This has two dimensions, political and economic. Free and fair elections are somewhat important for democracy. Open competition between firms is usually important for innovation in economies. Dominium in these two areas has a value that imperium can’t deliver.
«If monetary and fiscal policies, and regulation of business etc. could be claimed to be technical matters best left to specialists, decision-making would be independent of the party in power and agencies would be able to maintain “correct” policies in the interest of capital-owners. This was the ideology behind the independence of central banking, and likewise of other, economic, parts of government. In fact, the term “independence” here means independence from the elected officials who represent public interest.»
That thesis is popular and is especially dear to eurosceptics in England and in EU countries who claim that the EU itself, not just central banks, is undemocratic because all decisions are taken by unaccountable, faceless technocrats instead of democratically elected politicians.
The thesis does not take into account that the politicians actually have complete control of the technocrats and their careers, and the only role of the technocrats is to acts as "red herrings" and scapegoats of the politicians. This is particularly obvious in the case of the EU where the council of heads of government is entirely in control, is democratically elected, and is both the legislative and executive body of the EU.
The Fed, the ECB, the BoE, the EU Commission itself are neoliberal because "centrist" politicians have set them them to be neoliberal; in particular the EU is neoliberal because most of the member governments are neoliberal. The technocrats of the Fed, ECB, BoE, EU Commission would never dare to be the disloyal opposition to the political power, they would be steamrolled.
The fundamental reasons why the political classes that control the technocrats use them to put in place neoliberal policies are not that the technocrats are independent as they are not in practice, but:
#1 The neoliberal "sponsors" of the politicians have ensured that all the major parties nominate candidates and leaders who are neoliberal, so regardless of how the "suckers and losers" (working class and under class) vote they can only elect neoliberals. But this would not be enough without the #2 reason.
#2 The majority of the middle class have done stupendously well from neoliberalism: they have made enormous profits, entirely redistributed from the lower classes, from property and shares booming valuations, while often still enjoying very nice defined benefit pensions. These affluent and comfortable people would otherwise fight with the "sponsors" by organizing themselves to use the formal aspect of democracy to oppose the #1 situation.
In practice the biggest factor in the political feasibility of neoliberalism is that middle class people do not need "left-wing, socialist and populist parties would often do better and come to power" because they are making so much money from property. Sure neoliberalism means lower wages for them too, but their property profits are much bigger than their losses from stagnant or shrinking wages.
They are both "petty bourgeoisie" and "proletarians" but vote mostly as "petty bourgeoisie" and not as proletarians because of how huge their property profits are.
It is not technocratic independence that has made neoliberalism possible it is the support of mass rentiers from the middle class.
I agree with the first half of this piece, but not the second. If the state is the executive committee of the bourgeoisie, Trump is doing a terrible job of representing his true constituents. The neoliberals are anti-inflationary and pro-austerity. Trump only cares about short-term interest rates. The inflationary effect of low interest rates is of no interest to him. Similarly, he cares not a whit about deficits.
I agree that Fed independence is part of the neo-liberal agenda to take democratic politics out of the management of the capitalist economy and to leave it in the hands of technocrats. (But it is interesting that Congress constrained the Fed's decision makers to follow the dual mandate set by politicians.) However, Trumpism does not fit in with the neo-liberal agenda at all. The reason is he wants policy (everything actually--the Kennedy Center!) under his control and many of his impulses are anti-neo-liberal--trade policy being the most obvious example. You can also see this with his desire to control the Fed as well. He does not seek control over the Fed to make monetary policy closer to some optimal, technocratic way of balancing the inflation-unemployment tradeoff. Not at all. He wants the Fed to make his government more popular by engineering a boom.
Furthermore, as Trump tears down the entire edifice constructed by neo-liberals since WWII (like rule-based trade, Fed independence, etc.), he will make it easier for future presidents to move in a non-neo-liberal direction.
Irrespective of Trump being or not being a neoliberal, he feels confident that he or his agenda will rule the US in the foreseeable future. Thus, independent institutions like the Fed are a nuisance for him. It is indeed ironic that the early neoliberals established Fed etc. “Independence” for the fear of it being subject to the popular leftist agenda.
I think the solution is for bureaucrats to engage with the public and explain their decisions to the public. If Chinese bureaucrats fail in this regard, I feel it is because they don’t explain the reasons for the decisions very well. But Chinese bureaucrats differ from Western technocrats in one crucial respect, they do engage with the public. I realise this claim is not well received in the West particularly because Chinese bureaucrats engage with the entire population, not a narrow capitalist elite. This inevitably offends to capitalist elites in a way that they are not used to, as the Western technocrats are rather differential to the capitalist elites.
«But Chinese bureaucrats differ from Western technocrats in one crucial respect, they do engage with the public. I realise this claim is not well received in the West particularly because Chinese bureaucrats engage with the entire population, not a narrow capitalist elite.»
The vast majority of PRC party and state officials and academics have significant portfolios of property investments and many also speculate on shares, and they are well trained in marxism so they understand very well that they are "petty bourgeoisie" and what their class interests are.
They may engage with the whole population but they are going like in "the west" first and foremost engage with the interests of property and stock rentiers like themselves. The PRC elites have chosen "thatcherism with chinese characteristics" like China-Taiwan and China-HK. Chairman Xi himself seems to still to care about socialism but he cannot fight the entire "tizhi".
«But Trump is not a pessimistic and defensive neoliberal. He is an optimistic and aggressive neoliberal. If he today, and similar politicians tomorrow, hold political power, why shouldn’t they take over all economic institutions too?»
I think that here our blogger makes a colossal confusion between "right winger" and "neoliberal", which are two very different concepts.
Trump like his ideological predecessors Perot and Buchanan is a right winger but a nationalist consolidationist "one nation" tradcon instead of a globalist expansionist "two nations" neoliberal like Clinton/Bush/Obama/Biden. They are two very different factions backed by "sponsors" with common right-wing interests but also quite different interests as to the details.
The nationalist tradcon logic to which Trump has been consistent to it for decades is that the USA empire after 1991 became overextended and to make it last it needs a phase of consolidation and re-strenghtening of the home country, including policy to re-compact the working class around the USA empire; their goal is to return to the more compact and stronger, with shorter supply lines, USA of the cold war, this time with the "second world" lead by the PRC instead of the USSR. Note: that logic is not isolationist: Perot, Buchanan, Trump never meant to give up the empire, simply to "rightsize" it to a less expensive size.
The globalist neoliberal logic is instead that certain sectors of the USA economy in particular finance, tech and property have made enormous profits from low wage production in other countries and sales in other other countries, and that while this may overextend the USA empire and cause its earlier end the beneficiaries of globalism do not care because they simply move elsewhere or retire to enjoy the enormous short term profits they have accumulated in their mansion-fortresses in the USA, their country-sized ranches in South America, their private islands in the Caribbean or the Pacific, etc.
This is a provocative piece but I am not sure Trump is really a Neoliberal. He is for the welfare state as long as it is largely covering old white people. He likes tariffs which are not very Neoliberal. I think you are projecting ideas onto him that are not there. He simply wants the Fed to lower rates to goose the economy short-term and possible the $100 million bonds he bought over the last year or two. Also I think most people called for Central Bank independence to prevent inflation from going to double-digits or to Argentine levels. Working class people don't like high inflation either!
We're ok with wage inflation for the working class.
In favor of the welfare state? The one he just gutted, you mean?
Agreed. I may add: Trump is not an optimist, he is preparing a putsch through reelection for the 3rd mandate coupled with control of DC, to make sure that there cannot be a repetition of January 6th, à l’inverse.
In that scheme, a docile FED is essential to shield the US economy from the obvious, and expected, markets fallout in the aftermath of the coup.
I am witnessing the sleepwalking of a huge democracy into dictatorship and nobody seems to be really concerned. I am flabbergasted
Two more weeks.
Agreed that this the right way to understand Trump but some subtle shading is needed. Remember fascism (I am not debasing the significance of the word) is capitalism in its extreme phase. This applies even more when capitalism is married to aggressive nationalism, which is where we are heading. So markets will become less important and the state will intervene more frequently in the allocation of resources to produce goods and services that promote national greatness but also in the distribution of income away from labor and towards owners of capital. The original neoliberals —including Hayek for all his talk of spontaneous order — would have approved.
What Branko is writing about is the total hypocrisy of neoliberals. They were in favor of the non-independent Fed as long as they were the ones to control it. So much for the technical strength of their arguments. BTW, as far as I understand, the article is not if the Fed should be independent or not.
I find the word "direct" to be the most interesting and under-explored word here. What strikes me as new and significant is the combination of an authoritarian political structure with an ambiguously technocratic policy body. Note that Trump does not want to eliminate the fed but rather make sure that it's experts are his experts, who can implement policies without institutional intermediation ("indepencence"). There is an interesting book by Bickerton and Accetti called "Technopopulism" that speaks about this *synthesis* of technocratic and populist political techniques - rather than the rote oppositions between democracy and independence that are implied in the (rather mediocre) historical literature on neoliberalism....
Very good summary - Trump as an aggressive Neoliberal. To that i would also add authoritarian thirst for power.
My own thesis on Central bank independence here.
https://3rdworldecon.substack.com/p/central-bank-independence
Exactly!
Thanks. Very insightful about political and technical power.
Reading this, I wonder if neoliberalism is still a doctrine or simply the name we give to any structure that advances without asking the electorate. Central banks insulated from politics, strongmen improvising power, global integration, national retrenchment… all seem to qualify. If so, maybe neoliberalism is not an ideology at all but the grammar capitalism uses when democracy is too fragile to speak for itself.
Wait till MAGA realise that the cuts to Medicaid (that they depend on) and proceeds of tariffs (which they pay) will be used to fund tax cuts for the rich. Despite of reports of neoliberalism's demise it's all awfully familiar.
Which leads us to, "...they were too skeptical about the ability of such politicians to remain in power. But Trump is not." I suspect Trump has a plan to retain power, regardless of whether MAGA kick-off or not.
Also recommend yesterday's substack by Anne Pettifor, "Technocrats as handmaidens to authoritarianism - Pt 1" as an excellent companion piece.
Well, yes and no. Competition, which predates ‘neoliberalism’ puts a bit of a spanner in this argument. This has two dimensions, political and economic. Free and fair elections are somewhat important for democracy. Open competition between firms is usually important for innovation in economies. Dominium in these two areas has a value that imperium can’t deliver.
Quinn Slobodian, not "Queen". :D I can see how Word would try to correct Quinn, though.
Corrected. Thanks. (Between dictation and the auto-correct....)
«If monetary and fiscal policies, and regulation of business etc. could be claimed to be technical matters best left to specialists, decision-making would be independent of the party in power and agencies would be able to maintain “correct” policies in the interest of capital-owners. This was the ideology behind the independence of central banking, and likewise of other, economic, parts of government. In fact, the term “independence” here means independence from the elected officials who represent public interest.»
That thesis is popular and is especially dear to eurosceptics in England and in EU countries who claim that the EU itself, not just central banks, is undemocratic because all decisions are taken by unaccountable, faceless technocrats instead of democratically elected politicians.
The thesis does not take into account that the politicians actually have complete control of the technocrats and their careers, and the only role of the technocrats is to acts as "red herrings" and scapegoats of the politicians. This is particularly obvious in the case of the EU where the council of heads of government is entirely in control, is democratically elected, and is both the legislative and executive body of the EU.
The Fed, the ECB, the BoE, the EU Commission itself are neoliberal because "centrist" politicians have set them them to be neoliberal; in particular the EU is neoliberal because most of the member governments are neoliberal. The technocrats of the Fed, ECB, BoE, EU Commission would never dare to be the disloyal opposition to the political power, they would be steamrolled.
The fundamental reasons why the political classes that control the technocrats use them to put in place neoliberal policies are not that the technocrats are independent as they are not in practice, but:
#1 The neoliberal "sponsors" of the politicians have ensured that all the major parties nominate candidates and leaders who are neoliberal, so regardless of how the "suckers and losers" (working class and under class) vote they can only elect neoliberals. But this would not be enough without the #2 reason.
#2 The majority of the middle class have done stupendously well from neoliberalism: they have made enormous profits, entirely redistributed from the lower classes, from property and shares booming valuations, while often still enjoying very nice defined benefit pensions. These affluent and comfortable people would otherwise fight with the "sponsors" by organizing themselves to use the formal aspect of democracy to oppose the #1 situation.
In practice the biggest factor in the political feasibility of neoliberalism is that middle class people do not need "left-wing, socialist and populist parties would often do better and come to power" because they are making so much money from property. Sure neoliberalism means lower wages for them too, but their property profits are much bigger than their losses from stagnant or shrinking wages.
They are both "petty bourgeoisie" and "proletarians" but vote mostly as "petty bourgeoisie" and not as proletarians because of how huge their property profits are.
It is not technocratic independence that has made neoliberalism possible it is the support of mass rentiers from the middle class.
I agree with the first half of this piece, but not the second. If the state is the executive committee of the bourgeoisie, Trump is doing a terrible job of representing his true constituents. The neoliberals are anti-inflationary and pro-austerity. Trump only cares about short-term interest rates. The inflationary effect of low interest rates is of no interest to him. Similarly, he cares not a whit about deficits.
I agree that Fed independence is part of the neo-liberal agenda to take democratic politics out of the management of the capitalist economy and to leave it in the hands of technocrats. (But it is interesting that Congress constrained the Fed's decision makers to follow the dual mandate set by politicians.) However, Trumpism does not fit in with the neo-liberal agenda at all. The reason is he wants policy (everything actually--the Kennedy Center!) under his control and many of his impulses are anti-neo-liberal--trade policy being the most obvious example. You can also see this with his desire to control the Fed as well. He does not seek control over the Fed to make monetary policy closer to some optimal, technocratic way of balancing the inflation-unemployment tradeoff. Not at all. He wants the Fed to make his government more popular by engineering a boom.
Furthermore, as Trump tears down the entire edifice constructed by neo-liberals since WWII (like rule-based trade, Fed independence, etc.), he will make it easier for future presidents to move in a non-neo-liberal direction.
Irrespective of Trump being or not being a neoliberal, he feels confident that he or his agenda will rule the US in the foreseeable future. Thus, independent institutions like the Fed are a nuisance for him. It is indeed ironic that the early neoliberals established Fed etc. “Independence” for the fear of it being subject to the popular leftist agenda.
I think the solution is for bureaucrats to engage with the public and explain their decisions to the public. If Chinese bureaucrats fail in this regard, I feel it is because they don’t explain the reasons for the decisions very well. But Chinese bureaucrats differ from Western technocrats in one crucial respect, they do engage with the public. I realise this claim is not well received in the West particularly because Chinese bureaucrats engage with the entire population, not a narrow capitalist elite. This inevitably offends to capitalist elites in a way that they are not used to, as the Western technocrats are rather differential to the capitalist elites.
«But Chinese bureaucrats differ from Western technocrats in one crucial respect, they do engage with the public. I realise this claim is not well received in the West particularly because Chinese bureaucrats engage with the entire population, not a narrow capitalist elite.»
The vast majority of PRC party and state officials and academics have significant portfolios of property investments and many also speculate on shares, and they are well trained in marxism so they understand very well that they are "petty bourgeoisie" and what their class interests are.
They may engage with the whole population but they are going like in "the west" first and foremost engage with the interests of property and stock rentiers like themselves. The PRC elites have chosen "thatcherism with chinese characteristics" like China-Taiwan and China-HK. Chairman Xi himself seems to still to care about socialism but he cannot fight the entire "tizhi".
«But Trump is not a pessimistic and defensive neoliberal. He is an optimistic and aggressive neoliberal. If he today, and similar politicians tomorrow, hold political power, why shouldn’t they take over all economic institutions too?»
I think that here our blogger makes a colossal confusion between "right winger" and "neoliberal", which are two very different concepts.
Trump like his ideological predecessors Perot and Buchanan is a right winger but a nationalist consolidationist "one nation" tradcon instead of a globalist expansionist "two nations" neoliberal like Clinton/Bush/Obama/Biden. They are two very different factions backed by "sponsors" with common right-wing interests but also quite different interests as to the details.
The nationalist tradcon logic to which Trump has been consistent to it for decades is that the USA empire after 1991 became overextended and to make it last it needs a phase of consolidation and re-strenghtening of the home country, including policy to re-compact the working class around the USA empire; their goal is to return to the more compact and stronger, with shorter supply lines, USA of the cold war, this time with the "second world" lead by the PRC instead of the USSR. Note: that logic is not isolationist: Perot, Buchanan, Trump never meant to give up the empire, simply to "rightsize" it to a less expensive size.
The globalist neoliberal logic is instead that certain sectors of the USA economy in particular finance, tech and property have made enormous profits from low wage production in other countries and sales in other other countries, and that while this may overextend the USA empire and cause its earlier end the beneficiaries of globalism do not care because they simply move elsewhere or retire to enjoy the enormous short term profits they have accumulated in their mansion-fortresses in the USA, their country-sized ranches in South America, their private islands in the Caribbean or the Pacific, etc.