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Romaric Godin — Social crises, crises of Democracy, neoliberalism in crisis

Summary:
The connection could well be found in the great crisis the world entered in 2007–2008. Beyond what most observers remember—the “Great Crash” that followed the collapse of Lehman Brothers on September 15, 2008—the crisis is much deeper and persists to the present day. Because it is not a simple financial or economic crisis: it is rather the crisis of a mode of managing capitalism; that is, neoliberalism, which is based on putting the state at the service of capital, the financialization of the economy, and the commodification of society. Like the crises of the 1930s or 1970s, the current crisis profoundly challenges the contemporary functioning of capitalism. Such crises are often long and accompanied by periods of unrest. As the historian Adam Tooze has shown in The Deluge (2014), the

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The connection could well be found in the great crisis the world entered in 2007–2008. Beyond what most observers remember—the “Great Crash” that followed the collapse of Lehman Brothers on September 15, 2008—the crisis is much deeper and persists to the present day. Because it is not a simple financial or economic crisis: it is rather the crisis of a mode of managing capitalism; that is, neoliberalism, which is based on putting the state at the service of capital, the financialization of the economy, and the commodification of society.
Like the crises of the 1930s or 1970s, the current crisis profoundly challenges the contemporary functioning of capitalism. Such crises are often long and accompanied by periods of unrest. As the historian Adam Tooze has shown in The Deluge (2014), the disruption of capitalism began not with the 1929 crash but rather during the World War I and was not actually resolved until after World War II. As for neoliberalism, it only came fully into being in the 1990s, 20 years after the previous paradigm had gone into crisis.
Even today’s crisis has been prolonged and deepened as neoliberalism struggles to avert its own demise. But in seeking to survive, it is pushing the world into the abyss. Of course, neoliberalism survived the shock of 2008 and even emerged from 2010 strong enough to present “solutions” such as global fiscal austerity and “structural reforms” aimed at destroying any remaining protection for workers and the most precarious. But by seeking to remain dominant, neoliberalism has further deepened its own crisis....
Even if growth-rate differentials should bring emerging economies in closer sync with those of so-called advanced countries and thus reduce inequalities at the global level, inequalities within nations are widening more than ever. This was the conclusion reached by the economist Branko Milanović in Global Inequalities (2016), who foresaw the return of the question of social class. Thus it is a resurgence of class struggle that we are now witnessing at the global level....
Neoliberalism is helpless. Locked in its logic of extractivism and fictional growth, it clutches onto phantoms: the “trickle-down theory,” the Laffer curve, or the Coase Theorem, which holds that issues of distributive justice must be kept separate from economic reality. It does so thanks to another of its salient features: the “management” of democracy, whereby the economic sphere must not be subjected to democratic decision-making but must be preserved from the “”feelings” of the crowd or, to use President Emmanuel Macron’s notorious phrase, “unfortunate passions” (passions tristes). But such segregation is less and less possible as inequalities deepen and the climate crisis becomes more acute. After five decades of managed democracy, people are demanding that their own emergencies be addressed instead of those of “markets” or “investors.”
The current crisis of neoliberalism has three aspects: an ecological crisis, a social crisis, and a democratic crisis. The current economic system is unable to respond to these three profound sources of discontent. Faced with an ecological emergency, it puts forward market solutions and fiscal repression of consumption by the weakest. In the face of social and democratic demands, its response is indifference. In fact, responding to such demands would require a profound change in the economic paradigm.…
Addressing the climate crisis would require a complete reorientation of investments and an end to basing the economy solely on real estate and financial bubbles. This would imply a complete overhaul of the monetary system. The seeds of such a transformation are shown in the Green New Deal that has been proposed in the United States, which has struck fear among neoliberal economists, because if the legislation is enacted the climate transition would no longer entail weakening the working class but acting in concert with them. By ensuring a massive redistribution of resources to the detriment of the richest, the more modest classes could achieve better livelihoods without destroying the planet. Finally, greater popular participation could assure that such decisions are not made for the benefit of the richest and for capital, but in the common interest. This is exactly what neoliberalism has always rejected: this ability of democracy to “change the economic deal”—precisely what the world needs today....
Second leg down? And is that a good thing, sweeping out the old and preparing for the new. Or are are looking at a replay of the French Revolution, with blood in the streets? Or a fascistic crackdown?

These are just a few excerpts. The whole post is reading in full. This is the overarching social, political and economic issue of our times that is taking place in a historical dialectic dominated by a conflict among traditionalism, liberalism, fascism, and communism, all of which include a range of variety and which may overlap each other as well. Quite a mix.

Dollars & Sense
Social crises, crises of Democracy, neoliberalism in crisis
Romaric Godin

The original version of this article in French appeared in Mediapart (mediapart.fr) on October 21, 2019. It was translated by Fred Murphy.

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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