PPR295 GENERAL NOTES: WEEK 8

(NEOLIBERALISM AND GLOBALISATION)

★ CRISIS OF THE 1970s

- Key factors:

1) Blockages in the development of productive forces and productivity

❖ The economic boom of the post-war era relied on capital intensive forms of
accumulation
❖ Consumers’ goods cheaper due to greater productivity
❖ Continuous fall of consumer good prices, but productivity levelled off

2) Class antagonisms
❖ Profits and real income rose during the post-war boom
❖ Militant trade unions defended their wages during the early 1970s
❖ Inflation was used as a mechanism to protect the rate of profits

3) Challenges against US hegemony

❖ The rise of Japan and Germany (America tried to counter this by allowing the US
currency to float)
❖ The defeat of America in Vietnam
❖ The Yom-Kippur War of 1973
❖ Michel Beaud (2001):

● The US experienced an imperial overstretch

● The cost of supporting overseas holdings of the US hegemony became greater

4) The 1973-1974 oil crisis

❖ OPEC applied cuts to the oil supply as a result of the 1973 Arab-Israeli War
❖ Oil price quadrupled
❖ The oil crisis led to the decline of other industries
❖ Decline in the production in the primary sector

5) The rise of multinational corporations (MNCs) and transnational corporations (TNCs)

❖ Production became internationalised and enterprises need access to foreign markets
❖ Encouraged offshore banking
★ NEOLIBERALISM
- Envisioned by post-1945 era thinkers like Milton Friedman, Hayek, von Mises, etc
- What is it actually is:

● Individual freedom emphasising the price mechanisms, free enterprise, competition,

and a strong but impartial state

- Meant to restore the capitalists’ power and capital accumulation

- A mix of liberal pro-market, supply-side policies and monetarist orthodoxy

★ THE NEOLIBERAL STATE

- Very authoritarian
- The utter curtailment of democracy via marketisation, deregulation, and
commodification
- Economic deregulation and non-interventionism in the economy
- But the complete and extensive intervention in every area of
the socio-political life

★ GLOBALISATION
- Two “conventional/pro-capitalist” views:

1) As an inescapable and benevolent process

2) Globalisation as neoliberalism’s international face

- An all-encompassing process that crosses borders and is localised

- But: it is actually the powerful tendency of capital accumulation to break down
barriers that stood in its way

★ INTERNATIONAL PRODUCTION
- The relocation of durable and non-durable consumer goods
industries and Export Processing Zones to periphery states
- Most capital and agricultural output is located in advanced capitalist states

★ GLOBAL VALUE CHAIN

- The coordination of different stages of production that take place across various
countries
- Cheap labour in periphery states allowed for low-cost production
- Formed what we would call a “deformed capitalism” (massive disparity between the
wages of the workers in the core states and the periphery states)
 ★ INTERNATIONAL TRADE
- Very uneven
- Little international trade is “free” in practice
- High proportion of the world trade remained in the rich
“nation-triads” of North America, Japan, and Europe
- Many nations failed to grow despite being forced to employ “free trade” practices
- Some nations can only grow by employing protectionist measures

★ GLOBAL GOVERNANCE
- Governance refers to the ways through which social life is coordinated
- Globalisation questions whether or not the state is an adequate political form
- “New Solidarities” amongst the ruling classes of the core and periphery states
(Beaud; 2001):

● The interconnected hell-scape that is the neoliberal global political economy

allowed the ruling elites of the Periphery States to place their assets, invest,
and speculate in the core economies
● The capitalists of the core economies enrich these Periphery State elites to
continue operating in their countries

(CRACK-UP CAPITALISM: QUINN SLOBODIAN)

- Neoliberalism has created a new danger to states and democracies as it encouraged

the formation of global authoritarian capitalist states
- As encouraged by radical laissez-faire economy supporters (mainly the Right-
wingers, Fascists, and Regressives)
- Democracy and human rights are incompatible with what capitalism truly is: total
greed
- The establishment of sweatshops with workers that have high labour precarity, low
wages, and extremely long hours working in unsafe conditions
- Run states less like a state and more like a corporation
- The authoritarian states of Saudi Arabia, the PRC, Vietnam, Qatar, India, Pakistan
and so on have mastered the way of neoliberal capitalism
- Are active members of the capitalist economy but are very, very authoritarian in
nature
SEMINAR DISCUSSIONS

- Neoliberalism leads to the utter slashing of remunerations for workers (very low
wages, and long working hours; even by working long hours they still wouldn’t
get enough to support themselves)
- The inevitability of corruption and inequality within capitalism
- Change the way business interacts with labour supplies
- The “slacker generation”:

● The younger generation are increasingly disillusioned with life and work
● Low wages, long hours and horrible working conditions lead to younger working and
middle class folks being utterly crushed

- The quantity of work is less important than the quality of the work (short hours with
better wages and conditions > long hours with low wages)
- The finance industry relies on booms and busts and hedge-funds:

● Hire more and more and more workers into the finance industry during booms
● When bust, the finance magnates pull the plug on their enterprises and take all of the
money for themselves
● Let off most, if not all of the workers in the finance industry
● The “emptying of Wall Street”

- The London Bubble during the 1980s and 1990s which led to London growing
stupidly large and the other areas are left to die
- Killed of manufacture and agricultural industries up North, in Wales, Scotland, and
Northern Ireland
- Speculation vs. Surplus
- The UK shoehorned itself into focusing entirely on one industry
- Ridiculous price hikes lead to mass inflation especially for items and services
with inelastic demands (like the energy industry)
- Profit maximising theories/concepts of capitalism:

● Might be rational on an individual basis

● But as an societal system, it will lead to chaos and irrationality