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Wednesday, 5 March 2014

book review - Never let a serious crisis go to waste

Generally a very good presentation on how an ideology that lies behind a major economic problem ended up stronger as a result and promoting the idea that to cure the problem we need to do more of what caused the problem.

The book presents how mainstream economist failed to see the crisis coming as they rely on a faulty ideology that doesn’t fit reality; neoliberalism. The book gives a good summery of neoliberalism as a thought collective; essentially like a distributed holonic system rather than as a singular monolithic club. This distributed, or “Russian doll” structure as the book describes it, doesn’t just effect economics but invades our culture at many levels, thus contributing to its survival. It gives an interesting example of how the ideology has rooted itself in our culture through looking at the occupy movement; one part of the book that I thought gave a very interesting view of how things work (or don’t) in our individualistic society today.

The book presents the neoliberalist ideology and its foundation and history. From which, it becomes possible to see why neoliberalism fails. For example, neoliberalism sees people as rational agents that aim to maximise their own utility. This idea originates in the early days of game theory and failed empirical testing even then. The idea failed every time it got implemented; from the famous body count in the Vietnam War to UK health policies in the 1990s. Research in behavioural economics has shown that people do not act as rational agents that aim to maximise their own utility. A phenomena that economist understood way back in the 19th century (see the work of Thorstein Veblen for example).  We can see another foundational error of neoliberalism with their ideas of a “free market” as “pure information” and as a self-organising system. Although I would agree that markets do have the characteristics of a non-linear, chaotic, dynamic system and can self-organise I do not think it self-organises as neoliberals think it should. It will, through a processes of covariance, stabilise around a minority owning most of the system (i.e monopolies). Neoliberalism then argues for the state to maintain the free market. However, that to me, becomes a tacit admission that the markets don’t work as neoliberalism says they should and this forms an example of, what the book calls, “double think”, and other examples of double think inhabit neoliberalism. 

Another foundation of neoliberalism that does not agree with reality has to do with equality. Neoliberalism argues for inequality and for the rich benefiting all. However, this stands against a wealth of information that say the more equal a society the better it does (see “The Spirit Level: Why More Equal Societies Almost Always Do Better” by Richard Wilkinson).

Neoliberalism says that we cannot understand nature nor the markets and, therefore denies climate change and the economic crisis. Any “perceived” problems just means we haven’t got enough of a free market, thus “more free market” becomes the solution to all ills. The book describes this behaviour as “cognitive dissonance”; a type of stupidity. Taking stupidity as an adaptive-maladaptive behavioural pattern where we knowingly (or, at least, have the capacity to know) that our actions will harm ourselves or others we can understand neoliberalism as stupidity in action. As we have a wealth of evidence to say our current socioeconomic system has started to destroy our plant and threatens our own existence we, therefore, need to change our system.

Neoliberalism fails. It fails every time it gets implemented. It fails again and again! Yet it propose do more of the same? Taking the definition of insanity as doing the same thing over and over and expecting a different result, we can see that now neoliberalism has gone beyond stupidity and has entered the realm of insane stupidity.

If I had to mark this book down for anything I would say the author don ‘narf waffle! I think he could have said what he had to say in a book a third of the size!

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