Our civilization’s principle dogma: neoliberalism is a bubble. To explain, the rise and fall of ideologies such as neoliberalism resembles financial bubbles.
In a classic financial bubble, one asset or class of investment dominates the market and pushes everything out. For instance, internet stocks eclipsed all other equities during the dot-com bubble in 1999 and 2000.
Likewise, neoliberal thought eclipsed all other economic ideologies during the 1980s and 1990s. Keynesian economics, Marxism, anarchism, etc. All fell by the wayside. In addition, many Keynesians and Marxists retooled their ideas to appeal to neoliberals.
The Neoliberal Bubble
Money and success drive ideological and financial bubbles. People bought dot.com stocks because they thought those equities were far more successful than other shares.
Likewise, politicians and nations rushed to embrace neoliberalism because it was successful. For instance, neoliberal nations such as the United States and the United Kingdom prospered in the 1990s as Communism collapsed; and social democracies such as Japan, stagnated.
However, the Neoliberal Bubble; like all bubbles, burst during the Great Economic Meltdown of 2007-2008. Similarly, the dot.com bubble burst when people realized that the claims of dot.com promoters were exaggerations.
Similarly, Neoliberalism’s popularity collapsed when many of its promoters’ claims proved false or exaggerated. Neoliberal policies, for instance, did not lead to widespread prosperity or wealth. In fact, many working people were worse off under neoliberalism than under earlier social democratic regimes.
What is Neoliberalism?
Essentially, neoliberalism is the belief that unrestrained capitalism and markets can create utopia or a better world.
The basic tenets of neoliberalism include low taxes, small government, unregulated markets, and private ownership of everything. In the 1980s and 1990s, neoliberalism was successful because of bloated and inefficient governments.
However, neoliberalism reached its limits around 2000. To clarify, I think neoliberals privatized everything they could.
The Neoliberal Bubble continued for several more years because of its popularity and all the money people were making. Thus, greed drives ideological bubbles as it drives financial bubbles.
Is Neoliberalism Unsustainable?
Ordinary people, in particular, wanted to share in the bonanza. That led to the home ownership booms, stock market bubbles, and mortgage crises of the early 2000s.
Those booms collapsed because the economy was not generating enough money to sustain them. In addition, many of the ordinary people lacked the knowledge, expertise, resources, or money to participate in the growing economic activity. Remember the NINJA, (no income, no job) loans of the 2000s?
Hence, you can make a good case that neoliberalism is unsustainable. Conversely, it is hard to determine the limits of neoliberalism because of technology.
To clarify, I think neoliberalism reached some limits in the early 1990s. However, a technology boom driven by the internet drove neoliberalism to new heights.
Technology and the Neoliberalism Bubble
Moreover, a similar technology boom driven by green energy, artificial intelligence, and online retail restarted the Neoliberal Bubble after 2008. I think such bubbles are unsustainable because technology absorbs resources from other areas of the economy.
Amazon (NASDAQ: AMZN); thrives by driving brick and mortar retailers out of business, for example. Notably,Mr. Market was paying $1,780 a share for Amazon on 12 March 2020. In contrast, Mr. Market paid 60₵ for shares of the American department store operator J C Penney (NYSE JCP) on the same day.
Incredibly, JC Penney operated 865 stores in 49 U.S. States and Puerto Rico on 2019. Yet, Mr. Market only valued Penney at 42₵ on 13 March 2020.
People buy Amazon stock; for instance, because it grows and makes money. In fact, Amazon reported $55.02 billion in cash and short-term investments on 31 December 2019. In today’s market, investors think they will end up with nothing if they do not buy Amazon, Apple (NASDAQ: AMZN), or Alphabet (NASDAQ: GOOG) stock.
Are Neoliberal Politics a Bubble?
Similarly, people vote for neoliberal politicians such as Joe Biden (D-Delaware), UK Prime Minister Boris Johnson, and President Donald J. Trump (R-Florida) out of fear of loss.
Many Americans, for example, fear tax increases if social democrat U.S. Senator Bernie Sanders (I-Vermont) wins the presidential election. Similarly, many Brits feared a no-jobs economy under Labour Prime Minister Jeremy Corbyn.
Other Americans fear President Trump because the Donald rejects some tenets of neoliberal dogma. Notably, Trump is skeptical of free trade and sympathetic to antitrust arguments against large corporations.
Is the Neoliberal Bubble Bursting?
Interestingly, 49% of Americans under 54 had a positive view of socialism in November 2019, Gallup estimates. In addition, social democrat U.S. Senator Bernie Sanders (I-Vermont) received 30% of the vote in the 2020 Presidential Primary in the conservative state of Texas.
In addition, “conservatives” such as Trump and Boris Johnson attacked free trade and unrestricted immigration in their successful election efforts in 2016 and 2019. In particular, Johnson backs Brexit while Trump promises restrictions on immigration and free trade.
Therefore, I think the Neoliberal Bubble in politics could be bursting. Interestingly, neoliberalism could be collapsing on generational lines. For instance, 41% of Democrats between 30 and 44 chose the socialist Sanders over his neoliberal rival Biden in the 2020 Presidential Primary, Vox estimates. In contrast, only 15% of Democrats over 65 voted for Bernie.
Meanwhile, the well-financed presidential campaign of neoliberal billionaire Michael Bloomberg (?-New York) crashed and burned on Super Tuesday 2020. Thus, I conclude the Neoliberal Bubble has burst. In particular, Democraitic primary voters chose the moderate neoliberal Biden over the blatant neoliberals Pete Buttigieg (D-Indiana) and Bloomberg.
Interestingly, the bungling Biden reminds me of the buffoonish British Prime Minister Boris Johnson. To explain, both Biden and Johnson appeal to voters with their do-nothing message.
Voters support Biden and Johnson because they think both men will do nothing and leave the economy alone. Whether voters fear radical leftist solutions such as Medicare for All or Neoliberal measures such as deregulation is unclear.
The Bubble Theory of Recent History
We can describe the 20th Century as a series of political or ideological bubbles. Those bubbles include:
- Colonialism/Imperialism bubble 1900-1950 peaked around 1920.
- Nationalism/Fascism bubble 1920-1970 peaked around 1940.
- Communism/Marxism bubble 1917-1980 peaked around 1960.
- Social Democracy Bubble 1930-1990 peaked around 1970.
- Neoliberal Bubble 1980-? Peaked around 2000.
As you can see, each bubble lasted for decades after it peaked. The Communism Bubble, for instance, lasted for 30 years after it peaked around 1960.
Given that history, I think the Neoliberalism Bubble will last for another decade or longer. However, I think Neoliberalism could last longer because technology sustains it.
In addition, unlike Communism or Social Democracy, Neoliberalism has no obvious serious rivals. Although, I think Technocracy could emerge as a rival to neoliberalism. Notably, technocrats; such as Michael Bloomberg (I-New York) and Andrew Yang (D-New York), did well in America’s 2020 Democratic presidential primary.
Interestingly, Democratic presidential front runner Joe Biden (D-Delaware) reacted to the coronavirus crisis with a speech that was pure technocracy on 12 March 2020.
Hence, Biden thinks Technocracy appeals to many modern voters. Specifically Biden promised to ask scientists to lead the fight against Coronavirus.
Is the Technocracy Bubble Beginning?
Hence, the world could be at the beginning of a Technocracy Bubble. To clarify, Technocracy is the belief that Technology and science can solve the world’s problems.
Another popular form of Technocracy comes from China, where the Communist Party’s Leninist dictatorship is seen as a viable alternative to democracy. Democracy critics points to China’s economic success and that nation’s aggressive moves to deal with Climate Change.
I cannot tell if the Technocracy Bubble has started, but I think a Technocracy Bubble is imminent. In particular, I think many disillusioned neoliberals are turning to technocracy. Tellingly, Joe Biden, a long-time neoliberal, is drifting into the Technocracy camp.
Is Neoliberalism Over?
Yang, for example, started as a neoliberal businessman trying to create jobs through entrepreneurship with his Venture for America nonprofit. It was Venture for America’s failure that inspired Yang to propose his Freedom Dividend basic income scheme and run for President.
In conclusion, I think the Neoliberalism Bubble could be ending. Consequently, the next big struggle will be to create an ideology to replace Neoliberalism.
Currently, I think Technocracy has the edge in the ideological struggles, but I think socialists and traditionalists will fight hard for their beliefs. Notably, some conservatives; such as Michael Lind, already sound the alarm about Technocracy’s dangers.
Interestingly, Lind wants a new working class movement to counter the growing power of technocrats he labels a “managerial elite,” Joel Looper writes at ARC Digital. Lind’s belief is that the “managerial elite” threatens the “cultural dignity” of ordinary people.
Therefore, I think we will spend the next two decades in a struggle to determine what replaces neoliberalism.