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Neoliberalism and Protective Responses: Populist and Nationalist Insurgencies

Paper Session

Friday, Jan. 4, 2019 8:00 AM - 10:00 AM

Hilton Atlanta, Crystal F
Hosted By: Association for Evolutionary Economics
  • Chair: William Redmond, Indiana State University

The Economic Roots of the Rise of Trumpism

John Komlos
,
University of Munich

Abstract

Donald Trump won the election in 2016 largely because the voters in three states, all in the Rustbelt, which had voted for Barack Obama in both 2008 and 2012, switched their electoral vote from Democratic to Republican. Economic dislocations played a crucial role in these swing states or democratic strongholds to persuade voters to take the dramatic step to vote for an anti-establishment candidate even if that meant a leap of faith into the unknown. The sources of the dislocation were the stagnating wages, downward social mobility, declining relative incomes, and the hopelessness accompanying them. This was longer than a three-decade process that started with Reaganomics and its tax cuts that privileged the rich and conferred immense wealth, and its concomitant, political power, on them. Reaganomics also accelerated the decline in the power of unions which had supported the middle class. The process continued under Bill Clinton’s administration and its continuing both financial deregulation and of hyper-globalization. George Bush continued to pamper the superrich with his tax policies. The process culminated with Barack Obama’s bailing out the superrich and his benign neglect of Mainstreet. Five administration disinterest in the social group Hillary Clinton referred to flippantly as “the deplorables” culminated in the revolt of the masses in favor of an incompetent strongman by overthrowing the establishment captured by such chants at Trump rallies as “Lock her up!”, “USA!”, “Build the wall”, or “Drain the swamp” (i.e., in Washington D.C.),

Polanyi’s Double Movement and the Asymmetrical Power Struggles

Ali Tarhan
,
Anadolu University

Abstract

Karl Polanyi argues that last two hundred years of capitalist societies have been formed by an intrinsically antagonizing double movement. The first one is laissez faire front which consists of recalcitrant free market supporters, and the second movement contains various social groups and institutions which try to defend their societies from the destructive effects of unfettered capitalism. Polanyi believes that this double movement will come to an end by establishing a society-wide consensus on the unfeasibility of self-regulating markets, and societies will then re-flourish around new paradigms and institutions which give way to even more complex societies and more freedom for humanity within the framework of rationality. However, the developments beginning in mid 1970s show that these two movements have different and asymmetrical powers to reach the desired ends. While market-oriented powers are centripetal and monopolistic by nature, defensive powers are centrifugal and tend to be individualistic. Therefore, the latter movement has gradually lost its countervailing powers on behalf of the former by the disempowerment of trade unions which has been the most powerful of protective institutions. Consequently, double movement has not come to an end as Polanyi hoped for. On the contrary, the abrupt disappearance of trade unions’ power has caught the masses unprepared and unguarded against the free market movement. As a result, this movement has gained an unchallenged global power in the form of neoliberalism. The aim of this study is to discuss the fading course of Polanyi’s double movement.

Explaining the Rise of Populist Movements in Europe as a Response to the European Ordoliberalism

David Cayla
,
Angers University

Abstract

Observing the collapse of liberalism in the 1930s and the self-destructing war that followed, Polanyi (1944) came to the conclusion that “the idea of a self-adjusting market implied a stark Utopia”. For Polanyi, if “a market economy can function only in a market society” this society is not sustainable in practice. It would imply free markets of fictive merchandises (labor, money and land), a system that would “annihilate” the human and natural substance of societies.
Polanyi’s lesson has clearly been forgotten, especially in the European Union. Since the Single Act treaty (1986), European economy took a path that aims to create a supranational free market economy that rest on three dimensions: 1/ a Monetary Union based on a supranational currency; 2/ a Single Labor Market that generates competitive pressures on national social systems; 3/ Competition Authorities that prevent public interventionism and support a total capital mobility.
The way the European economy is regulated is a direct product of the ordoliberal philosophy stating that public intervention should concern only the legal system surrounding the markets without any discretionary intervention. Implementing ordoliberalism was also a way to diminish the role of national states in an attempt to create a continental economy. But by detaching the economic sphere from the reach of national societies, this process created a European economy with no real European society to control it. The result is destructive and may explain the rapid development of populist movements. According to Polanyi double movement framework, the emergence of these political forces may be seen as protective measures from societies weakened by difficult market adjustments.

Advising Politicians in the New Age of Uncertainty: The Role for Institutional Economists

Sherry Davis Kasper
,
Maryville College

Abstract

Richard Parker argues in John Kenneth Galbraith (2005) that, in part, The Age of Uncertainty project was a response to the growth of technically sophisticated research that no longer could serve effectively in public policy discussions. A similar trend has occurred in this new “age of uncertainty,” where economists increasingly sit on the sidelines in political debates. This paper seeks to discover how institutional economists could better bridge this divide. Initially, it will review the discussion about ways for economists to work most effectively with politicians. Then it will compare these best practices with the ways in which institutional economist have approached conversations with politicians. It will conclude by making recommendations for the ways institutional economists could most effectively advise politicians.

The Last Gasp of Neoliberalism

John P. Watkins
,
Westminster College
James (Cid) E. Seidelman
,
Westminster College

Abstract

The ideas of Thorstein Veblen and Karl Polanyi are relevant in analyzing the last gasp neoliberalism. The election of Donald J. Trump represents an effort to void social protections previously created. Ironically, the failure to protect blue-collar jobs helped elect Trump. The Trump administration exemplifies efforts to create a predatory economy: efforts to dismantle environmental regulations, undermine public education, reduce corporate taxes, eliminate the Affordable Care Act, roll back financial regulation, undermine consumer protection and so on. These efforts represent the last gasp of neoliberalism. First, Trump’s policies reflect a collapse of any consistent ideological viewpoint. He departed from two centerpieces of the neoliberal paradigm: a commitment to balanced budgets and free trade. In cutting taxes for the wealthy and cutting benefits for the poor, the Trump administration reveals a willingness to use government to help business, not protect people. In threatening tariffs, Trump has alienated major sectors of the business community. Second, his pugilistic approach has prompted many neoliberals to leave Congress, gutting the neoliberal agenda. What remains is a quasi-fascist use of government to advance particular business interests together with a xenophobic, racist, and misogynistic agenda. Third, anticipated demographic changes suggests that cutting protections is unsustainable. Fourth, appointing millionaires and billionaires to positions of authority reveals people acclimated to consuming conspicuously, a consumption level that carries over in their public positions, a consumption level that is widely unpopular. Trump embodies the predatory culture. To him, people are either predators or prey.
Discussant(s)
Paolo Ramazzotti
,
University of Macerata
JEL Classifications
  • B5 - Current Heterodox Approaches
  • D7 - Analysis of Collective Decision-Making