Why neoliberalism failed
The elites in the West have advanced neoliberalism or free market competition as the universalism for our times. It is the belief in sustained economic growth as the means to achieve human progress, with markets ensuring the most-efficient allocation of resources, and with emphasis on minimal state intervention in economic and social affairs, and freedom of trade and capital.
Neoliberalism favors multiculturalism which carries within it the seeds of future conflict. Since cultures are not free markets (a few sects punish apostasy with death), some groups keep on falling behind and wrongly blame others for discrimination. Multiculturalism leads to moral relativism that leads to confusion and decay.
The 21st century is — or it should be — the age of universal values to enable people to live peacefully in a globalized world. But as social media and replacement migration [1] brings people from different cultures together, how is the world going to manage inevitable conflicts in society?
Some people take the term “universalism” in a religious sense as a counter to sectarian religion in which there can be no peace until all the non-believers are either dead or converted. Since sectarian religions are based on hearsay stories of impossible miracles that happened a long time ago, one can leave them out. Anything that is against commonsense logic cannot have claims to be universalist.
Universalism is a set of fair values, norms or concepts to all people and cultures, regardless of race, gender, and historical background. It is the pursuit of unification of all humans under universal constructs such as self-evident truths that are consistent with the nature of the human experience.
The geopolitical dynamics of the coming decades will be stirred by the impact of a precipitous decline in world population and unprecedented migration of people across disparate cultures. Human workers and consumers will be either in extreme short supply in certain countries or in excess in certain other regions. This disparity in distribution will create a cascade of effects that will influence economies and politics in a fundamental way, just as a disparity of population during Islamic and European expansion led to the institution of slavery as a significant economic and social driver. [2]
As example, according to a UN projection China’s population will roughly halve to 766 million by the end of the century. The low case of this projection, with a drop in total fertility to around 0.8 gives China a population of only 488 million by the end of the century, which is about one third its present level. This low case is not improbable given that South Korea’s total fertility rate is an even lower 0.7 in 2023.
In the past, such quick reduction in population only happened in the most catastrophic pandemics from which the affected nations took generations to recover. Clearly steep population declines will have huge, unprecedented effects on social cohesion and well-being in society and on geopolitical order which neoliberalism or other old social and political ideas will not be able to address.
The roots of neoliberalism
Both neoliberalism and modern liberalism may be traced to the classical liberalism of the 19th century, which championed unfettered capitalism and individual freedom against the excessive power of government.
The British Empire was at its zenith, and the imperialists saw Britain’s self-imagined “civilizing” role as eventually covering the entire globe. The philosopher John Ruskin argued for “liberal imperialism,” which is the idea that “liberal” countries should conquer backward ones in order to spread the ideals of liberalism (really British colonialism) to all corners of the world.
In this effort, they didn’t want to be slowed down by the other energetic powers in Europe, and this explains the rivalry with France, and eventually the struggle with Russia to control as much of Asia as possible, which constituted the Great Game.
Modern liberalism sought direct state intervention to mitigate the negative aspects of this capitalism which had led to poverty and inequality, disease, ignorance, and discrimination. In late 19th century, ideas such as workers’ compensation, public funding of schools and hospitals, and regulations on working conditions were advanced. Eventually, by the mid-20th century, this led to introduction oof social services and benefits of the welfare state.
It is not often recognized that modern liberalism was based on the wealth drained from colonies using tariffs, restrictive trade practices, mercantilism, and outright theft of resources. It was a softer term for colonialism with control by the elite, who were the colonists.
After the second World War, Europe was exhausted, and political leadership of the free world passed on to the US. In the next few years, as erstwhile colonies of the European powers gained political independence. many leaders of the newly independent nations continued these policies for they and their advisors weere educated in European universities that presented all history through the colonial lens.
For the West, liberalism replaced colonialism, for it meant doing reforms in a manner that were largely in its interests. Leaders who went against this view were pushed aside by various regime change operations.
But political independence did mean that the amount of wealth transfer from old colonies became progressively less which led to economic stagnation and increasing public debt in Europe. To protect the West’s interests, there was a push for a return to classical liberalism, which in its revived form has come to be known as neoliberalism.
As technology-aided globalization has made national economies more interdependent, neoliberals began to promote free-trade policies and the free movement of international capital. Neoliberals support the libertarian ideal of markets and sharply limited governments and have increasingly become politically opposed to politicians who espouse nationalism. Seen from this perspective, neoliberalism is a program to help Western elites’ maintain their grip on power.
The US has promoted the idea that neoliberal capitalism together with a rule-based international order is the universalism that should be embraced by all nations. This has been eroded by America’s impulse to act unilaterally both in economic affairs by imposing sanctions, and its unilateral use of military power, even in contravention of the United Nations as in the bombing of Yugoslavia, and Iraq and Afghanistan wars. Furthermore, continuing the status quo provides the US with tremendous advantage since the dollar is the de facto currency for international commerce.
The 1941 Atlantic Charter is the guiding principles of Atlanticism, which is an agreement between Britain and the United States, to advance the goals of liberal imperialism in a new garb. It is a successor to an imperial order that began with East India Company and then morphed to direct rule from London. It is now the impulse behind the overlordship by the US with Europe as vassal together, with NATO is its enforcement mechanism. There is a special role for Britain via shadowy links in this framework.
Thus the “Five Eyes” agreement is about sharing of intelligence efforts by the US, UK, Canada, Australia and New Zealand. Chatham House (UK) and the Council on Foreign Relations (US) are two think tanks that coordinate policy. Other institutions for this purpose include the Transatlantic Democracy Working Group, The German Marshall Fund, The National Endowment for Democracy (NED) and its two daughter groups, the International Republican Institute (IRI) and the National Democratic Institute (NDI).
NATO’s first secretary general Lord Hastings Ismay famously stated that NATO’s purpose is “to keep the Russians out, the Americans in and the Germans down.”
Meanwhile, China has steadily gained ground over the West by following the same rulebook of mercantilism that was used by European colonialists in the 19th century. The US is mired in debt and China has become the workshop to the world.
Limits to American imagination
America may be history’s wealthiest state, but its steady retreat in face of Chinese challenge must be seen as one aspect of a much broader failure. The American family as a social and cultural unit is disfunctional and learning has been ceded by the family to television and social media.
American cities are dangerous, over half a million people are homeless, there is rampant drug addiction, and nearly 120,000 Americans die of drug overdose every year. The schools are bad with high truancy rate, and the literacy is estimated to be only about 79 percent. It’s not surprising that it cannot train its youth for science and technology fields and it must get scientist and programmers from overseas, principally India and China. With all its flaws, the US remains attractive for immigrants due to the dollar being overvalued compared to other national currencies.
In a book called Why America Failed, Morris Berman shows that the hustler culture that served its ruling class well during the country’s expansion came with the instruments of its demise [3]. He argues that unbridled materialism and the pursuit of personal gain without regard for its effects on others have been powerful forces in its culture from the earliest colonial history. As invention proliferated and industry expanded, railroads, steamships, airplanes, computers, and iphones quickened the frenetic pace of progress in which the goal was to acquire as many objects as possible as the sole purpose of life.
The American Dream, a twisted fantasy premised on a narcissistic individualism and the unquestioned faith that progress is to measured in material progress alone, was destined to end in self-destruction. But even as it unravels, the hucksters go into new domains, such as using children as laboratory for ideas on gender fluidity.
Back to more government control
Nearly twenty years ago, the financial crisis led some economists and political leaders to reject the neoliberals’ insistence on maximally free markets and to call instead for greater government regulation of the financial and banking industries. This is a step back to the earlier version of government aided liberal order.
Western elites appear to be putting their strength behind ideas such as DEI (diversity, equity, and inclusion) and ESG to lessen pressures arising from persistent inequality in different ethnic, social, and religious groups. These appear worthy goals, but they go counter to the idea of meritocracy that will make it harder for American institutions to compete [4].
ESG, environmental, social, and governance based on metrics, goals also sound high minded but the environmental and social criteria are drawn up by organizations to help already entrenched parties to the detriment of competitors, both within and in poorer countries.
The censorship regime that was put together during the Covid years has put focus on how the West has used information media to control public narrative and mold opinion. For example, the relentless propaganda about climate change seems misplaced given the world population has started to fall with projections that are as low as one-third of the current numbers in just a hundred years.
Perhaps a universalism that goes beyond the present focus on materialism by giving space to spirituality as a means for self-actualization will be the way to move ahead.
References
