Climate change is the symptom of an imbalance at the core of our economic system. Our world needs to make sense, not just money. To get passed the failed ideology of neoliberalism, a renewed intelligence of Democracy is key.
One could think that answering the issue of climate change mostly requires some level of economic and technical re-engineering. Practical matters have to be dealt with in a practical way in order to provide results. If this was entirely true, however, the world should by now be well on its way to implement 100% renewable energy sources, have energy-efficient buildings, and sustainably manage the remaining forests it has. The alleged scope and emergency of the issue would have commanded it. Apparently, the world did not get the memo.
Some countries do better than others but, on a global scale, we are far from having reached the necessary steps to keep an average increase of global temperatures below two degrees Celsius by the end of the century. Why? The immediate answer is the forceful lobbying of fossil fuel companies. Yet, this, in turn, has to be questioned. What kind of power could these companies have that would convince the rest of the world to do next to nothing in regard to the seriousness of a runaway global warming threat? None. More appropriately, just the one we allow them to have. Corporate interests can only do so much in financing disinformation campaigns, bribing politicians, and making sure that the mass media they support with advertising money keep in line and remain “neutral”. The responsibility is primarily ours as citizens.
It is an upward battle because money is power and any occasion to foster legal privileges allowing to rig the market and undermine the institutions will be taken. Compared to other basic forms of power that can turn into tyranny, such as personal dictatorship and ideology or religion, money is without any doubt the most insidious and the most efficient. For those who enjoy it, it works like a silent but immediately effective asset to rewrite the rules in their favor.
The incapacity of the economic world to reinvent itself in the face of a climate change catastrophe is, in this regard, telling. Interestingly, the Greek root of the word “economy” is “household management”. How could we consider that Earth is not our house? In a well-kept house, moreover, everything has its place and its utility. We need a healthy natural environment as well as a genuine democracy in order to thrive as human beings. This is what a narrow understanding of economics and profit-making would have us forget.
This confrontation between moneyed interests and the democratic ideal of governance is not new. What is new is that climate change has turned it into an opposition between life and death on a global scale. The cumulative effects of this warming process have mutually reinforced themselves for decades, fed all the while by our collective addiction to fossil fuels and utter disregard for the indispensable balance of nature. As a result, the sixth mass extinction of virtually all life forms of the planet is now well on its way.1
Simply put, this existential threat will be upon us as long as profit-making will take precedence over respecting the conditions of a sustainable society. The groundwork for fighting climate change is best defined, consequently, by opposing the true values of Democracy to the power of money left to itself. In a positive and constructive way, this also leads to determine what the democratic ideal implies in terms of action, structural changes, and shift of consciousness for the 21st century.
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When it comes to economic growth, the common wisdom could be summed up by “The freer the market, the better”. It has forged national and international economic policies since the end of the 1970s, almost systematically presented as the holy grail of a modern and prosperous world. Assimilated to the principle itself of trading, this abstract guideline is, nevertheless, intellectual baloney. One way or another, rules apply; simply because nothing exists out of context ever.
If rules do not come from a collective consent, they will come from the wants of those who already have an edge in a given situation. Saying that the market is neutral and should be free of regulations is akin to saying that a football match would be better played without any delimitation regarding what can and cannot be done on the field. It is a total abstraction that contradicts itself by denying the very possibility of competition; if there are no rules to the game, there is no game.
What about the invisible hand of the market, then? Adam Smith was right in the sense that the norm for mutual enrichment is to let demand and offer find their own balance to the satisfaction of all parties. He never said, however, that this balance could occur regardless of a set of necessary conditions. The problem with free-market fundamentalism is that the relativity of such conditions is simply ignored. Perfect competition, full information, and rational actors are supposed to be ever-present and effective under all and any trading circumstances.
But postulating that all trading parties will always have the same proportionate bargain power is just wishful thinking. Without proper rules to guarantee it, on the contrary, the market will never find its balance. As the staggering income inequality experienced in many parts of the world today shows, those who have next to nothing to deal with, aside from their work power, can easily become “working poors”, i.e. economic slaves. Eventually and because of the strains of a low income, they are cut off from any real possibility to enrich themselves and, in turn, the economy at large.
Reality works as a whole. Seeing it through a few simple abstract laws is a requirement for experimental sciences only. The world of economics, for its part, works as a non-linear, turbulent, and chaotic system of systems. We can make sense of it by discerning how these systems relate to each other, not by decreeing absolute laws forcing reality into an abstract scheme. This methodological blindness, unfortunately, has served as a blueprint for unsustainably exploiting resources, be it people forced into hopeless misery or disrupting the conditions for life as we know it on the planet.
But, again, money is power. And this power has all interests in sacralizing profit-making and in ignoring the cost for those who are not at the high end of the game. This is why it prefers conveying the message that a market free of all pesky and useless regulations is the only path to sound business practice. To that effect and in order to get people distracted from the real issues of income inequality or environmental unsustainability, the trick is to repeatedly use slogans that speak to the imagination. Along with the wants of a “free market”, “big government” vs “small government” is undoubtedly one of the most popular in the U.S. Let’s examine, then, this other banner of mainstream propaganda waived by “authoritative” sources, as Youtube would say.
The first thing to note is that, wherever one might stand politically, not being able to look beyond the opposition of “big government” vs “small government” implies that the market knows best anyway. In this view, whether you favor more or less of government intervention, the government is there in the second instance only and just to prevent things from going too awry. In the U.S., Democrats will tend to grant government more leeway, and Republicans less—this political pattern between liberals and conservatives being pretty much identical everywhere else. But these political differences share the same principle that, at some point, the government can only be a hindrance vis-a-vis the proper functioning of a “free market”. By doing so, liberal and conservative pundits are simply confusing rules and management.
That the government should not manage the creation of economic wealth is common sense. Who wants a clerk behind every practical decision to be made by a company? Private initiative is about talent, vision, and calculated risks. Action does not need arbitrary rules but only to rely on the best interpretation possible of a given context. But this does not mean that rules aren’t needed in their own right, notably to guarantee a fair game. The intellectual fallacy of “big government” consists, therefore, in pretending that the freedom to choose the best course of action should translate in the absence of rules. If you tend to fall for this hocus-pocus intellectual gig, just remember that rules are the matrix of the game.
In modern democracies, such rules emanate from legislatures, administrative agencies, and courts. The government does not “intrude” on the “free market”; it creates the market. When corporations write the law for themselves, on the contrary, economic and social misery systematically ensues. And why wouldn’t it, since the money needed to invest in the country’s public infrastructures is instead pre-distributed to corporations?2
Even in the most libertarian society, what would be allowed or not in business life would have to be formalized in order to maintain fair rules and practices. And none other than public institutions, acting in the name of all through a genuine democratic process, could do this. “Yet, says Robert Reich in his book Saving Capitalism: for the many, not the few, the interminable debate over whether the “free market” is better than “government” makes it impossible for us to examine who exercises this power [of writing the rules], how they benefit from doing so, and whether such rules need to be altered so that more people benefit from them.”“The economic owning class is always the political ruling class.” (Eugene V. Debs) tweet it!
That’s the point. Behind the fake rejection of “big government” (somehow it is never too big when bailing out mismanaged companies, unconstitutionally spying on its citizens, or waging out useless wars), the message to the masses is: let’s be dumb and forget that the government is none other than us, through representatives accountable to those who elected them. As a result, while investments in the public sector have been shrinking in relative terms, the U.S. economy has gradually morphed into a money game with very little benefit to workers, local executives, and the consumers themselves. The chain-value of individuals grounding the economy and creating real assets by their skills and efforts is being ignored for the benefit of financial engineering and unbridled profit-making.
It is telling that the “economy” is supposed to be a race to the bottom toward the cheapest solutions for the largest short-term financial gains, instead of being an investment in favor of all stakeholders, fostering, this way, the largest possible buying power for the economy as a whole. There was a time when America was intent to invest in a highly-skilled working force and was proud of what it was producing. Things are now upside-down with the anachronistic management practices of shareholder value theory.3
Unfortunately, almost all industrialized countries have followed the same course since the end of the 1970s. Let’s take, however, a few examples of this money game in the country where “big government” is such an issue. One can think, for instance, of contract laws requiring mandatory arbitration before private judges selected by big corporations; securities laws designed to allow insider trading of confidential information; CEOs using stock buybacks to boost share prices when they cash in their own stock options; tax loopholes for hedge funds and private-equity funds; lower marginal income-tax rates on the highest incomes and reduced estate taxes on great wealth. The list could go on. The lesson, here, is that the pseudo-debate about big government vs small government is being used as a convenient smokescreen to keep the public attention away from what really matters: a government for who?
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In theory—and in many political speeches—liberalism is for small businesses to have a chance to thrive on their own merits. In practice and because good liberalism is supposed to be deregulated liberalism, competition is being killed by those who have enough clout and financial leverage to then impose their own rules. The blatant official favoritism of many governments toward the fossil fuel industry—more than 5 trillion worldwide in direct and indirect subsidies each year4—is a case in point. Most importantly, this utter disregard for the existential threat of climate change confirms that the fate of humanity comes second after the pampering of already very fat cats. How is that even possible in supposedly civilized and democratic societies?
Greed does not explain everything. Such an aberrant situation needs an ideological background to sustain itself in the hearts and minds of people in charge of economic policies. Behind the catchphrases “free market” and “big government”, used as convenient signposts for the masses, lies the assumption that the general interest is not, as such, a relevant category for driving social and economic progress. Individuals are deemed to be better off on their own, free to prove themselves any way they want as long as they do not break the law. In this view, collective endeavors are for the most part irrelevant; only private initiatives can truly thrive and succeed since they have a natural incentive to do so. This assumption goes by the denomination of “neoliberalism”.“The accepted ideas of any period are singularly those that serve the dominant economic interest.” (John Kenneth Galbraith) tweet it!
In reality, of course, freedom under the sole rule of financial success has a very different taste for the general population than what the neoliberal dogma postulates. By bending governments to their will, companies like Exxon or BP show the world who is the boss. But pointing at a contradiction is far from enough. What matters is that ideas, whether valid or not, can shape the views of millions. If we uncritically believe that the common good is just a by-result of individual freedom and not a guiding principle, or that there is no society but just individuals and their families—as the late Margaret Thatcher once famously put it5—then the fight against climate change is over. No mobilization can take place at the required level if it is not seen as a meaningful collective endeavor, and this endeavor can be shared only if we believe in society.
By considering public concerns as dangerous lunacies, neoliberalism is the most serious obstacle to any cohesive and concerted global action against climate change. This is why, leaving this sacred cow cherished by our elites in the absolute world where it belongs, we have to examine how neoliberalism is, in effect, a pure ideology and a perversion of Democracy.
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Some may remember Gordon Gekko character’s line in the 1987 movie Wall Street: “Greed, for lack of another word, is good! Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit!” That greed is good has been notably theorized by the economist Milton Friedman (1912–2006). In his mind this was not, indeed, an invitation to become evil people but the expression of the basic fact that, as himself repeatedly said, “The world runs on individuals pursuing their own interests.”
The real problem with this view is not that it does provide an excuse to some insecure egos for effectively letting their greed run wild. The real problem is its superficiality. Like any ideology, neoliberalism is a popular intellectual doggy bag that never questions its premise.
According to Friedman, individuals should pursue their own interests because their respective actions will always balance out in the best possible way if unfettered. But what if there is a natural world out there with its own balancing needs? And what if there are more fundamental characteristics defining mankind than greed? Chances are that by denying the practical and psychological importance of shared interest, neoliberalism puts itself out of the pale of genuine progress from the get-go. In order to figure this out, we have to question how Friedman’s preferred maxim stands in regard to the main areas of our personal and collective lives.
Economically speaking, neoliberalism assumes that the creation of wealth depends on those who know how to accumulate it for themselves, consequently creating opportunities for others. The reverse is true. Ford, for instance, did not become one of the largest U.S. companies during the twentieth century just because Henry Ford was, indeed, a business genius, but primarily because he fully recognized that the creation of wealth for his company could come only from its customers, and first among them Ford workers.
Money flows in the economy from the customers’ wallet, not from the CEOs’. Knowing this, Henry Ford did not wait for opportunities to create themselves in his wake. He forced them by giving his employees wages allowing to buy the cars they built, therefore taking the first step in bringing about the mass market he had always envisioned. If the story is well-known, its lesson is hardly ever acknowledged. Customers create economic wealth, companies seize opportunities.“Be egoist: love each other.” (The Dalai-Lama) tweet it!
Psychologically speaking, pursuing our own individual interests necessarily defines boundaries to what we see as such. These interests are ours, not anyone else’s, and shine therefore in a particular and delimited place in our life context. But what is of true value is precisely what has no boundaries. No external goodie, be it a new car or a promotion at work, can in and by itself make us happy. As everyone knows through direct experience, happiness is an inner work totally foreign to the realm of what can be measured and compared. Enjoying the richness of being fully human, as well as the immeasurable wonders of life, is a much more genuine expression of what we truly seek. And, like anything that has true value, it is all for free. Even though pursuing our own practical interests can be perfectly legitimate and is what actually drives the economy, believing that happiness can be achieved in an egocentric fashion is, on the other hand, highly delusional. Our real interest can neither be delimited nor limited.
But even regarding the economic field itself, assessing that “Greed is good” is advocating the most superficial view possible about human exchanges. By refusing to consider any other factor of economic health than personal interests, Milton Friedman ignores, for instance, the huge contribution of voluntary work in the household, or of underpaid or non-paid community service. Even if those who choose to dedicate themselves this way do not do it for money, their time and energy have a decisive economic impact. In that respect, it is striking to see how thoroughly the intellectual build-up of neoliberalism takes place at the cost of our humanity.
On a personal level, additionally, the same way that considering the market as some kind of absolute reality contradicts the very possibility of competition, seeing the individual as the central unit of her personal achievements contradicts the possibility of her effective success. Whatever our individual merits can be, countless others have also contributed to our personal achievements in many different ways. Consequently, the most relevant metric for one’s success in any field is not our personal efforts but the accuracy with which we are able to recognize, honor, and take advantage of others’ legacy. A rich moron can think otherwise, a true genius or a real benefactor to humanity cannot.
This co-dependent nature of success directly opposes the idea that the “survival of the fittest” is the commanding principle of human lives. Based on a flawed interpretation of Darwin’s theory of the evolution of species (not individuals), the “survival of the fittest” is a puny philosophical excuse to justify the exploitation of others. It has been used during the gilded age in the U.S. and now in the era of neoliberalism. Opposing this hazy theory, the fact of the matter is that any living system needs as many interconnections as possible to thrive, not less. Helping when and where help is needed to bring back one element into full functionality is more often than not a better bet than letting it stall. In society, this means that the freedom of achieving success on one’s own merits is intrinsically linked to shared progress.
Politically speaking and in regard to our collective endeavors, that “The world runs on individuals pursuing their own interests” refers to a democracy by default only. The point, here, is that Democracy was not instituted simply to prevent enslaving each other but for sharing the best of what humans can be and do. If the freedom of running aside from each other in our quest for more material goods and social recognition has obviously to be guaranteed, the democratic project itself is nevertheless much broader than that.“Interdependence is and ought to be as much the ideal of man as self-sufficiency.” (Mahatma Gandhi) tweet it!
As humans, our true freedom lies in leading a meaningful life. Even though we usually consider that making sense of our own life is a purely personal matter, if we look deeper we can see that all people are longing for this same sense of inner fulfillment and that it is what makes us members of the same human family. Guaranteeing the same fighting chance in life for all, consequently, is not just a moral obligation but also the best practical way to go as a society. To the same extent that this equality in chances is the doorway for individuals to build themselves up, it is the primary condition for an open, healthy, and prosperous society to exist. To put it differently, respecting freedom of speech, movement, and enterprise goes much further than ceremoniously referring to the letter of a national constitution. It requires relentlessly working on the basic conditions ensuring that such freedom can effectively exist. Access to health care, education, or clean water comes to mind.
In the concept of Democracy, moreover, there is an intrinsic link between the citizens and their government, not just an external and formal one. Based on the social nature of human life and on the principle that people deserve their freedom simply and uniquely because they are endowed with reason, in a democracy the government is us—even if by delegation only. That people are the only legitimate source of power is easily proclaimed and celebrated, yet rarely understood. We are the government because we inter-are. We build our personal freedom by making use of reason and through mutual enrichment as human beings, and this intrinsic social dimension of human life needs protection. Having a government is this protection, as long as it is a government of, by, and for the people.
Contrary to what many believe, consequently, the right to private property is not the highest expression of our freedom, and politics, for its part, is a noble and necessary thing. Needless to say that neoliberalism fits neatly into the opposite view. By looking at the government as some kind of foreign entity, however, we are implicitly claiming a right to our civic irresponsibility and practically denying that a country can be anything more than a shopping mall. The flaw, in this view, is to consider individual freedom from an external standpoint only, assuming that it is defined by what we can see as the practical boundaries of our own life. The greater my freedom of movement, then, the freer I am. Restricted to my own self, freedom becomes an individualistic value.
This particularly narrow take on freedom logically leads to thinking that all one has to worry about is the limitations imposed on one’s ability to choose for herself. What is missed, here, is that even though we obviously have an absolute right to do what we want as long as we do not harm others, it is not the principle of what makes us free; it is just one of its implications. Choosing by myself for the sake of choosing by myself is idiotic. I choose something for a reason, not for the pleasure of telling the world that I am my own man or woman. Unfortunately, this is another intellectual cheap trick used by companies and the political establishment alike to lure the public into a false sense of freedom and trap it into a system that benefits them. The pathetic dress-up in defense of the so-called “freedom of choice” against Medicare for All is a prime example of that sophistic at work in the U.S.
Holding the belief that freedom is defined by making my own choices under any and all circumstances can only lead to consider that, because they actually drive people to do things a certain way, social concerns and all forms of collective endeavors are infringements on my innate right to freedom. It is stupid but this is also why it works. Most importantly, this superficial view of the supremacy of the individual is exactly what neoliberalism is politically about. This is how this ideology is a perversion of Democracy. It is up to us, then, to compare and decide at a personal level which, between our egoic cries as if being four years old and the democratic ideal of freedom and justice for all, can serve us best.
So far, it appears that when challenging its implications nothing stands under the idea that “The world runs on individuals pursuing their own interests”—neither at the economic nor at the psychological or at the political level. This does not mean that neoliberalism does not have its own coherence. And one thing that cannot be denied to Milton Friedman is that he is morally coherent. In his world, society is just a collection of individuals that have found more expedient to aggregate under common laws than to stay totally on their own. We do not owe anything to each other, though. The freedom of each individual to fight for herself has to guide public policies, not empathy.
If most people spontaneously cringe when confronted with the idea that, as a society, we should be indifferent to the pleas of others, this is because, in Friedman’s mind, they do not understand what works. All that is needed is to respect the absolute liberty of the individual to thrive for herself, instead of redirecting the results of her efforts to the benefit of an undifferentiated crowd that did nothing to deserve it. This is also why raising taxes in order to keep the possibility of a fighting chance for all is, to Friedman, an attack on the personal freedom of those who have succeeded in finding their way ahead. Because of its cost and its implied view on society, a social net undermines the possibility for the best of us to show the way out of poverty and can just foster, on the contrary, a permanent state of resentment and class warfare.
Even though quite popular, notably in the U.S., this line of thinking is a pure abstraction and has, as such, led to the global economic, social, and environmental dead-ends the world finds itself into today. The notion stubbornly held by many U.S. lawmakers that people with a serious medical condition should pay higher premiums—meaning that if you cannot afford them you go either bankrupt or dead—is a pathetic illustration of this intellectual and moral wreckage. As a consequence and under the guise of individual freedom, millions of Americans are serenely deemed better off without any proper health coverage. People may die in misery but at least the absolute freedom of the absolute individual is safe!
[To be continued]
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- Accelerated modern human–induced species losses: Entering the sixth mass extinction, by Gerardo Ceballos, Paul R. Ehrlich, Anthony D. Barnosky, Andrés García, Robert M. Pringle, and Todd M. Palmer. Science Advances – June 19, 2015; Vertebrates on the brink as indicators of biological annihilation and the sixth mass extinction, by Gerardo Ceballos, Paul R. Ehrlich, and Peter H. Raven. Proceedings of the National Academy of Sciences of the United States of America. First published June 1, 2020.
- See: – Anand Giridharadas: Winners Take All: The Elite Charade of Changing the World (2018); – Robert B. Reich: The Common Good (2018); The System: Who Rigged It, How We Fix It (2020)
- See: – Mariana Mazzucato: The Value of Everything: Making and Taking in the Global Economy (2018); – Lynn Stout: The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (2012)
- Fossil fuels are underpriced by a whopping $5.2 trillion, By Umair Irfan. Vox May 17, 2019.
- Interview by Douglas Keay for Woman’s Own magazine, 23 September 1987