I wonder if they will accept donations denominated in Airmiles?

by Daniel on August 1, 2008

Milton Friedman probably does deserve to have an institute named after him – he was one of the really big figures of 20th century economics, and even if he was much less of a principled libertarian thinker than his hagiographers like to pretend, it’s rather silly for the faculty of the University of Chicago to start acting like they’ve only just noticed that their university is famous for a particular school of economic thought that was founded by Milton Friedman. But I can’t help noticing that John Cochrane’s open letter[1] in response to the petition against founding a Milton Friedman Institute contains one of the canonical claims of Globollocks:

” I can think of lots of words to describe what’s going on in, say, China and India, as well as what happened previously to countries that adopted the ‘neoliberal global order’ […] But honestly, do we really yearn to send a billion Chinese back to their ‘local economies,’ trying to eke a meager living out of a quarter acre of rice paddy, under the iron grip of some local bureaucrat? […] Still, if you start with the premise that the last 40 or so years, including the fall of communism, and the opening of China and India are ‘negative for much of the world’s population,’ you just don’t have any business being a social scientist […]”

Yup, it’s the old game of “makes extravagant claims of success for neoliberal policies which on closer analysis are almost entirely dependent on economic growth in China”. Now one can debate this way and that the extent to which China is a success story and how much emphasis should be put on Chinese economic growth in the context of global inequality. But the fact is that the political and economic system of China is socialism with Chinese characteristics; it is not a liberal society in any way, shape or form (by the way, Cochrane appears to be about 400 million out in his estimate of the urban population of China). China has done very well out of managed opening of its markets and out of introducing capitalism into its domestic economy, but it hasn’t followed anything like the kind of policy agenda that’s described by neoliberalism, and it’s still a very unfree society in political terms.

And this isn’t just a cheap gotcha, because the question of the relationship between the capitalist mode of production and political freedom is pretty important if what we’re talking about is the intellectual legacy of Milton Friedman and the Chicago School. As anyone who has google and can spell the word “Pinochet” will be able to tell you. If Cochrane is representative of the University of Chicago economics faculty (he says that he’s speaking purely for himself, but he seems to have gathered widespread endorsement), and we’re to take seriously the idea that the recent history of China is something that the proposed Milton Friedman Institute will be endorsing, analyzing, etc, then that’s quite a radical reassessment of the fundamental political basis of Chicago libertarianism.

Which, in turn, is something that I’d say is entirely worth studying more seriously; what is the intellectual journey that took the Davos crowd from laissez-faire via free trade and the WTO, to regarding China as a success story? And how does it tie in to whatever Friedman et al thought they were playing at in 1970s Chile? So perhaps the anti-MFI petitioners have a point in suggesting that the University of Chicago ought to match the creation of the Milton Friedman Institute with some money for alternative lines of research. I suggest that next door to the Milton Friedman Institute, they ought to set up the Thomas L Friedman Institute For The Study Of Globollocks.

[1] Which is not particularly well-written and I’ve no idea why so many people are calling it a “fantastic polemic” – you could click randomly on a list of right wing blogs and have at least a 50% chance of finding a better cliche-ridden philippic against those terrible left-wing academicessess. I suspect it’s the Milton Friedman Reality Distortion Field Generator, the same strange psychophysical device that makes people believe that Friedman was a principled opponent of the PATRIOT Act and never really knew what Pinochet was planning when he recommended that trade union rights should be removed. The MFRDFG is powered by fifty per cent fear of being redbaited and fifty per cent disdain for dirty fucking hippies, and I’d regard it as a harmless intellectual defence mechanism if it didn’t generate industrial pollution in the form of toxic criticisms of JK Galbraith and/or Paul Sweezy.

{ 132 comments }

1

Dave 08.01.08 at 10:25 am

Nice fact-free assertion of antisemitism in there too: “This view has a particularly dark history. I’ll give you a hint: “Globalized capital” has names like Goldman and Sachs. “

2

conchis 08.01.08 at 10:29 am

Hear hear. (For someone who craps on about others’ prose so much, Cochrane’s is pretty damn awful too.)

3

pushmedia1 08.01.08 at 11:13 am

“makes extravagant claims of success for neoliberal policies which on closer analysis are almost entirely dependent on economic growth in China”

Growth in world GDP per capita (minus China) from 1978 to 2003: 145%

“[China] hasn’t followed anything like the kind of policy agenda that’s described by neoliberalism”

China’s growth rate averaged 6% from 1953 (the year of the first 5 year plan) to 1977 (the year Deng Xiaoping delivered his speech on the Four Modernizations). This is large by comparison to the US today, but the relevant comparison is with Japan of the same era which saw 11% annual growth. From 1978 to 2003, after liberalization began, the growth rate in China averaged 12%.

The Four Modernizations and other early reforms consisted of removing price controls on agriculture, opening foreign capital flows, reinstating the University system and increased defense spending. The Washington Consensus policy recommendations included the elimination of price controls, public investment in growth promoting sectors like education, liberalization of capital flows, deregulation and privatization. These lists seem very similar to me (especially when one includes later episodes of privatization in China).

Is it your contention that China became more socialist after Mao’s death? My reading of the history is that “China has done very well out of managed opening of its markets and out of introducing capitalism into its domestic economy” because of its implementation of neoliberal policies.

4

david 08.01.08 at 11:28 am

Nicely put.

I like Cochrane’s deep concern for the truth, in a letter trying to claim that the Milton Friedman Institute won’t be a home for reactionaries, even though it’s clearly been designed as a home for reactionaries. I wouldn’t want the Hoover Institution as part of my school — of course the smart people at Chicago feel the same way.

5

Luis Enrique 08.01.08 at 11:35 am

Hear hear too, in the main… although Cochrane’s attempted pillory isn’t entirely unsuccessful, globollocks notwithstanding. As a would-be left-wing academic myself, I think that petition is an embarressment to left-wing academia, both because it’s badly written and because of the Naomi Klien world-view it displays. I can’t quite figure out from this post whether you do too… I mean, this is a philippic against a particular set of terrible left-wing academicessess with some justification, isn’t it?

(Not that you’re guilty of it, but there is a kind of mirror globollocks, which is when those who are anti-free markets to the same degree as Friedman was for’em try to use China as evidence for their position too. This is by the bye)

6

pushmedia1 08.01.08 at 11:41 am

Oops. Got my math wrong: world gdp person (without China) is up 206% between 1978 and 2003.

And if you’re curious, remove India too and gdp per person is up 193%.

World gdp per person is up 258%. So the whole world is seeing 5.2% growth rates and everyone but China and India is seeing 4.4% growth rates.

7

Daniel 08.01.08 at 11:47 am

I think it’s a pretty stupid petition, frankly. As I say above, it is not as if the University of Chicago’s international reputation in economics is going to be based on this centre, and the suggestion of alternative cash elsewhere is a pretty blatant bit of cashing in. I disagree on the “Naomi Klein worldview” thing – I think they actually score a few palpable hits, in that if the MFI sets itself up to be the global tribune of the Washington Consensus, ten years after the baht devaluation, then it’s going to be a great big sticky embarrassment for the university. But AFAIAA that’s not the plan at all, and this petition just really looks like rather ungenerous carping that they wouldn’t have dared to do while MF was alive.

Disagree on your second paragraph btw; China is a perfectly legitimate example for antiglobos to use, in the same way in which Hong Kong or Singapore are absolutely legitimate examples for Friedmanites.

8

Luis Enrique 08.01.08 at 12:16 pm

Well, perhaps you take a more generous view of Naomi Kleinites than I do, and I more more generous view of Friedmanites than you do. Passages like “neoliberal global order … [leanding to a] weakening of a number of struggling local economies in the service of globalized capital … the substitution of monetization for democratization…” do not reveal a clear-eyed view of recent global economic history, imho. Too much Klein, not enough Rodrik.

On that second para, that’s not quite what I meant: I think the lessons to draw from China are quite nuanced, so just as China cannot be cited to support an extreme pro-free market position, it cannot be cited to support its converse either. So when you write ‘antiglobos’ I am trying to draw a distinction between sensible and silly antiglobos, (like, say, between Rodrik and Klein, again) as I might between sensible and silly free-marketeers, my point being that both the silly types try to recruit China to their cause – so the globollocks you identify has a mirror.

9

MDHinton 08.01.08 at 12:59 pm

Whatever your economic politics, if you can see past your prejudice, pretty well everything Cochrane says is true. Of course, that’s not the whole story but the petition is awful. I particularly like the ‘virtually all of us’ in the final sentence, implying that some of us think something else but have signed anyway so as not to be left out. That’s really telling them!

And he admits he’s not a good writer.

10

Daniel 08.01.08 at 1:06 pm

Whatever your economic politics, if you can see past your prejudice, pretty well everything Cochrane says is true.

Well no. For example, it isn’t true that neoliberal or Friedmanite policies have been an important contributor to China’s economic success. I wrote a post about this on Crooked Timber, did you see it?

11

John 08.01.08 at 1:13 pm

Isn’t it time we stopped using ‘l’ words for rampant capitalism? A better term for what the ‘lebertarians’ are advocating would be ‘propertarian’ since their approach privileges the rights of property and its ‘owners’ (however they acquire it) above those of people qua people.

12

Delicious Pundit 08.01.08 at 1:30 pm

It would be terribly representational, but outside the Friedman Institute there should be a sculpture of a Lexus wrapped around an olive tree.

And on the frieze of the Institute it should say, “SVCK. ON. THIS.”

13

david 08.01.08 at 1:37 pm

“As I say above, it is not as if the University of Chicago’s international reputation in economics is going to be based on this centre, and the suggestion of alternative cash elsewhere is a pretty blatant bit of cashing in.”

Agree, I think, on the alternative cash, though this may have been thought of as a bargaining chip (as in, look at what a can of worms you open up here…)

But the point of Chicago’s international reputation in economics is that it’s supposed to be won through good academic work, and the Hoover Institute -Midwest in planning may cash in on that reputation to hire ex-Republican administration hacks to write op-eds about how people who don’t support the extension of patent regimes in China are the real haters of the poor. (And, given mission statement etc., and Friedman’s public intellectual role, I think that’s a fair concern.)

So, it makes sense to not want the institute, even though everybody who’s signed knows about Chicago’s reputation in economics (Sahlins has written some of the best things about that reputation). The signers seem worried that the MFI will be even more hackish and counter-productive in the public sphere than the economics department.

The hand-wringing about poor writing and Kleinism reminds me of moderate (thinking of Tim Burke) rejections of a petition circulating against the Iraq War. “Sure, there’s problems with the war, but this petition smells of hippy, and it doesn’t spend the majority of its prose on explaining why Saddam Hussein is a really bad guy.” Petitions are rarely prose marvels. The point of the petition isn’t that hard to grasp: a well-funded institute of Friedmanite reactionary triumphalism isn’t a good thing. And it probably isn’t.

14

rea 08.01.08 at 2:04 pm

It would be terribly representational, but outside the Friedman Institute there should be a sculpture of a Lexus wrapped around an olive tree.

Wrong Friedman.

15

MDHinton 08.01.08 at 2:15 pm

Daniel – OK, I didn’t see your earlier post and I can see that this could be a bit controversial – I did say ‘pretty well’. My point was that people are queueing up to knock the guy( Cochrane) because of what he represents when his criticisms of the petition are actually generally well-founded. You don’t like the guy – but in the main, on this issue, he’s right.

16

abb1 08.01.08 at 2:28 pm

Kleinism is not a mirror image of the globollocks, but merely a strong reaction to it; it’s an anti- thing, not a thing of its own.

17

MF 08.01.08 at 2:42 pm

Cochrane: “If the government controls your job or your business, dissent is impossible.”

yeah, i guess that’s why you never see state employees on strike in places like france…

just one of the many brown nuggets with which this letter is strewn.

18

dsquared 08.01.08 at 2:46 pm

david: I thought it was meant to be a research institute, not a policy thing? If I’ve got the wrong end of the stick and it’s meant to honour Friedman’s work as a public intellectual then hrrmmmphhh in excelsis to that – as I’ve written, he was terrible. But an economics research institute is a perfectly fitting memorial (also Heckman is on the committee, which predisposes me in favour of it, as he is a real straight shooter as right wing ideologues go).

19

mds 08.01.08 at 3:32 pm

in the same way in which Hong Kong or Singapore are absolutely legitimate examples for Friedmanites.

Yes, a colony with no effective political representation whose government owned all the real estate, now controlled by Communist China, and a politically repressive welfare state, are both prime examples for Friedmanites. I’ll grant you that they are enthusiastic boosters of anti-democratic authoritarianism, but I must have missed the part where Friedman was a quasi-Georgist who endorsed a strong social safety net. Or was an actual libertarian, for that matter.

20

nick 08.01.08 at 4:26 pm

I was all outraged about this over at deLong’s, but here I’ll just say: we need a great limerick about the two Friedmans–any thoughts?

21

rea 08.01.08 at 4:50 pm

we need a great limerick about the two Friedmans—any thoughts?

It would take a year to write . . .

22

rea 08.01.08 at 5:11 pm

Whatever your economic politics, if you can see past your prejudice, pretty well everything Cochrane says is true.

Well, no. Friedman’s hands were covered in Chilean blood, a fact Cochrane does not wish to acknowledge. A “Friedman Institute” is about as appropriate as a Leni Riefenstahl School of Filmaking.

23

engels 08.01.08 at 5:39 pm

Whatever your politics, if you can see past your prejudice, you must agree with my politics.

24

Dave 08.01.08 at 5:42 pm

@21 – boom-boom! Very good….

25

david 08.01.08 at 5:53 pm

Upon re-reading the letter announcing the MFI, I’m less sure I’m right that this is Hoover-Midwest, but I still think I am. Lot of talk about cutting edge research, but very suspicious, this paragraph:

“The goal of the Institute is to build on the University’s existing leadership position and make the Milton Friedman Institute a primary intellectual destination for economics by creating a robust forum for engagement of our faculty and students with scholars and policymakers from around the world,” said President Robert J. Zimmer. “The Milton Friedman Institute will continue Chicago’s extraordinary tradition of creating new ideas that stimulate the academic world and innovative approaches that influence policy.”

Along with the MF hagiography on freedom in Cochrane’s letter, I have to think their innovative approaches in policy will be really really irritating.

Also, the Milton Friedman Society of donors, with their scheduled seminars etc., is likely to be a reactionary public intellectual lovefest.

I remain with the petitioners, awkward passive voice and kneejerk leftism an all.

26

ogmb 08.01.08 at 6:22 pm

Whatever your economic politics, if you can see past your prejudice, pretty well everything Cochrane says is true.

Cochrane is wrong on language (“global south” is not an oxymoron), he’s befuddled on neoliberal success stories (neither Japan nor China are neoliberal regimes, for their own very different reasons), and he closes with the almost-Bushism that, if the petitioners hate Friedman they must hate freedom. Cochrane’s response boils down to “Yu ar al stoopid ant yu cannt spel” — the question whether his core claim is true becomes irrelevant, because he makes it amply clear that he himself is in no position to judge.

27

notsneaky 08.01.08 at 6:25 pm

Well, China today would be much more to MF’s liking than China 30 years ago. So while it’s no great beacon of the neoliberal order, it has moved towards that light. Of course one could argue that the fact that they stopped short is part of what made them so successful. But in terms of Cochrane’s letter, that’s asking for nuance which you just not gonna get in, well, a letter.

28

notsneaky 08.01.08 at 6:35 pm

In general, before one decides whether Japan, China, or India, or SK, HK, Taiwan are “neoliberal” one should specify the metric being used. Neoliberal compared to what? Compared to some liberterian platonic ideal of course they all come up short. Compared to many other developing (Japan, when it was developing) and even developed countries they look much closer to it.
Of course lack of this precise metric is why both neoliberals and “interventionists” can claim the EA Tigers as their own success stories.

29

ogmb 08.01.08 at 7:13 pm

Well, China today would be much more to MF’s liking than China 30 years ago.

China is trying to establish a society where economic freedom is disconnected from social freedom. By Cochrane’s own stated interpretation, that goes clearly against the Friedmanite tenet that social, political and economic freedoms are “inextricably linked”.

Neoliberal compared to what?

The whole debate is completely out of place and won’t be resolved within this dispute. It is also wholly irrelevant. When the petitioners argued, in their turgid prose, that they’re worried the MFI will turn into a conservative showcase Cochrane could’ve simply responded: “Exactly, that’s something we don’t want either. Our mission is academic excellence over partisan handwringing, that’s why we put the following safeguards in place to ensure intellectual diversity”, etc. Instead he’s pontificating and trying to patronize his peers, and falls flat in his face in the process.

30

abb1 08.01.08 at 7:15 pm

…one should specify the metric being used.

Exactly. What’s missing here is the definition of ‘neoliberal’. The word ‘liberal’ is inside it, so it seems to imply some degree of political and social freedom. In fact it’s not obvious at all that this concept entails anything other than very strong property (i.e. capital) rights, very weak labor rights, and high political stability (usually correlated with a lack of democracy). If this definition is reasonable, then I don’t see why they shouldn’t claim China as their success story.

31

ogmb 08.01.08 at 7:28 pm

Cochrane verbatim: “Friedman stood for freedom, social, political, and economic. He realized that they are inextricably linked. If the government controls your job or your business, dissent is impossible.”

Under this standard, China = FAIL.

32

notsneaky 08.01.08 at 7:33 pm

Yes, but less FAIL than 35 years ago.

33

Dave 08.01.08 at 7:34 pm

@31: but as has been pointed out above already, that “standard” is based on a false dichotomy between private enterprise and totalitarian/repressive command economies, and is therefore a crock of sh1t anyway. I note that even in the USA it is not unknown for government employees to have minds of their own…

34

abb1 08.01.08 at 7:41 pm

I know, but even if Mr. Friedman did ‘stand’ (whatever it means) for all those good things, it doesn’t really matter. In the end it’s all about economics, isn’t it?

35

ogmb 08.01.08 at 7:44 pm

Actually more FAIL than 35 years ago, because an unsuccessful repressive China doesn’t challenge Friedman’s claim, but a successful China that is economically liberated but socially repressive poses a direct challenge to the “inextricably linked” claim.

36

abb1 08.01.08 at 7:54 pm

But is the “inextricably linked” one of the central claims, or is it more like “but wait! there is more!”? If it’s the latter, then it’s only a minor embarrassment. Maybe the increase in GDP (or whatever economic metric they prefer) greatly compensates for it.

37

ogmb 08.01.08 at 8:07 pm

They’re the first words of Cochrane’s “you ignoramuses don’t understand Friedman, here’s what he was really about!” paragraph, so I assume it’s a very central concept, at least to Cochrane.

38

nick 08.01.08 at 8:10 pm

#21–rimshot!

not great, but I had to get it out of the system:

how distinguish two writers named Friedman
when both thought free markets meant freedom?
one was laurelled by bankers,
one’s lauded (by wankers),
but both are admired in Chablisdom….

39

MDHinton 08.01.08 at 9:28 pm

When I said that what Cochrane says is true, what I was really getting at is that his criticisms of this ‘petition’ are, overall, valid. No one seems to want to address that – you’re hitting out at his choice of examples, questioning what MF actually stood for and generally knocking the guy but he wasn’t writing a paper on economics he was pointing out that the letter from these other guys is pretty stupid – which it is.

40

sg 08.01.08 at 9:36 pm

notsneaky, is it the social insurance or the nationalised healthcare or the zaibatsu or the national broadcaster or the publicly funded university system or the unions or the publicly funded sports halls and martial arts gyms or the public parks or the strict legal and social systems which make Japan neoliberal?

41

abb1 08.01.08 at 9:54 pm

he was pointing out that the letter from these other guys is pretty stupid – which it is

The letter is a petition against the suppression of non-orthodox economic views in the university. I don’t see how it can be ‘pretty stupid’; it can be either justified or unjustified.

42

ogmb 08.01.08 at 10:02 pm

sg, no love for MITI?

43

notsneaky 08.01.08 at 10:09 pm

sg,

no, it’s all the other things you didn’t mention. Like, you know, capitalism. Japan is a capitalist country isn’t? If you don’t think so then we’re really just arguing semantics here.

44

notsneaky 08.01.08 at 10:19 pm

ogmb, sort of what abb1 said in 36. China is a counter example to the quasi-Friedmanite idea that economic freedom will lead to political freedom (and for the record I disagree with that, though I think those who believe it would say that it might take some time). A perhaps more accurate representation of Friedman here would be that you cannot have political freedom without economic freedom (and come on, France is also a capitalist country). And then what Cochrane says (way way down in his letter) makes perfect sense.

45

Walt 08.01.08 at 10:52 pm

China is more to every political philosophy’s liking than 30 years ago (other than Maoism itself, I suppose). Does this mean that all political philosophies are true? That has to be good for everyone’s self-esteem.

46

Random African 08.01.08 at 11:00 pm

If the government controls your job or your business, dissent is impossible.

Doesn’t the Chinese government still control your job or your business to some extend ?

47

ogmb 08.01.08 at 11:01 pm

A perhaps more accurate representation of Friedman here would be that you cannot have political freedom without economic freedom

The question is not whether there exists a definition under which Cochrane’s claim that China = neoliberal success story makes perfect sense, the question is whether the claim makes sense under the definition Cochrane himself provided. And the answer is, unambiguously, no.

48

Random African 08.01.08 at 11:14 pm

The question is not whether there exists a definition under which Cochrane’s claim that China = neoliberal success story makes perfect sense, the question is whether the claim makes sense under the definition Cochrane himself provided. And the answer is, unambiguously, no.

But in that case, no claim about neo-liberalism makes sense, including this one:

“The effects of the neoliberal global order that has been put in place in recent decades, strongly buttressed by the Chicago School of Economics, have by no means been unequivocally positive. Many would argue that they have been negative for much of the world’s population, leading to the weakening of a number of struggling local economies in the service of globalized capital, and many would question the substitution of monetization for democratization under the banner of “market democracy.””

49

sg 08.01.08 at 11:40 pm

so notsneaky, your definition of “neoliberal” is “capitalist”?

50

ogmb 08.01.08 at 11:59 pm

RA, I agree. That’s why I think Cochrane’s analysis is crap. The expansiveness of the list of neoliberal success stories and the tightness of the definition of neoliberalism are diametrically opposed. If you want to include China and Japan in the list, your definition automatically becomes so vacuous that in the end you’re pretty much saying that “neoliberalism = capitalism”, as notsneaky just did.

51

Random African 08.02.08 at 12:39 am

I think Cochrane has simply accept the claim that “in the recent decades, a neo-liberal global order has been put in place.” I guess he understood it as “in the recent decades the world has switched towards neo-liberalism”. And that’s sort of expected from a Friedman fan, isn’t it ?

And if you accept that the global order equals “moving in that direction”, then yes, China and India which both experienced growth by moving towards neo-liberalism are valid examples.

Otherwise, there’s no Friedman legacy because there’s no country even remotely close his ideals.

52

ogmb 08.02.08 at 12:49 am

Well yes, that’s the span of the possibilities. If you define neolib tightly enough, no country passes muster. If you define it loosely enough, you can claim pretty much every country’s economic upswing as a success of neolib reforms. The problem with Cochrane is that he does both.

53

Random African 08.02.08 at 12:59 am

What matters is the movement.

The fact that those countries moved towards neo-liberalism.

Just like nowadays, you can claim that Venezuela has recently moved towards socialism or that most of the (Western) World moved away from classical liberalism after the Great Depression.

54

pushmedia1 08.02.08 at 2:25 am

Maybe argue from subtraction…

What non- or anti-neo-liberal policies did China implement after Mao’s death that led to significant improvements in standard of living?

55

notsneaky 08.02.08 at 3:21 am

“so notsneaky, your definition of “neoliberal” is “capitalist”?”

No, but there is an association, yes? This again goes back to what you’re measuring post is.

“If you want to include China and Japan in the list, your definition automatically becomes so vacuous that in the end you’re pretty much saying that “neoliberalism = capitalism”, as notsneaky just did.”

Well, I didn’t. But anyway. The point about China is not that it is a “neoliberal” (or capitalist) country. It’s that it has become MORE neoliberal (and capitalist) in the past 30 yrs. And as it became more more neoliberal it has become riches and also, in many but not all ways, freer. And hence it fits well in Cochrane’s narrative in all but the most uncharitable readings. Which is the point you keep missing.

56

abb1 08.02.08 at 7:42 am

It’s not just ‘capitalist’, it’s ‘capitalism on crack’. Any political move in favor of capital and against labor (and population in general) is a neolib move and any resulting increase in economic output is to be claimed as success. You will also insist that in your heart you’re a big supporter of freedom and democracy – as long as it doesn’t mean that the labor (and population in general) get what they want. All the negative consequences are to be attributed to the corrupting influence of the communists and antisemites (the same thing, really).

57

notsneaky 08.02.08 at 9:04 am

Hmm, the above does not sound like abb1 at all. Either Seth E. hijacked his account or the man’s drunk (or both). Where is that clarity of thought we’re so used to?

58

sg 08.02.08 at 9:47 am

so notsneaky, why don’t you just say “capitalism”? There is a difference. I think you would be hard pressed to find a great deal of support for neo-liberalism in modern (or post-war) Japan. Back in the day (when you implied it was more neo-liberal) it had government owned train networks. The shinkansen was govt owned, for god’s sake. It still has heavily subsidized agriculture.

You seem to be proving dsquared’s point, that neo-liberalism has morphed in the minds of its supporters so much that any success – even by, in this case, a Social Democracy – is claimed for it. If Social Democracy and neo-liberalism are one and the same well, neo-liberalism is a pretty useless word.

59

abb1 08.02.08 at 10:51 am

A harmless caricature; keeping up with the spirit of the post.

60

ogmb 08.02.08 at 10:58 am

Of course one could argue that the fact that they stopped short is part of what made them so successful. But in terms of Cochrane’s letter, that’s asking for nuance which you just not gonna get in, well, a letter.

I don’t expect nuance in a letter that dresses a group of peers down for mushiness, I expect precision. China quite clearly did not adopt the “neoliberal global order” because they clearly try to decouple economic freedom from social and political freedoms. Japan, under no meaningful definition, ever adopted the “neoliberal global order”. Japan, like Germany, gives the government a very clear and expansive role in public life. But that’s not the real problem with Cochrane’s argument. Let him define his terms any way he wants to, and let him be inconsistent with his definitions throughout the response, and let him use false dichotomies as much as he wants. But to claim that questioning his reading on things is just “the big lie theory at work” simply confirms the second charge of the petitioners, that there is little hope that the MFI will turn into a non-partisan research institute. As I said before: a sad exchange between partisan hacks at a university which used to have a pretty good reputation.

61

John Emerson 08.02.08 at 12:41 pm

Late to the party, but few or none of the development success stories since 1950 have followed the path recommended by the WTO ?IMF / World Bank, and few or none of the countries which did follow that path were development success stories.

When I was in Taiwan in 1983 I was amazed at the size of some of the tariffs (200% for “luxuries”) and by the number of government monopolies (rice, energy, tobacco, alcohol, and much of transportation). But it worked.

62

BenjaminL 08.02.08 at 1:56 pm

A lot of the comments seem like arguing over semantics…

I say the graphs here are relevant
http://www.economics.harvard.edu/faculty/shleifer/files/friedman3.3.pdf
Andrei Shleifer, “The Age of Milton Friedman”

63

Random African 08.02.08 at 2:48 pm

Let’s try again.

The United Kingdom, at the height of Thatcherism or New Zealand after Rogernomics or Iceland after they feel in love in Friedman all kept a quit big public sector and a social-democratic welfare welfare state.

Does the fact they’re more socialist after “liberalization” than the US has ever been somehow implies that Thatcher’s, Rogers’s or Davíð Oddsson’s reforms were not neo-liberal ?

64

dsquared 08.02.08 at 4:23 pm

at the end of the day I think sg’s right and the “well, they’re a bit more capitalist” line is very weak indeed as a specific argument for neoliberalism. At the end of the day, if you tell Daisy Mae from West Virginia to come and make her fortune in Hollywood, and instead she goes to the Chicago Merc and makes her fortune as a trader, then you can’t say “well, she kind of followed my advice because she’s a lot nearer Los Angeles than she used to be” and take credit for her success. Particularly if her sisters Dolly and Millie did take your advice and ended up as heroin addicts.

65

engels 08.02.08 at 5:36 pm

The climate is more congenial in Spain than it is in Mauritania. This provides support for my view that the ideal place to live is on the North Pole.

66

engels 08.02.08 at 5:54 pm

Or perhaps more accurately:

Seattle has a nicer climate than Anchorage. Seattle is closer to New York than Anchorage is. This is evidence for my view that New York has the nicest climate in the world and in particular that it has a nicer climate than Paris.

67

geo 08.02.08 at 6:32 pm

Just read through the comments and can’t believe no one has yet lauded Nick (#38) to the skies for his delicious limerick. Philistines!

68

pushmedia1 08.02.08 at 6:32 pm

Did she move to Chicago or Anaheim?

69

Martin Bento 08.02.08 at 6:52 pm

Let’s talk about what is sniffed at in the petition: by the letter as conspiracy theory, though it doesn’t quite use the magic phrase, and by some in this thread as Kleinism, by which I take it they mean much the same thing. Cochrane accuses the petitioners of implying that neoliberalism has been deliberately imposed, but being vague as to by whom and dodging this with passive voice. He fills in this silence with a scurrilous charge of anti-Semitism, and some general conspiracy allegations, which are supposed to cause all right-thinking people to kneejerkedly recoil in horror.

But neoliberalism has been deliberately imposed. To say “by whom” with any precision would require examining individual cases: in Chile, it was by their own military with CIA help; in Eastern Europe, by local people organized to jump in the power vacuum and riding the backlash against communism, including many former communists, in the United States by the Republican party, which took power through the electoral process. The petition cannot possibly address “by whom” without either oversimplifying or turning into a multi-part historical treatise. But to imply that neoliberalism spontaneously emerged without anyone intending to impose it is simply false, and this is one of the basic myths that Cochrane wants to imply (though he won’t precisely say it). It is the usual preference of power: to have its operations seen not as choices, but as the inevitable consequences of the natural order, because the former can be opposed and the latter not. Usually, in history, religion does this, e.g., through the divine right of kings, but in a secular age, we must settle for the intellectual dishonesty of conspiracy-bashing.

In Chile, which is most directly Friedman’s baby, neoliberalism “emerged” because the CIA, ITT, and others found and backed a faction in the military that would overthrow the democratically-elected government and pursue their desired policies. One could call this interpretation “conspiracy theory” in the sense that it sees human intention collusively enacted and covertly expressed as an effective force in history, and this interpretation was commonly ridiculed as such when the support for it was more inferential. But at this point, more direct evidence has emerged (oh, that cursed passive voice! I should be obligated to name every researcher who produced the evidence.), and the “conspiracy theory” is pretty hard to dispute, no?

70

jacob 08.02.08 at 7:04 pm

Don’t forget what else is sniffed at in the letter, Martin: that anthropologists in the United States might actually want to spend time with their subjects, be respected by them, and be seen as respectful of them. Cochrane dismisses this as “when we go to fashionable lefty cocktail parties in Venezuela, it’s embarrassing to admit who signs our paychecks.” But we should respect and admire people like the Comaroffs, Marshall Sahlins, and the other humanists and interpretive social scientists who signed the petitions for listening to what the people they study in the Global South say. That they don’t like Milton Friedman or neoliberalism should probably tell us something. That economists so rarely bother to listen should tell us something about them, too.

71

Martin Bento 08.02.08 at 7:26 pm

Jacob, good point.

What particularly gets me though is the charge of anti-Semiticism. It’s like money is the new Israel; criticizing anything done by or for money is proof of anti-Semiticism.

72

Martin Bento 08.02.08 at 7:28 pm

That’s anti-Semitism of course.

73

abb1 08.02.08 at 7:51 pm

I believe it is, in fact, the inevitable consequence of the natural order. The CIA and former communists and black market operators in Eastern Europe didn’t come up with the evil scheme to implement neoliberal policies, it was a natural thing to do. Capitalism matures, intertwines, expends; national capitals merge, become a part of the global capital, exploit the global labor, compete in the global marketplace. It’s a natural stage, inevitable in one form or another. One can try to soften the impact, like social-democratic and nationalist states do, but it is an uphill struggle and the prognosis doesn’t look good at this time.

74

random african 08.02.08 at 8:30 pm

Is there a particular reason why my comments are still awaiting moderation ?

75

random african 08.02.08 at 8:42 pm

Don’t forget what else is sniffed at in the letter, Martin: that anthropologists in the United States might actually want to spend time with their subjects, be respected by them, and be seen as respectful of them.

And who are those “subjects” who will stop respecting an anthropologist because he comes from the University of Chicago ?

76

engels 08.02.08 at 9:41 pm

I can tell you that round here we like University of Chicago anthropologists just as much as any others, as long they are cooked properly.

77

notsneaky 08.02.08 at 9:41 pm

“and others found and backed a faction in the military that would overthrow the democratically-elected government and pursue their desired policies”

What, the Catholic Party? Didn’t know they had a faction in the Chilean military.

78

notsneaky 08.02.08 at 9:58 pm

“so notsneaky, why don’t you just say “capitalism”?”

Ok. Actually, the term “neoliberal” is often used by many people as a euphemism for “capitalism” or “pro-market”. It’s just that in this day and age, if you rant on about being an “anti-capitalist” you sound like an out dated ol’ commie foggy who hasn’t woken up to the fact that all that stuff collapsed (and for good reason). And since some folks want to rant on about being anti-capitalist but don’t want that image they use “neoliberal” as a euphemism. I’m sure some of the original letter writers fall in this category.

This brings me to the second point. You could take the more academic definition of “neoliberalism” as an advocacy of a program to “stabilize (macroeconomic conditions), liberalize (prices and external account) and privatize (state owned enterprises)”. On the last one, I don’t think even the supporters of neoliberalism would want the state to privatize everything, rather they’d argue that in many countries the state owns TOO MUCH and should privatize SOME. So then your statement:

“If Social Democracy and neo-liberalism are one and the same well, neo-liberalism is a pretty useless word.”

isn’t crazy. Wrong, but not crazy. By the above definition the most neo-liberal countries in the world would/could be… the Scandinavian ones. Maybe not so much on the privatize part but definitely on the other two. So while Social Democracy and neo-liberalism are not one and the same, they could be compatible. In this definition of neoliberalism. Not in the first one, which is really just a rhetorical trick.

Also

“At the end of the day, if you tell Daisy Mae from West Virginia to come and make her fortune in Hollywood”

No, this is a bad analogy. West Virginia and Hollywood are two points in space with nothing between them. There’s no continuity as one moves from WV to HW. But it’s not too crazy to take North Korea at one end and, say, the US at the other and talk about countries becoming more or less neoliberal or capitalist. We might disagree about where the optimum point lies on this continuum (and of course it’s not a perfect one) but it makes a lot more sense to say that China has become more neoliberal because they liberalized prices, allowed for small scale private business etc. than to say that what’s her face become more of an actress because she moved from WV to Illinois.

Finally. There are people out there who will argue that the Chinese and the Indians are actually WORSE OFF because of the “capitalist” or “neoliberal” policies implemented in the past 30 yrs. More specifically they argue that only the top elite in those countries have gotten all the gains while the masses have sunk into levels of poverty worse than under Mao. A quick perusal of some of the comments on many economic blogs will find these people. I’ve gotten into some arguments with these people myself. Now, those people are crazy. You guys, presumably, are not arguing that, so you’re not crazy. But the fact that these people exist sort of puts the Cochrane response in perspective. I wouldn’t be surprised if some of the signatories of the original letter took this view.

79

Martin Bento 08.02.08 at 9:58 pm

Pinochet was a General, doncha’ know? And the coup was executed, and the subsequent government run, by the military. That aspect of it was quite open; I’m surprised I’m even having to state that.

80

notsneaky 08.02.08 at 10:02 pm

“This provides support for my view that the ideal place to live is on the North Pole.”

Well, it does depend on which side of that convex curve with roots at the equator and the north pole most countries are. The argument is about continuity not monotonicity.

81

notsneaky 08.02.08 at 10:07 pm

You need to turn up the sarcasm detector a notch or two. Anyways, that argument’s played itself out on the internets so many times that it’s pointless having it again.

82

notsneaky 08.02.08 at 10:18 pm

Also, what exactly is the difference between

“by local people organized to jump in the power vacuum and riding the backlash against communism”

and

” neoliberalism spontaneously emerged without anyone intending to impose it is simply false,”

or for that matter between neoliberalism arriving through the electoral process as you say it did in the US (and I’ll be damned if I let you call the Republican party “neoliberal”) and “spontaneously emerging”?
I mean, in that sense nothing ever spontaneously emerges, since someone somewhere always has to do something to bring it about. So why even bring it up? Or is it just that the policies you like “emerge”, while the ones you don’t like “are imposed”?

83

sg 08.02.08 at 11:28 pm

now you’re just playing at semantics notsneaky. But I am amused at the idea that West Virginia and Hollywood are “two points in space with nothing between them”. What about the Rocky Mountains?

You can’t claim that any system with any three of your neo-liberal defining characteristics is neo-liberal. I think you might find that your taxonomy falls apart a bit there. I should point out to you that logically my statement about social democracy and neo-liberalism is neither wrong nor crazy. It’s pretty obvious. If two words mean the same thing one of them is useless. There is a difference between Social Democratic Japan and the neo-liberal Japan of your imagination. Can we stop being silly now?

84

notsneaky 08.03.08 at 12:19 am

“But I am amused at the idea that West Virginia and Hollywood are “two points in space with nothing between them”. What about the Rocky Mountains?”

Hey, it wasn’t my analogy and it wasn’t that good to begin with so I was just working with what was given to me. But yes, in terms of the relevant analogy – acting careers and all that – there isn’t much between WV and HW.

“If two words mean the same thing one of them is useless.”

Well, this has gotten understandably confused. So lemme repeat. SOME people treat “neoliberalism” and “capitalism” as the same thing and yes in that case one of the words is useless, except for rhetorical purposes (not wanting to look like a clueless commie). I don’t think they’re the same thing though I think there’s some association between the two.

And the thing about Japan goes back to my original request for a goal post or a marker that we can compare things to.

85

ogmb 08.03.08 at 1:21 am

notsneaky, to say “I’m sure if you say ‘neoliberalism’ you really mean ‘capitalism’, hence I will treat your criticism of neoliberalism as a criticism of capitalism” is known as a straw man. To say “the group of petitioners surely must include some who hold crazy views about capitalism hence I can treat these views as representative of the group” is known as a guilt by association fallacy.

86

abb1 08.03.08 at 9:44 am

In my mind neoliberalism is all about making the world a safe place for the capital, simplifying cross-border capital flows, globalization, global capitalism.

#75 says: but it makes a lot more sense to say that China has become more neoliberal because they liberalized prices, allowed for small scale private business etc.

I don’t think so. Nobody would give a fuck about China allowing for small scale private business. Yugoslavia had that and it didn’t help. The story of China and India is not about any internal reforms, it’s all about inflow of Western capital, making it attractive and safe there for the Western capital.

Also, I kinda doubt it’s an “ol’ commie foggy” who is the worst enemy of neoliberalism. A bunch of peasants get to go work in a sweatshop factory – why would the ol’ commie object to that? It’s a gift. OK, a “clueless commie”, maybe… But I think the worst enemy of neoliberalism is nationalism (especially third-world nationalism) and communitarianism – destruction of traditional local cultures, loss of self-sufficiency, weakening of sovereignty, dependency is hard to swallow.

87

sg 08.03.08 at 11:47 am

notsneaky, perhaps the point in the continuum you are looking for is the phrase “adopted some neo-liberal policies”. Of course, they did this in the 70s (privatising rail, reducing the power of the unions, etc) and then they had – surprise! – a property boom followed by the “lost decade”. I’m sure it was just coincidence though, and since they adopted some neo-liberal policies in the 70s, we can blame all their economic growth in the 50 s and 60s on it, and blame their stagnation of the 90s on “too much govt”. That would be the correct logic for neo-liberal boosterism, right?

88

engels 08.03.08 at 2:08 pm

it does depend on which side of that convex curve with roots at the equator and the north pole most countries are

Oh, you’re making a Laffer type argument! Why didn’t you say so? If I’d known that I would have been much more dismissive…

89

Walt 08.03.08 at 2:27 pm

While notsneaky is of course almost completely wrong here, a joke as geeky as the “convex curve with roots at the equator and the north pole” deserves better than to be compared to Laffer’s cocktail napkin.

90

engels 08.03.08 at 3:18 pm

You have u(A) > u(B). Also, d(B,C) < d(A,C). From this you infer that u(x) has a maximum at C (or at the least that those situated at any chosen point X who wish to increase u(X) would be well-advised to aim towards C). That doesn’t seem to make a lot of sense, whether or not u(x) is continuous. Unless, of course, you share Arthur Laffer’s ability to magic parabolas out of thin air…

91

engels 08.03.08 at 3:24 pm

Oh and I did see the other half of the ‘argument’ was to equivocate between the term ‘neo-liberal’ (a point in policy space, or at most a small set of such points) and ‘capitalist’ (a very large set of such points) but I thought that that part was so silly it would more polite to such ignore it…

92

engels 08.03.08 at 3:34 pm

(The second inequality in #90 should be ‘>’.)

93

notsneaky 08.03.08 at 4:10 pm

Engels,

I guess it must be pointed out, but not every freaking parabola is a Laffer curve and you can’t tar them all by association.

94

anon/portly 08.03.08 at 6:08 pm

Is the definition of “neoliberal global order,” in the minds of the letter writers (or signers), closer to what Cochrane thinks they meant or closer to what Daniel Davies means by “neoliberal policies?” Cochrane’s real “claim” is not something about China and neoliberal policies but something about what the letter writers meant by “neoliberal global order.”

95

notsneaky 08.03.08 at 7:19 pm

“You have u(A) > u(B). Also, d(B,C) < d(A,C). From this you infer”

You’re the one who started this off in one dimensional space with your Mauritania and Spain. Why am I getting crap for other people’s wacky analogies?

96

notsneaky 08.03.08 at 9:27 pm

“China allowing for small scale private business. Yugoslavia had that and it didn’t help.”

Actually, it did. Of course it didn’t prevent the break of Yugoslavia (but then probably nothing short of Tito becoming a vampire and living eternally could’ve prevented that). But it is the reason why Yugoslavia was the richest among socialist country, with a GDP per capita higher in some parts (particularly Slovenia and Croatia) reaching almost Western levels.

” The story of China and India is not about any internal reforms, it’s all about inflow of Western capital, making it attractive and safe there for the Western capital.”

No, no. It is about internal reforms. The Western capital came later, and undoubtedly helped, but it did all start with internal reforms.

97

MQ 08.04.08 at 2:52 am

Neoliberalism is directly implicated in what was likely millions of excess deaths due to premature mortality in the former Soviet Union due to the 1990s privatizations and associated economic collapse (see: Steven Rosefielde’s article in the December, 2001 issue of the journal Europe-Asia Studies). Economist-types are always eager to pin all the deaths involved with the famines in Stalinist Russia and Maoist China on the evils of communist ideology, but it seems that the Russian deaths of the 1990s have disappeared down the memory hole (it takes 95 comments on a liberal blog for someone to even mention them!). They were the inevitable casualties of historical progress, I suppose.

Neoliberal triumphalism would be morally disgusting simply because of this, but it’s also intellectually unsupportable because it doesn’t fit the facts on development. China fixed its currency to provide a massive subsidy to exports, and the more it grew and developed the bigger this implicit subsidy became. Is this better explained by a deep affection for Milton Friedman, or by close attention to what China and South Korea demonstrated about export-led growth?

Really, what neoliberal triumphalists want to do is just chalk up all of global economic growth to neoliberalism, just because of a vague sense that our current economic order features lots of free market rhetoric. (Pushmedia sort of explicitly does this above, as does notsneaky when he equates neoliberalism to capitalism).

98

MQ 08.04.08 at 2:56 am

Actually, 94 is a good point, in that you can chalk up Cochrane’s idiot neoliberal triumphalism to the equally indiscriminate stuff about the “neoliberal global order” that he was reacting against. So the two sides deserve each other. Globalization and neoliberalism are not the same thing, any more than capitalism and neoliberalism are. But still, Cochrane puffs himself up as the smart one making an argument, while the petitioners are just doing the petition thing.

99

notsneaky 08.04.08 at 3:39 am

Great, the real crazies have shown up.

100

Walt 08.04.08 at 6:07 am

You brought this on yourself, notsneaky.

101

abb1 08.04.08 at 6:29 am

So what’s your definition of it, MQ: austerity, privatization and deregulation? In that case it really has nothing whatsoever to do with China and India. But how do you know your definition is the correct one, when people see so many different things in it?

102

dsquared 08.04.08 at 6:40 am

abb1 does rather cut to the heart of the matter with this point:

Nobody would give a fuck about China allowing for small scale private business. Yugoslavia had that and it didn’t help

103

ogmb 08.04.08 at 10:36 am

But how do you know your definition is the correct one, when people see so many different things in it?

Uhh, the standard MO is to go with the initial definition and to test it for internal consistency with the conclusions. Cochrane, who should be trained better than to say “here’s my definition and according to that, you’re wrong”, engages in the same limp-dicked analysis he accuses his opponents of. There is a quite obvious disconnect between the charge in the petition, which claims that the “neoliberal world order” did not create a Pareto improvement and Cochrane’s rebuttal, which claims that it created a Benthamite improvement. You can perfectly well argue that the railroad was instrumental in bringing prosperity to the U.S., but you’ll be hard-pressed to get the buffaloes to sign off on it.

104

abb1 08.04.08 at 4:32 pm

If neoliberalism is defined as ‘austerity, privatization and deregulation’, then I agree that it’s an imposed calamity rather than natural development. But if neoliberalism is a doctrine of economic globalization, capital breaking thru the borders and barriers of nation-states and taking over, then I still think it’s a natural phenomenon, and China is a big part of it, indeed the showcase.

105

MQ 08.04.08 at 4:54 pm

Great, the real crazies have shown up.

What happened in Russia in the 1990s is a matter of public record; denying reality is surely crazier than referring to it. The irony is that I’m sure someone like you quotes Rosefielde’s numbers on Stalin’s excess deaths (he is one of the major experts in that area), but now you’re apparently dismissing his methodologically identical scholarship on deaths under the Yeltsin regime as “crazy”. You can argue about the exact death toll, but it was considerable. The Russians themselves understand this quite well, that accounts for the difference in Yeltsin’s reputation there (categorically horrible) vs. here (drunk and incompetent, but heart in the right place because he followed the advice of Western neoliberal advisors).

I won’t post the link here because of the spam filter, but here’s the reference should you be disposed to stop the denial bit: “Rosefielde, Steven (2001), ‘Premature Deaths: Russia’s Radical Economic Transition in SovietPerspective’, Europe-Asia Studies, 53, 1159-117

But if neoliberalism is a doctrine of economic globalization, capital breaking thru the borders and barriers of nation-states and taking over, then I still think it’s a natural phenomenon, and China is a big part of it, indeed the showcase.

I actually agree completely with this, but I disagree that neoliberalism can simply be defined as capitalism or globalization. What is distinctive about neoliberalism is the “shock therapy” aspect, the refusal to admit that the ways in which the transition to globalization can and often should be buffered through social welfare institutions and through various forms of state management such as capital controls, export subsidies, etc. The neoliberals explicitly distanced themselves from such theories; they certainly weren’t looking to e.g. South Korea as a model.

So I’m closer to austerity/privatization/deregulation, but I would say that neoliberalism also cannot be separated from the general cheerleading for markets in the 80s-90s. And this may well have had a salutory influence in India/China (especially India), since those countries were strong enough to pick and choose their bits from the doctrine, be selective about deregulation and ignore the austerity.

106

Dave 08.04.08 at 6:13 pm

“Natural phenomenon”? Highly-complex, partially-regulated, international capital flows are a “natural phenomenon”? Jeepers….

107

notsneaky 08.04.08 at 8:32 pm

“What happened in Russia in the 1990s is a matter of public record”

Sure. In 1992 it implemented Washington Consensus-like “shock therapy”. And between 1992 and 1993 output per capita (and other relevant statistics like mortality etc. pretty much follow it) shrunk by 3.5%. Of course between 1990 and 1991 output shrank by 13% and between 1991 and 1992 by almost 9%.

If you don’t like the story the time series is telling – which is basically that it wasn’t neoliberal policies but just a general disentegration of the economy which began in the 1980’s Soviet Union under communism – you can take a look at the cross section, limited as it is. Some of the republics which seperated from Russia did not implement these type of “ne0liberal” reforms in the early 90’s. Nevertheless they experienced similar economic and social distress (possible exception here is Belarus which shows same trend but smaller magnitude. Possibly due to injection of Russian money).

So once again the evidence on the causes of the decline in Russian (and ex-SU) standards of living points to the general collapse of the Soviet Union with its origins in the communist era.

Since everyone’s running around offering crazy analogies, here’s mine. You come upon a house that’s on fire. You try to pour water on it but it burns down nonetheless. Then some people come around and say “you shouldn’t have poured water on that house. now it’s all destroyed”.

To reiterate, the collapse and the decline started before Sachs and co. got there, it was more severe before they got there, and it was the continuation and culimination of a process that started under communism in the 80’s (temporarily postponed by some of Gorbachev’s ‘neoliberal’ reforms)

AFAIK I’ve never quoted Rosefielde’s numbers on death under Stalin. There’s plenty of sources to choose from here. Also because I don’t have JSTOR access at home and because I’m leaving for Europe in six hours I can’t read his full article and check his methodology. However, even if HE is correct about the numbers, YOU’re quite incorrect in placing the blame.

And finally, it’s … I dunno, “In bad taste” (if not colossally stupid) to compare deaths under Stalin to “excess deaths” due to changes in life expectancy in 90’s Russia.

108

notsneaky 08.04.08 at 8:35 pm

One more thing. You could maybe argue that neoliberal policies contributed to the Russian financial crisis. In 1998. Even there large fiscal deficits and exchange rate mis management (hardly neoliberal prescriptions) played a big role. Between 98 and 99 personal incomes fell by about 2.5% (this is worse than it looks because by 97 the economy was starting to recover and the crisis basically caused a 1 year interruption in this process). Still, that’s nothing like the 13% drop that occurred between 1990 and 1991.

109

nick 08.04.08 at 8:36 pm

the neoliberal rhetoric of “shock treatment” gives the game away; it’s basically just the economic policy version of Tom Friedman’s fantasized “suck…on…this”…

110

abb1 08.04.08 at 9:02 pm

He didn’t compare it with “deaths under Stalin”, but with the deaths caused by the famine that followed Stalin’s innovations in economics.

111

ogmb 08.04.08 at 10:29 pm

You come upon a house that’s on fire. You try to pour water on it but it burns down nonetheless. Then some people come around and say “you shouldn’t have poured water on that house. now it’s all destroyed”.

Nice attempt to create a “bad cause” and a “misunderstood good response” there, but when badly applied, water can in fact a be very dangerous fire suppressant.

112

notsneaky 08.04.08 at 10:35 pm

Interesting. Irrelevant, but interesting.

113

Mr. Econotarian 08.04.08 at 10:44 pm

The calamity that occurred under Yeltsin was bad.

When dismantling socialism and moving to free markets, one needs to be careful.

We will need to remember this lesson when Cuba does it as well.

But it doesn’t mean that it is better to remain in a strongly socialist environment.

Regarding Mr. Friedman, let’s keep in mind that Chile now has the highest nominal GDP per capita in Latin America.

Wikipedia says it best about Friedman:

‘According to The Economist, Friedman “was the most influential economist of the second half of the 20th century…possibly of all of it”. Former Federal Reserve Board chairman Alan Greenspan stated, “There are very few people over the generations who have ideas that are sufficiently original to materially alter the direction of civilization. Milton is one of those very few people.”‘

Friedman won: Nobel Memorial Prize in Economic Sciences, National Medal of Science, and the Presidential Medal of Freedom.

In 1980, he had a series on PBS. How can you be right wing and do that? ;)

Chile was not Friedman’s best result, he influenced Iceland’s Independence Party and Prime Minister Davíð Oddsson who helped Iceland move from #53 to #5 most economically free country in the world from 1975-2008. Friedman also influenced Estonia’s prime minister Mart Laar to make the country a “Baltic Tiger”.

114

ogmb 08.04.08 at 11:12 pm

Irrelevant maybe, but revealing.

115

notsneaky 08.04.08 at 11:42 pm

If the majority of the economic decline had occurred in 93, 94 or 95 – after the reforms – it’d be either relevant or revealing. Since most of it took place before the major reforms were put in place, it’s neither.

116

Geoff Robinson 08.05.08 at 1:14 am

But didn’t the sources of the post-Communist economic collapse lie in Gorbachev’s bungled attempts at economic reform conducted with disregard for basic criteria of macroeconomic stability, did these tip the balance from stagnation to economic collapse?

117

MQ 08.05.08 at 1:55 am

notsneaky, you flat out have no idea what you’re talking about. I don’t know where your numbers come from, but they are wildly at variance with the established, recognized time series I’m familiar with. I don’t know if you’re lying, just ignorant, or we have some kind of weird communications disconnect, but here are the facts.

Russia’s measured GDP fell by about 40 to 50 percent between 1991 and 1998. The 40 percent figure comes from Angus Maddison, “The World Economy: Historical Statistics” the 2003 edition, published by the OECD. The World Bank historical statistics show a drop of closer to 50 percent (47 percent). (These World Bank stats are available directly at the worldbank org web site, on the main site hit the “data and research” tab, then hit “data”, and on the data page hit “quick query” on the “Most Requested Data” menu on the right hand side of the page. Then you can download historical stats for Russian GDP).

The World Bank figures show the decline beginning sharply in 1991, with the 1991 GDP roughly similar to 1989; Maddison finds that the overall USSR economy begins to shrink in 1989 (perhaps with the breakup of the Soviet Union and the beginnings of privatization under late Gorbachev), but he has no figure for the Russian Federation alone in 1989. (Also, I would note here that your timing of privatization and “shock therapy” to 1991 only is way off — the sharpest was in Spring 1992, but there were lots of privatizations both before and after).

This economic catastrophe is consistent with Russian Census statistics, eyewitness accounts, and numerous other sources. There is no evidence of any economic contraction of anything like this size any time over post-WWII Soviet history; indeed there is no evidence of any economic contraction like this during any period after the Russian Civil War ended and the Bolsheviks took over.

There is an excellent argument that the 1991-1998 period in Russia was the largest, most devastating peacetime industrial depression in modern economic history — indeed a fitting comparison to the disastrous famines that accompanied agricultural collectivization. Yet here we have someone who presumably thinks he knows something about economics who seems to be completely ignorant of it. What does that tell you about how ideological and propagandistic the discussion around this subject is?

As for the rest of the Soviet Union, the entire Soviet system was dependent on centralized direction from Russia, one cannot separate out a small republic here or there.

Andrei Shleifer has of course tried hard to wish away these figures, arguing that everyone’s (Angus Maddison’s, the CIA, the World Bank) measures of Soviet production are too high because the Soviets produced a lot of worthless goods that should be valued at zero, while post-Soviet production is undermeasured. As someone heavily involved in the privatization debacle, he would say that. But none of the statistical estimates agree (and all of these estimates of Soviet production are already heavily discounted off the “official” Soviet numbers). For a discussion of this issue, check out another piece by Steven Rosefielde, “Russia: An Abnormal Country”, European Journal of Comparative Economics, 2005, Vol. 2, Number 1.

118

ogmb 08.05.08 at 2:03 am

It’s mostly revealing because your analogy says a lot about how you frame things. In simple terms, there are three answers to the question whether neoliberal (WTFTM) reforms have helped or delayed the Russian recovery: yes, no, and we don’t know yet. The correct answer is of course the last, and anyone offering either of the first two probably started out with that answer and then started looking for supporting data.

119

ogmb 08.05.08 at 2:04 am

118 @ 115.

120

MQ 08.05.08 at 2:11 am

If the majority of the economic decline had occurred in 93, 94 or 95 – after the reforms – it’d be either relevant or revealing. Since most of it took place before the major reforms were put in place, it’s neither.

As I said above, this is just factually false. The World Bank figures show the fastest GDP contraction occuring in 1992, 1993, and 1994, with negative growth 7 out of 8 years between 1991 and 1998.

Also, as a note, the 47 percent decline I noted above is in equivalent U.S. dollars — the World Bank PPP series shows a smaller 35 percent decline over 1991-98, with some moderate decline beginning in 1989. Since there was also massive inflation over this period, it’s going to be hard to get the right currency comparison.

But didn’t the sources of the post-Communist economic collapse lie in Gorbachev’s bungled attempts at economic reform conducted with disregard for basic criteria of macroeconomic stability, did these tip the balance from stagnation to economic collapse?

Sure, it’s certainly seems that it may have started under Gorbachev. But Gorbachev also was getting terrible transition advice from Western economists, which he was acting on. Things got even worse and the decline accelerated as Western economists got even more influence.

it’s … I dunno, “In bad taste” (if not colossally stupid) to compare deaths under Stalin to “excess deaths” due to changes in life expectancy in 90’s Russia.

To Stalin’s outright killings, sure, I’m not comparing those. But as abb1 points out, the bulk of the killings ascribed to Stalin are excess deaths due to changes in life expectancy resulting from agricultural collectivization and the subsequent famines.

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MQ 08.05.08 at 2:36 am

In simple terms, there are three answers to the question whether neoliberal (WTFTM) reforms have helped or delayed the Russian recovery: yes, no, and we don’t know yet. The correct answer is of course the last

This is just what a Stalinist would have said in 1939 about agricultural collectivization. Collectivization and famine was justified as necessary for industrialization. After 1939, we can see that Russian industry first outproduced Nazi Germany during WWII, and then from 1945-1970 produced rapid growth in living standards for the Russian people (this is supported not just by GDP figures but by biometric and other measures). So you know, maybe it sort of worked. But we don’t forget the cost.

Russia’s economic turnaround quite clearly begins in 1998-99, after the financial crisis, around the time that Primakov and Putin took power. Western reformers are now claiming all of the post-1998 economic growth as the result of “foundations laid” during the 1991-1998 period, followed up by “liberalizations” of the economy under Putin. A more skeptical observer could point out that the 1998-99 period was just when the influence of “shock therapy” advocates waned and Russia began to chart its own course. Now, it’s still true that post-1998 there have been plenty of economic reforms that a Western economist would approve of.

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tom f 08.05.08 at 4:36 am

notsneaky:

Just on the face of it, when you see nations like Vietnam and China moving from command to market-oriented economies, and see them do so without a tragic collapse of economic well-being, and furthermore see them do so incrementally without the influence of “shock therapy”, it at least suggests that your statement:

“it wasn’t neoliberal policies but just a general disentegration of the economy which began in the 1980’s Soviet Union under communism”

requires some explaining. Why didn’t China or Vietnam just “generally disintegrate” under a state controlled economy in transition to a market-oriented one?

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abb1 08.05.08 at 9:35 am

Well, Russia is different from China and Vietnam, because in Russia the political system collapsed in the early 1990s. There was indeed a mini civil war. In general, it’s not surprising to see more radical actions in a time of turmoil.

I think the question is something like this: to what extent the socio-economic calamity was a result of sudden collapse of the political system (ala notsneaky) and to what extent the whole thing was a result of deliberate cold-blooded experimentation.

The collapse of Gorbi’s government seems like a garden variety power struggle, but I think it’s pretty clear that the second political crisis there (Yeltsin shelling the parliament ) was already a consequence and manifestation of Yeltsin’s clique deliberately choosing the path of privatization. That’s what – 1993?

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ogmb 08.05.08 at 11:27 am

This is just what a Stalinist would have said in 1939 about agricultural collectivization.

Inverse Goodwin’s Law? The difference is that the Stalinist has a ball in the game and I don’t. Usually if someone with a vested interest in a certain explanation starts equivocating everybody else already knows the explanation is dead wrong — like Aznar’s government after the Madrid bombings. The other difference is that the Stalinists were uneqivocally in power in 1939, so they could try and explain away the extent of the failure, but there was no question who had to take the blame. Unlike in the SU>RUS transition, where you have four main actors and any number of subactors, all of whom try to take credit and shift blame.

Why didn’t China or Vietnam just “generally disintegrate” under a state controlled economy in transition to a market-oriented one?

Neither Vietnam or China had a transition of power to go with the economic transition. One of the problems with Russia is that it still has no institutionalized mechanism for transition of power, and the prospects that they be able to implement one in the near future are pretty dim. Russia is lucky right now that they’re ruled by a popular dictatorship, and that high oil and gas prices prop up the economy. It’s anyone’s guess what will happen if macroeconomic conditions turn bad and they have to claw to stay in power.

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MQ 08.05.08 at 1:37 pm

in Russia the political system collapsed in the early 1990s….I think the question is something like this: to what extent the socio-economic calamity was a result of sudden collapse of the political system

The whole point here is that the collapse of the political system was aided and abetted by neoliberal advisors, who were basically saying that the biggest priority was freeing up and privatizing the economy rather than maintaining the capacities of the central state. Once Putin/Primakov started reestablishing state authority and doing incremental economic reforms within the framework of a stronger centralized state then stuff rapidly started improving.

The difference is that the Stalinist has a ball in the game and I don’t.

I was just pointing out antecedents to the “hey, maybe a million people died, but we don’t know if it worked yet — you can’t make an omelet, etc.” type of argument. Also, I wasn’t taking the Stalinist’s word for it, we now know that objectively Russian industry did great from 1940-1970 (maybe not in comparison with more recent rapid industrializers like China, but certainly great by comparison with Russia’s past history).

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MQ 08.05.08 at 1:40 pm

Russia is lucky right now…that high oil and gas prices prop up the economy.

ummm, see, this is not luck. Natural resource revenues now flow to the state through high rates of taxation, and are spent to do stuff in Russia. In the 90s under privatization, natural resource revenues went to the oligarchs who stole them and took them out of the country.

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ogmb 08.05.08 at 2:35 pm

The whole point here is that the collapse of the political system was aided and abetted by neoliberal advisors

I think we’re mostly in agreement but I don’t believe that the advisors played any major role in the collapse of the SU. Was it Soros who said that Gorbachev made the mistake of trying to open the door just a little after it was tightly shut for 70+ years? The fundamental notion that if you just create the markets the democratic institutions that support it will emerge automatically (the “natural phenomenon” theory if you will) took a big hit in post-SU Russia, with grave consequences. But I’m not all too convinced that, starting after the collapse, we’re not comparing the events against an idealized counterfactual. Iow, I find the “we had the right answer” triumphalism both annoying and unsupportable, but I also find the response that “you had the wrong answer when there was a right answer out there” weak as well. (China might prove me wrong, but in large part they’re only postponing the hard decisions.) Once the SU had collapsed, the only available choices were bad ones.

ummm, see, this is not luck.

Possibly, but with low world prices for their natural resources they couldn’t even do that.

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notsneaky 08.06.08 at 9:06 am

@118

See, that’s a perfectly reasonable position (I did say my analogy was crazy like the other ones – i.e. exaggerated). But the key words in your comment are “helped” and “delayed”. In other words while the effect of the reforms might be “Idk” in those terms, it’s pretty clear that they didn’t “begin” or “cause” the collapse, which is what MQ (and plenty of other folks) seems to be arguing.

As an aside, it’s worth pondering why the most plausible answer is “I don’t know”. I mean, all the data are in and it’s unlikely that there will any new relevant information forthcoming. The problem here is that you have a situation with so many variables and so many things going on at once. The reforms were multi faceted, the political situation was chaotic, and the initial starting point was a mess. Quite likely it’s probably the case that some reforms helped (freeing up the prices, legalizing what previously was black market activity), some might have hurt (bungled privatizations) and some were simply inevitable (lots of privatization happened before any laws were actually passed).

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notsneaky 08.06.08 at 9:28 am

“you flat out have no idea what you’re talking about. I don’t know where your numbers come from, but they are wildly at variance with the established, recognized time series I’m familiar with. I don’t know if you’re lying, just ignorant, or we have some kind of weird communications disconnect, but here are the facts”

And screw you too buddy. I’m using PWT data which is very respectable. The 40% to 50% drop is consistent with what I said when added up over all the relevant years. But the majority of the decline takes place 1990-1993.

Here’s Russian GDP per capita data:

1990 12314.6898
1991 10731.44122
1992 9822.60983
1993 9489.138766
1994 8893.726814
1995 8461.583773
1996 7934.389688
1997 8339.782697
1998 8130.870191
1999 8532.885342
2000 9263.459629
2001 10048.81328
2002 10877.14261
2003 11794.72644

And the corresponding growth rates:

-0.137614978
-0.088491011
-0.034538997
-0.064801681
-0.049809812
-0.064329926
0.049830723
-0.025369208
0.04825961
0.082150026
0.081376957
0.079209033
0.08098894

(since we can’t preview our comments anymore I dont know if the formatting isn’t gonna get screwed up).

“There is an excellent argument that the 1991-1998 period in Russia was the largest, most devastating peacetime industrial depression in modern economic history”

“This economic catastrophe is consistent with Russian Census statistics, eyewitness accounts, and numerous other sources. There is no evidence of any economic contraction of anything like this size any time over post-WWII Soviet history”

No one’s disputing this. That’s what happens when a rotten system collapses.

“Yet here we have someone who presumably thinks he knows something about economics who seems to be completely ignorant of it”

If you can show where I deny that the period 91-98 was a catastrophe in Russia then show it. If not, well, then, screw you too buddy. Obviously the argument is about the causes.

“As for the rest of the Soviet Union, the entire Soviet system was dependent on centralized direction from Russia, one cannot separate out a small republic here or there.”

…which suggests that it wasn’t the neoliberal reforms but the political collapse of the system, yes?

“But Gorbachev also was getting terrible transition advice from Western economists, which he was acting on. “

Oh yeah? And what was that? Come on the whole thing was coming down on its own regardless of what Gorby did. If anything his actions postponed the inevitable for a few years.

“But as abb1 points out, the bulk of the killings ascribed to Stalin are excess deaths due to changes in life expectancy resulting from agricultural collectivization and the subsequent famines.”

First, the “bulk of killings” – there was so much killing that shifting a couple million deaths from intentional to by-product doesn’t change the balance much. Second, under Stalin the policy was DESIGNED to cause massive famine as part of a political strategy to suppress certain anti-soviet groups (nationalist Ukrainians, kulaks, independent peasants etc.).

“The whole point here is that the collapse of the political system was aided and abetted by neoliberal advisors”

See, this is where the crazy talk comes in. Sure, the whole collapse of communism was a nefarious neoliberal plot. Right.

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abb1 08.06.08 at 10:56 am

under Stalin the policy was DESIGNED to cause massive famine […] See, this is where the crazy talk comes in.

Hmm.

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Dave 08.06.08 at 12:18 pm

Dudes, who’s the crazy one?

Probably the one who thinks someone else’s mind is going to be changed here…

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ogmb 08.06.08 at 10:00 pm

But the key words in your comment are “helped” and “delayed”. In other words while the effect of the reforms might be “Idk” in those terms, it’s pretty clear that they didn’t “begin” or “cause” the collapse, which is what MQ (and plenty of other folks) seems to be arguing.

I don’ think the position that neoliberals (WTFTA) started the fire has much traction, and I don’t see much of MQ’s efforts being devoted to that. The claim that they exacerbated it by misconceived rescue efforts (and a modicum of hubris) has much more traction and deserves more scrutiny.

As an aside, it’s worth pondering why the most plausible answer is “I don’t know”.

Other than that the various authorities can’t even agree on the basic numbers (another game I don’t have a ball in), we simply don’t have that many Soviet Unions lying around that we can collapse and test the newest economic theories on for comparison.

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