This Thing Called Neoliberalism

I began studying economics seriously in 11th grade. Mrs. Bindra, who taught us so patiently and enthusiastically, taught us all we needed to know about the historical evolution of the Indian economy over the past century and a half, the basic techniques of statistics, the system of national income accounting, and of course, microeconomic and macroeconomic theory. As I sat with rapt attention and imbibed a fascinating mix of concepts and methods, I marveled at the new intellectual universe it opened up for me. It is possible today to sum up what I learned in four simple statements. Firstly, the Indian economy had been stagnant for most of modern history, first due to colonial exploitation and then due to socialist governmental policies. Secondly, free markets held the key to economic growth and development, because they permitted societies to allocate human and non-human resources most efficiently and profitably. Thirdly, liberal trade policies complemented domestic free markets by expanding consumers' options and producers' markets, and globalization offered developing countries the best way to get out of the poverty trap. Fourthly, the government ought to cut taxes, duties, spending, and regulation, and adopt the role of an umpire who ensures that individuals and corporations acted lawfully, traditional drawbacks such as gender and caste discrimination were eliminated, and markets functioned smoothly.

Today, I know these four propositions form an ideology called neoliberalism. Proponents of neoliberalism argue that these propositions reinforce each other such that free markets, political liberty, and limited government are our best hope for progress and freedom in the 21st century. Critics, however, argue that these interlinked elements of neoliberalism rest on utter lies and deception such that they exacerbate socioeconomic inequalities, increase poverty, and heighten political tensions within countries. Since both sides rely on unshakable ideological convictions to argue their points, we invariably enter an intellectual stalemate. Of course, politically, the proponents of neoliberalism have won in most parts of the world, whether in South Asia, Eastern Europe, Sub-Saharan Africa, East Asia or Latin America.

I am afraid I have never been an ideological partisan for either side in this debate. As a skeptic, I tend to focus more on contextual social-fact considerations rather than purely ideological ones. Facts are messy, and ultimately, I think, they undermine the neatness of ideological worldviews on both the left and the right. Three factors stand out for me in assessing neoliberalism and its critics worldwide. Firstly, contrary to what both sides believe, the four propositions I discussed earlier are NOT, in fact, consistent with each other. It is quite possible, as in China, to deny civil liberties and maintain a vast state presence yet exchange socialism for trade liberalization and globalization. Likewise, it is also possible, as in India as in Africa or Eastern Europe or Latin America, to roll back the state and embrace free markets without liberal political consequences. Lastly, it is perfectly possible, as in the United States and Britain, to resist trade liberalization but prioritize limited government and political freedoms. The defenders and opponents of neoliberalism rarely possess the pragmatism to open their eyes wide enough to acknowledge what seems absolutely obvious to laypeople. This is what ideological dogmas do. We should be wary.

Secondly, if neoliberal ideologues and their cheerleaders are correct, then we should observe progress in economic and political terms in our age of globalization. Yet the picture is not so rosy. In the North Atlantic world, socioeconomic inequalities have risen alarmingly over the past three decades, and these account partly for the growth of racism, xenophobia, and other aggressive forms of reactionary politics in recent years. In the Global South, neoliberalism can hardly be called a success. As states have cut spending and privatized public services, we find new oligarchic forms of crony capitalism and violent appropriation and control of resources by private corporations, strongmen and militias/gangs. Consider the kinds of cronyism exposed during the East Asian financial crisis in 1997-98 or in the United States in 2008 or the slew of corporate scams this decade in India. Also consider how neoliberal state reforms have paved the way for lucrative monopolies of armed groups and corporations in West Africa, Latin America, and Afghanistan. This is not progress by any standards.

Thirdly, if neoliberal critics are correct, then we should find doom and gloom everywhere. But we find new social and political formations arising out of the challenges and opportunities created by neoliberal policies. The massive increase in capital flows domestically and internationally means higher incomes and living standards for more people than anytime in human history. While it is true that things are getting better for people at the top and middle rather than at the bottom, it is important not to forget how economic liberalization is creating new entrepreneurial opportunities for rural and semi-urban residents as well as women and minorities in countries such as India. Additionally, where economic and political liberalization actually coincide, political opportunities for citizens also increase. New expressions of Dalit and adivasi politics in India, for example, are as much responses to liberalization as they are expressions of it. People can now vote with their feet to kick out unresponsive politicians and they can even find radical democratic solutions to their problems outside the party system. However, where we do not find liberalization, as is the case ironically in the North Atlantic world, we find economic stagnation and political resignation. Much as critics on the left complain on growing inequality, the problem lies less in markets as in corporate governance and effective state policies. Those were problems well before "neoliberalism" entered our lexicon.

Fine, you might say, both sides are partially correct or partially wrong, but the basic ideological premise in either case is nonetheless defensible. No, I'd respond, because neither side has an adequate theory of political economy to claim any empirical successes. Textbook-style free markets are not necessarily the most efficient way to allocate resources in an economy for two reasons. Firstly, there are social, political, and environmental costs that do not show up in a simple supply-demand diagram. When we factor those into our equations, it will be evident that healthy regulation and policing of markets are optimal: no private actor will be willing to absorb the costs of monitoring and managing markets to ensure their smooth functioning. Secondly, as left critics have argued for a century and a half, free-market economics assumes that everyone has equal access to resources and everyone starts from the same level. This is, of course, patently false, so those who are richer, better educated and with the right family connections are better positioned to profit from markets than the rest of society. As even Adam Smith accepted, education and healthcare cannot be privately organized in a healthy society, so the state needs to assume a pretty large role to ensure everyone has access to schooling and medical facilities. Otherwise, citizenship is rendered meaningless.

But this conclusion should not lead us into stock criticisms of markets that focus on inequality. Yes, the state needs to play a bigger role than neoliberals allow, but when markets are stifled or managed oligarchically, wealth-generation is affected adversely. There is no prospect of pulling millions out of poverty by state policies alone; markets must generate enough wealth and employment opportunities for everyone to be free from scarcity and want. Those on the left need to know that attacking corporations and their defenders in thinktanks and governments is NOT the same thing as attacking free markets. If markets were truly free and open, effective state policies in health and education will lead to a progressive society. Corporate landgrabs, crony capitalism, and warlordism cannot be permitted in such a society. Ultimately, strong welfare states that rule lightly must coexist with an healthy market economy. What is true domestically is also true internationally. If future financial meltdowns and global warming are to be countered effectively, there is no alternative to global state regulation and a global market economy. Despite the vociferous criticism of markets in toto, there are no realistic leftist alternatives to build a different kind of political economy. Neoliberalism as an ideology may be rotten to the core, but without thriving markets, there is no hope for progress whatsoever.

Bring on the Ashes!

If you're waiting as eagerly as me for the Ashes to begin, read on. The English media is understandably buoyant about their team's chances. The Aussies are under massive pressure, especially after failures against India and Sri Lanka. Yet pundits are split on who'll win: Ian Chappell reckons Australia should scrape through with a 2-1 win, while Shane Warne leads the pack of trojan horses within the Australian camp; of course, the English are cautiously optimistic about their chances.

As a neutral in this mouth-watering contest, I wondered whether one could pen down some definite indicators of what lies in store for us this winter:

1) Over 80% of Tests in Australia yield results, so the odds of a 2-1 win are rather improbable. Let's say at least four of the five Tests will end in a result.

2) Australia's batting is roughly as strong as England's. The only problem is that Ponting and Hussey are in decline, and Clarke and North have underperformed massively over the past year or so. Watch out though for the opening duo of Katich and Watson as well as the lower middle order batting of Brad Haddin. If either Usman Khawaja or Callum Ferguson plays later in the series, I think they'll do better than North in the No. 6 position. It is possible that the Aussie middle order will crumble now and then, but expect them to pile on over 400 on good batting pitches such as Adelaide and Sydney.

3) England's batsmen have been in good form this month. The media keeps asking questions of Cook and Pietersen, but I doubt if either of them will score less than their career averages in this series. For me, however, Strauss, Trott, and Collingwood hold the key to England's batting hopes. They are solid in defense yet refuse to get intimidated by good fast bowling. The lower order of Prior, Broad, and Swann looks good for at least 100 runs in each innings. Think of what happened at Lord's earlier this year. In my view at least, lower-order batting gives England a slight edge: faced with a total of 300-350, they can reasonably aim for 400-450 in their first innings.

4) Australia's bowlers seem eager to take on the Poms. A juicy pitch under overcast skies at the Gabba will be to their liking, so the toss will be crucial on Thursday. I expect Siddle and Johnson to do better than they did last year in England. Hilfenhaus and Bollinger are, however, the bowlers to watch out for. Both have been Australia's best and most consistent bowlers over the past year and a half. I am not too sure about Xavier Doherty, Steve Smith or even the beleaguered Nathan Hauritz. I expect the spinners to concede over a hundred runs in the first innings of each Test. Honestly, I don't expect the Australians to bowl out England for under 200 in any innings, and I do think we've seen how hard it is in recent times for the Aussies to pick up 20 wickets. Unless something change dramatically, I see good honest performances on the cards with the occasional burst, but no consistently series-altering spells from this attack.

5) England's bowlers, much like Australia's, will relish the pace and bounce at the Gabba and the MCG. For flatter tracks such as those in Sydney and Adelaide, Swann and Broad will hold the key to England's chances, especially when it comes to slicing through the middle order or polishing off the tailenders. Anderson is a fair-weather bowler, to my mind, and Steve Finn is an untested proposition. I worry that there isn't much back-up for these four in the post-Flintoff era. England's prospects of taking 20 Aussie wickets will depend as much on their matchwinners as their support bowlers. On livelier pitches, this won't be a problem, but I imagine tough passages of play in warmer, drier conditions when Ponting & Co. manage to get going. But all said and done, Swann's presence makes me favor England over Australia in terms of bowling.

6) Australia's performances at home since 2007 have been iffy. They won narrowly against India partly due to umpiring howlers from Steve Bucknor and chums. Then they trounced the Kiwis but lost to South Africa comprehensively. Last year, Chris Gayle nearly pulled off a drawn series for the lowly West Indies. And who knows what went wrong with Pakistan at Sydney this January? In the interim, Australia are no longer world conquerors abroad, but merely honest triers. On the surface, the record since 2007 at home reads: W 10 L 3 D 2. But no one is deceived by the string of victories against lesser teams. The Aussies are no pushovers, but they are definitely vulnerable.

7) England's away record has been pretty impressive recently. They won against South Africa and could so easily have beaten India at Chennai in 2008. The mini-setback against the West Indies is more than amply offset by strong performances against Bangladesh earlier this year. I'd take a close look at the South Africa series last winter for clues on how England play on hard, bouncy pitches. I wouldn't rule out stage fright for Anderson & Co., but this is certainly the best English team to arrive on Australian shores for a long time. Of course, they'd have lost to Australia in their prime under Waugh and Ponting, but this is a different challenge.

8) So, what's my prediction? Since I expect at least four results and a close series, I'd shortlist possible three results: 2-2 (if things get really close); 3-2 (if England manage to pip the Aussies at the post in a close series); 3-1 (if England romp home in Brisbane and beyond). Honestly, can Australia win two Test matches this summer? I'm not so sure unless something miraculous happens. Can England win three Tests? Yes, I'd say, watch out for Brisbane, Melbourne, and Sydney. So, I really doubt Ian Chappell's prediction of 2-1 in favor of Australia. There'll be more results for sure, and I don't think the Aussie bowlers are good enough to take 20 wickets for cheap on two occasions against a long, strong batting lineup.

In short, I'm sticking my neck out and predicting a 3-1 victory for the Poms!

What's Wrong With My Generation?

In the fall of 2002, I started college in Grinnell, Iowa. I opted for a liberal arts education over a specialized degree in economics at St. Stephens', Delhi, because it promised to open up an intellectual universe that encouraged learning for learning's sake. Over the past eight years, however, I have tended to harbor mixed feelings on what I see and experience on campuses. As I have enjoyed and profited from the company of outstanding teachers and peers, I've nonetheless found myself at odds with so many others. My generation invented Facebook and made it a runaway success, but it lost something along the way. We can stay in touch online with friends and family, but we have lost the art of conversation. We can write computer code or blogs, but we have lost the pleasures of penning a persuasive argument. We read emails and news articles all day, but we have lost the joys of reading books that open our minds to hitherto unknown worlds. We seek power and profit or pleasure and expressiveness in all we do, but we lack a sense of purpose. So what's wrong with my generation?

Perhaps it's wisest to begin with introspection. How many of you write every day? No, I don't mean emails or post-its! I mean writing to yourself, your friends or anyone else who cares to read. By writing, I mean expressing oneself in a creative yet disciplined way on a subject that matters to you. That takes out most blogs, twitter and Facebook updates, essay assignments, and grant applications. And when you do write, do you reflect long on a word or strive for succinctness? Or has writing (or typing) merely becoming a kind of expressive act on the one hand and a chore on the other? Most importantly, do you enjoy writing? Do you usually complain of writer's block or do you get thrilled at the prospect of penning down your thoughts in a structured way? If we consider the average person born between 1980 and 1995, I think, the answers are pretty straightforward: either writing is a necessary evil required in college and beyond or it is a purely expressive act in which anything goes. Of course, there's no "right" response here, but isn't it worth pondering what our responses today might reveal?

In the spirit of that question, let's consider reading. What do you read? Emails? Newspapers and magazines? Harry Potter? Dan Brown? Jared Diamond? And why do you read? Simply because you need to check the news and your inbox? Or because fantasy worlds appeal to you? You might say it's impossible to find time to read for pleasure nowadays; there's just so much work to do at home and at work. Fair enough, I'd say, but you do watch TV, surf the Net, spend hours on Facebook, and so forth. Surely, you could read for pleasure now and then when you get the time. And when you do read, would you read slowly like we sip wine? Or would you skim through the pages of a novel much like you'd down a beer in a jiffy? Lastly, if one were to ask you to recall what you read, what would you remember? The plot, the characters, and the author's turn of phrase? Or merely that it's something about the world of wizards or the mischief of the Catholic Church? Again, for those of you born between 1980 and 1995, I am not so interested in what your specific answer might be, but in the overall patterns we can start to discern here.

Broadly speaking, I find there are two sets of responses: Utilitarian and Sentimentalist. The Utilitarian sees reading and writing as means to some worldly end. It might be grades, jobs, grants, or just name-dropping at a social gathering. Formal education in schools and colleges is, as economists say, an "input" that serves to produce the finished product: an industrious, rational self-interested calculator who minimizes risks and maximizes benefits. To speak of learning for the sake of learning before such a person is to invite ridicule and scorn. Wake up to the 21st century, they yell, and get yourself a Master's in some technical subject so that you can earn a six-figure salary within the next five years!

On the contrary, the Sentimentalist sees no pleasures in industry, rationality or calculation. These are far too bourgeois-rational for, say, someone deep into Nietzsche, Heidegger, and Sartre. They say: let's save the planet, stop making war, organize concerts for starving Third Worlders, and lead authentic lives. The world is bereft of goodness and kindness, they argue further, so we must dream and express ourselves online and offline to our friends. Art is expression; words are expression. Academia attracts such people en masse because it offers healthcare benefits and a stable middle-class life without hard work. Joblessness also attracts such people en masse because it is the lot of artists and hippies to revel in the slings and arrows of bourgeois society. But if one suddenly stop a sentimentalist to ask about reading and writing, one should expect mumbles and incoherent phrases. Conversation, after all, is not to be expected of someone who knows that anti-war protests and Habitat for Humanity are the hallmarks of the authentic life.

College and graduate students overwhelmingly fall into one of these two categories. Or sometimes even in both? Arguably, the finest example of my generation is Mark Zuckerberg, founder and CEO of Facebook. If you know anything about him or saw the fictionalized account of his life in The Social Network, you'll know what I'm talking about. Here is a person who is exceedingly smart and ambitious, much like our Utilitarians on campus, but his relationships with his friends are notably shallow and his speech resembles monologues rather than conversation. But he is also a creator, an entrepreneur, someone who avidly reads ancient Greek philosophy and advocates Stoicism in a money-obsessed age. He could be any of your restive nerdy/geeky friends from college, except that he's the world's youngest billionaire. But he doesn't converse, read or write much beyond what's minimally required of him. And it doesn't prevent him from doing well for himself!

If you've read until this point, you might have guessed what I'm talking about. It is not that my generation has mastered non-verbal communication or their auditory skills as substitutes for reading and writing. They have instead opted for shallowness and superficiality. What is true of your peer in the comparative literature doctoral program is also quite true of your banker friend on Wall Street. Education is a means to an end. In other words, the Utilitarian must try to maximize his job prospects by writing and reading minimally, and the Sentimentalist must simply re-affirm her naive moral convictions in what she reads and finds. Vast worlds are shut off for these blinkered individuals. It is not merely the pleasures of the mind that are out of vogue, but an experiential understanding of the world around us. It is now possible to study economics or politics without paying attention to the homeless people on the streets. It is now possible to protest against the US war on terror while retaining Bush-like stereotypes of Muslims as intolerant, irrational, pre-modern bigots. It is now possible to earn a lot of money or hold many degrees without a clear sense of purpose in life. It is now possible to socialize without listening to others. It is now possible to love without affection, live without values, and learn without passion.

Something is very nearly lost forever in our world: intellectual depth and moral seriousness. You cannot expect someone who drinks fair-trade coffee at Starbucks to earn "good karma" to be anything but shallow and superficial. Everything is a means to an end: relationships, knowledge, clothes, speech, food. But what good is such instrumentalism, whether it is Utilitarian or Sentimentalist? Can it help us understand the world and ourselves better? Can it help us change our world ever so slightly by our actions? Can it make us better human beings? None of these ends require a higher education degree. Indeed, there might be much to learn from those who are less fortunate than us economically and educationally. But how can a well-schooled upper-middle class teenager today take someone less privileged seriously? Our social inferiors are either to be despised or pitied, depending on your ideological convictions. The world is, as VS Naipaul wrote famously, what it is, so my generation simply choose to extend their middle-class privileges in corporate, government or academic spheres. Restive yet unmindful of what is missing, they affirm their commitment to cynicism and moral flippancy. Now where do we go from here?