Yves here. This is a short, straightforward Real News Network interview with John Weeks, Professor Emeritus of the University of London, which dissects the logic, such as it is, by which neoliberals argue against taxes and for smaller government.
I wish the visual image was not so choppy, because Weeks’ remarks are cogent and accessible. I’ve included the transcript from RNN as well as the clip. I hope you’ll share them with family and colleagues.
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.
This is the first part of a three-part discussion on a new book titled Economics of the 1%: How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy. The author of the book is John Weeks. He’s a professor emeritus at the University of London, he’s a regular guest of The Real News, and he’s now joining us.
Thank you so much, John Weeks.
JOHN WEEKS, PROFESSOR EMERITUS, UNIV. OF LONDON: Well, thank you for having me on. I’m very pleased to be here and talk about my book.
NOOR: So one of the chapters in your book is titled “Lies about Government”, and you start off the chapter by talking about fake economics, which is the term you use to describe mainstream neoliberal economics. And you say it includes as a central message the inherent inefficiency and intrinsic malevolence of governments at all levels. Talk about what you mean and how governments and their role in our economy is so vilified and why that’s done.
WEEKS: It derives from a basic ideology that says that everybody and everybody in the world is a consumer and that you derive your pleasure in life from consuming, which, if you reflect on it, obviously is a pretty sick idea. I mean, people who actually behave that way I think are rather unhappy people. But at any rate, if you take that position, if you take that analytical position, then it follows that taxes are a burden–they take away an individual’s ability to consume. And they are–some of it may be absolutely necessary. You might say that that’s the more benign wing of this school of economics, which I refer to as fakery. And so they begin by saying everybody’s a consumer. Taxes should be as small as possible so you can go out and consume. And anything that can be produced through the private sector should be produced by the private sector. And then, in addition to that, if it ends up being produced through the government, it will be produced inefficiently; that is, there are some things you can’t avoid, one presumes. You can’t have a private fire department. They would just go and put out the fires of the people that paid, not the ones next door that hadn’t. But most things, you should go from the private sector, ’cause the government is inherently inefficient.
It’s quite extraordinary, actually, that people–many people believe that. The reason they believe it is because it’s beaten into people every day, because–think about it for a moment. You’ll learn that, say, the environmental agency wastes money building something or other, whether it be subsidizing wind farms or subsidizing people to do research on non-carbon-based energies. But this is peanuts compared to the private sector. I mean, you have these executives who oversaw the collapse of the financial system, and each year they’re getting bonuses of up to $100 million, $300 million. Well, I mean, if this isn’t a waste, what is?
And then, in addition, many of these companies produce things that are absolutely useless for the economy, making billions of dollars out of producing so-called financial products which led to the collapse of the economy.
But the idea’s been sold. You know, government is inefficient. We’ll make it as small as possible. And we ought to–oh my deuce. I forget what the cliche is. It ought to be leaner and more effective.
This is nonsense. The government sector needs to be larger. Just about all of the basic things governments do they do more effectively and cheaper than the private sector. One of the best examples is pensions. The U.S. Social Security system is much more efficient than anything in the private sector. And that is because the government doesn’t charge you a handling fee and doesn’t run a profit doing it.
So there is this ideology that says the natural state of people is markets, and governments are intrusions into those markets, which itself is completely nonsense, because the people out there watching, they might have had bad experiences going down to the post office, having to stand in line, all that sort of stuff, but they sure had bad experiences with the private sector.
The idea that markets should exist without government regulation is absurd. You know, say a supermarket, which is a concrete form of a market–how do you get there? You’re driving your car. In order to drive that car, you have to have a licence. You get the license from the state government. You’re going to drive on a road. The government will have built that road. There will be regulations about how fast you can drive so you don’t kill each other, other people when you do it. The government is doing all of that. That supermarket could not exist. That supermarket chain could not exist without the role of local and federal government. It’s not that the federal government intervenes in markets. It’s that they are the facilitator by which markets exist.
Now, there may be some things that are silly for governments to do, just like there are some things that are silly for markets to do. But the idea that somehow you could have a market, it wasn’t–that had the government out of it wasn’t completely contrary to all experience.
NOOR: Professor Weeks, that wraps up the first part of our discussion. We’re going to continue this in part two in just a moment. Thank you so much for joining us.
WEEKS: Thank you.
NOOR: Thank you for joining us at The Real News Network.
53 comments
Comments are closed.
Proofreading note:
“AISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.” [missing a “J” there on “Jaisal”]
Geez … don’t label me … but … horse manure.
After reading about Obama (Holder) and the JPM settlement … you want to give government more power?
Social security is an example of good, efficient government? Perhaps compared to Obamacare.
Personally I do not trust the government any more that I trust JPM.
TBTF?
How about TBTE.
In the United States’ political elites systematically sabotaged the federal government and, to a degree, the electoral system. One of the reasons that the left has had so little traction is that most people understand that the federal government is broken and most of the policy prescriptions demand action on the level of the federal government.
The federal government needs to be radically reformed starting with re-inventing the Civil Service system, partially dismantle national security state and eliminating government contractors and the most of the power of money in Congress before people will willingly support more government regulation and oversight. Since that’s unlikely we have to make other arrangments in life.
‘The U.S. Social Security system is much more efficient than anything in the private sector.’
Hilarious. SocSec is the only pension scheme in the country, to my knowledge, that has no equity holdings at all. This is despite the fact that an ‘equity premium’ (higher return on equities compared to bonds) has been a fundamental tenet of finance for half a century.
Weeks is a flat-earther, the sort of self-assured know-nothing who would have gleefully tormented Galileo for heresy.
You do realize of course, that the ‘equity premium’ in the private sector is entirely possible due to government “facilitation”?
reply to you at bottom; lost my place in line
You are correct. But, its beneficiaries have received every dime to which they are entitled. A goodly number of “highly risk averse” pensions have had to be rescued due to purchases of risk assets. Many are woefully underfunded. But SS is a minor part of the argument that government can and does do many things quite well, while the neocon argument is that that never happens. Yeah, the U.S. government is not what it should be, but we don’t have melamine in our infant formula and other such free market horrors.
at least we hope we don’t – there is just no way to know in an ultra pristine and virtuous “free market.”
Why should a government-run transfer program have equity holdings?
Private retirement investment programs are also transfer programs by the way. You pay in some money early in life which becomes the income of other people alive at that time, and which buys you a share of the future cash flow generated from the work of other people.
We should support the retirement of our seniors by transferring an appropriate share of the national output directly to the retired, without funneling it through the filthy intestinal maze of the financial services system where millions of parasites take a cut.
And this, of course, is why Social Security has always been under attack from financial capitalists and their privatizing “reformers”. The very idea of a massive part of the economy where wealth flows from young to old without the banksters dipping their hands into the flow makes them pull their hair out. They also hate the very idea of a society run on the basis of an enlightened social contract of mutual intergenerational support rather than the pure capitalist engine of individual greed and isolation.
Profit is inefficient. It comes into existence without a mechanism to make another return – yet it demands one. Profit. Does this actually mean “no way to make another profitable investment” without making the whole system spin out of control? We need to give every enterprising person just one, one, lifetime profit and call it good. No more doubling down – the bedrock of our beloved capitalist free enterprise “system”. In other words: gambling. Of course there is no market without governments – so go figure. It’s safe to surmise that government tempering of the markets is the only way to prevent critical mass. So then, if profit is so irrational, why don’t we analyze what a rational government-market-world would look like? Oh god no! We can’t look at that.
Sigh. Soc Sec is part of the US government. It can and has been financed by simply printing money / bonds – which has a zillion percent return, known since forever. A rigmarole with equities would just be welfare for Wall Street. Having it draw directly from the Treasury was the original plan for SS, and it should probably do that more. The taxes were Henry Morgenthau’s idea – and might have been a good idea at times back then.
It’s not hilarious but sad that intelligent people can be brainwashed to believe innumerate things like Jim Haygood’s remarks, to the point of laughing at elementary truths at the level of 2 + 2 =4.
The MMT argument I’ve seen for SS taxes is that it reduces demand among people who are paying so we have the economic capacity to supply the needs of the recipients.
That sounds more like the standard model. MMTers would, I believe, state that it depends on the particulars of the economy whether or not you need to tax to offset benefits. But if there is a labor surplus and inadequate demand, as now, MMT suggests printing to fund social programs until such time as the demand has recovered and inflation looks like it might become a real problem. FWIW.
Moron! You are a moron!
Who invited the twelve-year old?
This is a very poor criticism of neoliberalism.
Presenting the gov’ts as ‘good’ and opposed to the markets as ‘bad’ after all the bail-outs and connivance will not win over anybody thinking twice about the wonders of neoliberalism.
Also it doesn’t follow that by abstracting individual behavior as a consumer for economic analysis then taxes should go down in order to consume more.
The problem of neoliberalism is not a problem of reductionism of individual behaviour for economic analysis or a problem of weakening the State.
The problem and failure of neoliberalism is strengthening the State for the wrong reasons, of giving the State more power to engineer the transfer of wealth to failed elites, of giving the gov’ts more tools to concentrate wealth upwards instead of diversifying to optimize the harvest of productive talent.
Yeah, off the top of my head I would make two points:
1). I think we need to move beyond this weak analysis that “neoliberals are in favor of small government,” as Weeks clams. I would say Weeks is promulgating a “liberal lie about neoliberalism,” or alternatively (if we still want to be nice about it), Weeks is accepting at face value the propaganda behind which neoliberals actually promote “big government” and “strong arm government.”
I prefer something more like your formulation:
“The problem and failure of neoliberalism is strengthening the State for the wrong reasons, of giving the State more power to engineer the transfer of wealth to failed elites, of giving the gov’ts more tools to concentrate wealth upwards instead of diversifying to optimize the harvest of productive talent.”
2). Consumerism and reconstruction of “the citizen” into “the consumer” long predates “neoliberalism.” It is, for example, one of the pillars on which Keynesian-influenced economics rests with its emphasis on “aggregate demand,” along with its more corporate companion, “Fordism”:
http://en.wikipedia.org/wiki/Fordism#In_Regulation_theory
It is true that “neoliberalism” emphasizes consumerism and markets, strong arming a government they’ve made more powerful than ever before into the creation of would-be markets globally and domestically (Obamacare), while stripping out the supports that made a consumption driven economy possible.
But neoliberals most certainly did not invent consumerism and make a central driver of the economy, and the role to which the citizenry was to be put, by power of governments and corporations. And the “believers” amongst the public to which several comments refer, were already a ready made audience long before the neoliberal fundamentalists high jacked the national religion and took it on a joyride.
You don’t need a state to transfer wealth to elites and exploiters. That’s what capitalism and capitalist markets do naturally all by their itty bitty selves. You need a state to trump market decisions for the sake of social solidarity and the common good. Neoliberalism was a movement that aimed at removing as many of these government regulation and redirection schemes as was politically viable, and re-asserting the primacy of market values and individual acquisitiveness over social values, so that capitalism could go back to creating massive inequality and a robber baron economy as it did during similar periods of weak regulation in the past.
I already stated that neoliberalism strips out the supports for a consumption driven economy, so I gather you’re just upset that I don’t buy the liberal lie that the state’s primary function in the 20th century was to protect the citizenry, and not to enable the development of capitalist enterprise.
All things considered your industrial era Lord Keynesian “New Deal” looks like a pretty happy f*cking coincidence to me.
” You need a state to trump market decisions for the sake of social solidarity and the common good.”
That’s a theory. I don’t necessarily disagree with that theory about how the state should work. I am, however, calling into question your conviction that this is how the US government actually worked in the 20th century.
I don’t necessarily expect you to put your assumptions into question in the name of enlarged understanding, however. I know FDR and Lord Keynes are your boyz.
‘Till death do you part.
Dan Kervick:You don’t need a state to transfer wealth to elites and exploiters. That’s what capitalism and capitalist markets do naturally all by their itty bitty selves.
IMHO, this makes the error of conceiving of capitalism and markets as being natural, existing independently of the state, rather than being their creature, with the structure of the private sector largely determined by the government’s taxation and spending. Which tends naturally to the error of thinking that the only thing, or the important thing is redistribution of an already existing pie conceived as natural and unchangeable, rather than enlarging the pie by predistribution, by full employment above all.
Capitalist elites and exploiters’ itty bitty selves don’t naturally transfer wealth to themselves without the state. Because their itty bitty selves don’t exist without the state. To a great degree, what the state does is “trump market decisions” by ensuring wealth flows upwards and enforcing an oligarchical economy. State spending is largely on gifts to the rich. State taxation is largely imposed on the poor, directly or indirectly.
Capitalist elites and exploiters’ itty bitty selves don’t naturally transfer wealth to themselves without the state.
Well, a state of some kind is necessary for the establishment and maintenance of some kind of property rights. But if you start with that minimal state, and then let things go in a natural laissez faire way, greater inequality will result.
The world is full of blood-suckers. To preserve civilization and a decent society, you need tough rules against blood-sucking. If you roll back the rules you unleash the bloodsuckers, and then you get a vampire apocalypse: a few extremely healthy winners who have engorged themselves on the blood of the few, and a landscape of losers and blood-drained carcasses.
That’s what happens in a world run mainly on the principles of aggression and competition. A few win the competition by defeating and subordinating everyone else.
And Minsky argued persuasively that is financial instability is also the natural result of loosely regulated capitalist finance.
Looking forward to the Piketty book.
Neo-lib doesn’t describe world as it is, but as they wish it was (even though it’s impossible) – in the same way as die-hard marxists describe communism. Neither system survives clash with reality (systems are good, you know, but we got the wrong sort of people to live in those systems..)
That said, the point about the inefficiencies should be repeated ad nauseum. It’s not government that’s inherently inefficient, but the structure which _can_ (but doesn’t have to) lead to inefficiencies. But those same structure are the same structures that large corporate have, ergo any government inefficiencies will be replicated by large corporates. I don’t see any neo-libs arguing that large corporates should split. In fact, quite a few of them even support natural-monopoly companies, so why it’s so hard to accept that the government is also a natural-monopoly (on the use of violence, out of which quite a bit of it hangs)?
“nauseam.”
First declension, singular accusative.
Sorry – pet peeve.
John Weeks makes a good point that the private sector is often more inefficient and wasteful than the government, but because of effective propaganda few people will believe this.
All groups that survive are “efficient” at what they do–the fact is that neither the private sector nor the government has much of an interest in the welfare of the society at this point in history at least in the USA. At one time, government and the corporate sector did take an interest in the society and felt protective of it to some degree or the country would never have survived. That’s hardly the case today–we need alternative structures.
+100
Perfect and to the point. It goes (almost) without saying that the idealization of humanity as a crowd of consumers is hammered into every undergraduate’s brain by elementary economics textbooks. Mao’s littlt Red Book had nothing on this sustained propaganda. What the interview doesn’t pick up, however, is that even people of moderately good will swallow this swill, because they have been taught to think that they cannot reason about ecomic life without it. That includes people of actual good will like Paul Krugman. The logical (not to say factual) flaws in this vision have been exposed and in some meadure understood for over a half century. Ian Little’s highly respected Critique of Welfare Economics put the kebosh on it in the early 1950s, and Sen did the same thing a couple of decades later. The degradation of economics is in my view a product of its Americanization since the 1950s. Americans see themselves, or at least then saw themselves, ad ‘can-do’ persons. None of this nimby-pimby philosophizing about trivial points of logic. Let’s get down to work and get the job done! Of course, the nimby-pimby philosophizing was all about what the job is. Thngs have only gotten worse with the influx of engineering types into the field. Absolute lack of self-understanding.
Knut,
Your criticism of US economic theory is likely well placed.
Maybe we need more one-handed economists – or to ignore them entirely..
“The degradation of economics is in my view a product of its Americanization since the 1950s”
Small quibble, I would say that it was the American embrace of Austrian economic theory.
He is talking bollox to some degree.
Although the neo liberals are obviously greedy as they are using the process of bank created artifical scarcity to their own benefit and not the community in which they must live.
We live in a extremely hard money / easy credit system
How does he know what we want !!!!!!
The central state actually creates the demand.
This is a quite extraordinary situation.
People do not create their own intrinsic demand.
These Bank of Amsterdam / NY Fed like operations are force feeding people conduit capital goods (now at 0% interest for Christ sake.)
The Government is the bank.
Until people destroy the bank then ….well they will remain as conduit products of that bank.
He should really read the works of CH Douglas – he strikes me as a well meaning but dim old man.
agree; this is not the government we fantasized it was
“WEEKS: It derives from a basic ideology that says that everybody and everybody in the world is a consumer and that you derive your pleasure in life from consuming”
Spot on. Convincing large swaths of the electorate that their actual identity is in their buying practices, that they are consumers first, is a clever way to pacify the electorate and sell lots of stuff. It also mentally decouples elected officials from the electorate. For too many politicians their fellow citizens are seen merely as passive shoppers, children with an allowance, easily manipulated with advertising, not active citizens engaged in determining the direction of the country and the government.
What! I’m living in a huge store – with a ballot box to the side!
@Flora
You don’t get it.
The people are not free consumers – they are conduits locked inside the credit creation process.
The system creates the demand via bank credit and advertising.
The people are not free fiat like agents.
They must work for bank assets.
The state as we know it today is a Bank of Amsterdam / Bank of NY type operation
Everything else is just floss.
Artificial scarcity, energetic faux-competition, badge marketing, lifestyle marketing, brand evangelism, and some massive organization behind it whose incentives conflict with yours and which is only interested in ensuring the health of the market.
Is the West thoroughly incapable of creating anything, even so much as a political system, that operates without preselecting a set of losers to guilt into making it work?
The use of the word “consume” and “consumption” are sloppy ways of making all activities into market or business activities to the detriment of all other actions we take part in. The mental image of human beings “consuming” everything is a nasty one.
“You know, government is inefficient. We’ll make it as small as possible. ”
Who believes in making the government as small as possible?
Not me.
You’ve apparently never heard of Grover Norquist or the Tea Party or the Republican push to keep lowering taxes.
Norquist is at least as powerful as Karl Rove.
Norquist’s famous quote is he wanted government to be so small he could drown it in a bathtub.
This is just the Randian image they like to project, but behind the facade these people are the biggest dependants on the power of the State and they know it.
The basic question is what services, duties, tasks, are to be performed by the State.
… that is, some kind of collective to which all contribute according to their means to pay for the common good, aka needed services, tasks, that can’t, for reasons legislative, moral, financial, common-sensical, organizational, be left to the private sector without oversight.
! The answer will be different in selected countries, cultures !
That oversight may vary wildly: none when selling off tax-payer paid for infrastructure to bandits who loot, none…when the State…collaborates with the private sector to increase their profits on both ends…but strong when the State out-contracts with stiff controls to some private co. in a ‘proper’, agreed-on, public-private partnership.
On the ground, one needs to address, how are these ‘public’ services, jobs, to be organized and paid for?
Any discussion that buries this point is highly suspect.
Actually talking about it raises questions like:
Should MDs have State regulated salaries, paid for by the community, as they perform a public service?
Should energy delivery (e.g. electricity) be State-controlled or left to competing agencies?
Talks like the posted don’t leave a space for such questions. It is obfuscating and silly. Covers up today’s realities, where the Gvmt. and Corps, other influential bodies, are in bed together.
Tellin’ the public they are just dumb consumers is a neon-colored flashing-LED red herring. Never mind if they have been ‘manipulated’ to that condition.
“On the ground, one needs to address, how are these ‘public’ services, jobs, to be organized and paid for?”
Absolutely backwards. The only reason one ever asks how to pay for it is to find an excuse not to.
One first needs to make a firm commitment that those services are part of the duties of the government. Then the government simply fulfills its duties by *doing* and buying.
Which could be fleshed out with questions like: “Should med students have State-provided tuitions, paid for by the community, as they perform a public service?”
Or, in the other direction, answering them with values questions that can inform other related questions: “Should basic needs be prone to hostage-taking by an elect few?”
At the 4 minute mark, our guest was trying to remember the cliche from the famous Neoliberal , Grover Norquist – “Drowning Government in a Bathtub”;
On another note, I find it interesting how we often avoid (especially in popular media) talking about the issue of “strength through interdependency” or countervailing forces pressuring the dominance. Are we stronger as a country when capital is so highly elevated above government and labor?
Markets (and its 1% extractors and complicit henchman) need rules or they get fat, lazy and capricious. One only need to remember the Pecora Commission’s effect on systems of regulation, the wealthy, and subsequent legislation in 1932-1940.
Right. Reply to Maude. And this is the final coup – installing a “government” that does not work for the nation; we the people then come to hate government because it is ineffective – which, under Obama, is true. He does it all under the guise of good government and social equity. But Obama has decimated the 99% like no other president. I’d guess that no other national downfall in history, no other empire collapse, has been as undermined as the USA by its own quislings. No wonder we all “hate government.”
Amen, Susan…. I had the good or bad fortune to watch, up close, both political parties deliberately sabotage the federal government–that it does as well as it does is a major miracle. For me the blame lies with the American people who may be the easiest to fool people in the world though this is changing at last but it’s almost too late as everyone in the government and media are almost all for sale.
I’m thinkin’ we are of a mind today, Banger.
It seems essential to rethink the political framework of the American Left.
Historically, was the US just another European style nation state or a federation whose understanding requires the development of different political categories?
In the 19th century anarchist and populist traditions were quite influential. It was only after the success of the Russian revolution that an opportunistic capitualization by the Western Left to Marxist-Leninism actually took place.
C Wright Mills, long ago, offered some insight into this situation:
“Ruling class is badly-loaded phrase. Class is an economic term, rule is a political one. The phrase “ruling class” thus contains the theory that an economic class rules politically. Specifically, the phrase “ruling class” does not allow enough autonomy to the political order and its agents and it says nothing about the military as such…the highest agents of each of these political realms often have a noticeable degree of autonomy and that only in its often intricate way of coalition do they make-up and carry through most important decisions. These are the major reasons we prefer power elite to ruling class as a characteristic phase for the higher circles when we consider them in terms of power.”
With the collapse of the Soviet Union it seems imperative that the never-ending debate between politics and economics must again be revisited and re- examined.
In one tradition power is presented as the grounding concept and property as its derivative, while the economic tradition has consistently rejected an allegedly groundless or abstract notion of power in order to locate this absent ground in property.
With the merging of Big Capital, Big State and Big Bank the exact relationship between production, property and labor on one side and organized political power on the other, again becomes a central issue.
The attempt to conceive of society primarily in terms of a single component (Big Capital or Big State) no longer seems convincing.
There was also a long non-Marxist egalitarian tradition, starting with some aspects of Judaism and early Christianity, continuing through the Levelers/Diggers in England to the American Regulators and various people like Daniel Shays (William Hogeland wrote extensively here about this), and arguably some counter-cultural figures in recent times. It’s a tradition though that isn’t well known or discussed much.
Monty Python, of course, has an excellent primer on Digger and Leveller ideas:
http://www.youtube.com/watch?v=5Xd_zkMEgkI
Many decades since I last saw that, but still brilliant!
The lie that private enterprise can do anything better than government needs to be exposed for what it is.
Take Social Security Insurance for example. Since there is no profit being made it has been a huge success that the private sector wants to kill or subsume.
We should have the government run health care as well as is done elsewhere to remove the profit motive from the equation. IMO, we would have much better health care if profit was not the driving force but instead providing good health care without continually cutting costs like the private sector was.
Just like the posting yesterday about consumer goods being crap, where was the connection to the lie that the private sector does things better with their only focus being profit?