When capitalism’s long cycle of expansion was drying up, there was an urgent need for debate on the reasons for this exhaustion and the ways to get economic development back on track. The rejuvenated version of liberalism triumphed, championed in particular by Ronald Reagan, who said that there would have to be a suspension of the limits to the free circulation of capital and regulations would have to be relaxed. Capital would circulate once more, people would invest, economies would grow again and everyone would profit.
The free circulation of capital was encouraged worldwide by opening up the national markets, privatising public assets, commercialising what used to be rights, destabilising professional relationships, removing State involvement and centralising the market. But things didn’t quite go as expected.
The thing is, as Marx always pointed out, money isn’t made for production, but for accumulation. Freed from the shackles of the previous era, capital was directed massively towards the financial sector where it’s more profitable, enjoys total liquidity and exerts a lot of pressure on governments. (A speculators’ support agency once rounded up its suggestions by saying: “Enjoy the good times while they last…”) There was a huge global transfer of resources from the manufacturing sector to the ‘speculation sector’, with financial capital assuming the role of the hegemonic sector in the neoliberal age of capitalism.
The low growth rate, stagnation, or even withdrawal of economies is due precisely to the fact that the hegemonic sector in the economy is a parasitical one which creates neither goods nor jobs. It’s financial capital in its speculative form which doesn’t finance consumption, research, or even production. It lives off the buying and selling of stocks and shares.
Vulture funds are the most radical example of the parasitic character of speculative capital, typical of the neoliberal age. They’ve taken advantage of the debt crisis of Latin American countries in order to impose Draconian laws on subordinate governments, a fundamental part of the cursed legacy inherited by the anti-neoliberal governments. Loans at brutal interest rates in exchange for sacrificing national sovereignty.
Thus, this legacy even has to be braved by the countries which have opposed neoliberalism by developing alternatives to this exhausted model. In the eyes of the Right, this is a sign of the progressive governments’ failure, when in reality they’re the leftovers of the same right-wing governments.
The BRICS nations have started to aim towards an alternative: The New Development Bank for the world’s Southern Hemisphere countries. The current conflict with Argentina represents the last few dying breaths of the model against which the progressive governments were elected and are developing a post-neoliberal model.
(Translated by Thomas McGuinn)
– Emir Sader is a Brazilian sociologist and political scientist and the coordinator for the Public Policy Research Lab at Rio de Janeiro State University (UERJ).