The failures and excuses of the Shock Doctrine policies and rhetoric…

David Davis has proclaimed that the Coalition’s slash and burn approach to the economy, as the UK is in another recession, with welfare, benefits, education, pensions, health care, amongst numerous other things attacked, hasn’t gone far enough. In departmental cuts that Thatcher didn’t even dare implement, Davis slams the so-called timid approach of the government. He calls for a shock therapy/doctrine approach to the economy, with further tax cuts (presumably heavily focused for those at the top) and further cuts to spending. As borrowing levels go higher and higher, more than estimated by Labour, the neoliberal shock therapy approach has already been shown to fail especially when they are attacking a debt level that is historically not that unprecedented (debt was around 250% of GDP after the 2WW and is now currently around 60%) alongside the UK not being massively exposed to foreign markets like countries such as Greece and Spain to over valued credit. Furthermore, this country’s debt levels relative to other countries is also not that great.

There are two key case studies that can be cited here to provide evidence against this argument that the Shock Doctrine is the right way for Britain. Yes, case studies have their own context, but the general trend of what has gone wrong applies to the UK:

  1. Russia after the collapse of the Soviet Union. I have blogged about this beforeillustrating that Russia’s current problems have links to the capitalist shock tactics that were brought in following the collapse of the Soviet Union under Yeltsin’s and the Russian Chicago Boys’ guise. Despite Gorbachev being on path to liberalising the economy and political scene, it wasn’t good enough. Now after years of devastation many Russians are nostalgic for Soviet Russia given the security and safety net such a system provided them. For Yeltsin and the Boys, democratic reforms were a hindrance to neoliberal economic reform with the Constitutional Crisis a key example of this. Essentially, as I explained in the blog:“Naomi Klein’s shock doctrine analysis is a well known and very comprehensive report of what happened to Russia in the 1990s, after the public were still in a state of shock after the collapse of the Union. This allowed Yeltsin to push through his radical reforms quickly and painfully. In 1998, the economy collapsed with real incomes shrinking quickly and living standards at unprecedented lows; there was 74 million, compared to 2 million in 1989, living in poverty, alongside mass unemployment, rapidly increasing substance abuse with the population levels drastically decreasing. The UN Human Development Plan called this “a human crisis of monumental proportions”.”
  2. The European Crisis. I have also blogged about the larger context to this crisis. I am fed up of having people say something along the lines of “The Greeks deserved it” – this ignores the context and mechanisms of those at the top that have created dire situations and living conditions for so many ordinary Greek citizens who did not benefit from the inflow of excessive overrated credit. Europe’s response has involved the tightening of already existing debt and deficit levels on countries, which is only making the situation worse. This ignores it was a well-known fact amongst leaders that Greece was not meeting these conditions before their access into the Euro (but nor was Germany meeting the deficit requirements in 1994; 1996; 2003-2006; 2009 and onwards; alongside breaking the debt limit since 2003) and they actually created a loophole for Greece to access the Euro, alongside Goldman Sachs’ helping Greece cover their true economic situation; but it was this that also allowed them to get access to over valued credit so key to their destruction once the crisis hit.

What is often used as an excuse for these neoliberal spending cuts and tax cuts for the rich is that without it we will see a brain drain and investment and economic growth will suffer. This ignores facts. For one, there is more evidence of regionalisation, rather than globalisation – with global economic integration not being historically unique. The idea that governments are powerless against some forces such as larger corporations helps states with policies such as those inflicted upon Russia and Greece because without them, the rulers say, their economies would be unattractive and people’s futures would be destroyed. This ignores the fact that for the ordinary person, like what is happening in the UK now, it is precisely these shock doctrine policies that are destroying people’s living conditions and lives. There has been a considerable amount of shock therapy inflicted upon UK citizens already, Davis just wants it intensified.

There needs to be more focus on the issue of regionalisation, for example:

In Monetary Union, Fiscal Crisis and the Preemption of Democracy, Scharpf (2011) refers to the problems of underlying structural and institutional differences of countries creating issues with European economic convergence alongside the problem of monetary policies not being tailored to specific national contexts. This is key when understanding what has happened to the so-called GIPS economies (Greece, Ireland, Portugal, Spain)

Here there is a regional problem that needs addressing in terms of the Euro and the way it is structured and framed given its lack of political transparency and democratic accountability. For instance, there is concern that whilst the introduced European Excessive Imbalance Procedure recognises the problems of imbalances between economies it may also make it easier for Europe to push through neoliberal reform in countries under the facade of pitching to help correct imbalances.

Essentially, the idea that cuts for the rich and in public spending, alongside leaving the massive imbalances and unfairness in the tax, credit, banking and financial sectors alone is a good thing for society does not meet the facts, as shown in the two case studies used above. David Davis can try to argue that the government is not doing enough cuts, but that is elitist (edit: but as a reader of this blog has pointed out, it would be wrong to argue this is the same type of elitism of Cameron and Osborne, given Davis’s different background), out of touch bullshit. Ordinary people around the world are paying the price for greed and profit driven credit imbalances and bonus obsessions of the 1%, we are paying for the private debt being turned into public debt, and we are paying hard. No excuse, including the often purported excuse of globalisation, can be used when trying to defend such inhuman and sadistic policies.

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3 responses to “The failures and excuses of the Shock Doctrine policies and rhetoric…

    • Hey,

      Thanks for this!

      Nope, I haven’t stopped blogging – I just have a lot less time to blog because of MA, work and other commitments! I wish I could blog a lot more but it tends to be when I can muster the time.

  1. Pingback: Terrorism, State Terrorism and Political Economy… « Jane's Political Ramblings·

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