Skip to main content

How a group of economists undermined public institutions, paving the way to neoliberalism

An assumption had become a truth. The self-interested model of human behaviour, that had been developed in the Cold War to make the mathematical equations work, had now been adopted by these economists as a fundamental truth about the reality of all human social interaction.


A group of economists in the early 70s arbitrarily adopted the self-interested model of human behaviour that had been developed in the Cold War, to explain the dysfunctionality of public institutions. This perception would become a powerful tool in the hands of the neoliberal ideology, carried by big banks and corporations, to demonize the state and dismantle any state control upon them at the expense of the societies.

In his documentary The Trap, Adam Curtis explains:

In the early 70s, the government bureaucracies in Britain began to collapse. Those around them blamed a growing economic crisis, but it was clear that something much more fundamental had gone wrong. What were supposed to be institutions to help people, had become destructive. Those around them seemed to turn against the very people they were supposed to serve.

A group of right-wing economists in America now put forward a theory that, they said, explained why this was happening. At the heart of their idea was Game Theory. They said that the fundamental reality of life and society was one of millions of people continually watching and strategising against each other, all seeking only their own advantage.

An assumption had become a truth. The self-interested model of human behaviour, that had been developed in the Cold War to make the mathematical equations work, had now been adopted by these economists as a fundamental truth about the reality of all human social interaction.

Economist and game theorist, Thomas Schelling, says:

           We were always trying to infer the intentions of the other. We were always trying to convey our intentions, either deceptively or truthfully. We were always trying to find ways to make believable promises, and sometimes to make believable threats. Threatening the Soviet Union, threatening a misbehaving animal, threatening a child, threatening a neighbour… I think what we were doing is what we call strategising. ‘What does he think that I think he thinks that I think he's going to do?’ It has to come to some kind of equilibrium. What is it that we can both recognise, is the obvious thing to do?

What this meant, the economists argued, was that the politicians and bureaucrats belief that they were working for what they called "the public good" was a complete fantasy - because to do that depended upon creating shared goals in society, based on self-sacrifice and altruism. But in a world that was really driven by millions of suspicious, self-seeking individuals, such concepts could not exist.

Out of this came a theory called "Public Choice", and a group of economists who were determined to destroy the politicians’ dream that they were working for the public interest.

Their leader was called James Buchanan.

Buchanan says:

           There's certainly no measurable concept that could meaningfully be called the public interest, because how do you weigh different interests of different groups and what they can get out of it? The public interest as a politician thinks, does not mean it exists, it's what he thinks is good for the country. And if he would come out and say that, that's one thing, but behind this hypocrisy of calling something "the public interest" as if it exists, that's what I was trying to tear down.

In 1975, Mrs Thatcher became leader of the Conservative Party. And Buchanan's ideas had a powerful influence on her, and the group of radicals gathered around her. A rightwing think-tank advising Mrs Thatcher brought James Buchanan to London for a series of seminars. And he explained starkly why the British state was failing. It was pure Game Theory: because there was no agreed version of "the public good", the bureaucrats and the politicians schemed and strategised in their own self interest, building up their power and their own empires. They claimed to be helping others. In fact it was the very opposite, and the result was economic chaos, and a breakdown of society.

As the British economy spiralled out of control, the political and bureaucratic elite who had dominated Britain since the war, found themselves under attack from both the Right and the Left. Where once they had been heroic figures who would create a new world, now they were accused of being agents of control, not freedom.

And these new theories began to spread into the public imagination. The writer who was part of the group advising Mrs Thatcher, began to write a sitcom [Yes Minister and Yes Prime Minister] that explicitly put forward the theories of Public Choice. As well as being funny, it was ideological propaganda for a political movement.

Comments

  1. Natural human behavior, protecting finite resources in hand, is in mankind DNA. However, this became not the case for humans since 1712's steam engine in Britain - the observation that has been also written on passionately by William Jevons, back in the 1980's.

    The suspension of that instinct has played havoc with Economics, as now humans are unable to fathom the role of fossil fuels Energy in our civilisation.

    Humans can NOT manufacture energy (a constraint depicted in a couple of diagrams below).

    Economics and Social-Contracts written since Malthus, Adam Smith and Marx should now be re-written again for the coming, post abundant fossil fuels age.

    Until then, "The Tragedy of the Commons" has now given its own law of thermodynamics!

    https://the-fifth-law.com/pages/press-release?failedrev=economicsundermined

    ReplyDelete

Post a Comment

Popular posts from this blog

Κυβέρνηση Σαμαρά: Πιο νεοφιλελεύθερη και από την Τρόικα!

Ο πρόεδρος της επιτροπής για θέματα ανταγωνισμού του Επαγγελματικού Επιμελητηρίου Αθηνών, Γιώργος Φλωράς, αποκάλυψε στην εκπομπή του δημοσιογράφου, Νίκου Χατζηνικολάου, ότι η έκθεση του ΟΟΣΑ, με βάση την οποία συντάχθηκε το τελευταίο πολυνομοσχέδιο, είναι ουσιαστικά δημιούργημα του ΙΟΒΕ!
Ανέφερε χαρακτηριστικά ότι:
Οι προτάσεις αυτές δεν είναι του ΟΟΣΑ, αλλά του ΙΟΒΕ και της Επιτροπής Ανταγωνισμού, δηλαδή κυρίως των Χατζηδάκη και Στουρνάρα και ότι η κυβέρνηση στην ουσία χρησιμοποιεί την Τρόικα για να περνάει τις θέσεις των πολυεθνικών, μεγάλων αλυσίδων σούπερ μάρκετ, κ.λ.π.
Ο κ. Χατζηδάκης, τονίζει συνεχώς σε ότι έλεγε ότι 'εμείς χρησιμοποιήσαμε τον ΟΟΣΑ γιατί είναι αντικειμενικός, έχει την αξιοπιστία, έχει τη διεθνή εμπειρία κ.τ.λ.' και γι'αυτό βγήκε και ένα κονδύλι 936.000 ευρώ για να γίνει αυτή η έκθεση. Η έκθεση ξεκινάει αναφέροντας στη σελ. 2 ότι οι θέσεις μέσα σ'αυτή δεν εκφράζουν απαραίτητα τον οργανισμό.
Η έκθεση αυτή δεν είναι του ΟΟΣΑ, είναι μια οργανωμένη απάτ…

Panicked neoliberal tools attempt to trigger a war of generations against AOC's progressive counterattack

globinfo freexchange
We were slightly surprised to see such an article title in one of the primary info tools of the global neoliberal regime and financial capital. But the subtitle immediately clarified everything.
When we read the title “Alexandria Ocasio-Cortez and the Revenge of the Millennials” of the article in Bloomberg, we thought that we might be in front of a small miracle. We thought that the time has come for some people inside the core of the establishment apparatus to admit that the younger generations have lost dramatically from this brutal system. And so, the time has come to overthrow it, take their 'revenge'.
But no, it was too good to be true.
The subtitle immediately revealed the trick: “The Democrats’ major economic initiatives tend to favor the young at the expense of the old.”
Then, inside the article we read: “Almost every major new economic initiative proposed by Democrats — the Green New Deal, Medicare for all, debt-free college — has a common feature: Un…

It seems that Bernie Sanders got it all wrong again, this time regarding the situation in Venezuela - very disappointing

globinfo freexchange
In an unfortunate series of tweets regarding the situation in Venezuela, Bernie Sanders exposed his weak spot again on foreign policy matters.
Sanders tweeted:
The Maduro government has waged a violent crackdown on Venezuelan civil society, violated the constitution by dissolving the National Assembly and was re-elected last year in an election many observers said was fraudulent. The economy is a disaster and millions are migrating. 1/3 — Bernie Sanders (@SenSanders) January 24, 2019
The United States should support the rule of law, fair elections and self-determination for the Venezuelan people. We must condemn the use of violence against unarmed protesters and the suppression of dissent. 2/3 — Bernie Sanders (@SenSanders) January 24, 2019
But we must learn the lessons of the past and not be in the business of regime change or supporting coups—as we have in Chile, Guatemala, Brazil & the DR. The US has a long history of inappropriately intervening in Latin Amer…

Canada has been trying to destabilize Venezuela at least since 2004

globinfo freexchange
Paul Jay, editor in chief at The Real News, gave some very interesting information - some based on personal experience - about Canada's total alignment with the US on its imperialist missions against Venezuela and other countries:
Mexico was part of the Lima Group, but now with the new leadership - with AMLO now taking office in Mexico - Mexico is not going along with this plan to recognize Juan Guaido. And Mexico is not the only country of the region. Many, many countries of CARICOM have come forward and have said they do not support this plan. So, the corporate media is trying to make this sound like the whole region is on board with this scheme.
For months, Canada has been playing a leading role in preparing for - according to the Canadian newspapers - for exactly what happened, the recognition of Juan Guaido.
And Canada has been into this scheme for months. And the rationale is supposedly that the election of 2017 was not a legitimate election because people w…

Former Pentagon official confirms: Trump prepares for war with Iran

globinfo freexchange
Right after Trump's sudden announcement that he will withdraw the US forces from Syria, we had some mixed reactions. Some liberals reacted angrily, but most of the reactions from the liberal machine were rather moderate, or at least not as intensive as someone would normally expect.
On the other hand, Trump's supporters and all those who had enough of the pro-war neoliberal establishment, felt a kind of vindication, as it appeared that Trump would eventually keep its promise for an 'anti-interventionist' policy.
But the blog wrote immediately a 'not so fast' article to explain that most of the Americans and all those who are tired of the US endless wars, should not rush to celebrate. We estimated that Trump's move is probably a sign that he is going to re-organize troops and go after the big target called Iran.
Indeed, shortly after the move, Trump, suddenly again, announced that he will also pullout troops from Afghanistan.
And then, about…

Jeremy Corbyn + Brexit = UK's liberation from the EU neoliberal barbarism

With Tories in power Brexit would be meaningless
globinfo freexchange
As has been mentioned in previous article, Brexit could play a much more critical role in the future course of Europe, apart from being treated just as a result of national pride - wounded Britons alarmed by the sirens of patriotism.
While the Brussels-Berlin axis will seek to implement all the conditions of the Greek experiment inside the EU, the Labour party under Jeremy Corbyn could become an example against this dark future. While the Greek PM, Alexis Tsipras, suffered a heavy defeat as went unprepared in the battle with the ruthless neoliberal priesthood, Corbyn should go to the battle with the neoliberal regime after a good preparation and a well-constructed plan.
Costas Lapavitsas explains why only outside the EU, the UK will have a chance to turn left - with a Labour government under the Corbyn leadership - in order to implement progressive policies for the benefit of the vast majority:
The European Union has bec…

Pompeo's special tweet potentially indirect threat against those who won't follow the orders on Venezuela

globinfo freexchange
After John Bolton indirectly threatened Venezuela with that 'accidental' revelation of about 5,000 US troops to be sent to Colombia, it was Mike Pompeo's turn.
In a peculiar tweet, the other major Trump warhawk essentially sent a clear message to those countries (mostly under the US influence) that refused to recognize Washington's puppet, Juan Guaidó, as the legitimate president of Venezuela.
Pompeo named one by one the countries that obeyed to Washington's orders: “We applaud Austria, Belgium, Croatia, Czech Rep., Denmark, Estonia, Finland, France, Germany, Iceland, Latvia, Lithuania, Luxembourg, Macedonia, Netherlands, Poland, Portugal, Spain, Sweden & UK for supporting Venezuelan people by recognizing @jguaido today as Interim President.
And then he placed a map, colouring the obeyed countries and the US with the same intense color.
We applaud Austria, Belgium, Croatia, Czech Rep., Denmark, Estonia, Finland, France, Germany, Iceland, Latvi…

When Venezuela's state-owned Citgo was aiding poor Americans with a 'fuel for heating systems' program

globinfo freexchange
A report from 2011 proves that the Venezuelan government designed a special program to aid the poorest US citizens overcome funding difficulties to heat their homes, through Citgo Petroleum Corporation, subsidiary of the state-run company PDVSA.
Citgo's heating fuel program began in 2005 after the passing of the hurricanes Rita and Katrina, but it didn't stop there. It continued uninterrupted for several years under Hugo Chávez' administration:
For seventh year in a row, the CITGO Petroleum Corporation (or CITGO), subsidiary of the state-run company Petroleos de Venezuela (PDVSA), will aid poor communities of the United States (US) with a program of fuel for heating systems.
CITGO president Alejandro Granado, through a press released in the website of Venezuela's embassy to the United States, said the increasing costs of energy continue affecting the quality of life of millions of US citizens and community organizations in that …

#HandsOffVenezuela: Brave Italians show us the path of resistance against the European branch of the neoliberal beast

globinfo freexchange
According to RT, Italy vetoed EU recognition of Venezuelan opposition leader Guaido. As RT reported:
Rome has effectively derailed an EU statement meant to recognize Juan Guaido as Venezuela’s interim leader if President Nicolas Maduro fails to set up snap elections, a Five Star Movement source confirmed to RT.
Italy announced the veto at an informal meeting of EU foreign ministers that started on January 31 in Romania, the source said. The statement, which was supposed to be delivered by EU foreign affairs chief Federica Mogherini recognized Guaido as interim president if snap elections were not held.
The European Parliament is the first European body to recognize Guaido “as the only legitimate interim president of the country until new free, transparent and credible presidential elections can be called in order to restore democracy.
The parliament urged the EU to follow suit but the effort stalled due to internal discord.…

Government shutdown, Venezuela: Donald Trump evolves into the best propagator of neoliberal fascism that tends to become a norm

by system failure
Even before the 2016 US presidential election, this blog supported that Donald Trump is a pure sample of neoliberal barbarism. Many almost laughed at this perception because Trump was being already promoted, more or less, as the 'terminator' of the neoliberal establishment. And many people, especially in the US, tired from the economic disasters, the growing inequality and the endless wars, were anxious to believe that this was indeed his special mission.
Right after the elections, we supported that the US establishment gave a brilliant performance by putting its reserve, Donald Trump, in power, against the only candidate that the same establishment identified as a real threat: Bernie Sanders.
Then, Trump sent the first shock wave to his supporters by literally hiring the Goldman Sachs banksters to run the economy. And right after that, he signed for more deregulation in favor of the Wall Street mafia that ruined the economy in 2008.
In 2017, Trump bombed Syria f…