At the roots of the Great Reset: neoliberal ideology

Speech by Ilaria Bifarini at the conference "A POSITIVE WORLD – Analysis, design and implementation of an economic renaissance", which was held on 24 March 2023, in the Parliamentary Groups Hall of the Chamber of Deputies.

Ilaria Bifarini introduced the works with a report entitled "At the roots of the Great Reset: neoliberal ideology", analyzing how neoliberalism was born and developed and what its fundamental dogmas are. Misleading right from its name, neoliberalism is far from being liberal, configuring itself as a wholly, all-encompassing and dogmatic ideology, to make huge companies and banks prevail, acquiring monopoly positions in public life. This is the video of his speech:

This is his written speech:

“Deceptive by its name, neoliberalism is far from being liberal, configuring itself as an ideology of the whole, all-encompassing and dogmatic. From the initial economic thought it has crossed its borders and permeated the entire social apparatus, spreading with an extraordinary speed and force of contamination.

The original basic theory is that of economic liberalism and can be summarized in a few simple axioms: markets regulate themselves; money flows to where it is most useful; every economic risk is calculable.

It follows that it is absolutely necessary to avoid that states generate budget deficits to finance social services and public infrastructures: in the event of accounts in the red, austerity policies will have to be resorted to, through fiscal consolidation measures (tax increases) and cuts to public spending.

The declared enemy of neoliberalism is the phenomenon of inflation, ie the increase in the general level of prices, considered as a state drug. Friedman's monetary policies will be adopted by the Federal Reserve and the ECB.

Other pillars of neoliberal thought are the liberalization of markets and the removal of all barriers to foreign trade: through the free movement of goods, the market will reach its natural balance, capable of ensuring wealth and well-being. Thus a whole series of treaties and free trade agreements were introduced between different areas of the world for the liberalization of the flows of goods and people.

The next and inevitable step is the weakening of labor rights, social protections, collective guarantees – in a single word, the emptying of democracy – which are accepted as a natural condition for the functioning of the system.

Thanks to a formidable propaganda machine, neoliberalism has managed to conquer every ideological space left empty since the fall of Keynesianism (1973). More than communism, the sworn enemy of liberal theories is in fact the Keynesian economic model, which had ensured a rather long period of growth and social conquests in most Western countries, which went down in history as the Glorious Thirty Years , from the second post-war period up to the seventies.

Shock therapy

Together with the Austrian Von Hayek, founder of the Mont Pelerin Society in 1947, a key figure of neoliberal thought is undoubtedly the American economist Milton Friedman, awarded the Nobel Prize for economics in 1972, progenitor of the "The Chicago Boys" school of thought.

Famous is his theory of shock therapy, according to which "only a crisis, real or perceived, produces real change (…) the politically impossible becomes politically inevitable" .

A situation of severe crisis and unease, whether real or perceived, by a population represents the ideal solution for accepting the drastic recipes envisaged by the neoliberal paradigm.

Modern history offers us countless examples, starting with what happened in Chile in the 1970s, with Pinochet's coup d'état.

In a very short period of time, a consolidated economic model is overturned, with enormous social repercussions: it is the so-called shock therapy. The mentor of the Chicago School is so enthusiastic that he speaks of the "miracle of Chile".

The examples of neoliberal shock therapy can go on and on, from the destruction of the public school system in New Orleans after Hurricane Katrina to the wild privatizations – real sell-offs of strategic assets – that took place in the so-called Asian Tigers during the 1997 financial crisis- 1998. Although the effects of neoliberal therapies may seem edifying in the short term, in the long term they always prove to be favorable for lobbies and multinationals and disastrous for citizens, who pay the price in terms of worsening economic conditions and loss of social rights.

The admiration for neoliberal theories is such that the young Margareth Thatcher defines Friedman "a freedom fighter", while Ronald Reagan wanders around during the electoral campaign with Friedman's book "Capitalism and Freedom" on his arm, acclaimed by many as the Bible of neoliberalism. These two governments are among the most successful examples of the application of all those policies aimed at the complete opening of markets, the dismantling of the welfare state and the start of privatization of public companies.

Financing Capitalism

“ Of all the ways to organize banking, the worst is the one we have today”. (Sir Mervyn King)

One of the most profound transformations of the economic system initiated by neoliberal deregulation policies is that of financial capitalism or finance capitalism, where power is concentrated in a few large credit institutions.

Since 1980 the amount of assets generated by the financial system has exceeded the value of the GDP of the entire planet. Since then, the race of finance to profit has become so fast as to quintuple the real economy by mass of assets in the space of thirty years.

Under President Bill Clinton two key tools were introduced to complete the deregulation of the neoliberal financial system. With the abolition of the Glass-Steagall Act, the separation between commercial and investment banks was eliminated, thus gaining concentrations of economic power. At the same time, the World Trade Organization (WTO) canceled the rules considered restrictive on the control of derivatives, giving way to the proliferation of the so-called shadow finance , that vast parallel market which includes deregulated and liberalized activities.

It is evident that an economic system based on speculation, detached from production, and on debt, both public and private, is unsustainable. Reality has shown how it is subject to recurring crises which do not derive so much from triggering causes as from structural ones.

A deceptive ideology

In conclusion we can say that neoliberalism realizes in practice what it opposes in theory, i.e. the prevalence of companies and banks of enormous dimensions, which acquire monopoly positions in public life, contradicting the very principle of free competition and market equilibrium .

The system that has been touted as “free market capitalism” actually consists of a series of measures designed and promoted by the state on behalf of the interest groups that hold majority shares of the planet's wealth.

The economic power of the de facto state has not been annulled, on the contrary it has perhaps even been strengthened: it has gone from serving the cause of social progress to protecting the interests of the financial elite and the markets.

As masterfully summed up by the US writer Gore Vidal, the essence of such a system is " free enterprise for the poor and socialism for the rich "."

The full video of the conference, divided into 3 parts, can be seen on "Byoblu – Citizens' TV" with these links:

– 1st part – HELL – https://www.byoblu.com/2023/04/02/un-mondo-positivo-marzo-2023-1-parte/

– 2nd part – PURGATORY – https://www.byoblu.com/2023/04/02/un-mondo-positivo-marzo-2023-2-parte/

– 3rd part – PARADISE – https://www.byoblu.com/2023/04/02/un-mondo-positivo-marzo-2023-3-parte/

Fabio Conditioni

President of Positive Money

https://www.youtube.com/@MonetaPositiva

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The article At the roots of the Great Reset: neoliberal ideology comes from Scenari Economici .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/alle-radici-del-grande-reset-lideologia-neoliberista/ on Sat, 08 Apr 2023 14:23:20 +0000.