The Washington Consensus [song]
For the past three decades, we have attempted a vast economic experiment, largely in the Americas and Europe (but by no means limited to there) called Neoliberalism. It is known by several names (Reaganism, Thatcherism, and others), and is a type or "school", in a very loose sense of what we now (thanks to George Soros) call Market Fundamentalism. Its edifices and ideas, it's doctrines and policies, and the culture(s) that have sprung up around and because of it, will likely be familiar to anyone in the aforementioned areas. So familiar, in fact, that many casual observers may not even realize that there are other systems, and that the one that they live within, natural though it may seem, is a relatively recent invention. This is a testament to the amazing success of its supporters and its practitioners; its disciples and priests; its critics; and of course, its victims.
This system and its variants are rooted in several traditions and schools of thought. Among them, as some argue, is Social Darwinism (though Mises disagreed), which came to prominence in the late 1800s and early-to-mid 1900s. Its basic essence is thus: society, like nature, should be constituted as a competitive race, with those able to succeed surviving, and those unable to do so dying out. It's a simple, elegant idea in theory. An idea with winners and losers, simple rewards and punishments, and a constant, forward progress created by having only the best able to live and breathe. Due to its uncompromising nature, and its ability to allow the best to get ahead, it leaves behind the failed, the rotten, and the useless - whether those be institutions, organizations, or individuals. In practice, however, it requires us as societies and people to jettison the idea providing support for those who have not, or cannot succeed through no fault of their own. To eliminate the idea that anyone could fail for reasons other than their own incompetence or laziness, and to convince ourselves of the fiction that the world is constituted as a level playing field; that in a world where we have such a thing as a "birth lottery", that there can be pure meritocracy. Even if one rejects the idea that Social Darwinism has strongly influenced today's Market Fundamentalisms strongly, its difficult to argue that they don't produce similarly cruel outcomes and "systems of private tyranny."
As an idea, Social Darwinism is extremely seductive for those of us who believe in meritocracies; who wish for them. It envisions the world ever improving, ever innovating, and ever purging - all of which could make up for its brutality. A seductive idea indeed.
The most prominent and powerful influence on today's Neoliberalism was, of course, Classical Liberalism (which of course also influenced modern liberal social democracies; many great ideas come from this, today's social democrats (and their ideological allies) and Libertarians tend to part ways on economics, and are often close allies when it comes to non-economic rights, to all of our benefit), and in more recent decades, Objectivism and (Economic) Libertarianism. These latter two movements have always been bit players, and in terms of their number of actual adherents (and elected politicians) they remain small. However, they've had an outsize influence on economic policy, particularly starting in the mid/late 1970s and early 1980s. With the rise of Thatcher and Reagan, the ideas of Hayek and Friedman started to gain traction and were allowed to function in the real world. Still reeling from the excesses of "embedded Liberalism" (overly generous pensions, bloated budgets , too-powerful unions in some places, laughable vacation and sick day policies, and waste) this new order rose up. Neoliberalism, as it came to be called, was and is a synthesis of many of the previously mentioned schools and systems of thought; in a way, it can be conceptualized as a kind of "professionalized, polished economic Libertarianism." It spread, in its various forms, throughout the world during the 1980s, and is credited with much of the growth of that era. While this is true, it also hides the fact that wealth inequality, as many expected, grew to levels unseen since the beginning of the 20th century. Yet another "new Gilded Age" it has been called, and rightly so.
To its credit, it has helped cement two facts: that near-absolute government control of an economy does in fact produce worse outcomes compared to less government control (in many/most circumstances) and that unfettered markets do the same. We've discovered that what works best in the world at the moment are purposely mixed economies; systems that renegotiate the boundaries between public and private; government control, corporate control, union control, and individual control; a system that uses markets where they make sense, and government control where it does - and change as technology or other factors change; flexible, well enforced regulatory structures; responsive representatives; the rule of law, and uniform enforcement, along with the ability for the law to change as needed; tax rates that are based on needs and incentives, not ideology; and perhaps most importantly: the realization that we should do everything necessary to provide equality of opportunity, and the ability to get wealthy and provide a floor through which no one falls; A "range compression" of wealth. We should want people to get wealthy, and for aggregate social welfare to increase, and need to provide institutions and policies that encourage and support this, while doing our utmost to prevent anyone from slipping into destitution. What we have now has distorted our ability to any of this.
So what we've seen is decades of radical deregulation of areas that should not have been deregulated, radical privatizations of things that should not have been privatized, disappearing social mobility, massive wealth concentration, and decreased opportunity overall. Deregulation and privatization have their place. Tax cuts and changes have their place. Governing and society should be regarded as a careful balancing act. Now, as this experiment has shown too little regulation in areas where its needed, too much privatization in areas where its not needed, and too low tax rates where they aren't warranted can produce terrible effects as surely as the converse can. Where Communism and Socialism have failed, Neoliberalism has failed just as mightily, just in different ways. In all cases, however, we all wound up worse off.
The policies contained in John Williamson's document that is credited with articulating these ideas is known as The Washington Consensus, and is the subject of this song.
From the album "America: 25 years in review."
> dog eat dog
> every man for himself
> lift up - bootstrap
> Darwin misapplied
This section refers, quite obviously to ideas put forth by our Social Darwinists, particularly the admonition to "pick yourself up by your bootstraps." From early Hayek to Rand, from Alger to Rothbard, from Friedman to Friedman, the central ideas if only one puts in the requisite effort, one can succeed - an inherently unfair, non-level playing field notwithstanding. It is embedded deep in the American psyche that everyone can get rich, if they only work hard enough; social services make people lazy, dependent parasites; everything that happens to you is your own fault; and that we'd live in a perfect meritocracy, if only we didn't have a meddling government. Nature is a "dog-eat-dog world"; human society should be too, in many of their minds.
> drain down tub pipe
This of course refers to the famous quote by well-known Anarcho-Capitalist Grover Norquist. An extreme variant of Market Fundamentalism, this school and its adherents have had a strong influence on the debate over taxes, having successfully convinced many people that all "taxation is theft", and all that implies. Even the most hardcore devotees of the other schools don't believe in no taxes and no state, just a radically downsized one. Nevertheless, the influence of Norquist and his close allies have done an excellent job, though indirectly, of demonizing government - all government - and more than anything, has helped shape conversations regarding government - particularly the question of "should it exist at all?" serving at the extreme end of that half of the ideological spectrum. This "Overton Window-shifting" has served a very useful purpose. As is well known in social sciences and (broadly speaking) economics, people tend to choose the middle option, given several choices. Shifting the debate so that "smaller government" looks like the middle has been extremely successful. Norquist's usefulness in that area has perhaps been underrated. Due to the realities of the Republican party and the whims of this electorate, the effect of this, while strong, has also been narrow by the standards of its supporters. We did not, as they truly wish, get a radically downsized state overall. Instead, we have a fragmented one. One where your laborers get to experience the glory that is largely unfettered markets (in some areas, many of which are sociall destructive), while corporations get "Social Welfare" and regulations in their favor (this topic is explored in the song "Mussolini's Revenge", which deals with Corporatism and Crony Capitalism in America), and the dreams of "non-aggression" and neo-Isolationism wholly ignored.
They can count among their successes progress in privatizing infrastructure; deregulating many utilities; and health care and higher education systems so far removed from socially useful ones that it beggars belief.
So while the believers in these systems pine for a tiny or non-existent state, what we get instead is sanity in our economic policies and system washed down the drain.
> blame only yourself
> invisible hand and velvet
> gloved iron fist
A reference to Adam Smith's invisible hand, and how his words have been selectively applied, and repurposed into something he would hardly recognize (see Market Fundamentalists and Adam Smith.) The invisible hand, conceived as the unplanned side effects of individuals taking actions in their own self interest, which would produce socially useful outcomes, has been reimagined as a weapon to punish and often destroy the weak, pitiful, and of course, undeserving. Smith, unlike what many of those who quote him may believe (or pretend to believe) supported public goods, regulation, and social welfare systems to support those unable to support themselves. The fact that his idea - which when understood as he intended, really does tend to produce many socially useful outcomes - has been ideologically weaponized, would cause him a great deal of chagrin, were he alive today.
> distributive justice - redefined
This line refers to how the idea of distributive justice - traditionally understood as the redistribution of income from taxes through social programs - has been reconstituted as a mechanism, through the working of the market to mete out rewards and punishments to the deserving and undeserving, respectively. Our new conception of this idea fits perfectly with the term without changing either word; we've simply replaced its intent of "mercy" with "retribution."
> walled fortresses, black seas - new order emerge
A line that reflects a dystopian vision of a society that could (and has partially) come about as a result of radical deregulation. Destitute masses, severe pollution, no middle class to speak of, people dying left and right from contaminated food and dangerous products, and dizzying array of choices, private tollbooths on the private roads - which would be all of them, and the domination of private industry of every aspect of society. A society of well-guarded bunkers for the fortunate few, surrounded by a destitute, slum-dwelling underclass. Hyperbolic? That remains to be seen, but we do have a taste of this vision in many places today. From a ruined Detroit to a decaying sunbelt, from a dilapidated Baltimore to a gritty Newark, we've tasted it. As visually appealing to some of us (myself included) as these places are - and they are - their effects on actual human beings are anything but.
"New order emerge" is a play on the idea that markets themselves create an emergent order, but in this case the order created is not likely to be one that its sometimes naive adherents imagine.
> non-coercion - until the people reject
Neoliberals, unlike their more starry-eyed (and far less aggressive) ideological allies, realized early that getting people to accept the new system voluntarily would be difficult, if not impossible. One of the earliest casualties in the professionalizing of Libertarianism/Objectivism was to ignore the core tenets of "non-aggression" and "non-coercion." Instead, they were replaced with the notion that free markets could only be put into, and kept in place by force when people did not otherwise want them. Pinochet famously asserted that “sometimes democracy must be bathed in blood” and that only by changing the culture of a country (in this case Chile) could real change be effected. If people refuse to accept this new economic order, they would have it forced on them. He was right that force was the only option, and as a result, Chile experienced massive inequality, disappearances, torture (Villa Grimaldi), genocide, and a radical shift towards privatized risk. Though many of those reforms may have helped in some ways, in others they made things far worse, and the cost was unbelievable.
> we're all Chile now
A reference to the (to be fair, far less horrible) effects that other countries that have tried this experiment have experienced.
> exchange systems of tyranny more - than one road to serfdom
The communist experiments of the mid-1900s at first produced growth and socio-economic progress; they wound up as sclerotic, tyrannical, and soul-crushing systems of control. Our Neoliberal experiment has brought us there in many places as well. The Cold War looked like a victory for unfettered markets; the gangster Capitalism of today's Russia shows that a replacement system can be just as bad the original. The "road to serfdom" of course refers to Hayek's well-known work on the subject of government control or interference leading to totalitarianism. As we see now, both too strong and too weak government can produce tyrannical outcomes (instead of government tyranny, you get the tyranny of unregulated corporations and the punitive tyranny of unfettered markets.)
> Do the means justify the ends?
> Does process make this legitimate?
This refers to the "process legitimizes outcome" belief inherent in Market Fundamentalist ideas. A near-mystical belief in the aforementioned "emergent order" always being meritorious and "right", completely infallible (which prevents many of them from accepting the notion of market failure.) Any and all outcomes, no matter how horrible, are accepted.
> This is the "machinery of freedom"
> Are we really free?
This refers to the title of Friedman's famous book. In his work, he posits that there isn't, and cannot be a separation between economic and other kinds of activity, and that greater economic liberty - understood by him and his followers only as "Negative Liberty" - promotes individual liberty. On its surface, the ideology says "you are free to do what you wish", the economic side says "you cannot afford to risk it". Does he who has no means to open a business, to pay for health care, to afford an education really have more choices than those who do? Can I go skydiving without health insurance? Can I change jobs and risk losing it? Without a baseline, a floor, you are not given more choices, you have less. The essence of positive liberty is to give people more choices by giving them greater economic support. This does not mean coddling, and it does not mean handouts. What it does mean, however, is providing a strong social safety net, the ability for anyone to receive higher education or job training, the ability for people to change jobs without fear, and the ability to start businesses (free enterprise) without worrying that it will be their end. Negative Liberty should be the baseline of our rights, not the end of them.
> This leads to the second freedom
> the freedom to starve
Finally, this refers to Zach de la Rocha's famous quote regarding the kind of "freedom" you get under pure/near/quasi free markets. You always have another choice, but that is no real choice at all.
dog eat dog every man for himself lift up - bootstrap Darwin misapplied drain down pipe blame only yourself invisible hand and velvet gloved iron fist distributive justice - redefined walled fortresses, black seas - new order emerge non-coercion - until the people reject we're all Chile now exchange systems of tyranny more - than one road to serfdom Chorus ------ Do the means justify the ends? Does process make this legitimate? This is the "machinery of freedom" Are we really free? Last chorus ----------- This leads to the second freedom the freedom to starve