Philip Pilkington: The Coming Age of Neocla

This from "Naked Capitalism" -- please follow link to original
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Monday, November 28, 2011
Philip Pilkington: The Coming Age of Neocla

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

We stand for the withering away of the state. At the same time we stand for the strongest state power that has ever existed. Is this “contradictory”? Yes, it is contradictory. But this contradiction fully reflects Marx’s dialectics.

– Josef Stalin in remarks to the Soviet Party congress in 1930

Such is the contorted nonsense that flows from doctrine and dogma when these become institutionalised. When dogma is confined to the armchair of the intellectual or the blackboard of the social scientist it is innocuous – simply an attempt by one individual to make sense of a world that they will never, in truth, ever make sense of. But when it comes to occupy a seat of power it becomes like a steamroller that can crush common sense and practicality in a misled attempt to change the world for the better.

Stalin and The Party came to call Marx’s (or Engels’?) philosophy of dialectical materialism ‘diamat’ – a phrase that perfectly captures the bureaucratic, narrow mindset that Orwell invoked when he referred to his semi-fictitious ‘newspeak’. In like manner I propose that we rename neoclassical economics whenever it comes to truly occupy a real seat of power; that is, when this set of ideas takes control over peoples’ lives in a wholly unmediated manner. When this occurs… well, welcome to the topsy-turvy world of ‘neocla’.

In times past when neocla grabbed power it was either through the IMF (as, for example, happened in Latin America during their various crises) or through the co-opting of some hapless government in search of answers (as happened in Russia under Yeltsin and Chile under Pinochet). When neocla gained real power its faceless bureaucrats then went about wrecking the society and the economy through various ‘microeconomic’ ‘reforms’ – taxation-based, usually, but also through privatisation, deregulation etc.

The reason these policies were enacted is because adherents of neocla claim that they have a model worked out in their heads of the world really works – just like Stalin’s, but the details are a little different. So, they figure that if they can just get the world to look a little bit more like their model and a little less the existing world, they figure we’ll eventually establish a sort of utopia – again, like Stalin, except the details are a little different. When they encounter failure they assure themselves that it is only a temporary setback; after all, they have this model in their heads and they simply know that it describes the inner-workings of the outside-world – again, like Stalin except the details are a little different.

(Note that the adherents of neocla will often bend language through the prism of their own ideas to suit their purposes and justify their crimes – just like Stalin does in the above quote. They will claim that they are not, in fact, imposing policy at all when they ‘reform’ the tax system or privatise certain institutions. Instead they will claim that they are actually rescinding policies. The logic of this is so twisted that I will leave it to some philosopher to explore in any depth. For now, it can safely be said that these folks step in and make changes in policy. In that they are imposing policy, no matter how they like to twist this to claim that when they impose policy they are actually not imposing policy but are, in fact, getting rid of already existing policy etc.)

In the past the adherents of neocla were kicked out of positions of power in the economies they wrecked after a few years of imposing nonsensical policies. The reason for this was that democracy, or at the very least popular opinion, pushed in a way that it could not in the stifled, totalitarian USSR. In this the populations exerted enough pressure on the government to change tack or elected a government that would do so.

But we are now seeing the birth of a new centre for neocla policymaking in Europe that I fear will be far more difficult for its victims to do away with. We see this new centre – let us call it the ‘Politeuro’ – emerge slowly through the centralisation of fiscal policy that is currently taking place in Europe; as yet its constitution is indeterminate, but even now we can start to make out its general shape and nature. We can see a broad sketch of it here, as written by Professor Bill Mitchell:

Basically it is setting up a centralised surveillance unit to further usurp the fiscal capacity of the member states without at the same time establishing a fully-fledged “federal” fiscal capacity to meet asymmetric aggregate demand shocks (across the region).

The plan would require all member states (17 nations) to send draft budgets to the EC by October 15 each year. The Commission could then reject the plan and force the nation to alter the spending and taxation proposals. There would also be stricter rules under the “Excessive Deficit Procedure” which would seek to enforce the Stability and Growth Pact more closely.

All member states would be forced to set up “independent fiscal councils” which would be involved in the preparation of budgets and official forecasts.

If a nation needed financial assistance there would be federal support it would have to be obedient under these rules.

Short conclusion: it would be a total disaster.

And that doesn’t even take into account the subcommittees of neocla that will enforce privatisation and various other microeconomic policies on governments that cannot comply with their impossible demands.

Soon a bunch of neocla policymakers will have significant control over the minutiae of government policy in the peripheral countries. And, since they are unchecked by the populations – not being subject to democratic control – and basically have free rein to implement their policies from a distance, we can be sure that they will concoct a most outlandish and stupid grab-bag of neocla policies which they will then force down the necks of the periphery governments.

They will tinker with taxes and impose privatisations, all of which will fly in the face of common sense – and all of which will be undertaken in reverence to a ‘free market’ that only exists in the foggiest corners of their own minds.

The economies and the societies of the periphery will suffer to no end, but these neocla technocrats will be particularly difficult to get rid of. They will be allied neither to a single government, nor will they be tied to a strictly international institution like the IMF. Instead they will be built into the European ‘chain of command’.

The Politeuro will be listened to by governments in the periphery and the citizens that elect these impotent governments will pay for it in real living standards. Meanwhile, these citizens will not have within their grasp any lever of power that they can pull to change the rules of the game.

In saying all this, I, like many others, recognise that we need the ECB to step in and write the check in order to stymie the crisis in Europe. And I fully recognise that, at this juncture, we have no real choice but to hand over fiscal powers so as to convince them to do so.

But we should not walk into this with our eyes closed. It is all too clear what is taking place here: the birthing of a sickly neoliberal superstate in which neocla technocrats will be able to impose their fantasies on people from a safe distance with complete freedom from democratic accountability. Once the ECB steps in and the eurocrisis is wound down, this will be the world in which many of us will have to live. And a brave a new world it will be – with all the Huxleyian associations that particular phrase calls to mind.