Lately, everyone seems to be acting like an economist. Whether they are screaming that Keynesians are destroying the economy, that the debt will be the downfall of the US and European economies, or that the FED is an evil conspiracy meant to bring down the Constitution. All of these seemed to be linked to an economic theory that has been running rampant for the last 40 years under the guise of two different names: Neo-liberalism and Supply-side economics. Typically, those two words get attached to the word globalization, because then it is fancy and peaceful just bringing us all together like one big family. I call it false equality, bad policy making, and the creation of oligarchic or plutonomic economies, which are the worst form of surplus value extraction. So, as we go together down the rabbit-hole, take the red pill, or whatever way you wish to say turning the world right-side up, remember at all times, âItâs the Economics Stupidâ.
Let us begin with this philosophical idea of Supply-side economics, an idea that is meant to be a value-free economics, that is ultimate objectivity and ultimate subjectivity at a point betwixt neither shall meet. When I say ultimate objectivity it is to take Friedman at his word that economics should not be making judgments, it should just be formulas and theories. And ultimate subjectivity is to take Hayek at his word that the formulas themselves, even if they match reality, do not make them scientific. These two are the leading lights of Supply-side economics, walking contradictions that are a-historical and a-scientific, yet somehow are believed to be supreme, because they do not judge where money goes as long as money moves. From both sides the reason for the stance is to remove the idea of value-judgments in government policy. If a government must be neutral it must be completely objective, or if it does not have the ability to be god and judge with absolute certainty it must be completely subjective. But, only in the realm of economics is this permissible, and only in relation to fiscal policy.
Well, why only in those areas would we accept such a blatant disregard of any modern philosophical thought. What is important that relates to economics and fiscal policy that would put a person in a position to degrade value-judgments. Of course it is the fact that one has to justify a system which actively legitimates and sells itself as trickle down, as inequitable. It is a claim to individual freedom that excludes the fact that everyone exists within a system, or the claim to a system which excludes connections between people. Take for instance the idea put forth by Friedman for vouchers for private school instead of public school (both words in the sense of the US system), permitting an opt out on the taxes for a school district. Instead of a nation being a society, it turns into sectors, those who need to pay taxes and those that do not in order to have a school. Those who can buy privately will not need aid in the support of those who can not pay. If they can not do so privately, what is there to assume that the tax revenue would be sufficient to provide a tax base for a public school. Then what exists is a larger percentage of the population which remains un-educated and without opportunity. However as Friendman would point out, it is there free choice to not be educated or there inability to pay. Maybe they just do not understand opportunity cost.
An economy though is a large conglomeration of factors, it is not so easily that taxes are this, programs do that, or this sector is insupportable. It is an objective-subjective mixture which in the end is a multiplicity/singularity, the whole is made of parts, but is not directly related to them. A failure to understand this produces an extremist and ideological economic philosophy that we now call Neo-liberalism. It is a fundamentalism that overestimates absolute advantage and over simplifies Ricardian comparative advantage. Yet, even in Hayek who is focusing on ultimate subjectivity, the State as an apparatus becomes something which is not part of the singularity, a false imposition. Although, that only presupposes that the market in its complete subjectivity and pervasive present is able to encompass the entire singularity. But, this then is the imposition of the irrationality of the market instead of an imposition of the rationality of the State. Maybe explained better like this, if the State will bring the people to serfdom by acting as God, then the market will bring them to serfdom by acting as if history never existed. For Hayek it is politico-cultural actions of the State which are the undercurrents of an attack on liberalism, but his liberalism is only an equation of liberalism equals the market and not the debate of liberalism as the State providing for the general welfare.
This in the end has the significant meaning of value judgments as judgments which include historical factors. Neo-liberalism is the act of excluding history, hence why the term has arisen of the post-modern state, the post-modern economy, and post-industrialism. This is also not a Derridean post, but wants to seem as if the State is not acting, not deciding anything. In reality the State maintains a function of transferring wealth from the bottom to the top by cutting taxes and utilizing taxes to supplement corporate structures. Therefore, the function of the State for Friedman, Hayek, and Supply-side economics is to protect the market, yet only segments of the market deemed to have an absolute advantage. At this moment the only market being protected is the financial market, the industrialists became financiers instead of betraying class interest. So the old model collapsed in the USA, but was rebuilt cheaper elsewhere. The world is therefore still an industrial one, it has not entered a new form of economy. That is excluded, because as was stated before Supply-side economics (Neo-liberalism) was just ultimate objectivity and ultimate subjectivity at a point betwixt neither shall meet. Nothing more, nothing less, but an incredulous lie.
By. Andrew Smolski
Andrew Smolski is a contributor at Oilprice.com and specializes in Political/Economic Sociology. His work has been syndicated in many leading online publications and he can be reached at email@example.com
Hayek would not be in the supply-side camp, but in the Austrian camp of economics. It should state Milton Friedman and Friedrich Hayek become the legitimization for the neo-liberal regime, through a uniting of a certain form of supply-side neoclassical economics and Austrian economics.
Also, for Hayek it would need to be in relation to the money supply, therefore monetary policy is also included, not just fiscal policy.
These corrections are crucial and this article needs to be developed much more. I admit it is not even close to the work I normally deliver.