First of three parts
In the historical epic TV series Shogun, the embattled, weakened and seemingly defeated Lord Toranaga shrewdly uses his scarce resources to eventually outwit the other four regents ruling Japan. After an arc including much self-sacrifice, the series’ final moments look far beyond the horizon to a long period of peace after a long civil war.
This comes to mind because Toranaga played the long game – he kept control of his situation even when things seemed to be in disarray, nothing was working for him, and he was powerless. It’s a little bit like where we seem to be right now with our beleaguered efforts at “social development” amid “multifaceted disruptions” while looking at the seeming potential of the “5th Industrial Revolution.”
Many of us are burdened by Gramsci’s “pessimism of the intellect.” We know the immensity of the problem at hand – how to radically transform society and move beyond this historical period of capitalism and its obsession with profits and growth, toward a system obsessed with people’s well-being and welfare. The structural obstacles are tremendous.
Yet we of course also have the “optimism of the will.” We know a world based on the principles of cooperation, solidarity, and sustainability is being born because of all those tirelessly striving to build communities, embracing interconnectedness, and promoting stewardship. This room is full of them.
But this optimism is blind if we don’t acknowledge our setbacks in mobilizing the vast numbers committed to action and hope needed. We must confront growing illiberalism where rightists and reaction have enough public support to take political power. In the physics of struggle and social development, the immense organized oppression we face demands a more than equal opposite reaction from similarly immense civil society and social movements. Yet the forces for democracy and development worldwide are besieged from without, and in some important ways also from within.
Along the themes of this conference, five (5) points of attention may be relevant to our common efforts to advance the cause of social development. Hopefully they can help give some perspective.
(1) First, a little clarification on “neoliberalism.” The real driving force of the neoliberal era of the last 40-50 years hasn’t been a “free market” impulse as if this is the natural evolution of economies, but rather the state privileging capital, elite profits and wealth over everything else. This was done most visibly by expanding market mechanisms but also, very frequently, with relentless government intervention and support.
Economic life is not determined by inexorable and impersonal market forces and the state ultimately decides who benefits from the economy and society. The implication is that using the state to shape and organize economic life remains the most important and effective means to social development.
There’s no doubt that domestic economies around the world have been restructured according to market mechanisms on a massive scale over the last 40-50 years. The “free market” policies of globalization – aka liberalization, privatization and deregulation – were the tip of the spear.
The opening-up of economies to foreign trade and investment was most conspicuous in the Global South as the nationalist economic regimes of the post-colonial era were aggressively dismantled. This started in the 1970s, driven by International Monetary Fund (IMF) stabilization programs and World Bank (WB) structural adjustment. In the 1990s, the World Trade Organization’s (WTO) agreements and other free trade deals further intensified this trend.
Our cheap labor, natural resources and markets were made ever more accessible to foreign monopoly capital. This gave them substantial profits at the expense of local and national development. Social services, utilities and infrastructure were also privatized to vastly expand the opportunities for corporate profit-making. Businesses were liberated from social, environmental and economic regulations so they could profit freely.
Neoliberal globalization policies were also implemented in the Global North but much more opportunistically. It was fine for the United States (US), Europe, Japan and other industrialized countries to open up whenever they felt they could retain the advantage. They gave protections in the name of “national security” whenever they saw fit and dispensed corporate bailouts for those deemed too-big-to-fail. Countries like China and Russia likewise opened up but did so while maintaining elaborate regimes of state control over markets and so-called market forces – with stunning economic success in the case of China.
In any case, the result is everything we rail about so much today – immiserating growth and deindustrialization, chronic poverty and deepening distress for the majority, and vast ecological degradation. The other side of the neoliberal coin is of course soaring corporate profits and billionaire wealth. Still, growth has slowed since the 1970s with more frequent busts and recessions. The stagnation of the world economy since 2008 just became even more protracted post-COVID since 2020. Neoliberalism so justifiably deserves all the vitriol thrown against it because the evidence is exhaustive.
Countries are the most economically interlinked and integrated now than at any time in human history. Monopoly capital has unprecedented access to the world’s labor, natural resources and markets for its profit-seeking through their giant globe-spanning transnational corporations (TNCs). If this does not stir alarm among many it’s only because those in power have made sure that their dominance is not questioned or challenged.
However, while markets became more expansive, the neoliberal era wasn’t really an era of thoroughgoing radical laissez-faire economic policy. Globalization was implemented extensively but not really universally. Markets were opened up widely but still manipulated, restricted and ignored as necessary according to whatever capital deemed was most profitable for it.
The caricature of the neoliberal era seeing the rollback of the state is inaccurate and even misleading. Markets and profit-seeking did expand greatly since the 1970s by how much nationalist and protectionist economic policies were undone. The state didn’t roll back though and, if anything, even expanded its support for capital’s relentless profit-seeking.
Government spending as a share of gross domestic product (GDP) can be a proxy indicator of state intervention. Globally, this expanded from around 15-25% in the post-World War 2 (WW2) years until the 1970s, to 31% in the neoliberal 1980s-2000s, and now nearing 35% since the COVID pandemic and huge waves of state intervention worldwide. For the G7 traditional industrialized powers it was 20-35% in the post-WW2 years until the 1970s, then some 45% in the neoliberal 1980s-2000s, and now over 50% since the pandemic.
Among the biggest drivers of these increases are: large public infrastructure spending to support corporate activities; bailouts and subsidies for key industries; non-competitive government contracts especially, but not only, for defense spending; financing for overpriced private social services; and regulatory and compliance costs to protect private property rights in the name of the “rule of law.” Government deficits and debt meanwhile kept increasing because of revenue-losing corporate tax breaks and tax relief for the wealthiest families.
All of this is important to grasp how notions today of the “end of neoliberalism” are grossly overblown. The current era remains fundamentally neoliberal in essence, agenda and practice – state power over the economy is still systematically wielded for the benefit of a few. In particular, the so-called market reforms that have made capitalist elites so prosperous remain in place.
The US, Japan and major European powers have recently become more nationalist and protective of critical industries but the economies of the global South still largely remain open. Social services, utilities and infrastructure are not being re-nationalized, regulations are not being restored. There are no real reversals in the widespread use of markets to enable capital’s profits from social and economic life. The conditions of the working classes are as dire as ever, which is alarmingly exploited by populist reactionaries.
Imperialist hegemony is overpowering and systematically blocks the development of even any kind of independent national capitalisms. Control of economies and of political life has become even more centralized and, contrary to neoliberal illusions, neither economies nor electoral democracies have become free and competitive.
What has the neoliberal era wrought? (To be continued)
(This paper was presented at the 10th International Consortium for Social Development (ICSD) Asia Pacific Biennial Conference with the theme “The Fifth Industrial Revolution Amidst Multifaceted Disruptions: Harnessing the Power of Social Development,” held on October 22-25, 2024, University of the Philippines)
