by Darryl S.L. Jarvis
Martin Jacques (The Guardian, August 21) recent comments on the ‘death of neoliberalism’ are important, not least because he was one of the first analysts in the early 1980s to identify the emerging dominance of neoliberalism in the West. This reversal of fortunes for neoliberalism, due to what Jacques identifies as a wave of political developments in the two countries which were its main champions, the UK and USA, is thus significant – indeed for many a cause for celebration.
To borrow a line from Mark Twain, however, reports of the death of neoliberalism are greatly exaggerated. Jacques’ analysis is an overly optimistic reading of current political developments — developments which are still formative and which may yet challenge neoliberalism but through inherently nationalist and reactionary ways.
Jacques’s assertion, for example, that ‘A wave of populism marks the return of class as a central agency in politics, both in the UK and the US’ is questionable. The populist politics of Trump and UKIP can equally be read as race politics, or a reaction to cosmopolitism, multiculturalism, and the rise of race-nationalism. To be sure, such movements might be driven by growing material inequality and the failure of various governments to sustain redistributive measures, but the anti-neoliberal politics Jacques identifies is not manifesting as a class consciousness but often something altogether more dangerous.
At the same time, the rise of populist political movements seems far from challenging the pillars of neoliberalism. The pending failure to secure both the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), for example, will have little impact on the neoliberal trade order.
Trade liberalisation has already been secured. The spate of bilateral trade and investment agreements (BITS) over the last few decades off the back of various multilateral trade agreements and symbolised in the instruments of the World Trade Organisation (WTO), are not impacted by the failure to secure TTIP or TPP. In practical terms, there are now few barriers to trade, tariffs have fallen to insignificant levels, and non-tariff protectionist measures have largely fallen away. Yes, the TTIP and TPP would add another layer of ‘protectionism’ to sections of capital in terms of intellectual property protection, the extension of the life of patents to bolster profits, and flatten the world further in terms of standardizing regulatory regimes and realising compliance with neoliberal norms, but the failure to realise the TTIP or TPP will have little impact on the already entrenched pillars of the neoliberal trade order.
The same observations can be made of finance, banking, and the global financial order. Despite the severity of the global financial crisis, the impact on the financial order has been negligible. Populist politics manifested in demands for moderation / regulation of Banker’s pay. The European Union announced restrictions on bonuses that can be paid to Bankers rather than pay caps, with the EU fearful that any real restrictions on pay and bonuses would cede ground to competitors and see an exodus of banking talent to other counties. The ‘restrictions’ on Bankers pay were thus a chimera; bonuses could be paid but had to be split into a cash component (20-30% of the bonus), part of the bonus deferred between 2-3 years to reflect year-on-your financial outcomes of the bank (40-60%), and 50% of the bonus had to be paid as shares rather than cash.
By far the bigger impact on Bankers pay was not EU regulations, but the financial performance of the sector. With the implosion of the sub-prime lending market (essentially turning ‘turds into investment grade gold’ as one Banker put it), the banking sector has withdrawn out of that market, shedding tens of thousands of jobs as the investment side of the business went south. But all of this was driven by the market, not by anything governments wrought upon the banks as a result of populist sentiment.
To be sure there has been some pain for the Banks, with the UK, Germany, and France jointly introducing a banking levy (in the UK a tax measure that was made permanent in 2012 and levelled at the rate of 0.088% on bank balance sheets – excluding ordinary deposits). But the Banks have responded by managing balance sheets and using offshore booking facilities to shelter any real impact. Indeed, apart from populist measures like a Bank levy and nominal ‘restrictions’ on Bankers pay, the structural integrity of the financial system and global financial order has been sheltered from any impact. For example, there has been no attempt to limit the growth of financialisation or impede the flow of speculative or tax-sheltering capital.
No ‘Tobin tax’ eventuated on FX transactions, transaction taxes never emerged as a means of correcting speculation or cross border currency movements, and no changes to transparency and accountability practices in terms of tax sheltering emerged. As the Panama Papers revealed (and continue to do so), the world of global finance continues as per normal, largely operating beyond the purview of governments.
Martin Jacques tells a nice story, one which I empathise with. But if this is the beginning of the end of neoliberalism, my suspicion is that neoliberals continue to sleep very well at night.