The high cost of neoliberalism

Financial liberalisation undermines democracy, handing power to a “virtual senate” that acts on beha

In the contemporary world of state-capitalist nations, loss of sovereignty can lead to a diminution of democracy, and a decline in the ability of states to conduct social and economic policy on their own terms. History shows that, more often than not, loss of sovereignty leads to liberalisation imposed in the interests of the powerful. In recent years, the regime thus imposed has been called "neoliberalism". It is not a very good term, as the social-economic regime in question is not new; nor is it liberal, at least as the concept was understood by classical liberals. The very design of neoliberal principles is a direct attack on democracy.

The central doctrine of neoliberalism is financial liberalisation, which took off in the early 1970s. Some of its effects are well known. With the increase in speculative capital flows, countries were forced to set aside much larger reserves to protect their currencies from attack. It is striking that countries which maintained capital controls - among them India and China - avoided the worst of the Asian financial crisis of 1997-98.

In the United States, meanwhile, the share of the financial sector in corporate profit rose from just a few per cent in the 1960s to over 30 per cent in 2004. Concentration also increased sharply, thanks largely to the deregulatory zeal of the Clinton administration. By 2009, the share of banking industry assets held by the 20 largest institutions stood at 70 per cent.

Among the consequences of financialisation is the creation of what an analysis by the investment bank Citigroup calls "plutonomy". The bank's analysts describe a world that is dividing into two blocs: the plutonomy and the rest. The US, UK and Canada are the key plutonomies: economies in which growth is powered by - and largely consumed by - the wealthy few. In plutonomies, these rich consumers take a disproportionately large slice of the national pie. Two-thirds of the world's economic growth is driven by consumption, primarily in the pluto­nomies, which monopolise profits as well.

The virtual senate

Citigroup's "plutonomy stock basket" has far outperformed the world index of developed markets since 1985, when the Reagan-Thatcher programmes for enriching the very wealthy were taking off. This is a substantial extension of the "80-20 rule" that is taught in business schools: 20 per cent of your customers provide 80 per cent of the profits, and you may be better off without the other 80 per cent. Corporations recognised years ago that modern information technology allows them to identify profitable customers to whom they can provide grand treatment, while deliberately offering skimpy services to the rest, creating a form of "consumer apartheid".

Financial liberalisation also creates what some international economists have called a "virtual senate" of investors and lenders, who "conduct moment-by-moment referendums" on government policies. If the virtual senate determines that those policies are irrational - meaning that they are designed to benefit people, not profit - then it can exercise its "veto power" by capital flight, attacks on currency and other means. Take one recent example: after Hugo Chávez was elected president of Venezuela, capital flight escalated to the point where assets held abroad by wealthy Venezuelans equalled a fifth of the country's GDP. With capital flow liberalised, governments face a "dual constituency": voters and the virtual senate. And even in the richest countries, the private constituency tends to prevail.

The Bretton Woods system put in place at the end of the Second World War was designed on the understanding that capital controls and regulated currencies would create a space for government action responding to public will - for some measure of democracy, that is. Keynes considered the most important achievement of Bretton Woods to be the establishment of the right of governments to restrict capital movement. In dramatic contrast, in the neoliberal phase that followed, the US treasury department came to regard free capital mobility as a "fundamental right", unlike such alleged rights as those guaranteed by the United Nations Universal Declaration of 1948: to health, education, decent employment and security - entitlements that the Reagan and Bush administrations dismissed as "preposterous", "letters to Santa Claus", mere "myths".

In earlier years, the public had not been much of a problem. In his definitive history of the international monetary system, the economist Barry Eichengreen observes that, in the 19th century, governments had not yet been "politicised by universal male suffrage and the rise of trade unionism and parliamentary labour parties". This meant that the severe costs imposed by the virtual senate of lenders and investors could be transferred to the general population.

But with the radicalisation of the general public during the Great Depression and the anti-fascist war that followed, this luxury was no longer available to private power and wealth. Hence, in the Bretton Woods system, Eichengreen writes, "limits on capital mobility sub­stituted for limits on democracy as a source of insulation from market pressures". It is only necessary to add the obvious corollary: with the dismantling of that system from the 1970s on, functioning democracy was restricted.

Real choices

In Latin America, specialists and polling organisations have, for some time, observed that the extension of formal democracy was accompanied by an increasing disillusionment about democracy and a lack of faith in democratic institutions. A persuasive explanation for these disturbing tendencies was given by the Argentinian political scientist Atilio Boron, who pointed out that the new wave of democratisation in Latin America coincided with neoliberal economic "reforms", which undermine effective democracy. The phenomenon extends worldwide, although it appears that the tendency may have reversed in recent years, with departures from neoliberal orthodoxy.

The annual polls on Latin American opinion by the Chilean polling agency Latinobaró­metro, and their reception in the west, are interesting in this respect. Few elements of the reigning western orthodoxy are upheld with more fervour than the view that Chávez is a tyrant dedicated to the destruction of democracy. The polls are therefore a serious annoyance that have to be overcome by the usual device: suppression.

The November 2007 poll had the same irritating results as in the preceding few years: Venezuela ranked second behind Uruguay in satisfaction with democracy and third in satisfaction with leaders. It ranked first in the assessment of the current and future economic situation, equality and justice, and education standards. True, it ranked only 11th in favouring a market economy but, even with this flaw, overall it ranked highest in Latin America on matters of democracy, justice and optimism, far above the US favourites Colombia, Peru, Mexico and Chile.

The Latin America analyst Mark Turner has written of an "almost total English-speaking blackout about the results of this important snapshot of [Latin American] views and opinions". He also found the usual exception: there were reports of the finding that Chávez is about as unpopular as Bush in Latin America, a fact that will come as little surprise to those who are familiar with the bitterly hostile coverage to which the Venezuelan president is subjected in the media, not least (and this is an odd feature of this putative dictatorship) in his country.

In the US, faith in institutions has been declining steadily. It is interesting to compare recent presidential elections in the richest country in the world and the poorest country in South America, Bolivia. In the 2004 US presidential election, voters had a choice between two men born to wealth and privilege, who attended the same elite university, joined the same secret society where privileged young men are trained to take their place in the ruling class, and were able to run in the election because they were supported by pretty much the same conglomerations of private power. Their announced programmes were similar, consistent with the needs of their primary constituency: wealth and privilege.

By contrast, in the December 2005 election in Bolivia, voters were familiar with the issues: control of resources, cultural rights for the indigenous majority, problems of justice in a complex multi-ethnic society and many others. They eventually chose Evo Morales, someone from their own ranks, and not a representative of narrow sectors of privilege. There was real participation, extending over years of intense struggle and organisation.

Election day was not just a brief interlude for pushing a lever and then retreating to passivity and private concerns, but one phase in ongoing participation in the workings of the society. The comparison, and it is not the only one, raises some questions about where democracy promotion is most needed.

Latin America has real choices, for the first time in its history. The usual modalities of imperial control - violence and economic strangulation - are much more limited than before. There are lively and vibrant popular organisations providing the essential basis for meaningful democracy. Latin American and other former colonies have enormous internal problems and there are sure to be many setbacks, but there are promising developments as well. It is in these parts of the world that today's democratic wave finds its basis and its home. That is why the World Social Forum has met in Porto Alegre, Mumbai, Caracas, Nairobi, not in northern cities, though by now the global forum has spawned many regional and local offshoots, doing valuable work geared to problems of significance in their own regions.

The former colonies, in Latin America in particular, have a better chance than ever before to overcome centuries of subjugation, violence and foreign intervention, which they have so far survived as dependencies with islands of luxury in a sea of misery. These are exciting prospects for Latin America, and if the hopes can be realised, even partially, the results cannot fail to have a large-scale global impact as well.

Extracted from "Hopes and Prospects" by Noam Chomsky (Hamish Hamilton, £18.99)
© Noam Chomsky 2010 penguin.co.uk

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First they came for Pepe: How “ironic” Nazism is taking over the internet

Over the last year, various internet subcultures have embraced Nazi iconography while simultaneously claiming to hold no Nazi beliefs. Why?

There is a scene in Roman Polanski’s critically-acclaimed World War Two film The Pianist in which the Jewish protagonist, played by Adrien Brody, puts on a German soldier’s coat to keep warm.

“Don’t shoot!” he tells the Polish troops who have come to liberate Warsaw. “I’m Polish!” A soldier, realising his mistake, lowers his gun. With disdain on his face, he asks: “Why the fucking coat?”

The chilly hero might not have been acting unreasonably, but neither was the soldier. It's safe to say that in normal circumstances, "Nazi coat" can be used as shorthand for "Nazi person". I found myself asking a similar question last month when I interviewed a “Nazi furry”. The furry (ie. person who dresses as an animal, often for sexual reasons) likes to wear a red armband reminiscent of those worn by the Nazi party. “It’s just a piece of cloth,” he said at the time, insisting he held no far-right views. Then why not choose another piece of cloth? I wondered to myself.

This furry is just one of hundreds of people online who flaunt the iconography of National Socialism whilst denying they hold any Nazi views. If that doesn’t make sense, it shouldn’t. “Ironic” Nazism, “satirical” Nazism, and “just joking” Nazism have taken over the internet. Who is behind it, what are they doing, and how did it begin?

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Unfortunately, it is probably Hillary Clinton’s fault. In September 2016, the presidential hopeful’s website declared popular internet meme Pepe the Frog to be a white supremacist symbol. If we ignore that this has now become a self-fulfilling prophecy (racists embraced Pepe after the Anti-Defamation League chimed in and officially declared the meme a hate symbol), this was a frankly ridiculous assertion.

“We've won folks... My God ...We've won,” read a post on r/TheDonald – the Reddit hub for Donald Trump supporters – after the news. They didn't hold back with their disdain. “This makes her look absolutely retarded to anyone young enough to be on the internet,” read the top comment. Why? White supremacists were undoubtedly already using the meme – many on the notoriously politically incorrect 4Chan board /pol/ had emblazoned the frog with swastikas. So why wasn’t it, in turn, a white supremacist symbol?

The answer to this is irony. Layers and layers of it slathered with thick, glutinous nonsense that form a Bruce Bogtrotter’s cake that is impossible to digest. You and I are what 4Chan would pejoratively call “normies”, i.e. normal people. We can’t possibly hope to understand the difference between someone on 4Chan who holds sincere Nazi beliefs and someone who is shouting “Death to all Jews” for the keks (see glossary), like a toddler who has just learnt the word “poo”.

This doesn’t normally matter – we can just ignore them – but Clinton’s post gave them the legitimacy and media attention that they craved.

It also, I would argue, set off a new internet trend. Angry at liberals labelling everything (most notably, the alt-right) “Nazis”, fringe internet communities decided to fight back. The logic – if it can be called that – went like this:

“Let’s dress like Nazis and act like Nazis so that liberals call us Nazis when we’re not! That will show just how stupid these liberals are!”

***

“The press, the media, does not deserve to have a consistent picture of reality presented to them.”

These are the words of Qu Qu, a man in his late twenties who considers himself the leader of the “alt furry” movement, who is speaking to me over Twitter. Alt furries are furries who have embraced far-right messages and Nazi iconography on the social network. Some wear armbands, others write erotic Nazi literature, some tweet anti-Semitic jokes. When I spoke to some last month, I was shocked when only one of them actually admitted to holding Nazi views. Many claimed they were being “ironic” or fighting back at what they consider to be left-wing intolerance.

“If the press becomes obsessed with a moral panic, such as the one about the resurgence of National Socialism, it is the duty of every subculture to feed that paranoia until its absurdity becomes plain for all to see.”

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Earlier this week, the king of this logic died.

PewDiePie – the most subscribed content creator on YouTube – was dropped by Disney after the Wall Street Journal exposed an array of anti-Semitic comments in his videos. In the past, he has spoken out against the media for misrepresenting his “jokes”, but this time he wrote a blog post in which he admitted: “I understand that these jokes were ultimately offensive.” What changed?

What changed is that PewDiePie was confronted with a reality that anti-hate campaigners have long since known to be true. After his anti-Semitic videos, PewDiePie was embraced by the neo-Nazi website The Daily Stormer, which is now calling itself “The world’s #1 PewDiePie Fansite.” PewDiePie has learnt a truth that many of the “just joking” brigade frequently try to deny – that satire, irony, and jokes can validate and legitimise hate speech in a way that helps it to spread.

“Pushing out anti-Semitic tropes has consequences in the real world,” says a spokesperson for anti-racism organisation Hope Not Hate. “PewDiePie may or may not believe this stuff himself, but he does need to understand that he has an effect on the world, and that racists and haters can sometimes act on the words and memes that are shared so readily on social channels, and – with soaring hate crime rates – already have.”

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Then they came for Trash Dove.

The head-banging purple pigeon is a Facebook sticker (a picture users can post in the social network’s comment sections) that went viral this week. In response, 4Chan started “Operation Nazi Bird”, a satirical campaign to turn the meme into a Nazi symbol. The aim was to trick the left.

This started to work when a self-described philosopher known as Quincy Frey wrote a satirical Medium post (which has since been removed after a copyright claim) declaring Trash Dove to be an “alt-right” symbol. When people began to fall for this, 4Chan won. Yet so too – as Hope Not Hate argue – did actual white supremacists.

“What started as irony will now actually spread and this will become a ‘Nazi hate’ symbol whether we like it or not,” Quincy Frey tells me. “The alt-righters from 4Chan work in a funny way; it always starts ironic but they seem to take irony to the next level and then these idiots become brainwashed… eventually their sickness will spread.”

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Which leaves us with a question that regrettably summarises today’s state of affairs: are ironic Nazis as dangerous as real Nazis?

Simon Johnson, the chief executive of the Jewish Leadership Council, seems to think so. “It is difficult to understand how people can use Holocaust language, imagery or comments and think that it is a joke,” he says. “The French comedian Dieudonne uses the Quenelle gesture and other supposedly humorous Holocaust imagery, as well as dressing cast members in concentration camp uniforms, as part of his act." The Quenelle gesture was an originally jokey gesture which has grown to be considered anti-Semitic after individuals posed in front of Jewish institutions holding the stance. In December 2013, French President François Hollande reacted to the gesture, saying: "We will fight against the sarcasm of those who purport to be humorists but are actually professional anti-Semites.”

Johnson agrees it is important to tackle this alleged comedy. "For many this demeans the Holocaust and would be considered anti-Semitism. Allowing these acts to continue perpetuates myths and often leads prejudice against the Jewish community.”

It is also important to note that many who claim to be “satirical” Nazis are simply hiding behind a thin veil of plausible deniability. The word “irony” – however incorrectly it’s being used – allows them to spread Nazi messages and iconography whilst denying culpability. It also leaves many on the left unsure where they stand. What’s more important: combatting hate speech or protecting free speech?

Kassie is a 31-year-old graduate student who reached out to me after being mocked for taking Trash Dove seriously as an alt-right symbol - proving that online trends can have real-world consequences. “My friend is liberal but thinks I'm overreacting and don't understand satire,” she tells me. “But I don't get why I have to call Nazi jokes satire.

“The most frustrating part is that my concern is immediately written off as stupid because I don't belong to the community. If we get past that part, then I'm overreacting or dumb because I don't get that it's ironic or I don't understand that it's a joke. But I get that on some level people are saying that it's a joke, and some are ‘just joking’ and I still think that a joke can be racist and misogynist and alt-right or whatever.

“I'm just left with feeling like I've fallen down a hole of ironic devils advocates who use that as an excuse to say ‘funny’ racist and misogynistic things.”

***

When Prince Harry donned a Nazi uniform for a fancy dress party in 2005, no one thought he was actually a fan of Hitler. If ironic Nazis had emerged twelve years ago, they might have been given the same benefit of the doubt by being considered poor taste but not ultimately racist. Yet context is key. In an era when the President of the United States wants a registry of Muslim citizens, and fascism appears to be on the rise across Europe, no one who is “just joking” – not furries, YouTubers, or 4Channers – can be annoyed if the media labels them Nazis.

I do agree that fundamentally it is important to combat the left’s tendency to label everything right-wing “Nazi” or “racist”. Internet subcultures are not wrong to attempt to challenge this and other examples of left-wing extremes. Yet if this is what they really want, then one - very pressing - question remains. Why the fucking coat? 

Amelia Tait is a technology and digital culture writer at the New Statesman.