FICHAM. - Gerard-Dumenil-Dominique-Levy-The-Crisis-of-Neoliberalism Introd.

Neoliberalism is a new stage of capitalism t hat emerged in the wake of the stru ctural crisis of the 1 970s. It expresses the strategy of the capitalist classes in alliance with upper management, specifically financial managers, intending t o strengthen their hegemony and to expand it globally. [..] this strategy appear ed successful, based on its own objectives, the income and wealth of a privilege d mi nority, and the dom inance of a country. The contemporary crisis is an outc ome of t he contradictions in herent in that strategy. The crisis revealed the s trategy's unsustainable character, leading to what can be denoted as the "crisis of neoliberalism". A New Social O rder-A M u ltipolar World The crisis of neoliberalism is the fourth structural crisis in capitalism since the late nineteenth century. Each of these earthquakes introduced the establishm ent of a new social order and deeply altered i nternational relations. Neoliberalism as Class Hegemony- I m perial ism in Neoliberal G loba l ization The greater concentration of i ncome in favor of a privi leged m i nority was a crucial ach ievement of the new social order. [...]The new configuration of inc ome distribution was the outcome of various converging t rends. Strong pressure was placed on the mass of salaried workers, wh ich helped restore profit rates f rom thei r low levels of the 1970s or, at least, to put an end to their downward t rend. Neol iberal ism corrected for the earlier decl i ne of the leadership of the Uni ted States in the 1 970s, at least vis-a-vis Europe and Japan . The U. S. econom y is sti ll the largest in the world in terms of gross domestic product (GOP), w ith a leadership in fields as i mportant as research and i n novation, both i n production and fi nancial mechanisms. As a consequence, the dollar is acknowledg ed as the i nternat ional currency. As in any stage of imperialism, the major instruments of these international power relations, beyond straightforward economic violence, are corruption, subversion, and war. The main political tool is always the establish ment of a local imperial-friendly government. The collaboration of the el ites of the domi nated country is crucial, as well as, in contemporary capita lism, the action of international institutions such as the North Atlantic Treaty Organization (NATO), the I nternational Monetary Fund (IMF), the World Bank (WB), and the World Trade Organization (WTO). Economically, the purpose of this domi nation is the extraction of a "surplus" through the imposition of low prices of natural resources and investment abroad, be it portfolio or foreign direct investment. That countries of the periphery want to sell their natural resources and are eager to receive foreign investment does not change the nature of the relations of domination, just as when, with in a given country, workers want to sell their labor power, the ulti mate source of profit. hegemony and domination - I n each instance, a class or country leads a process of dom ination in wh ich various agents are i nvolved. neoliberalism, the upper fractions of capitalist classes, supported by l institutions, act as leaders within the broader group of upper classes the exercise of their common domination . Similarly, the United States In fi nancia in acts

as leader within the broader group of imperialist cou ntries. A H i storical Pe rspective: Modern Ca pita l ism neoliberalism = the latest phase of capitalism Moderno capitalismo, para eles, compreende a assimilao, por esse sisema, das "revo lues" das fusoes e incorporaes, do final do sex. XIX, financeira e gerencial. Nessa nova configurao, as empresas individuais perdem relevancia para as megocorporaoes e os conglomerados. Powe r Co nfi g u rations and Their Class Foundatio n s Neoliberalism is the latest of the t h ree social orders that jointly constitute modern capitalism. The fi rst and third-respectively, from the turn of the twen tieth centu ry to the New Deal, and since the early 1 980s-can be called a "fi rst" and a "second fi nancial hegemony." Financial hegemony, as used here, refers to the fact that capitalist classes-actually Fi nance, the upper fraction of capitalist classes and financial institutions-benefit from a rather unchecked capability to lead the economy and society in general, in accordance with their own interests or what they perceive as such. This is, somehow, a "normal " situation in modern capital ism, and the capitalism of the fi rst postwar decades, from the New Deal to the late 1 9 70s, during which this power was dimin ished, stands out as an exception . a major crisis destabi lized these social patterns: the structural crisis of the 1 970s. The crisis was the consequence of the downward trend of the profit rate and the cumulative inflation rates in which economic tensions were expressed., and created the conditions for the imposition of neoliberal ism. Neoliberalism as a second fina ncial hegemony. The transformat ion was, however, broad and radical . A fi rst aspect was a new h igh management or, equ ivalently, corporate governance. Neol iberal ism released the freedom of enterprises to act, the al leged return to a "market economy" (a euphem ism for u nbou nded capital ist dynamics, domestically and i nternational ly). In l i ne with this ideology of the market, neol iberal ism p romoted deregu lation i n every field, part icularly of fi nancial mechanisms. It i mposed strong macro policies aiming at the protection of lenders by the i mposition of price stability, and the ope n i ng of t rade and capital frontiers. Each of the above achievements was consistent with the i nterests of the upper classes, that is, the maximizati on of h igh incomes. The purchasing power of workers was contai ned, the world was opened to transnational corporations, the rising government and household debts were a source of large flows of i nterest, and fi nancialization al lowed for gigantic incomes (wages, bonuses, exercised stock options, and dividends) i n the fi nancial sector. The hegemony of the upper classes was deliberately restored, a return to fi nancial hegemony. A neoliberal ideology emerged, the expression of the class objectives of neolibera lism. This ideology was a crucial political tool in the establ ishment of neol iberalism. Structu ra l C rises: Profita bil ity a n d Fin ancial Hegemony The three phases in the history of modern capita lism were punctuated by

the occurrence of last i ng a nd deep crises, denoted here as "st ructural crises." They a re the crisis of the 1890s, the Great Depression, the crisis of the 1 970s, and the crisis of neoliberalism culmi nating i n the Great Contra ction. 6 Structural crises a re the combined outcomes of the i nternal contradictions of each social order and class struggle. They mark sharp breaks i n the h istory of capitalism but do not change u nderlying evolut ions. Ambitions and Contrad ictions of the U . S. Domestic and I nternational Neoliber al Strategy contradictions: I. The dizzy dynam ics of the quest for h igh income. Neol iberal ism is a social order ai med at the generation of income for the upper i ncome brackets, not i nvestment in production nor, even less, social progress. I n countries of t h e center, domestic capital accumulation was sacri ficed i n favor o f i ncome distribution benefiting t h e upper classes. Notably, U. S. neoliberal ism meant a de-territorialization (t ransfer outside of a territory) of production to the benefit of a number of economies of the periphery. The origi nal bet was that the countries of the center would gradually transform themselves i nto services economies, sti l l concentrating a nu mber of activities where knowledge, education, and research are crucial, and supplying the world with fi nancial services. The socal led i ntel lectual property would, of cou rse, be protected. Above a l l , these econom ies were supposed t o become fi nancial centers. 2 . The impaired capability to govern the macroeconomy. 3. Forging ahead at the cost of a trajectory of declining accumula tion and perilous cumula tive disequ ilibria. Exempt from the requ i rement of balancing their extern al t rade as a result of their global hegemony, i ncludi ng the role of t he dollar as i nternational currency, the Un ited States pushed the process of i nternat ionalization of commodity production to unprecedented levels. There were two aspects to these mechan isms. On the one hand, accumulation rates i n the U. S. domestic economy followed a downward trend. On the other hand, the rise of consumption demand resulted i n the upward trends of i mports and growing t rade deficits. A consequence of these tendencies is that the normal use of productive capacity and the corresponding levels of growth rates i n the United States had to be mai ntained at the cost of a strong sti mulation of domestic demand. This stimulus was based on the surging i ndebtedness of households, which fueled the corresponding boom in residential investment. This result was only achieved at the cost of perilous and risky financial innovations Judged by its own class objectives, neoliberalism was an unquestionable success prior to the present crisis. There were important social resistances i n the countries of the center, for example, to maintain a degree of wel fare protection. There was also resistance around the world as i n Latin America, a reaction t o t h e devastation caused b y neoliberalism. This did not cha nge, however, the fact that everywhere the i ncome and wealth of the wealthiest segments of the population increased t remendously.

I. THE STRATEGY OF THE U.S. UPPER CLASSES IN NEOLIBE RALISM: THE SUCCESS AND FAILU RE OF A BOLD ENDEAVOR The Historical Dynamics of Hegemony 7 2 Anatomy of a Crisis 33 II. THE SECON D REIGN OF FINANCE: CLASSES AND FINANCIAL INSTITUTIONS

3 The Benefit of Upper Income Brackets 45 4 The Apotheosis of Capital 55 Ill. A TRIPOLAR CLASS CON FIGURATION: BREAKING WAG E-EARNING HOMOGENEITY 5 The Managerial and Popular Classes 73 6 A Theoretical Framework 90

ANOTAES SOBRE O CAPITALISMO RECENTE E A REESTRUTURAO PRODUTIVA NO BRASil