I have been reading the commondreams and counterpunch websites for some time now. These feature a collection of articles written by left leaning writers mostly bemoaning the state of the US. That is only natural since most of the contributors are Americans. Reading these people one gets a sense of a US sliding gradually and to its citizens imperceptibly into an anti-thesis of democracy. The history of the US has always been dominated by a small number of issues down the years. In the late 18th century, the basic issues were gaining independence from the UK primarily on a point of principle. The people who raised the banner of revolt were those who had been among the upper sections of colonial society. Perhaps that was why they had a perception of being secnd class citizens; a perception of their concerns being ignored by the mother country. Once the revolt got underway, the basic issues were winning the war (which was literally a matter of life and death for the leaders of the rebellion) and formulating a set of rules to govern the country once victory was achieved. The second issue was articulated as a negative. The new country was not to be like Europe as it then was. To their credit, the leaders of the rebellion came up with a document that was strongly inspired by events that had been occurring in England for some centuries; a document robust enough and flexible enough to stand largely unscathed for two centuries.

The first half of the next century was taken up largely by the issue of slavery. This culminated in the civil war. It is interesting to note that just as the US had broken away from England on a matter of principle, the Confederate States also tried to break away from the Union on a matter of principle. The British had unsuccessfully tried to suppress the revolt. The northern states were successful in their attempt to keep the union intact. The civil war was also a point of change. Afterwards, the US started a concerted effort to colonize all the lands between the eastern half and the Pacific. This was done at the expense of the native american tribes who made treaty after treaty with the government only to find them being repeatedly broken. At the same time, industrialization started on a massive scale. This resulted in the so-called Gilded Age in which there were massive income inequalities. This in turn resulted in attempts to decrease this inequality which was resisted by the newly rich industrialists. The result was repeated massive strikes strongly resisted by the Establishment.

In the 20th century, the first half was dominated by first the Roaring Twenties and then by the Great Depression. The Second World War was a turning point. Afterwards, there was the Cold War on the foreign front and the Great Society domestically. All this culminated in the right wing / big business backlash known as neo-liberalism.

It is this latter issue which has become a problem for the rest of the world. Prior to the 20th century, the US was pre-occupied domestically. Now however, its impact on the world is too great to be ignored. This has had the unfortunate consequence of short-circuiting the development of most of the world. Incidentally, this is a process which started with European colonialism.

Neo Liberalism

Neoliberalism has now been imposed on the world for more than 25 years. The basic tenet of the doctrine is that governments should get out of the way of business and let the private sector be unfettered from any sort of regulation. The idea is that the Market can allocate scarce resources far more efficiently than government. Individuals in their private capacities should be unleashed to earn as much as they can.

On the surface, this doctrine is all about freedom and that is how it is communicated across as. But outward impressions can be deceptive. This doctrine rests on a number of assumptions. First and foremost, despite its claims to the contrary, this doctrine requires a large, strong, centralized government. Markets are touted as magical entities that arise spontaneously once the dead hand of the government is removed. This is total nonsense that has been repeatedly disproved in country after country. The truth is that while markets can operate efficiently and can allocate resources in a manner that reasonably reflects the wishes of the paying public, they require a strong government. In the absence of such, markets degenerate into a free for all in which the consumer is fleeced for all (s)he is worth. Other abuses like insider trading, embezzlement etc. also occur.

A second assumption of this doctrine is that the government can and will enforce private property rights. In the absence of such, markets simply cannot endure in any form. These rights have evolved over time to encompass a wide range of subjects many of which previous generations would have considered to be in the public domain. For example, take the case of basmati rice. A variety that has been grown in certain parts of Pakistan and India for centuries. Yet an American company tried to copyright its genetic structure. Success in this and its enforcement would have meant that farmers who had been growing this for generations would then have had to pay the company in order to keep growing this variety.

So neo liberalism is all about private property and private markets acting in concert to produce economic growth. Since its inception, this doctrine has been touted as not just a cure-all for everyone everywhere. It has been presented as the only viable (indeed the only) economic system. So the natural question is: what is its track record? It is all very well to ask people to endure economic pain in the present in exchange for economic well-being in the future, but for how long is the economic pain to be endured? This doctrine has been imposed on the world for a generation now under the label of "Washington Consensus". This is a long enough time to look back and in doing so, what do we see?

The picture is bleak. As Mr. Noam Chomsky has pointed out in many of his writings and speeches, this doctrine and the agreements that are imposed on countries locks them into a low wage / low growth model. It results in increasing poverty for the majority and increasing affluence for a minority. What is worse is that it tends to squeeze the middle class out of existence. Usually the former middle class people find themselves in the ranks of the poor. This is a disastrous effect because it removes hope for economic advancement. A large middle class gives hope to the poor that one day they or their children can join these ranks. Similarly, the middle class can hope to join the ranks of the more affluent. An absence of a middle class usually means greater repression in the end. Furthermore, the domestic economy shrinks as the bulk of goods and services are consumed be these people.

Up until fairly recently, these negative effects were felt primarily in the lesser developed, peripheral countries. Now however these pernicious effects are being felt in the developed economies as well.