Brexit result shows democratic rejection of neoliberalism

By   /   July 2, 2016  /   14 Comments

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Brexit has shone daylight on a crisis that’s been brewing for several decades. The utopian proclamation by Francis Fukuyama about the ‘end of history’, in the heyday of globalisation, has succumbed to the reality that paradigms come and go.

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Brexit has shone daylight on a crisis that’s been brewing for several decades. The utopian proclamation by Francis Fukuyama about the ‘end of history’, in the heyday of globalisation, has succumbed to the reality that paradigms come and go. The hegemony of neoliberal ideology and institutions, which supported a financialised and globally integrated form of capitalism, is fragile and fracturing.

For students of history and/or political economy that was utterly predictable. Karl Polanyi attributed the collapse of the last laissez faire era in his epic, The Great Transformation, to attempts to strip the social and political from the economic, and let the ‘markets’, or more accurately capital, rule and plunder. Laissez faire capitalism proved intrinsically unstable and socially and politically unsustainable. Sounds familiar.

My second favourite guru, Antonio Gramsci, offered his own pearls of wisdom as he languished in an Italian jail under Mussolini in the 1920s. Gramsci described a state of interregnum, where the old was visibly dying and the new was yet to be born. The transition from one paradigm to another would be heavily contested between those who hold power can dictate the formal responses to recurrent crises, and those who want to displace them, who need a workable plan for developing a real alternative. We are in that space again now.  

Gramsci also warned not to presume that the new would be socially progressive – fascism and neo-imperialism were equally likely responses. Progressive voices would need to work collectively and connect with people’s realities if they were to prevent regressive forces from shaping the new future. Ditto.

Not in the same universe as the others, but interesting as a case of (former) power speaking truth to power, is a blog on the Spinoff this week by Geoffrey Palmer who called the Brexit result ‘entirely understandable’: ‘when the treaties took more and more control away from national parliaments unease increased.’ He went on: ‘The political elites have foisted a new system on ordinary people and the ordinary people do not like it. So when the people have an opportunity to decide they reject it. Their fear about jobs and their sense of insecurity about immigration are entirely understandable. … There is a further and wider set of issues that also relate to democratic governance. There exists in many countries an underlying alienation of a significant portion of the population concerning the exercise of power by what they see as economic and political elites that the voters cannot influence.  

He then copped out and said: ‘I hope it doesn’t happen in New Zealand. But growing economic inequality may lead it that way. Some sense of democratic renewal is needed to avoid alienation, there is a sickness in western democracies.’

But we are already there. The unprecedented backlash against the TPPA is only symptom of a deeper malaise. In Auckland, belated coverage of homelessness has forced social realities of poverty and inequality centre stage. New figures show the gaps in income and wealth have widened once more, and the government maintains a state of denial.  It does this while presiding over a fragile and increasingly distressed economy of FIRE – where wealth creation depends on finance, insurance and real estate, rather than real production, firms that have a long term horizon, and quality durable jobs.

Last year in my book The FIRE Economy. New Zealand’s Reckoning I said we were sitting ducks for a financial crisis. Levels of household debt are well beyond the danger level identified by IMF researchers, as is our overseas debt. Those conditions have intensified. Almost everyone now concedes the property bubble will burst. The collapse of the dairy price has exposed an unserviceable rural debt. The Christchurch rebuild can no longer plug the GDP gap through a classic reliance on disaster capitalism. Immigration as a source of economic activity is compounding the other problems.

The IMF’s research economists describe affluent countries like ours as in a ‘state of denial’.

We know the capacity for the élites to resist paradigm change, and the appeal of fascism, are greatest when countries are faced with a crisis.

As the GFC, Europe’s debt crisis, and those that preceded them showed, the ‘orthodox’ response of austerity aims to rescue the failing status quo. The mechanisms that embed the neoliberal model are remarkably robust and resilient. The rise and neutralisation of Syriza in Greece will have emboldened finance capital and their crony technocrats in Europe and elsewhere.

The austerity response is a ruthless, but temporary, strategy. It compounds both the instability of financialised capitalism and the alienation, insecurity and inequality that fuels social and political dis-ease. There is a breaking point. As people who feel powerless get left further behind, those who seek to protect the status quo hasten the day of reckoning.

In this country that scenario has become frightening real. I believe it’s not now a question of whether we will have a meltdown, but when and how severe it will be. Popular mobilisations could take many forms and there are no guarantees they will be progressive.

As Brexit shows, the failure to take that prospect seriously leaves a void that allows state-corporate elites to regroup. It also shows the bastions of neoliberalism will not just melt away, nor will workable alternatives rise like a Phoenix from the ashes.

This is not a call to arms. It is a call to organise, to put strategies in place to protect the most vulnerable, and to work on concrete options and strategies to transform the institutions and instruments of the state and private power.

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14 Comments

  1. jay1 says:

    So here is where we find ourselves. The economic system is not working, except for the likes of Philip Green. Neoliberalism has not delivered the meritocratic nirvana its theorists promised, but a rentiers’ paradise, offering staggering returns to whoever grabs the castle first while leaving productive workers on the wrong side of the moat. The age of enterprise has become the age of unearned income; the age of the market, the age of market failure; the age of opportunity, a steel cage of zero-hour contracts, precarity and surveillance.

    http://www.monbiot.com/2016/06/29/roots-in-the-rubble/

    The empirical reasons for voting for Brexit were as clear as day. The obvious one is that there is no “European Union” to belong to. Germany rules the roost. The “Union” doesn’t exist. But the “Apartheid” does.

    The facts have being piling up for all to see in recent years. Only an educated fool could miss them. The financial crisis of 2008 crystallised everything. The subsequent rape of Greece and the generalised attack on workers throughout the EU (Austerity) made the EU feel more like a Banana Republic than a Super State.

    And the 2014 coup in Ukraine made this banana feeling unbearable. The USA was doing to Europe what it did to Honduras in 2009. To paraphrase the US Assistant Secretary of State for Europe and Eurasian Affairs, Victoria Nuland, the US was “fucking” Europe. And the response of the EU? Silence. Not a word of complaint. So why would anyone want to belong to an organisation that is being “fucked”?

    The fact that damns the EU the most however, in the eyes of “cold calculation”, is the EU’s death wish. The EU’s push for World War III in the East is truly mad. And makes a mockery of the “peaceful” portrayal of the EU.

    http://www.counterpunch.org/2016/07/01/brexit-the-english-and-welsh-enlightenment/

    • CLEANGREEN says:

      “This is not a call to arms. It is a call to organise, to put strategies in place to protect the most vulnerable, and to work on concrete options and strategies to transform the institutions and instruments of the state and private power.”

      Yes Jane it is so good to read your post.

      “This is not a call to arms. It is a call to organise, to put strategies in place to protect the most vulnerable, and to work on concrete options and strategies to transform the institutions and instruments of the state and private power.”

      I am studying the operation of the Government’s flagship propaganda agency and administration nerve centre, “Ministry Of Business innovation & Employment” (MBIE)

      It is the National Party HQ of their “instruments of the state and private power” central operation centre now.

      If you have any current student doing their thesis of this agency as part of their politic studies can we have some paper on ay critique done as the agency has been set-up by the “Minister of Everything”
      to rearrange the whole Government power & agenda.

      • Winnie says:

        It’s a call to arms to get 25% of the population who are not voting out to the polls to give the Brexit, Trump and Bernie message to Key and the neoliberals in their coalition like ACT, United Future and the Maori Party.

        Put neoliberal inequality where the sun doesn’t shine.

        I see the Business Roundtable has re-appeared as The New Zealand Initiative. You know they are feeling confident coming out from their hiding place.

        • CLEANGREEN says:

          very scary isn’t it WINNIE, when these scumbags are lurking in the shadows then pop up now and then almost like leopards I used to see at night down on the Zambezi valley at Lake Kariba, Zimbabwe Or Rhodesia it was called in 1970, during my working life.

          But at least then, you were safe during the day, as they didn’t lurk around to devour me during the day but only at night but these crime ridden scoundrels hunt at any time day or night.

  2. gsays says:

    prof jane kelsey, thank-you for your efforts re tppa.
    you make a dull, seemingly inpenetrable subject, accessible and able to be understood.

    the above post helps communicate a myriad of ideas that come from the brexit vote.

    in terms of organizing, i am a huge fan of food resilience at a community level.
    be it community gardens, shared gardens, school/kindy gardens.

    as for the institutions, they are a reflection of the humans that run them.
    i trust there is a shift in generations due where the neo-lib, tina, mindset will become obselete.

    thanks again.

  3. Afewknowthetruth says:

    I do not like the use of the word ‘elites’ to describe the scumbags near the top of the economic pyramid who have lied to the masses for decades in order to enrich themselves and their own kind at the expense of everyone else and at the expense of the global environment: an elite person is someone who stands out from the crowd because he/she has extraordinary talent or skill. The only ‘skill’ or ‘talent’ those at the top of the pyramid have displayed is that of blatantly lying and generally misleading for their own short-term benefit, and in order to prop up a completely dysfunctional financial-economic system.

    Everything now points to collapse around 2020, as a consequence of the insane policies foisted on western societies since the 1970s.

    Limits to Growth is on schedule. Collapse likely around 2020

    http://energyskeptic.com/2016/limits-to-growth-is-on-schedule-collapse-likely-around-2020/

  4. jay1 says:

    NZers are so dumbed down with greed and self gain and living in the cage mentality: there’s no hope for them. This stupid country is so buggered up it’s hopeless. So bugger off you stupid key cock suckers.

  5. Jacqueline Gibson says:

    Thanks for this Jane, especially the interesting bits of history, it all makes so much sense. I have a question about the housing bubble in NZzzz. If the rumours about the shaky isles becoming a bolt hole for the rich are true, will this not prolong the bubble for as long as this remains the case?

  6. cliff says:

    What might our “pheonix” need to look like? I have a few suggestions:

    • less mindless consumption. We will need to learn a new respect for our natural world that begins with respecting our ‘harvests,’ so to speak. We should only use our resources to produce quality products that we repair instead of replace, manufacturing that is built to last. Less products in general. So much crap is unnecessarily produced and consumed just to keep the wheels rolling and people employed. To survive we only need food, clothing, shelter, community and to be challenged and entertained. The rest is just unnecessarily ‘keeping up with the joneses.’ The planet cannot take more of this.

    • less emphasis on jobs, and more on legitimate contributions. A shake-up of the education system. Civics from primary to year 13. Tertiary level shouldnt just be about getting students into jobs. We need to be comfortable with the fact that not everyone can or should be employed at any given time. That attitude drives mindless growth and consumption and the negative forms of competitiveness and desperation that cause all kinds of social and environmental issues. What if we beefed up our tertiary education system and encouraged (not forced) those out of employment to explore new horizons and find where they are best fit to contribute? Instead of simply forcing them into low paying dead end and often pointless jobs. A good look at some kind of UBI and a four day work week (or even more adventurous) would be necessary. Think of the resulting good work available in the areas of performance/arts/entertainment/food/hospitality/education if we were to offer people more free time to be audiences, diners, students, amateur performers, creators, hobbyists etc

    • land. I dont know what to do here but somethings gotta give. We slave all our lives just to pay for this, whether its rental costs or rates and servicing a mortgage. Without the high price of land, our lives would be less competitive and complicated. If you didnt have to pay for it for your whole life you could have the option of self reliance. Homesteads, growing your own food, etc. The country is so unequally divided by land ownership that it would take a big bubble bursting to have a serious conversation around this.

    anyone else?

  7. Helena says:

    Thank you Jane for prodding us into action again!
    There’s a revolution in Britain by the Jelly Generation (phrase borrowed from David Icke) against the Baby Boomers saying the latter have destroyed their future : http://www.telegraph.co.uk/news/2016/06/24/millenials-fury-over-baby-boomers-vote-for-brexit/
    Many papers follow this trend and there are calls for voting rights to be taken away from all those over 60.
    Interestingly none of the Jelly Generation quote Cameron’s former aid who said prior to the vote : http://www.independent.co.uk/news/uk/politics/european-union-makes-britain-literally-ungovernable-says-david-cameron-s-former-guru-a7042916.html
    and that Cameron learned of some new EU regulations from TV MSM.
    I hold the opinion that the Jelly Generation have been systematically brainwashed for a good many years into trusting their high school/university education holds the answers to all questions to be asked irrespective of the provable fact that history now seems to have been re-written by those who hold power and sit in the dark,(e.g. QEl had dark skin … woohoo…and certainly was not fair skin/red hair…just a trivial piece of truth). Science is outdated with reverse engineering now be disclosed, all facets of medicine are carefully controlled to maintain a satisfactory death rate but many of us know about the deaths of holistic doctors http://www.healthnutnews.com/recap-on-my-unintended-series-the-holistic-doctor-deaths/ and some of us are aware that one GcMAF clinic was hounded out of New Zealand. Some of us are aware that our DNA is deliberately being damaged : http://www.envirohealthtech.com/emfdevice.htm and that fluoride/chloride are poisons terribly damaging to the body.
    So few of us in all age brackets are willing to venture beyond what we are told is good for us and do research to make that decision for ourselves, i.e. take back our personal sovereignty : http://www.huna.org/html/perssov.html
    I also hold the opinion that all aspects of TRUTH have been deliberately withheld from New Zealanders by a government/corporation that is been financed, guided and controlled offshore : http://www.sinhalanet.net/three-corporations-run-the-world-city-of-london-washington-dc-and-vatican-city
    Another example is why hasn’t plasma technology been introduced into every community/home putting out electricity for no cost: the Keshe Foundation Magrav System has been proven and on the market for some time and Mr Keshe has offered the technology/blueprints to all countries willing to sign his World Peace document : https://store.keshefoundation.org/store/?alias=store
    But of course this would mean our NZ Inc CEO jonkey would have to step out of “The Club” and bring our troops home.
    New Zealanders are a kind people who are privileged to live on a kind and giving piece of land. But even here we are subjected to the evils of those with technology to control weather :http://www.geoengineeringwatch.org/air-force-bombshell-admits-they-can-control-weather-haarp/
    Our knowledge of what IS has been kept to a level of what’s best to keep us under control and our government still operates under the illusion that it can slither around in the making secret deals … but …
    TPPA is, according to UN legal expert, illegal : https://geopolitics.co/2016/06/30/u-n-legal-expert-calls-proposed-trade-deals-illegal/
    We are winning. We are finding the truth. We can use technology wisely for the benevolent benefit of all. The meek will inherit the earth.

  8. Castro says:

    A call to arms, literally, is precisely the solution required. The Free Slave Agreement signed with the universe’s largest dictatorship since the dinosaurs has ruined No Zealand. Civil war is the only solution… here we come…

  9. Dan Broid says:

    Everything will be better when the baby-boomers are dead.