boilingspot: Ideological Failure

Sameer Dossani, Foreign Policy in Focus, October 15, 2008

As the disaster known as the Bush era draws to a close, we'd do well to recognize just how deep its failures go. The Bush debacles — unbridled deregulation, illegal and immoral wars, the experiment in "disaster capitalism" that used to be the proud city of New Orleans — aren't primarily or exclusively policy failures. They're failures caused by two distinct yet interconnected ideologies: neoliberalism and neoconservatism.

On the economic front, both mainstream political parties embraced neoliberalism (also known by a term George Soros coined as "market fundamentalism") even before George W. Bush's presidency, though he took the ideology to new heights. Stemming from the ultra-conservative ideology of world leaders including Ronald Reagan, Margaret Thatcher, and Helmut Kohl, neoliberalism advocates small government and the supremacy of free markets to promote growth. The United States exported these "Washington Consensus" policies — privatization, liberalization, and budget austerity — through influential financial institutions such as the World Bank and the International Monetary Fund.

In military terms, the ideology of neoconservatism has grown in prominence for the last decade. Presenting a case for U.S. exceptionalism (what the rest of the world calls U.S. imperialism), neoconservatives argue that the United States has "a unique role in preserving and extending an international order." Neoconservatives such as Donald Rumsfeld, Dick Cheney, and Paul Wolfowitz sought and ultimately carried out the invasion and occupation of Iraq, and they have threatened to expand that war to Iran for the last few years.

It's worth bearing in mind that neoliberalism and neoconservatism are deeply intertwined and have roots in the colonial history of Europe and the United States. Both ideologies hinge on the idea that the world should follow U.S. orders but not emulate U.S. actions and are therefore deeply hypocritical. As the Bush administration finally draws to a close amid a global economic crisis sparked by inadequate regulation, it's time to permanently retire both of them.

Free Markets for the Poor

The United States has never practiced pure neoliberal capitalism as preached by Ronald Reagan and as implemented by institutions like the IMF. Of the IMF's three core policies — cutting government spending, liberalization, and privatization — the one that the U.S. government is least likely to implement is reducing spending. Due in large part to massive military expenditures the U.S. debt-to-GDP ratio (which economists use to measure debt sustainability) is about 3.1:1. By contrast, when Brazil's debt-to-GDP ratio went up to 0.51:1 it received a stern rebuke from the IMF.

This massive state spending goes to some of the least transparent and most unaccountable companies imaginable. George W. Bush's presidency went a step further and often awarded these companies no-bid contracts. In Iraq, stacks of hundred dollar bills were used as footballs and misplaced, taking corruption to hitherto unimagined heights. Even aside from incidences of corruption, as others have documented the entire Pentagon procurement system amounts to huge taxpayer subsidies for those at the very top of the income scale.

But budget cuts aren't the only Washington Consensus principle that the U.S. rejects. While the United States has negotiated free-trade agreements with about 20 countries, it uses anti-free market protections such as agricultural subsidies and steel subsidies. These and similar European trade distortions are the primary reason for the World Trade Organization's latest Doha "Development" Round failure.

While the United States ignores free-market rules when it wants to, some of those rules are applied, especially when they can help CEOs turn a profit or keep workers' salaries down. At the moment, the most obvious example of this contradictory behavior is the unbridled deregulation promoted by the Republicans (and largely accepted by Democrats including Bill Clinton) since the 1980s, but it's important to remember that this isn't the only or even the most important such example. Just because deregulation policies caused Wall Street to collapse under its own weight, we shouldn't forget that these policies have always been disastrous for the majority in the United States and around the world.

Deregulation caused the financial mess in which we find ourselves at the moment. The idea that banks could produce opaque mortgage securities and sell them to other financial institutions without any oversight was always going to lead to abuse. Anyone paying attention should have noticed.

Echoing Crisis

As Wall Street's house of cards tumbles down, we would do well to remember that this now-discredited model has already been exported around the world. Many in Asia see this crisis as an echo — albeit an amplified echo — of the Asian financial crisis that began in 1997 and of similar crises in Mexico, Brazil, Russia, and elsewhere. In the Asian case, a housing bubble in Thailand brought about by deregulation rapidly burst and shook investor confidence not only in Thailand but throughout much of East and Southeast Asia. IMF-backed liberalization policies not only created the crisis, but as the crisis developed the IMF insisted on even more liberalization and increased interest rates (in stark contrast to the recently ordered interest rate cuts in the U.S. and Europe). Those who followed this advice recovered more slowly than those who didn't. Those who stood up to the IMF, including Malaysia, came under heavy criticism from economists and international media.

While Malaysia is an example of resistance in the face of the failure of the Washington Consensus, it's worth remembering that there have always been those who resisted these market fundamentalist policies. When Salvador Allende, a Chilean physician, became president of Chile and threatened to implement such radically anti-free market ideas as a free-milk program for children, Henry Kissinger and Richard Nixon argued for and ultimately implemented a CIA-backed coup. His successor, Augusto Pinochet (whose recent death forestalled his prosecution for war crimes) acted quickly to restore free market rules.

Though these examples came long before anyone had heard of the word "neoconservatism," the histories of U.S. intervention in Iran, Guatemala, El Salvador, Chile, Cuba, Brazil, and elsewhere largely follow a similar pattern of countries unwilling to tow the U.S. economic line being forced to do so. During the Cold War, the pretense for intervention generally involved references to democracy, but few believed that the citizens of Chile wanted to be invaded by the United States. As Kissinger himself stated, "I don't see why we need to stand by and watch a country [Chile] go communist because of the irresponsibility of its own people."

`White Man's Burden'

Take up the White Man's burden —

In patience to abide,

To veil the threat of terror

And check the show of pride

—Rudyard Kipling

Had Kipling ever met Kissinger, they might have found they held similar worldviews. Kipling wrote these words in 1899 to argue that the U.S. should do in the Philippines what he and others in England had been doing in Asia and Africa for years: build an empire and "liberate" the "backwards" inhabitants of the rest of the world. When the United States ultimately followed Kipling's advice, the only liberation to be seen was that of souls being liberated from bodies because as many as a million Filipinos met an early death due to the war and occupation. U.S. companies profited handsomely from the ordeal, though U.S. business interests were never discussed in the run-up to the invasion.

Kipling's argument is repeated in the now-infamous founding principles of the Project for a New American Century (PNAC). In that document and elsewhere, Richard Perle, Paul Wolfowitz, Elliott Abrams, and others laid out a perceived need for U.S. military control over a post-Cold War international order. Their belief that the United States needs to step up and play the role of an international policeman — for the good of the whole world — are nearly identical to the logic of Kipling's poem.

If one is looking for analogies to the ongoing invasion and occupation of Iraq, the U.S. invasion and occupation of the Philippines isn't a bad choice. In Iraq, the civilian death toll may also be as high as about one million and like the Philippine invasion, the rush to invade Iraq was filled with all sorts of easily debunked propaganda.

In fairness, the neoconservatives, who first argued for the invasion of Iraq as far back as 1998, represent a set of policies that's more or less consistent with the role that the United States has played in the world since the end of World War II. In that time the United States has carried out over 70 military interventions, the vast majority of which weren't authorized by the United Nations. Perhaps the most striking difference between the neocons and the more "rational" war planners like Zbigniew Brzezinski (former President Jimmy Carter's secretary of State) is that the neocons are more honest. Brzezinski explains his "Afghan trap", the policy that built up the Mujahideen (some of whom would later form the Taliban) to defeat the Soviets, as a necessary part (perhaps even a necessary evil) of the Cold War. Neocons unapologetically defend such U.S. interventions. There's little hand-wringing or agonizing in the neoconservative world view. For neocons, empire isn't a necessary evil. It's a worthy aim.

Neoconservative and Neoliberal Roots

Neoliberalism and neoconservatism are new names for old phenomena. In the case of neoconservatism, there's no attempt to disguise the colonial nature of the enterprise.

In the case of neoliberalism, Adam Smith argued in his Wealth of Nations that having a colony was an economic boon to a European country in two ways: A, it gave that country access to untold wealth of natural resources which could then be taken back to Europe for manufacturing; and B, the residents of the colony comprised a large captive market for the sale of goods manufactured in Europe.

In other words, you can take low-value raw materials out of the colonies, process them into high-value finished goods, and resell those goods to the place where the raw materials came from. IMF policies that force countries to cut tariffs and export raw materials have kept many former colonial countries in exactly this position. While it's true that things are a little more complicated these days (most manufacturing actually takes place in places like China, India, and Mexico, though it's often still a U.S. corporation that owns the factories), Smith's explanation still does a great job of explaining the economics of places like Guatemala or Mali.

Both ideologies are based on hypocrisy. The United States never had any intention of reducing its farm subsidies or of curtailing government funding for the Pentagon even when it was advocating budget cuts and trade liberalization for the rest of the world.

And no voice more loudly condemns Russian aggression in Chechnya or Georgia than that of the United States. When such incidents occur, no voice on either the left or the right states the obvious: if the allegations are correct and Russia has invaded a sovereign territory, it has behaved no differently than the United States did in 2003 when it began to occupy Iraq.

Solutions

In the last several weeks, the mainstream media has questioned everyone who's been skeptical of the unbridled expansion of U.S. style capitalism. The question on every reporter and television producer's mind appears to be, "What will it take to solve this crisis of global capitalism?" Instead, they should ask whether it's worth saving global capitalism at all.

In practice, neoliberalism has meant a world order with the United States and its allies dictating economic rules that serve their own interests and, backed by neoconservative ideology, using force or the threat of force to enforce those economic rules as and when necessary.

There are alternatives to these ideologies and many of them have their basis in already existing structures. For example, the Universal Declaration of Human Rights outlines a vision of a world where:

[E]veryone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Though these words were written more than half a century ago, we're far from achieving those rights for all. Instead of these basic human rights, the economic system has been built upon a "right to profit." Our ability to build a just and sustainable economic system depends on the extent to which we can make profit subservient to human need.

And that will never be possible unless all nations, including the U.S., agree on the principle of rule of law. The UN Charter outlines the framework for an international set of laws based on principles of sovereignty and self-determination. Just as we cannot have a functioning economic system without recognizing the principle of human rights, we can't have a functioning political system until we accept the rule of law (and not the rule of force) as the driving principle behind international relations.