20. We have been duped ….
We have followed what has happened with internal migrants in the European Union (EU) and
refugees from other countries trying to enter Europe for too long. The reports and the examples of
human suffering that are coming closer to the people of Europe have created massive humanitarian
reactions of solidarity and support amongst ordinary people. Other reactions especially from the EU
Establishment and individual countries have been to strengthen the EU Fortress with barbwire and
fences that remind us of South African and Israeli apartheid.
When the so called free market ideology took over we were promised that life will improve
for everybody, mainly through the win-win and trickle-down effects. The message was that everyone
would gain from an unrestrained market. Today, more than thirty years after the takeover, we know
that we have been duped. The only measure of equality is that poverty has been more evenly spread
between nations. But the rich have been richer while the majority that has been left behind is poorer
in relative terms. These absurd market policies have also created the crises structural, economic, and
global levels.
The structural crises are characterised by contempt for politicians, the social rift between
rich and the rest, and the neoliberal hegemony. The contempt for politicians is related to the fact
that it is becoming more difficult to recognise the differences between political parties as most of
them are moving their policies closer to each other. This is also related to being a politician has
become another way to create a career and not something that has developed from earlier working
or social experiences. Disappointments with politicians have also developed from a lack of serious
treatment of issues that make people worried about their future. This has created room for extremist
right-wing parties based on racist or nationalist notions. The social and economic rifts are due to
marginalisation of welfare systems replaced to the illusionary ideas that individual choices will create
better living conditions even amongst those who do not have the capacity or do not want to make
these choices. These choices are disingenuously marketed as freedom of choice and those who do
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not make the choices just have to blame themselves. The marketization of choice beyond selecting
goods in the grocery store has also the effect that it creates winners and losers not only on the
lottery but in life. The neoliberal hegemony has also marginalised collective responsibilities and
solidarity away from the societal arena and been replaced by self-interest and selfishness as guiding
stars. These tendencies are resisted by different movements that often fail to change hegemonic
habits. The reasons for these failures are often that alternative movements are not institutionalist in
the society and therefore remain as fading alternatives.
The economic crises are caused by the combination of how free-market economics,
neoliberalism, the financial market, and the way mainstream globalisations work. The rich countries
and transnational corporations want the free-market economy to work like a global octopus that
reaches everywhere because it supports their own interests. Then they have forgotten how they
accumulated their riches in the first place. It was through a history of protectionism and robbery
under the flag of civilizing through colonialism. Whenever national corporations needed help in their
endeavours they got it from the state. But today the rich countries and transnational corporations
need new markets. Therefore they are saying that an omnipresence of a global free market is what is
needed. But that policy does not fit countries in the global South that are busy trying to build up their
own economies, while they instead become the victims of global capital. The economic crises are too
a large extent related to the financial market that is overshadowing everything and as soon as there
are some news concerning productions and profits the stock exchange jumps up and down. The
financial market and the banks seem to direct everything as both entities are more or less
unregulated and make at the same time extremely high profits. Furthermore, the new financial
instruments like derivatives that not even the so-called experts can control contribute to the financial
bubbles.
When the global migration crisis hit Europe it suddenly became an important issue on the
political agenda as if it was the first migration crises in our lifetime. The European Union is now
discussing more than ever how they can hinder people from entering Europe. This reminds us of the
official reason for creating the EU in the first place as it was said to be a peace project! We have been
duped again! The so-called European peace project started to get involved in the conflicts in former
Yugoslavia, later on in Afghanistan, and more recently in the Arab countries around the
Mediterranean. None of these activities contributed to peaceful solutions. On the contrary they
escalated the violence and today Europe is doing what it can to close its borders because of the
increasing number of people who migrate under dangerous conditions because they want to escape
the conflicts and to live in peace. When the EU was initiated it was officially marketed as a European
peace project. It is obvious that it has failed its mission if peace was the reason to create the EU. But
maybe it had another priority that has become more successful, namely to extent the neoliberal free
markets that actually have created many of the crises we experience today. So what can be done to
cure the present social illnesses and to avoid another political and social scam?
Occasionally, I find proper analyses by economists that I have referred to previously, such as
Samir Amin and Thomas Piketty. This time I want to refer to Ha-Joon Chang, who teaches in the
Faculty of Economics at the University of Cambridge. In his recent book titled Things they don’t tell
you about Capitalism he summarises his arguments under eight points. To begin with Chang
concludes that a market economy is the best solution, provided that it is regulated in a better way
than today. He says that we have to put an end to the unrestrained free-market capitalism. Second,
Chang suggests that we should build our new economic system on the recognition that human
rationality is severely limited. He does not believe in the present call for transparency. Information is
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not the problem but our ability to process it. Furthermore, complex financial instruments like the
ones building on derivatives should be banned as they cannot guarantee that the society will benefit
from them in the long run i.e. for 10 years or longer which means we should apply a perspective far
beyond the present quarterly financial reports. Third, Chang says that we need to rebuild our
common as well as private institutions in a new way so that solidarity, honesty, and cooperation
become the ideas that drive organisations instead of glorifying self-interest that is the motto of
today. This new way of building our society goes together with long-term goals related to knowledge
development that concerns environmental issues and the future of humankind. The fourth point is
related to the myth that people are always paid what they ‘deserve’. Chang points to the fact that
most private companies and their top leadership operate under the limited liability clause. This
means that the leadership strata are not responsible for what they are doing, while their pay cheques
reflects a different reality. And when companies go bankrupt the workers are left on the streets,
while the leadership receive large compensational payments. Therefore, workers need to get better
and real conditions that can give them hope and a second chance through well-developed welfare
systems. Chang is also concerned about people suffering from poverty, especially in the global South.
He states that poor people should not be blamed for their poverty, because the main explanation to
human poverty is found in poor policies in rich countries. Chang’s fifth point is related to the postindustrial knowledge economy that he believes is a myth. Humans are material beings that cannot
live on ideas, even though knowledge is important. Chang means that we put too much emphasis on
formal education, forgetting about the innovative minds of poor people. He further notes that the
productivity impact from internet is modest. The internet is also part of the deceiving forces in
society that replace knowledge with information. The next point by Chang is related to the
relationship between finance and ‘real’ activities. Financial liberalisations has made money move
around quickly and speeded up profit circles meaning that the demands for profits come quicker with
less concerns about long-term implications. Chang is of the opinion that finance needs to be slowed
down and suggests taxes on financial transactions, restrictions on cross-border movement of capital
especially in and out of developing countries, and greater restrictions on mergers. Chang’s seventh
point is related to the role of governments. He suggests that the role of governments need to
become bigger and more active in relation to finance and production and is opposed to the view by
free-market spokespersons that governments should not get involved in the market. Governments
have an important role as the collectors of taxes as a way to redistribute its resources more evenly.
As Chang concludes:
We need to think more creatively how the government becomes an essential element in an
economic system where there is more dynamism, greater stability and more acceptable
levels of equity. This means building a better welfare state, a better regulatory system
(especially for finance) and better industrial policy. (Chang, p. 261)
Chang’s last point is related to countries in the global South. All countries that are dependent of
donor support have been forced to adopt free-market policies. This have not benefitted these
countries or their people but rather deteriorated their situation and made them even more
dependent on international finance and goods from the rich part of the world. The World Bank, IMF,
and other international organisations that are controlled by the rich countries have to change their
policies, according to Chang. He concludes that “the world economic system needs to be completely
overhauled in order to provide greater ‘policy space’ for the developing countries to pursue policies
that are more suitable for them” (p. 262). A consequence of a new policy is that the vulnerable
countries of the world among other things must get opportunities to use protectionism, regulation of
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foreign investment, and intellectual property rights if they ever will move away from their present
situation. These necessary changes that Chang is putting forward go against the economic wisdom of
the last three decades, but are the medicine to cure the illnesses created by the liberal virus and to
avoid future crises on structural, economic, and global levels.
(this text is an extended version of an article published in Västerbottens Kuriren, a local newspaper in
the northern part of Sweden, 2015-10-14. It was titled ‘Grunlurade efter 30 år’ /Duped after 30
years/)
Lars Dahlström
Reference
Chang, Ha-Joon (2010) 23 Things They Don’t Tell You About Capitalism. New York: Bloomsbury Press.
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