The needs of the many outweigh the needs of the few

May 4, 2020 11:59 PM

Four functions of markets - "The period from 2008 until now has been a kind of undead neoliberal era. Post Great Financial Crisis, neoliberal ideas have been discredited among much of the public and are actively contested even within governing elites. But, absent consensus on some new set of social heuristics, not much has actually changed. Material interests in the continuity of institutions shaped by neoliberalism remain strong."[1]

Continuity now is broken. When this pandemic is “over” (whatever that means), the undead bones of neoliberal governance may well yet again gather themselves from the chaos and reconstitute the suave, smooth-talking vampire to whose predations we have grown unhappily accustomed.[2] But they may not. We may find ourselves in a period of social experimentation and change.[3] If so, as we diminish (not eliminate!) the role of markets, it is useful I think to understand the variety of functions that markets serve, so that framers of new institutions understand what will be excised, what may sometimes need to be replaced. So. Here are four functions of markets:

1. Markets serve as Hayekian information processors
2. Markets naturalize outcomes, defusing social conflict
3. Markets “flip the incentives” surrounding resource utilization
4. Markets launder history

Obviously, the list is not exhaustive.

also btw...
It's Time to Build - "When the producers of HBO's 'Westworld' wanted to portray the American city of the future, they didn't film in Seattle or Los Angeles or Austin — they went to Singapore."

• Singapore is a cautionary tale - "The lesson: you can't beat this virus without taking care of your most vulnerable workers."
• 7 things we must do before we open up - "We asked American experts if they thought we could do it. Their answer? None of you are close to being ready."[4]
• GOP conflation of the public interest with corporate/investor interests - "GOP demands to immunize businesses from liability for death and injury due to workplace infection amounts to a very frank acknowledgment that re-opening endangers the life and health of workers and risks broader spread of infection... which implies a view verging on sociopathic class warfare: fatal losses to workers and communities are tolerable but financial losses to the investor class is not."

Why we can't build - "America's inability to act is killing people."

• The U.S. Needs Way More Than a Bailout to Recover From Covid-19 - "Shore up the markets, sure, but don't stop there. It's time for Congress and the White House to do things that have been unthinkable since JFK's moonshot. It's time to go big."
• Plutocratic grift - "We'll need to reform our political economy of public private parasitism."
• Productive Public-Private Partnering In Times Of Public Crisis - "The American economy has always been 'mixed,' partnering public with private ownership and control. In times of crisis the public role both has to and always grows larger. Here's how to do it now."[5,6] (via)

How Tech Can Build - "Human progress in this view is solely online."

• Satya Nadella: crisis requires co-ordinated digital response - "We need citizens and customers to demand partnership across sectors."
• See No Evil - "Software helps companies coordinate the supply chains that sustain global capitalism. How does the code work—and what does it conceal?" (via)
• Will the Coronavirus Create a More Progressive Society or a More Dystopian One? - "A progressive turn is certainly possible, but so is its antithesis: a further upsurge in right-wing populism, and the strengthening of antidemocratic forces." (via)

Green zones will have better economies and healthier populations in the long run - "Get new cases to zero and then keep the reproduction number below one."

• The Class Politics of the Dollar System - "Managing an international public good." (via)
• Fixing the Bailout Scammers: The Ten Percent Solution - "No one in policy circles actually believes in the market... The people in power believe in using the government to give themselves as much money as possible. Usually they can do this through structuring the market so that money flows upward."[7] (via)
• Workers need financial security and bargaining power - "The fact that progressive policymakers don't automatically and intuitively appreciate the immense advantage of enhanced UI over a paycheck guarantee speaks volumes about their level of awareness of the real lives of low wage workers. These extra dollars will change lives... Left-leaning policymakers should fully leverage enhanced UI to extract maximum financial assistance and maximum bargaining power for lower wage workers as they confront a severe economic downturn, a predatory labor market and rampant disregard for worker health and safety... What workers need now is economic security, financial flexibility and institutional advantages that will allow them to drive a hard bargain."[8]

posted by kliuless (21 comments total)

The needs of the many outweigh the wants of the few.
posted by Pouteria at 1:24 AM on May 5, 2020 [13 favorites]

The needs of the money outweigh the needs of the you.
posted by Faint of Butt at 3:17 AM on May 5, 2020 [42 favorites]

Hasn't it been said that populism came to the rescue of neo-liberalism?

I think about the consequences of this crisis a lot. Perhaps we won't be able to fit it into a blurb. Here in India, it exposed shocking injustices. The pandemic was portrayed as a Muslim conspiracy by government entities and media outlets (the term "Corona Jihad" was popularized, many Muslims were unofficially barred from hospitals and public spaces), and the government's decision to ignore the plight of migrant workers led to tens of millions walking home to their villages from cities, or squatting without supplies in towns. Public opinion will shift, it has to, although it won't be in one direction. At the same time, the government gains power and money by relying on emergency legislation.

While some countries are seeking a way out of neo-liberalism, others are only just succumbing. The privatization of India's government services (education, electricity, the energy sector etc.) is happening now. Red-baiting and the demonizing of socialist policies that have a long history here are being used to achieve this. The irony that the government is collecting donations by appealing to the public reveals how their selective socialism works.
posted by kolendra at 3:30 AM on May 5, 2020 [18 favorites]

Hasn't it been said that populism came to the rescue of neo-liberalism?

Yes, times of crisis are times when things change. That doesn't mean the change will be good, even if the starting point is pretty damned bad.
posted by tobascodagama at 6:53 AM on May 5, 2020 [2 favorites]

It's time for Congress and the White House to do things that have been unthinkable since JFK's moonshot. It's time to go big.

Does anyone in their right mind trust the current WH to "go big"? Arguably they are, in the sense of stealing from the public and redirecting it to their cronies. I fully suspect that when the Trump Grift is unwound, assuming it ever is, it will be a moonshot-scale theft.

So that suggestion seems a bit premature. Right now, Congress needs to grow a spine and resist, as best it can, and start collecting documents and evidence for the eventual investigations that will follow, whatever deity you prefer willing, when Trump departs Pennsylvania Avenue.
posted by Kadin2048 at 6:56 AM on May 5, 2020 [5 favorites]

I found the above the fold article a fascinating read. The pull-quote made me think it would be preaching to the choir about how markets are evil, but it is actually sincerely about what value markets have as well as their limitations.
posted by He Is Only The Imposter at 7:27 AM on May 5, 2020 [4 favorites]

Hamilton Nolan, In These Times: The Disconnect Between the Stock Market and the Real Economy Is Destroying Our Lives

There are two ways to approach the question of why the stock market has seemed so impervious to the state of the real world. The first is to focus on the technical reasons. The stock market is forward-looking, so prices reflect what investors think will happen in the future, rather than right now; investors are overly optimistic of a coronavirus vaccine, and exhibiting the flaws in the efficient markets theory; and the stock market is pricing in a vast injection of free money from the Federal Reserve and from its good friends in Congress, raising expectations of a soft buffer to take the edge off of the catastrophe. There is, on Wall Street itself, a spirited debate over whether stock prices are still too high or not, but the final proof is in the numbers. And the numbers still say that if you are the sort of person who derives most of your income from investments, then the pain accruing to those who must work at a job for a living is nothing but a faint and faraway dream to you right now. [...]

And this brings us to the second, and more useful, way to understand the bizarrely healthy stock market: as the result of a political choice. Brush away the financial jargon that Wall Street uses to ward off interlopers and it is easy to see what is happening here. The coronavirus forced our entire economy onto life support from the federal government. Instead of choosing to support everyone during this temporary shutdown—guaranteeing the incomes of workers, instituting widespread debt relief, and pouring stimulus money directly into the base of the wealth pyramid, which supports everything else—the government has instead done what it is built to do: protect the biggest businesses and the accumulated wealth of the richest people, herding society’s most powerful into an economic fortress, content in the knowledge that high unemployment and austerity for local governments will just create a population desperate to work for even lower wages than before. As the Trump administration pled helplessness over the fact that we have no good system for delivering money directly to individuals, it did not need to say that that, itself, is a policy choice that is now serving its intended purpose.

This political choice is also a moral choice. It is a choice of whether or not to value fairness. Either the incentives of everyone in society are aligned, or they are not. In America, they are not. In fact, they are the opposite: the incentives of the rich, who live through stocks and the accumulation of corporate power, are in fact opposed to the incentives of the vast majority of people, whose existence is reduced to nothing more than labor income to be minimized as much as possible. An economy devised to prop up stock prices is an economy devised not to encourage widespread public wealth, but rather the concentration of private wealth. That is a choice. That is the incentive structure we have built in this country. The mystifying government response that allows a crisis of unemployment and sudden poverty to happen and then refuses to solve it even while doling out trillions of dollars to business is in fact just American capitalism working as we have designed it to.

posted by tonycpsu at 7:55 AM on May 5, 2020 [21 favorites]

We definitely need to be careful what kind of populism arises out of this wreckage: "Fed study ties 1918 flu pandemic to Nazi Party gains."
posted by PhineasGage at 8:36 AM on May 5, 2020 [13 favorites]

See also: reopening restaurants (and I'm assuming other businesses, too) while people are still staying home and capacities are limited may do more harm to these businesses and their workers: this is about screwing the working class and small businesses, not helping us (image transcribed on Reddit).
posted by filthy light thief at 10:10 AM on May 5, 2020 [1 favorite]

i see fragmentation of global economic ideologies multiply further. Already there is a global realignment around pandemic response. Yesterday, the European Union and multiple countries including Canada, came together to raise 8 billion dollars for covid. The US refused 6 times to answer why they were not participating. Instead the USA has launched its own prosperity circle inc. Japan, Korea, India, to go its own way.
posted by Mrs Potato at 10:56 AM on May 5, 2020 [1 favorite]

Often people talk about state vs. market as if they're mutually exclusive, which tends to obscure that at a fundamental level, it's the state that creates markets. Without state-reinforced trust between parties (ie. that product X is actually product X, or that Y coin contains Z amount of gold, or that disputes will be resolved without violence), markets tend to be opaque and inaccessible.

I understand neoliberalism as a whittling down of the state as a broker of trust, and I think -- with the exception of a few outliers -- that's been shown to be highly detrimental politically as well as economically. Great post, thanks.
posted by dmh at 10:59 AM on May 5, 2020 [3 favorites]

I still find it a bit strange that neoliberalism as a term has been hitched to what's going on so solidly, when it's basically become a euphemism for what has become abundantly clear: the great sucking chest wound of total commitment to supply-side economics.

Fundamentalist supply-siders have driven the worst excesses of what is currently called neoliberalism. Relaxation of labor and environmental regulations. A ceaseless drum of tax relief for the wealthy and corporations. The relentless race to the bottom of wages, and the intentional, by-design gutting of the middle classes -- and the intentional, by-design prevention or slowing of middle class development in developing nations. Bailouts for companies who commit malfeasance.

But there is a liberal, capitalistic, market-based approach that exists -- or used to -- that suffers far less from these issues. That deals better with labor, that provides strong regulation protecting workers' rights and the environment, that provides stimulus to individuals through direct support via welfare state safety nets, and indirectly through government supported jobs that build infrastructure and provides services. People have forgotten demand-side, Keynesian economics, and the power of mixed economies. Elizabeth Warren hasn't forgotten, but it seems everyone else has.

In certain circles, call yourself a market capitalist and you'll get tarred with the supply-side "neoliberal" brush. Saying you're a demand-side capitalist in support of mixed economies in other circles and you're a Marxist.
posted by tclark at 11:05 AM on May 5, 2020 [4 favorites]

We definitely need to be careful what kind of populism arises out of this wreckage: "Fed study ties 1918 flu pandemic to Nazi Party gains."

This is precisely what is happening. The GOP and their propaganda arm recognize it. And that is why they are leveraging it.

The left is woefully behind. The left actually believes people will reverse everything they've ever believed about the economy and social order for the greater good because a crisis came along and proved their previous beliefs were false. They believe people will say to the selves "I need to change." No. That almost never happens.

Most people double down on bullshit for quite some time. What they do do is look for somebody to blame for their problems — and it's rarely the powerful. It's almost always somebody weaker than them. And with weak incompetent leaders encouraging this behavior I guarantee you we come out on the other side of this with a full blown popular fascist movement larger and more reactionary than it was before.

If the democrats do not win in November that movement will be near impossible to stop.
posted by Everyone Expects The Spanish Influenza at 11:59 AM on May 5, 2020 [3 favorites]

Often people talk about state vs. market as if they're mutually exclusive, which tends to obscure that at a fundamental level, it's the state that creates markets.

This is a good point, but I think the causative element is the other way around, at least in the West: much state infrastructure has arisen to meet the needs, i.e. to fill demand, from markets. It's not like bureaucrats sit around thinking up new things to regulate, at least not normally: there's almost always a demand for regulation (to prevent fraud, or remove dangerous products, or keep banks from collapsing with one's life savings) which drives the creation of regulatory apparatus and the expansion of the state.

Which is one of the things I don't really understand about anti-regulatory neoliberalism; it seems to have no concept of its own history. If all regulatory bodies were abolished tomorrow, on the following day people would start demanding for them to be recreated, because the same reasons that caused them to be created in the first place would re-emerge.

Ergo, either neoliberal anti-regulators are just stupid, which is a possibility that shouldn't be neglected especially among the rank-and-file (i.e. the average Trump supporter), or they know that massive deregulation would only be temporary, and their aim is to fleece and cheat people in the interim when nobody is minding the store. Either they're ignorant, or they're con men, there's very little room for anything else.

That's not to say that you can't have a nuanced argument about the correct balance of, or exact implementation mechanisms for, state regulation—there's always going to be disagreements about the how and to some extent the when. But when you run into people who claim that economic regulation by the state is inherently illegitimate, as some basically do, it's time to look not at the arguments (which are meritless) but at what their angle is: how do they stand to personally benefit from creating chaos. There's always an angle, unless they're just a pawn in someone else's game.
posted by Kadin2048 at 12:32 PM on May 5, 2020 [4 favorites]

The term neoliberal has mutated so much in the past 10-20 years that it has become a functionally useless shibboleth.
posted by wierdo at 4:17 PM on May 5, 2020 [1 favorite]

-"Capital in the 21st Century": Finally, a Movie That Tells the Story of How We Got Into This Mess
-TNR Roundtable with Thomas Piketty, Gillian Tett and Ian Bremmer
-support a local theater!

also btw...
-Crisis Interviews: Looking Beyond the Pandemic
-Mark Zuckerberg talks to Tyler Cowen (Economist), and Patrick Collison (CEO of Stripe) :P
posted by kliuless at 9:09 PM on May 6, 2020

This is a good point, but I think the causative element is the other way around, at least in the West: much state infrastructure has arisen to meet the needs, i.e. to fill demand, from markets

That's very germane. They are certainly mutually reinforcing in many ways, with market demand driving regulation in some cases, the interests of the state in others. But that just underscores their mutual interdependence.

More specifically with respect to my original point, the supposed efficiency of markets (which I'm willing to grant is their best feature), I think only comes about when they are sufficiently transparent and accessible. But this transparency and accessibility is not a natural feature of markets. In fact, left to their own devices, markets tend to devolve into oligopolies or monopolies. So in that sense I think it's the state that creates (efficient) markets. Or, markets can exist without the state, but then they won't provide many of the supposed benefits.
posted by dmh at 6:33 AM on May 7, 2020 [2 favorites]

Geopolitics and technology threaten America’s financial dominance

Weaponisation of sanctions leading to workarounds that bypass the American fintech chokehold on the world
posted by Mrs Potato at 11:38 AM on May 7, 2020

with market demand driving regulation in some cases

Fight brews in Congress over Republican push to protect business from coronavirus lawsuits[*]

Weaponisation of sanctions leading to workarounds that bypass the American fintech chokehold on the world

"The Cold War with China will have very little to do with military might. It's about economic strength and technological supremacy. And the strength and effectiveness of two radically different political systems." --@ianbremmer

-A paper on how close China is to semiconductor independence
-Why America Can Make Semiconductors But Not Swabs
-Huawei scores chip coup against US pressure: "The joint chip development with STMicroelectronics... enables Huawei to secure access to the latest software needed for developing advanced chips. This software is mainly provided by two US companies — Synopsys and Cadence Design Systems — whose business with Huawei was restricted after Washington blacklisted the Chinese company last year."

also btw...
-China launches new rocket into space as it steps up Moon landing plans
-China Rolls Out Pilot Test of Digital Currency
-Bond markets shaken as China's yuan stirs: "Non-Chinese investors are shifting into yuan-denominated government debt at a record rate as they seek a safe haven amid the coronavirus pandemic. The shift bears signs of longer-term recalibration of global finance."
posted by kliuless at 10:23 PM on May 7, 2020 [1 favorite]

The Cold War with China

Ehh, while I might be all right with calling it "A cold war" with China, I would definitely disagree on calling it "The Cold War" with China. Because "The Cold War" implies the US vs USSR conflict where one side sought to spread it's own ideas while defeating the other. Instead, I agree with Jennifer Chen Weiss when she writes that:

"those developments reflect less a grand strategic effort to undermine democracy and spread autocracy than the Chinese leadership’s desire to secure its position at home and abroad. Its efforts to revise and work around international institutions are the result of pragmatic decisions about Chinese interests rather than a wholesale rejection of the U.S.-led international order. Beijing’s behavior suggests that China is a disgruntled and increasingly ambitious stakeholder in that order, not an implacable enemy of it."

posted by FJT at 12:45 AM on May 8, 2020 [2 favorites]

Singapore rushes to build homes for 60,000 migrants after coronavirus outbreaks

also btw...
UK widens visa rights offer to almost 3m Hong Kong residents
posted by kliuless at 5:41 PM on June 1, 2020