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Boston Review - July 19, 2021

It has been four decades since neoliberal globalization began to reshape the world order. During this time, its agenda has decimated labor rights, imposed rigid limits on fiscal deficits, given massive tax breaks and bailouts to big capital, sacrificed local production for multinational supply chains, and privatized public sector assets at throwaway prices.

As trickle-down economics lost its credibility, a new prop was needed to sustain the neoliberal regime politically. It came in the form of neofascism.

The result today is a perverse regime defined by the free movement of capital, which moves relatively effortlessly across international borders, even as free movement of the people is ruthlessly controlled by a sharp increase in income inequality and a steady winnowing of democracy. No matter who comes to power, no matter what promises are made before elections, the same economic policies are followed. Since capital, especially finance, can leave a country en masse at extremely short notice—precipitating an acute financial crisis if its “confidence” in a country is undermined—governments are loath to upset the status quo; they pursue policies favorable to finance capital and indeed demanded by it. The sovereignty of the people, in short, is replaced by the sovereignty of global finance and the domestic corporations integrated with it.

This abridgment of democracy is usually justified by political and economic elites on the grounds that neoliberal economic policies usher in higher GDP growth—considered the summum bonum after which all policy should aim. And indeed, in many countries, especially in Asia, the neoliberal era has ushered in noticeably more rapid growth than under the earlier period of dirigisme. Such growth scarcely benefits the bulk of the people, of course: in fact, neoliberal policies are even more highly associated with the growth of income inequality than with the growth of GDP. (Even International Monetary Fund economists Jonathan D. Ostry, Prakash Loungani, and Davide Furceri concede this point in their 2016 article “Neoliberalism: Oversold?”) But neoliberals have sold a powerful response to this objection: a rise in income inequality should be considered an acceptable price to pay for more rapid growth, for it still might mean an absolute improvement in the conditions of the worst off. The fundamental ideological conceit of neoliberalism has been that growth will lift all boats, even if some boats rise much more than others. ...
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