On Tuesday, Philoguy wrote a very effective summary of the concept of Neoliberalism. If you haven't yet, I highly recommend reading that first, or this might not entirely make sense. Being a philosopher, Philoguy implies that we need to focus first at the oratory level to change the structures of oppression all around us. This is not for purposes of simple rhetoric but out of a deeper linguistic necessity. Neoliberalism is a concept for building a more constructive discourse among Kossacks by placing our struggle against conservatism within a broader geographical and historical context. In a watershed moment, it was simply wonderful to see one of the central concepts for understanding global class warfare explained so eloquently and precisely on the rec list at Daily Kos, as most posters agreed. As an important caveat, the term really shouldn't be leveled at someone lightly, or as a dirty word, ever. The only people who should be called neoliberals are policy makers and perhaps their funders. The vast majority of us are their enemy, whether we realize it or not. It has a very specific definition, again, that can be summed up as follows:

Neoliberalism is a free market economic philosophy that favors the deregulation of markets and industries, the diminution of taxes and tariffs, and the privatization of government functions, passing them over to private business.
As Philoguy argues, this philosophy is deeply embedded in the hierarchical structure of both political parties. This is an important insight for understanding Obama; it makes him less the focus (or even target) of the analysis, more of a strategic chess piece, constrained as we all are by the current rules of the game. And rule one is: thou shalt not redistribute the wealth.

There were still a few doubting Thomases, however, some of whom raised compelling objections, and most without reflexively jumping to Obama's defense and down others' throats (*cough). The two most prominent objections were that A.) If you compare the legislative records, Clinton and Obama specifically, and Democrats in general are for the most part not Neoliberal but Republicans have made major headway since 1980 and deserve all the blame, and B.) there are no global demographic indicators to support the assertion of a class-based, Neoliberal project.

In this diary I have a three-part argument in response: 1.) individual leaders' legislative records are not a major factor in shaping the spread of market fundamentalist politics because they are impossible to place in any kind of comparable context in the space of a dkos diary 2.) Economic trends do exist both domestically and globally to support evidence for a continuous class-based, Neoliberal project 3.) the single most important trend to prove or disprove the existence of neoliberalism is global income inequality.

It should be self evident that we need a macro-economic trend in order to show the dynamics of Neoliberalism, and place any policy achievements in context. Historical arguments would and indeed do stretch out to the length of volumes on the subject, although Naomi Klein's the Shock Doctrine is a fairly well read, exemplary sampling. But why inequality? Why not, say, average global wealth (Global Production Per Capita) or public health figures like infant mortality? These figures all indicate that the world has continued to improve since the beginning of the industrial age. This is one of the legitimate benefits of capitalism. But these trends have failed to improve in much of Africa and Central Asia. And even if they had, that wouldn't apply much here. As Neoliberalism is said to be an instrument of class warfare, then what we need to look for is a marked increase in the polarization and stratification of global income since the late 1970's.

There are three ways to measure global income inequality. The first measures inequality of incomes between states as a whole, regardless of their population size. The second adjusts the first to take account of states populations, hence a slightly more personal measure of actual Global inequality; the third and best measure is total global inequality, treating every person as individual across the globe. The most widely accepted measure of inequality is the Gini Coefficient, which simply measures statistical dispersion. The higher the gini coefficient, the higher the inequality within a system. Here is the Global Gini Coefficient from 1950 to 1998 using the third measure in inequality, that between each individual person on the planet:

What this remarkable graph shows is a spike in global inequality that began in 1984 and rose to an unprecedented level. Between 1964 and 1984, there were global workers struggles, there was civil rights legislation, there were regulatory apparatuses in place to prevent major economic crises. Since 1984, that relative level of equity has rapidly vanished, and today we are living in a more unequal world than ever before. Now some of that was technological, but as Paul Krugman vehemently insists, it has a strong political component: Krugman introduced his blog at the New York Times back in 2007 with a frank discussion of runaway income inequality and its political origin:

Most people assume that this rise in inequality was the result of impersonal forces, like technological change and globalization. But the great reduction of inequality that created middle-class America between 1935 and 1945 was driven by political change; I believe that politics has also played an important role in rising inequality since the 1970s. It's important to know that no other advanced economy has seen a comparable surge in inequality and even the rising inequality of Thatcherite Britain was a faint echo of trends here.

On the political side, you might have expected rising inequality to produce a populist backlash. Instead, however, the era of rising inequality has also been the era of movement conservatism, the term both supporters and opponents use for the highly cohesive set of interlocking institutions that brought Ronald Reagan and Newt Gingrich to power, and reached its culmination, taking control of all three branches of the federal government, under George W. Bush. (Yes, Virginia, there is a vast right-wing conspiracy.)

The chart he offers is from the work of Thomas Piketty and Emmanuel Saez, two leading experts on American inequality, showing the share of American Wealth by the top 10%. Here's a more up-to-date picture of that same measure of the income inequality trend in America:

SOURCE: Compiled by Dr. Robert S. McElvaine from data in Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913-1998,” Quarterly Journal of Economics, Vol. 118, No. 1 (2003), pp. 1-39. Tables and Figures updated to 2006 (July 2008), Table A2. http://elsa.berkeley.edu/...

Notice of course the other time in our history when income inequality rose to such levels, but note the distinction: the 1930's brought those levels down considerably; the War and the GI bill helped drop them dramatically; part of what makes neoliberalism so much more dangerous is the fact that it seems to require war on an epic scale to break its cycle. I should mention here also that neoliberalism IS a cycle, not so much a spelled out conspiratorial agenda. Rather it's a top-down phenomenon, designed to take on a momentum and a life of its own. But understanding how that momentum is driven from the top-down requires looking at the actual distribution of the American income pie over the course of the Neoliberal era:
Source: CBO, via Afferent Input.

This graph treats the annual collective income of the US as $100, and shows how that hundred dollars would be divided each year according to various levels of wealth. And when you stop to think about the stratification of annual income shares at the various levels of wealth, it is most important to note that the top 1% has been running away with the majority of the stratification pie, if you will, while real income shares for the bottom 80% have steadily fallen since 1980. Indeed, real middle and lower class incomes have plateaued since the late 1970's. Furthermore, the top 1% itself has also seen a similar stratification, meaning that the higher you get into the income stratosphere, the faster they're leaving the rest of us behind. More importantly, this graph shows that 95% of the country has not benefited at all from this vast enriching of the top 1%, when you account for inflation, and that the other 4% beyond that has barely seen any improvement. This means that Neoliberalism is a philosophy that 95% of the country should oppose. That the democrats don't make this the centerpiece of their agenda is perhaps the strongest evidence of a Neoliberal class project dominating both major parties.

Good faith Neoliberals would not deny that income inequality has risen starkly  in America and Europe since the 1980s due to globalization treaties. Their more democratic wing might argue that this has been the cost of a rising global tide that pulled countries like China and India out of Third World status. Their slightly beefier conservative wing might argue that this has been the cost of freeing up markets from the constraints of organized labor. Now people can get what they earn and deserve what they make, the conservatives say. But there's little daylight between the two in practice. And by their logic, global inequality between states (measures 1 & 2 from the first paragraph of the body, above) should have actually decreased after 2000 and the rise of China and India as new economic powerhouses. But accordingto the leading researcher on global income inequality, Branko Milanovic of the World Bank research group, that has not been the story at all. Global income inequality overcame the challenge from an optimistic China and India on the first measure (income inequality between states regardless of their size) and third (overall inequality between all people regardless of their state). Only when you take into account a state's size are China and India's impressive growth enough to move the metric of interstate inequality toward convergence. But this ignores the rising levels of inequality within these states (measure 3). Milanovic concludes that Global Gini not only continues to rise since 2000, interstate inequality has also increased between unweighted states, meaning there is a greater gap between the overall total number of states as states even after China and India's rise. This shows that the trend that began in 1984 is still going strong despite the rhetoric about a rising tide floating India and China's boat. Inequality in those countries is actually growing. Gini coeficients in China are now at 2009 United States levels, and India is not far behind. And as this graph shows, there is some correlation between higher inequality and lower GDP/per capita, our standard measure or overall wealth of a nation, which doesn't bode well for China or India should they remain on the rising inequality path:

To summarize, though a inter-party comparison of neoliberal support by voting record would be almost impossible given the complexity and scope of the doctrine and the entangled nature of legislative history, the fact that neither party has made the elephant in the room, aka income inequality, its central agenda item is ample proof of bipartisan support for neoliberalism. Continuous, observable economic trends do exist, both domestically and globally, to support evidence for a continuous class-based, Neoliberal project. Inequality is the trademark sign of the Neoliberal phenomenon, just as it was of the Neo-classical phenomenon of the 1920's. What this implies is that because during the Clinton and Obama administrations there were no marked differences in Global or domestic income inequality, there is little measurable difference to be expected from the rule of either major party with regard to income inequality, not to mention all the other neoliberal policy priorites, like privatization, especially of prisons and schools, the weakening of organized labor, the degradation of the environment, etc. Just as the drop in innequality of the 1930's is proof that a New New Deal could sufficiently address this if the neoliberals in both parties weren't actively against such policies. This is hardly surprising when you think about where the major campaign contributions for both parties come from. All this strongly suggests that a new, mega-rich socio-economic class consisting of the titans of global industry and finance has emerged, and their relative power over ours ensures the trends stay roughly the same, leading to 2 possible catastrophes: A. further environmental degredation to the point of crisis and B. increasingly severe economic crises due in the main to a lack of effective demand. And the IMF has recently shown the extreme costs of another 2008-like recession: 900 million new entrants into poverty. Either one of these could amount to the WWIII-like event that breaks the cycle, but at what cost? Is anyone in need of reminding how horrible WWII was?

A final, more common complaint from a lot of people in Philoguy's diary was that this analysis is so dismal. What can be practically accomplished? Well the first thing is to help people who don't know understand what is really going on. Not call each other names. This will help build the kind of movement that is capable of making educated, wise political decisions without splintering off. Karl Rove could never wedge such a group. There is at the end of it all strength in numbers. And if we don't turn back this tide it will indeed be as much our fault as anyone else's.

Even now, there are a great many activists focused on toppling the neoliberal agenda. One example is The Right To The City, which is a movement of cities across the world to organize their working poor, homeless, downtrodden, empathetic, brilliant, etc., of all constituencies to work against the Neoliberal Agenda, which they feel has a strong urban achiles heel due to the massive amounts of people and sharing of ideas as well as flows of capital, resources, etc, that are the trademark of global cities.

Beyond that, I am voting for Obama. We should keep Republicans as weak as we can through what's left of our democratic channels, whatever the costs. If we want to stop neoliberalism dead in its tracks in America, then we will need to repeal corporate personhood and pass publicly financed campaigns or some other good strong type of campaign finance reform. Democrats at least say, quite publicly in the case of our recent State of the Union address, that they are in favor of that. But of course, part of the neoliberal agenda is centered on doing precisely the opposite, and as Warren Buffet says: yes there is a Class War, and his class is winning it. The point of these diaries I've been doing on neoliberalism is to get people thinking outside the party box, even while admitting that it has to be part of a larger strategy.

Fri Aug 19, 2011 at  4:35 AM PT: Thanks everyone for making this my first Rec listed diary! Particularly coming from this brilliant community, it's quite an honor. Obligatory update out! Now go donate to Elizabeth Warren ;-)


Originally posted to tote on Thu Aug 18, 2011 at 03:00 PM PDT.

Also republished by Frustrati, Progressive Policy Zone, ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, Income Inequality Kos, and Community Spotlight.

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