N eoliberal economic policy—the framework of measures that preaches market fundamentalism but uses the state to engineer a redistribution of income and assets in favour of finance capital and big business—has lost its legitimacy. A huge financial crisis and a decade of recession or low growth, which hurt most sections except the elite 1 per cent, have convinced the majority of people in many countries that neoliberalism is no alternative. That change in mood was revealed by the Brexit vote and the Donald Trump victory, among other developments.
However, this has not set back but has unleashed a new aggression on the part of the neoliberal elite, which fears that the state may be captured by forces that not merely promise but actually implement, in idiosyncratic ways, a dismantling of its preferred policy framework.
Across the world, big business is attempting to influence economic decision-making in ways that can save the neoliberal project from collapse.
The political challenge to neoliberalism comes from two directions. One is from the Left, which is weak in most contexts but still present in others. The other is from the extreme Right, which senses that the best way to rise to power is to appeal to sections marginalised by the neoliberal wave. If this had been mere rhetoric, there would be no real cause for concern for the elite. But once even Trump, who rose to power by appealing to the alienated majority, chose to rail against globalised capital and implement protectionist policies, it became clear that the threat from the Right was real.
As of now, there is little that big capital can do to deal with the likes of Trump presiding over the world’s most powerful capitalist nation. So, elite aggression has been directed at the Right or the Left elsewhere as they seek to challenge the basic tenets of neoliberalism.
Consider, for example, Mexico, preparing for an election in July, where a poll of polls has predicted that Lopez Obrador, a candidate with a clear leftist agenda who is contesting for the third time since 2006, has a clear edge, with 44 per cent of the vote. Obrador, or “Amlo” as he is popularly called, comes with a pro-poor, redistributive agenda, which includes reorienting Mexico’s excessively pro-big business policy environment. He has vowed to take on “the mafia of the powerful” and put an end to the “long dark night of neoliberalism”.
In response, big business leaders have chosen to come out openly against Amlo, in the hope that their opinion matters to their employees, shareholders and the population at large. In multiple letters, the heads of many business groups have chosen to caution employees, shareholders and voters against what they claim would be the catastrophic consequences of voting Obrador to power and allowing him to implement his “populist” policies. They include Grupo Mexico, a mining, rail and infrastructure conglomerate; Femsa, the Coca-Cola bottling company; Grupo Herdez, a food company; Grupo Vasconia, a manufacturer of aluminium, tin and kitchen products; and Grupo Chihuahua, a construction company.
In his letter to employees and shareholders, German Larrea, the chief executive of Grupo Mexico, warned that Mexicans had “recently heard worrying proposals of nationalising companies, scrapping the energy and education reforms among other ideas that would turn the clock back decades to an economic model that has been more than proven not to work”, as had been illustrated by the experiences of “Venezuela, Argentina, Cuba, the former Soviet Union, among others”.
The message was clear: Pro-poor “populist” policies that aim to reverse the regressive redistribution of income and assets to a small minority of the rich would not work and would have damaging consequences for growth and development. However, in the words of Jose Ramon Elizondo, head of Grupo Vasconia, since everybody was “very mad at politicians because of corruption, impunity, insecurity, poor services and the lack of opportunities”, there is a real danger that that anger could cloud popular judgment “and could lead us [the country] down the road of populism”.
This kind of aggressive campaigning against politicians and parties that could in any way undermine the comfortable run that neoliberalism has had over the last four decades took a bizarre turn in Italy, where a divisive vote forced the right-of-centre, eccentric Five Star Movement and the Far-Right party League to come together and stake a claim to form a government on the basis of a clear majority of seats.
At the centre of this coalition’s programme is a rejection of the policy framework being imposed on European Union (E.U.) member-countries by European Commission (E.C.) bureaucrats implementing the corporate-driven, neoliberal E.U. agenda. In what was seen as a declaration of intent to pursue that programme, Matteo Salvini, leader of the League, and Luigi Di Maio, leader of the Five Star Movement, nominated Paolo Savona, a known Eurosceptic, as Finance Minister. Being in a position to form the government, the two parties had a right to choose their Cabinet and the portfolios of different Ministers.
However, even while allowing the coalition to form a government, Italian President Sergio Mattarella refused to swear in one that was to be headed by Giuseppe Conte, the Prime Minister-designate of the coalition, as long as Savona was named Finance Minister. When the Five Star Movement and the League threatened to withdraw their offer to form a government, which would have precipitated an election in which the League was widely expected to strengthen its position, Mattarella stuck to his guns and decided to put in place a stopgap government to be headed by a Prime Minister nominated by him—Carlo Cottarelli, a former senior International Monetary Fund (IMF) official.
The recourse to ex-IMF and World Bank employees to head governments in periods of political uncertainty has been heard of in developing countries. But this was unusual in a developed country context. Clearly, Mattarella was serving the interests of those wanting to protect the currently operative E.U. framework. The pressure, clearly exerted by forces bigger than Mattarella, was so strong that both the Five Star Movement and the League relented and shifted Savona out of the finance ministerial position, which was handed over to a nominee seen as less of an opponent of the European “compact”.
What was at issue in this bizarre and anti-democratic standoff was not the xenophobia and anti-immigration rhetoric of the League but the threat to the E.U. framework on which European neoliberalism rests. And here, too, the case sought to be made against the rightist coalition’s opposition to the regressive economic and social policies imposed on E.U. members from Brussels was that populist rejection of sensible economic “discipline” was disastrous for Italy and its people.
However, the real reason for the opposition to Savona was the fear, not necessarily well-founded, that he would begin to undermine the neoliberal, corporate-led globalisation framework to which nations are tied by the principles of E.U. agreements.
One challenge that this elite aggression has to address is the loss of legitimacy of and support for forces advocating neoliberalism. The neoliberal propaganda machine attributes this apparent loss of legitimacy to the misdirected turn to “populism” of citizens confronted with government failure. Jose Ramon Elizondo of Grupo Vasconia, for example, attributed the turn to populism to people being “mad at politicians because of corruption, impunity, insecurity, poor services and the lack of opportunities”.
In Mexico, and much of Latin America too, the turn away from establishment politicians and parties is attributed to corruption, impunity and the inability to combat crime. The aim of such explanations is to deny that popular anger and protest are triggered by the inequalising, marginalising and exclusionary effects of neoliberalism itself.
There remains the issue as to why politicians such as Mattarella are willing to so brazenly advance the interest of a financial and corporate elite bent on protecting the neoliberal framework even when it could prove politically damaging. One reason is of course the capture of representative democracy, given the need for huge contributions across the world to finance party propaganda and election campaigns. The other is a possible corrupt nexus between big business and politicians. As the Brazilian case illustrates, the journey from mobilising contributions for elections to corruption can be short.
For big business, the collaboration with politicians, parties and the state results in a willingness to subsume under the neoliberal class project of income and asset redistribution all other issues in order to mobilise in its favour defenders of the project.
Thus, while there was business opposition to a Eurosceptic Finance Minister, there is no similar opposition being expressed about the xenophobia, penchant for violent racism and fascist ant-immigrant platform of the League. This only emboldens the Far Right, which uses a divisive platform to mobilise political support, even while retreating on its promise to end the damaging EU project.
The Far-Right leader Matteo Salvini, who now serves as Interior Minister in the Italian Cabinet, has already called for a census of the country’s Roma population to determine undocumented foreigners and deport them.
On the other hand, the Five Star Movement, which was reportedly not pleased with Salvini’s statements about the Roma, is not able to advance its anti-establishment and anti-E.U. agenda.
In India, too, this kind of a nexus between big business and politics is visible. The former lauds the Narendra Modi government for its embrace of neoliberalism and complains when it feels that “reform” is slowing or that the monitoring and regulation of big capital is holding back the neoliberal project of extracting large surpluses.
On the other hand, big business and the media it increasingly controls are unwilling to criticise and oppose the aggressive and violent majoritarian politics that the Rashtriya Swayamsewak Sangh (RSS), the Bharatiya Janata Party and their associated organisations are known to pursue. If such politics can deliver votes, even when inequalising economic policies are adopted, it only suits the interests of finance and big business.
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