okamido

For the discussion of differences in the two philosophies.

Yôḥānān

Tell me something, what is the"neo" appendix before liberalism for? I believe in liberalism and it has always been the same since the days of Locke and Adam Smith based on the negative concept of liberty.So I'm not sure we are talking about the same thing. If you want to call someone a "new" liberal you might start by calling it to American liberals who from what I understand believe that more government control, more regulation, more spending will make people more free, it's the positive concept of liberty and a new form of liberalism. I ain't calling people neosocialists. I would call neoconservatives new socialists since they found a way to control and meddle in the economy pretending they aren't doing so.
Liberalism a scam? I would call a scam to Communism and Socialism and populism in general. Actually a true and honest liberal is someone who will have dificulty getting elected since he will not have much to give to the people to buy their votes.
I didn't made it clear but I'm not speaking of the Irish bailout of the banks. Actually I prefer the way Icelanders solved that problem. I'm speaking about the reforms Ireland did in the 90's and made it the second richest country in Europe. Among other things, I read, they realized the state could not be the main employer, so they sacked public servants made liberal reforms and it worked.
But in which country did liberal reforms not work? China? India? Ex-soviet republics? Chile? I'm at a loss here.

About the situation in Portugal and Greece being the same, I'm not sure. In somethings it might resemble, but Greece has had strong growth before the crisis while the Portuguese economy has been stagnated for the last decade. So we've been hurting more.

spellbanisher

It's neo because "liberty" is imposed from the top down. Chile, for example, had its economic reforms imposed by a military dictatorship. Also consider that most policies associated with free markets have nothing to do with free markets. I'll give a few examples. Patents, copyrights, and other forms of intellectual property are forms of government granted monopolies, yet most neoliberals support these. Whether you think intellectual property is good or not it most definitely is not free markets. Neoliberals tend to look favorably on corporations, which are not free market institutions. Rather, they are legal entities with government privileges such as limited liability. Furthermore, these corporations are further aided by governments through so-called "free trade" agreeents, which do everything to pit working class workers against each other but not higher wage workers or executives and allow corporations to impose externalities on societies such as environmental degradation. And how many Neoliberals oppose central banking or currency monopolies? Neoliberals fully support antilabor laws; whatever your opinion of unions, workers should have the right to freely assemble.Most of what we call"free market"institutions are not free markets at all, but policies that greatly favor the rich. Note I am not saying any of these things are good or bad or that you subscribe to them, only that strictly speaking they are not of free markets.

Well, the way you use socialism and other classical and neo liberals is different from its historic meaning. Hayek, for instance, did not consider the welfare state to be socialism; he specifically used socialism to mean central planning, not mere government regulations and safety nets. Agree, but when w talk about economic reforms, we are almost always talking about neoliberal reforms. And just a quibble, but neoconservatism is not an economic doctrine; it is a doctrine of foreign policy that purports a continual clash of civilizations(capitalism vs communism, democracy vs islamofascism, and so forth). Neoconservatives argue that the dominant hegemon (currently the United States) should actively use its power to spread its civilization Failure to do so leads to decline and the rise of a competing civ.

Again, there is a difference between classical liberalism and neoliberalism. You may object to the terms, but that's how the meaning has evoled over time.
It is very difficult to assess the success of any reforms over the last two decades since growth was driven by real estate bubbles. Sweden also had some liberal reforms the nineties, but they still have a strong public sector(public spending is 50 percent of gdp). Notably, they have had the fastest growig economy in western Europe and while the rest of Europe is mired in stagnation, Sweden seems to be having a solid recovery. They seem to have a nice balance of strong market liberalization and strong safety nets.

Yes, but Greece's growth was driven by a real estate bubble. The reality is that they'll either have to go through many years of painful internal devaluation, or do the Argentine tango. They do need reforms, market but also political, as the wealthy pay virtually no taxes in that country.

Yôḥānān

So you call neoliberalism to liberalism, then explain me that the neoliberalism refers to people who are not really liberal but use liberalism when it profits them, and with this move you put liberalism out of the equation and present big government as the only solution and salvation.
Sweden is a small populated country with big multinationals and with a culture of dialogue among social partners that is not easy to find. They were the richest nation in Europe after WWII when they started with their welfare system model which led them to fall comparing to other nations. Again they had to walk towards economic liberalism to survive. In fact you may consult the index of economic freedom and see where Sweden ranks. And look to where Portugal is (I'll help 21 and 68 positions).Country Rankings: World & Global Economy Rankings on Economic Freedom
I consider socialism the control of strategic sectors of the economy by the government, redistribution and protection of particular groups. I wonder if Hayek is a liberal or neoliberal to you.
Fancy left wing economics may find many followers but I've seen in loco the failure of democratic socialism, keynesiasm, and heavy regulation and nobody is going to convince me that it works.

spellbanisher

Um, I never called liberalism neoliberalism. The whole point of the post was to distinguish between the two! And no where in my post did advocate any kind of governmental policy.
Every developed country in the world is a mixed economy. And didn't I say that Sweden had highly liberal markets? Yes, and it has Singapore up high, which in many ways is a highly socialistic economy. They have a ministry of health that regulates prices for public hospitals, universal healthcare, 85 percent of all land is owned by the government, and heavy investment in education and infrastructure for strategic industries. Many of the transportation industries are government run, and the government also owns a large stake in many private industries.

So why is it ranked so highly? Low taxes and low spending mostly. They also have an enormous multinational presence, but that is mostly due to their highly skilled workforce and advanced public infrastructure. But a government that owns almost all of the land(and thus collects rent), runs major industries(and thus collects fees), has stocks in private companies(and thus collects dividends), and regulates prices for major social industries like public healthcare(and thus not having to spend as much on social insurance) doesn't need to collect a lot in taxes nor spend much. The heritage rankings don't really look at things in context.

Well, you can have whatever made up definitions you want. Hayek is generally classified in the Austran school of economics, which is libertarian, although Hayek believed that government should ensure a minimal standard of living for all citizens as well as provide basic environmental regulations. At the very least Hayek believed basic social protections were necessary to ensure social stability and to prevent the population from turning to things like communism and fascism. Hayek understood that a pure free market was not politically, socially or economically viable.

Ironic then that the financial crises in Latin America, East Asia, and the recent financial crisis were all due to deregulation. Anyways, no one here has called for heavy regulation, except maybe on the financial sector. And your understanding of keynesianism is just wrong. For instance you have implied that Krugman is a socialist, a man who is an ardent supporter of free trade, a defender of sweat shops, and an opponent of the minimum wage. So what makes him a socialist? Oh, he supports unions and countercyclical fiscal policies. A regular Stalinist that guy is. But keep up the righteous struggle against those scary straw men...

Yôḥānān

Spellbanisher there is no point in discussing then since from what I read we are both in agreement that liberal reforms lead to economic growth and economic liberty is a good thing and necessary for the wealth of a nation.
That neoliberalism is not really used to designate liberalism or liberal reforms or liberal ideologists but it is a sort of anathema that comes out now and then to be thrown on someone or some kind of policy.
I didn't say Krugman was a socialist but that I was fed up of him, you encourage me to read about his ideas.
Finally Milton Friedman also advocated government intervention and public services when beneficial.
Since in my country the word liberal hasn't been highjacked I use it in its proper and original meaning which to an American might be a libertarian in fact MF called himself both libertarian and liberal. But libertarian sounds to me like a communist anarchist and putting a "classical" in it like if liberal thought is outdated and should be in the shelves of a museum.

About economic crisis originated by deregulation there is one point that should be discussed. From what I've heard, and you are the person to correct me, it was really easy to get a loan in the US, I was under the impression that it would might be easier than opening a bank account in my country. It was also one of G.W.Bush's banner that every American should be able to buy a house, and he was follower of compassionate conservatism and something like the third way in which you deregulate a sector and via remote control informally allocate financial capital to where it might be necessary. A sort of voodoo socialism without taxes.
All this to say that I agree a certain amount of regulation is needed, in fact I know some people of liberal thought (libertarians) who even believe usury should be prohibited. But there has been a crucial government meddling in many crisis attributed to deregulation.
And also that strong growth followed by contraction doesn't mean people are worse in the end.
And by the way I'm against deregulating only some sectors while heavily regulating others.

Solidaire

Neoliberalism is liberalism taken to the extreme. Friedman advocated the deregulation and privatisation of everything, with the exception of the military. All other facets of economy and society are supposed to be left to private self-regulation, including health, education, working rights. You do realise that in an unregulated jungle it's the strongest that prosper and the many that suffer.

I'm not against liberalism, on the contrary. But I am against its ideals taken to the extreme. As I am against state control of everything, while I support a strong presence of the state on crucial issues. Neither Communism, nor neoliberalism, but a healthy place in between. Both the state and the private sector have a part to play, and neither should be allowed to dominate entirely.


Ireland's unregulated capitalism created a banking and housing bubble, which when it burst (because bubbles always do in the end) dragged the whole country down and destroyed many lives along with it. Ireland growth was based on cheap credit and attracting foreign investors, not on domestic production of hard commodities, which is what I consider a healthy economy. The Irish prosperity was an artificial dream, not a solid one.

The other countries you mention are in fact examples to be avoided, and speak against your argument. Are you aware of the quality of life of the average Chinese or Indian? If that is what is promised to us, then thank you, I'd rather go back to tribalism.

Southern American countries like Chile or Guatemala, where neoliberalism was applied, are not examples to be imitated either. 1 out of 2 children in Guatemala suffer from malnutrition and lack of health care, while a super rich class enjoys extremely luxurious lives. Chile is a very unequal country, too. Sure, macroeconomics appear good, but these numbers fail to describe what the life of the average person is like.

And as for the ex-Soviet countries, the fact that there is a very strong nostalgia for the Communist era (20% I believe in recent Russian elections), speaks volumes about how satisfied those people are by the economic 'reforms' that took place there. Pillaging the wealth of a country by a few elites and abolishing basic social protection for the masses, is not a recipe for happiness. I believe Russians are among the most miserable people on the planet.

Give me the balanced Scandinavian model any time of the year, please.

spellbanisher

Here is one of his articles on free trade.
In Praise of Cheap Labor - Slate Magazine

A libertarian is usually against gvernment itself.
I understand classical sounds pejorative, but "liberal" to me has always meant left wing democrats, and so on an American forum the fastest and most clear way to communicate what I mean to all posters is to use the word "classical."


I think the problem with a US centric approach is that there were real estate bubbles in virtually every developed country in the world. The causes then would have to take into account international trends and banking practices. One of those trends was global liberalization of banks and capital.

I believe in environmental regulations, some workplace safety regulations, and financial sector regulations since thefinancial sector is the one sector that can destabilize and debilitae the whole economy.

Yôḥānān

Read "Capitalism and Freedom", he didn't advocate such things.





Irish prosperity was build on strong foreign investment but Ireland is still one of the wealthiest nations in Europe. Strong growth minus recession still equals more wealth.

What speaks against your argument are the more than 40 million Chinese that have come out of extreme poverty in the last decade have you even the notion that China's GDP has been growing at nearly 10% on a yearly base and India near 7% rate?


Like a person from the ex-USSR told me "those were the good times we were alll poor but were all equal" and against that argument I had nothing to say. That person also told me what happened when Communism fell and they were out of jobs and with frozen bank accounts and nothing to eat. A three days fasting was nothing for them.

The balanced neoliberal Scandinavian model by your standards.

Yôḥānān

Our Greek friend Solidaire should also read this article and to be honest I agree with it.
However Krugman came to my country and the headlines in the news the next day were about him advocating a reduction in the wages of 20% if I'm not mistaken. I don't know which level of income he was addressing, wages in my country are inflated, and I'm in favour of any draconian measure that might take Portugal out of the present mess, but people with lower wages would really be hurt and I doubt they would become more productive. Because for our level of income the Portuguese economy is already overburdened with taxes, and among these the VAT which is the more hurtful for the poor so that a lot of the income goes to the government.


I think environmental costs should be charged on the companies so that the price of the goods produced will reflect the cost.