Saturday, June 22, 2024

Don’t Bank on it: Neoliberalism with its Reckless Pursuit for Money and Financial Gain

Large Monopoly and old man with bags of money driving car
Before reading the insightful and eye-opening book “The Quiet Coup: Neoliberalism and the Looting of America” by Mehrsa Baradaran, I was under the impression that neoliberalism is synonymous with capitalism. Part of it is because neoliberals have presented themselves in a broad light and they have touted not only market freedom with healthy and productive competition, hallmark signs of capitalism but also claiming to be free and independent from government control and intervention.

Yet when I think of freedom, it is essentially democracy that comes to mind in which people are the emblems of the society, nation, and community and, as a result, they keep politicians accountable for their decisions, seek transparency and demand honesty from the elected members of the parties. The views and opinions of the people enshrined in the constitution as a collective “we” would matter because they are (or at least ought to be) the ones that are calling the shots and that select and determine who is going to be at the helm of the government.

Yet since the coup of neoliberalism, there has been more instead of less government intervention; the laws have been surreptitiously tipped in favor of the big corporations. At the same time, because there are fewer legal limits and limitations, there is less pressure and accountability on the side of these corporations, and they have become – or at least they claim to be - too big to fail and hence must be bailed out at all costs and regardless of the circumstances. It is no longer an issue of left versus right but is now deeply embedded and ingrained within legal bureaucracy essentially and effectively holding both parties at bay and in the palm of neoliberal hands.

At the same time, there is no longer much competition to speak of as large corporations have either bought and engulfed the smaller businesses or they have run them into the ground and out of business, or in some cases, they have done both. What is touted as freedom is now a subject of control, and where there seems to be a plethora of choice, it all comes back to a handful of companies that are essentially running the show and pocketing all the money and profits.

There is not much in terms of rule of law and much less in terms of fairness and justice as the prime objective of neoliberalism is the darkest side and corner of unbridled capitalism itself, to make maximum profit in the shortest amount of time with little consideration or respect for the environment or people’s lives.

Anything that would bring in a quick buck or two, namely, an increase in financial capital and monetary value would be all good. The easier, the better, and, in addition to the ubiquitous loopholes, specific rules and regulations have been set in place to protect the companies from prosecution, failure, and even bankruptcy. In other words, and as Mehrsa puts it herself, the game is rigged.

Matters of fairness and justice are being ignored ever since this economic ideology has infected politics, and now mega corporations are running our lives. Democracy is on the decline as money, to borrow from Bob Dylan, does not speak, it swears, and reaches and extends its spiky tentacles in practically all areas of life and existence. What was seen and presented as market freedom has delivered its opposite, not a state-controlled economy but a corporate-driven state turning everything into minable commodities.

Add to that corruption and cases of unchecked and even unlimited lobbying, and everyone’s hands become tied and sullied with mud. As Mehrsa explains, it is not necessarily single individuals that are responsible and to be blamed but it is a system, a big dumb machine that has been the culprit and like memes, it keeps incessantly and mindlessly reproducing itself with the aim of increasing profits up to unimaginable heights and draining the pockets and livelihood of honest and hard-working people everywhere within its reach and vicinity.

In fact, this is eroding and undermining the middle class and thus creating a larger divide between the super wealthy and the very poor. Not only do most people need to work harder to barely make ends meet but they are also bending under the burden of serious amounts of debt. Without regulation and skyrocketing debt, usury, a practice frowned upon by major religions across the world since time immemorial, is not only good but excellent for business. It is dumb money in action as capital reproduces itself at high speed with little effort and not much productivity to speak of.

And yet, to my surprise, it has not always been like this. Previously, with the help and aid of government rules and regulations, corporations were made aware of the duties they have to the public. Often with various government contracts pending and at stake, corporations aimed to address social problems while equally contributing to the overall wellbeing of society. This was another dimension of corporations because it was actually good for business.

Embracing their role of corporate social responsibility made economic sense and it was not driven out of the goodness of their heart but for more practical reasons. They were seeing and treating people as their prospective clients and treated them with a certain amount of respect or tact. Yet in the world of absolute power, the same people are just viewed as mindless consumers that can be and are exploited in various ways and via different, often shady and even nefarious means.

In fact, modern day corporations seem to take people and their influence and their many contributions for granted. It is because of the honest and hardworking taxpayers that corporations have the infrastructure to move their goods and services across the world as well as police and security in each of the towns and cities to ensure safety, safe transport, delivery, and consumption. It seems so unfair and frustrating that while citizens are pulling their part and paying their dues, corporations seek tax havens to escape paying their much needed and obligatory share to us, the people.

Yet it is not corporations alone that are causing issues and ripple effects across the economy to the detriment of ordinary citizens. Banking, which used to be restricted and constrained in its operations to ensure that it would give less cause or occasion to abuse and to provide additional layers of protection to the public became another corporate structure piece under the helm and guidance of neoliberal stewardship.

As a result, banks started taking reckless risks with other people’s money. And it did not stop there since it gave rise to “shadow banks” that, not unlike corporations, are driven by financial benefits and profits. Enter the derivatives, which are seen as “synthetic” as opposed to what are considered “real” assets. There is no productive value in this except the possibility of increasing one’s own financial assets at the expense of others.

Yet this erodes what has been the staple of the banking system and the currency itself, namely people's trust. It was the erosion of trust that was a significant catalyst for economic crises, be it the Great Depression or the Wall Street crash of 2008. Banks need and bank on people’s money for their own investments, which can incur considerable risks and losses, yet when there is distrust, bank runs become more likely and possible.

The problem is that banks cannot guarantee the availability of each patron’s money at the same time. If everyone takes out their money within a short time span, the bank will not be able to pay out the necessary and requested amounts and would essentially become bankrupt. This is what Roosevelt was concerned about when he talks about perceived fear being potentially more dangerous and threatening than actual and real threats and dangers.

This is additionally troublesome because money, with the absence of any guarantee after the elimination of the gold standard is essentially only paper, or in the digital world, flickering numbers on a screen. The economy runs on trust and so a lack thereof can trigger or be its downfall.

The distrust and frustration with mega corporations are already present, their influence and control upon politics is suspect, and with it, democracy is at stake. This can only forbode impending disaster, and it becomes more important than ever to change course and to ensure that faith and trust of the people are slowly and carefully upheld if not restored. Otherwise, it will not merely be the end of democracy but the rise of totalitarianism, and we already know from painful experience what it can do to the social and human fabric and existence.

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