The 21st century has presented us with an opportunity to save humanity from an impending collapse and total extinction by ensuring that we provide a solution that will save us from sinking into the abyss of barbarism. Socialism is that solution that is necessary and it is steeped in ecological considerations that seek to attain sustainable and responsible industrialisation, while undoing the capitalist system, and creating a planned economy which will use the resources endowed to us by mother nature in a responsible, equitable, and just way that will benefit all who live in this planet. We hope you will enjoy this excerpt, and plenty more will be released in promotion of the pamphlet in conjunction with out sister blog, The Radical Opinion.
The pamphlet will be released for public consumption on the 6th of December 2024. This is due to delays in finalising the literary side of the pamphlet as it was supposed to be released on the 7th of November 2024, on the anniversary of the 107th Bolshevik Revolution. We apologise for such, and we commit to ensuring that we do not have further delays.
It
would be historically unmaterialistic for us not to delve into the historical
context and the nature of neoliberalism without linking its origins to classic
liberalism as espoused by Adam Smith which preached the 'gospel' of free
markets, limited to no government intervention, and individual liberty which
has become the hallmark of all advanced capitalist societies, more particularly
USA. However, the Great Depression led to a collapse of the classic liberal
understanding of how the economy works when the 'invisible hand' failed to
intervene. The 'invisible hand' theory suggested that the capitalist economy
had the mechanisms to self-correct its inherent contradictions without
government intervention. The rise of Keynesian economics as propagated by
renegade socialist and former Marxist; John Maynard Keynes, which sidelined
classic liberalism by advocating for government intervention to correct the
inherent contradictions of capitalism. Keynesian economics remained a dominant
force until Post-World War II.
As a result, after World War II, neoliberalism began to take shape as an
ideological response to the expansion of the government intervention, and some
of the Keynesian welfare policies like unemployment grants, and alphabet
agencies (government-owned job creating mechanisms and mega public
infrastructure programmes to create employment) which had become dominant not
just in USA but in the Western world as a whole due to government intervention,
and the damage caused by World War II. Intellectual networks like Mont Pelerin
Society were founded by the Austrian economist Friedrich Hayek, and many
other like-minded economists in 1947, just two years after the conclusion of
World War II. These networks were fundamental in resurrecting and redefining
liberal economic principles to fit the post-World War II and post-Great
Depression geopolitical reality. As a result, early neoliberal thought started
gaining traction due to economists such as Milton Friedman using their
proximity to institutions like the University of Chicago (this would eventually
produce the phenomenon of the Chicago Boys in Chile during the Pinochet years),
and influential publications which drove discourse. The founding of Bretton
Woods institutions in the Bretton Woods conference like the International
Monetary Fund (IMF) and the World Bank (WB) during this period saw them
incorporate neoliberal principles more particularly in their lending practices
through a method called Structural Adjustment Programmes (SAPs).
Even
though in the early days Neoliberalism did not dominate mainstream politics
immediately after World War II, i found expression in the socio-economic
experiment that was West Germany under the then Chancellor of West Germany,
Ludwig Erhard who implemented a model called social market economy, which is
vastly different from the social market economy model currently in place in
Vietnam. However, Keynesianism dominated much of the Western economy during
this period, and it was aided and abetted by the Truman doctrine which
emphasised spending huge sums of money to rebuild Western Europe to prevent the
spread of the Soviet Socialist interpretation of Joseph Stalin's
administration. However, by the late 70s, the post-World War II economic boom
fuelled by Keynesian economic measures of government intervention had begun to
wane, and the West faced a phenomenon called stagflation (stagnation plus
inflation). The Keynesian model was subsequently viewed as insufficient to
address this particular challenge, thus creating an opening for Neoliberalism.
In
1979, UK Prime Minister Margeret Thatcher begun implementing privatisation (the
ownership transfer of public enterprises and public services to private
entities often justified as a measure to enhance efficiency and reduce public
spending) of state-owned industries and entities, deregulation of
markets (removing or relaxing government rules on businesses and markets
to encourage competition and economic growth), and reduction of the
power and influence of trade unions who had maintained the power of the workers
and defended the rights of workers against the bosses. After achieving this,
she moved towards fiscal consolidation and a monetarist approach to control
inflation which marked a decisive break from Keynesianism. Meanwhile in 1980,
Ronald Reagan who was recently elected as USA President pursued a similar
programme in the USA and implemented tax cuts, deregulation, and reductions in
spending on social programmes; the hallmarks of neoliberalism. A phenomenon
known as Reaganomics emerged and it was typified by
'trickle-down economics' which prioritised reducing the tax burden on big
business and the wealthy. This was believed to spur economic growth with the
wealth gradually trickling down to the lowest earning workers, and even the
unemployed masses. This is the same policy which has manifested itself in South
Africa as Growth, Employment and Redistribution (1996 was the year of
implementation) (GEAR), Accelerated and Shared Growth Initiative for South
Africa (2005 was the year of implementation) (ASGISA), New Growth Path (2010
was the year of implementation) (NGP), and finally the National Development
Plan (2012 was the year of implementation) (NDP).
The
Bretton Woods institutions (IMF and World Bank) began promoting neoliberal
policies globally as there was alignment with the biggest and most advanced
capitalist economies in the Western world. Their hallmark policy of SAPs was
imposed on many Developing nations like Tanzania which had taken loans from
these institutions. The policy meant the adoption of austerity measures (enforcing
reduced government spending, particularly on social programs, under the pretext
of addressing budget deficits and encouraging fiscal discipline),
privatise public assets and SOEs, and liberalise trade in exchange for
financial aid from these institutions. In 1989, a set of ten economic policy
prescriptions for developing countries which basically codified and systemised Neoliberalism as an all-encompassing ideology which would be hegemonic in the
post-Cold war reality. This was known as the Washington Consensus Neoliberalism's dominance and hegemony was confirmed in
1991 with the dissolution of the first ever Socialist experiment, the Union of Soviet Socialist Republics (USSR), and further entrenched its dominance
political discourse, emphasising individualism, competition, and vulgar
consumerism.
This entrenchment has led to the rapid financialisaton (financialisaton
refers to the process by which financial markets, financial motives, financial
actors, and financial institutions become increasingly central to the operation
of domestic and global economies. This phenomenon often leads to an increased
focus on short-term profits, stock price maximization, and financial
instruments over other forms of economic value creation, potentially resulting
in risks related to economic stability and social inequality of the world
economy), with South Africa, Chile, Uruguay, Paraguay, Namibia,
Botswana, and Argentina experiencing that phenomenon sharply, given despite fact
that these societies are Developing nations. This has led to widespread
criticism while proponents of neoliberalism argue that Neoliberalism promotes
global trade, innovation, and efficiency, especially with the rise of Silicon
Valley as the centre of technological development. However, the reality is that
Neoliberalism has rapidly increased wealth and income inequality, erosion of
workers' rights in the workplace, and underfunding public services as is
characteristic of the South African economy which has not only led to political
instability within South Africa, but everywhere Neoliberalism has a hegemony.
This has given rise to movements who are determined to shift away from
Neoliberal orthodoxy either to the centre-left or the far left. This focus on
market-driven growth has overlooked environmental degradation and
sustainability contributing to climate change, with the Global South bearing
the brunt of such. It is in this context that we must understand the
Just-Energy transition as nothing but a mechanism to shift the blame to the
Global South for environmental degradation caused by Neoliberalism which has
its origins in the Western world or the Global North.
The
exploitation of natural resources, commodification of public services, prioritisation
of profit over ecological sustainability, lack of climate mitigation and
genuine green energy alternatives which are removed from profiteering, weak
public welfare systems, increasing wealth and income inequality, and aggressive
tax avoidance through transfer pricing (It is a method of pricing goods
and services transferred within a multinational or trans-national company in
order to reduce tax burdens and maximise profits) & profit
shifting (Base erosion & profit shifting (BEPS) relates to tax
planning strategies that multinational enterprises use to exploit loopholes in
tax rules to artificially shift profits to low or no-tax locations as a way to
avoid paying tax) which lead to illicit financial outflows (Illicit
financial flows, in economics, are a form of illegal capital flight that occurs
when money is illegally earned, transferred, or spent. This money is intended
to disappear from any record in the country of origin, and earnings on the
stock of illicit financial flows outside a country generally do not return to
the country of origin) have been contribution factors in
intensifying the divide between rich and poor, with Neoliberalism enabling
such. Developing nations (Global South) are subjected to austerity as part
of structural adjustment programs, remain trapped in cycles of borrowing to
service old debts. This limits their ability to invest in infrastructure,
education, or healthcare. Furthermore, fiscal consolidation in the wake of
COVID-19 has seen governments slash social spending to reduce deficits, despite
rising unemployment and healthcare demands.
The
labour market has been severely impacted due to Neoliberalism deregulating
economies, thus fostering precarious employment (piece-jobs, temporary jobs,
casual labour, and low paying internships) with fewer labour protections, and
growing income insecurity. This phenomenon is called the Gig economy
expansion because it renders normal work into something similar to
a gig for an artist, musician or comedian. The weakening of Trade Unions due to
bureaucratic degeneration within unions, and the subsequent undercutting of
unionised workers by privatisation of public services, outsourcing, employing
cheap labour which is largely dominated by African migrant workers, Southeast
Asian shop owners & shopkeepers (merchant class) in the context of South
Africa, and the implementation of anti-collective bargaining laws has led to
the increase in unemployment resulting in under employment in many sectors,
with government services having over 154 583 vacant positions as of
September 2022, with a vacancy rate in national and provincial government
departments of 11.7% according to the Public Service Commission of South
Africa. Furthermore, workers bear the brunt of austerity through wage stagnation
(Wage stagnation refers to a prolonged period where workers' real
wages—adjusted for inflation—do not significantly increase, even as living
costs rise. This phenomenon erodes purchasing power and contributes to income
inequality), reduced pension benefits (two-pot pension system) and cuts
to public services that once supplemented low income.
(An excerpt from the pamphlet, On Neoliberalism & United Front Politics: Towards a progressive United Front against Neoliberalism by Lindokuhle Mponco)
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