As an intended outcome of neoliberal doctrine and a natural stage of capitalist development, global financialization constructs a borderless nexus of power in which debt and austerity fuels a cultural, political and economic landscape bound to enduring structures of domination, and creates unprecedented wealth through the accumulation of suffering.
According to economist Richard Wolff, “Capitalism has always and everywhere oscillated between two phases.” One phase is operationalized by free-market doctrine, often referenced as economic liberalism, classical economics, laissez-faire capitalism, or neoliberalism which refers to a “new” or “revived form” of liberal economics. While some economists will distinguish differences between these terms, generally this free-market phase of capitalism is distinguished by a liberal economy where capitalist industry and markets prevail and experience very little (or no) government oversight. In this phase, the state primarily serves as an agent of capitalist interests.
The other phase of capitalism is often referred to as Keynesian economics, the welfare-state, state-capitalism or social democracy. This phase entails state intervention via substantive taxation, regulations, price controls and state administered social programs. To varying degrees, it is a mixed economy driven by both private and public sectors, yet allows for (or requires) the existence of significant social inequality while guaranteeing that a capitalist ruling class will manage the political system. Moderate examples of this phase include the New Deal in the U.S. and the social democracies in Western Europe between 1945 until 1990. More substantial examples of this phase include countries in which a significant portion of their societies’ productive enterprises are state owned and operated. This phase does not include the political economies of socialism or communism.
As Daniel Stedman Jones and anthropologist David Harvey have documented, the ascendance of neoliberal doctrine began in interwar Europe during the 1940s, but found fertile ground in post-World War II America, which provided an optimal ideological milieu for it to thrive and for its uncompromising political and cultural narrative to be crafted. Embraced and transmitted by a network of influential think tanks, corporations, financial institutions, business associations, politicians and journalists; the economic crisis of the 1970s provided a rich opportunity for its champions to roll out this long simmering plan. Since capitalists are well known for creating and exploiting crisis and suffering to pursue their interests, this well positioned network of free-market ideologues and profiteers expeditiously went to work. The core of their plan involved reversing (or not enforcing) New Deal and Great Society programs and the Nixon administration’s schizophrenic domestic polices; while simultaneously imposing a menu of liberal economic polices tied to a (nationalistic) conservative American values crusade (known as the “Culture Wars.”)
In 1973 the U.S. facilitated the overthrow of the democratically elected socialist president of Chile, Salvador Allende, and the installment of the brutal military dictator Augusto Pinochet. This coup d’etat allowed the U.S. to position Chile as a test laboratory for neoliberal restructuring as prescribed by Nobel Laureate economist and free-market ideologue Milton Friedman, along with his Chicago School of Economics trained “Chicago Boys” who ushered in the so called “Miracle of Chile.” Simultaneously in the U.S., Friedman’s liberal economic prescriptions were gradually being implemented throughout the 1970s by both Republicans and Democrats (here and here), then more aggressively in the Reagan (and Thatcher) era of the 1980s. Thereafter, neoliberal doctrine steadily gained cultural, political and economic momentum during the Clinton era and beyond. Steadily, financial institutions were being unleashed across the globe to fulfill their fundamental purpose: to create and seize upon all investment opportunities possible, not matter how brutal, so as to enrich themselves.
Many cultural scholars, including Stuart Hall, Nancy Fraser and David Harvey, emphasize how the neoliberal revolution was not only about economics, but more broadly with the adjoining culture wars, was a means to destroy mounting resistance to the original and long-standing social order of the United States. The social order to be preserved encompasses the intersecting structures of settler-colonialism, white supremacy, capitalism and heteropatriarchy. The threats to be destroyed included the Civil Rights, Black Power, Native American, Chicano, Feminist and LGBTQ liberation movements; as well as the Anti-War and New Left movements. While some within these struggles had revolutionary aims, including emancipation, sovereignty, economic equality; others pursued reforms involving recognition rights, representation and social equity within existing systems. According to Hall, legal scholar Tayyab Mahmud and political scientist Nancy Fraser, no matter the aims, all of these struggles threatened the foundations of the founders’ and the current rulers’ power and cultural design for America. Fraser goes on to explain:
[In the 1960s], this “Golden Age of Capitalism” was shattered. In an extraordinary international explosion, radical youth took to the streets—at first to oppose the Vietnam War and racial segregation in the U.S. Soon they began to question core features of capitalist modernity that social democracy had heretofore naturalized: materialism, consumerism, and “the achievement ethic”; bureaucracy, corporate culture, and “social control”; sexual repression, sexism, and heteronormativity.
As Stuart Hall explains, while racial inequity and terrorism, gender oppression and economic inequality in the U.S. thrived during the short-lived Keynesian (New Deal) era, it softened the blow of capitalism for some, while materially putting the common good on the radar. Yet as Fraser contended:
[T]he feminists of this era recast the radical imaginary. …Problematizing welfare paternalism and the bourgeois family, they exposed the deep androcentrism of capitalist society. Politicizing ‘the personal,’ they expanded the boundaries of contestation beyond socioeconomic distribution—to include housework, sexuality, and reproduction.
According to James Petras and Henry Veltmeyer, the neoliberal revolution on a global scale was largely a reaction to emancipatory movements of colonized peoples the world over struggling to take control of their countries and resources from imperial and colonial rule, often accompanied with strivings for agrarian reform. Tayyab Mahmud describes how the neoliberal revolution set out to impose a social order “across the globe to reverse the setbacks that the economic power and political hegemony of the wealth-owning classes had suffered on account of Keynesian welfare in the West, socialism in Eastern Europe, and nationalism in the global South.”
Embedded within the ideology of free-market capitalism is the notion that state intervention should be minimized so that capitalists are free to maximize market exchanges to their advantage, which in turn stimulates economic growth that benefits all of society. Fundamentally, ideology in inequitable societies is generated by myths that are constructed for the purpose of social control or hegemony. The myth of the free-market is an example of this rule in that state intervention on behalf of capitalism is a long-standing practice and necessity. According to John Clarke, “[d]espite its compelling qualities (natural, necessary, foundational, universal), [the market economy]…everywhere requires to be supported, nurtured, developed —while being protected from ‘interference’—and these nurturing processes require the care-taking work of states.”
This includes policies protecting and facilitating economic activity (through trade agreements, tariffs and subsidies), providing stable and fertile conditions for market growth—including military and covert intervention—and ensuring that a majority of people adhere to its exploitative and inequitable demands through ideological, political and legal means. As Jeremy Bentham wrote in 1843, “Property and law are born and must die together. Before the laws, there was no property: take away the laws, all property ceases.” Accordingly, legal scholar Cass Sunstein points out how the U.S. Constitution (via negative rights) – all the things the federal government cannot do – bolsters the ideology and rule of law of free-market capitalism. With this understanding, Sunstein goes on to claim:
As we know and live it, private property is both created and protected by law; it requires extensive governmental assistance. The same point holds for the other foundation of a market economy, the close sibling of private property: freedom of contract. For that form of freedom to exist, it is extremely important to have reliable enforcement mechanisms in the form of civil courts.
More importantly, as Karl Polanyi poignantly claimed in 1944, a decade into the Keynesian project, free-market capitalism cannot “exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness.” “Ultimately,” according to Polanyi:
The control of the economic system by the market is of overwhelming consequence to the whole organization of society; it means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system.
Scripted by market fundamentalists and advanced through private sector and government partnerships, neoliberalism was constructed to serve as the predominant social imaginary that would propel U.S. hegemony into the 21st century. Spoken of with sacred reverence and disseminated with the discourse that the free-market is the only rational way of organizing social relationships, neoliberalism imposes market logic on citizenship and the public sphere. Consistent with the U.S. founding fathers’ original design, human beings are defined as economic maximizers and governed by individual self-interest, whose value is narrowly equated as being a flexible, self-sufficient worker and uncritical consumer. “This consumer citizen is glorified, construed as willing, resourced and capable of making empowered market-led choices” whereby the very idea of democracy is “a function of consumer choices, and the individual is solely responsible for her or his own well-being, success or failure” (Scott). As Hall, Massey, and Rustin summarized it, neoliberalism “is a reassertion of capital’s historic imperative to profit through financialisation, globalisation and yet further commodification… [and] includes class and other social interests, new institutional arrangements, [and] the exercise of excessive influence by private corporations over democratic processes.”
Beginning in the mid-20th century, Structural Adjustment Programs (SAPs) became the primary neoliberal instrument, whereby a nation’s illegitimate national debt facilitated financial colonization via the lending institutions of the International Monetary Fund (IMF) and the World Bank. According to the IMF, “the Bank and the IMF are twin intergovernmental pillars supporting the structure of the world’s economic and financial order.” SAPs are very specific free-market policies that debt-ridden “developing countries” (countries ravaged by franchise and settler colonization throughout the “global south”) must adopt in order to receive new loans to be able to make payments on preexisting debts. SAPs are promoted by the IMF, World Bank and other International Finance Institutions as the only reliable method of “reforming” a deficit-ridden economy and putting “underdeveloped” economies on the road to (free-market) development to enable them to participate more fully in international trade and commerce.
As Sabelo J. Ndlovu-Gatsheni contends, this conception of development “is an ideology of colonial and neo-colonial modernity… linked to liberal ideology and to the idea of progress” that became “another lever of justifying Western intervention and interference in the internal affairs of Africa.” Ndlovu-Gatsheni goes on to point out how this worldview means “that development of any kind could only take place within the parameters of the capitalist world system that manifested its ugly face within the non-Western world in terms of the slave trade, imperialism and colonialism.” The term and very idea of development now invokes neoliberal hegemony, impeding alternative imaginaries of progress and growth that are not rooted in the ideology of Western Enlightenment and modernity. Anything that deviates from the neoliberal conception of development is dismissed as undeveloped and primitive.
The IMF (largely controlled and funded by the U.S) and the World Bank are part of a network of powerful industrialized nations and financial institutions that are the drivers and beneficiaries of neoliberalism and financialization (here and here). The driving force behind the hardline neoliberal reforms or “conditionalities” attached to SAPs have long resided within the halls of power in the U.S. In 1989 this understanding led the English economist John Williamson to label these reforms as the “Washington Consensus,” which according to Williamson, entailed “a list of ten specific policy reforms, which I claimed were widely agreed in Washington to be desirable in just about all the countries of Latin America, as of 1989.”
The ideologically and operationally reform policies attached to SAP conditionalities include: fiscal discipline; redirecting public expenditure; tax reform; financial liberalization; adoption of a single, competitive exchange rate; trade liberalization (free-trade); elimination of barriers to foreign direct investment; privatization of state-owned enterprises; deregulation of market entry and competition; and secure property rights (Lopes). This list of ten “desirable” reforms is what power brokers in the U.S. were imposing on Latin America for three decades. It also played a significant role in fueling the surge of “Twenty-First Century Socialism” throughout Latin America (here and here).
Austerity measures are best understood by looking at the impact neoliberal policy mandates have on people’s lives once they are enacted. In practice, these vicious instruments of greed and power augment inequality, bolster white supremacy and deepen poverty. Austerity reinforces the fundamental social dynamic of unbridled capitalism – inherently linked to colonialism and white supremacy – which is dependent on a small opulent minority whose power and wealth is solely derived from the domination and exploitation of stratified and disposable groups of people. By design SAPs and their austerity mandates target those who are commonly exploited, dehumanized, subjugated, dispossessed and therefore impoverished by Western nations – Indigenous, Black and Brown people, women, children, the working class, the elderly and those who are sick and disabled.
As an essential instrument in the marketization and financialization (restructuring) of economies, austerity is an essential instrument in expediting the political, social and economic conditions used to rationalize the elimination of barriers that inhibit international investors from maximizing profits by exploiting basic human and civic needs. In practice this entails laying off workers, cutting wages and benefits, gutting social safety nets, while also raising taxes and increasing user fees on essential and life sustaining services. Austerity means reducing spending on and/or privatizing public works, utilities, infrastructure, programs and services, including water, electricity, education, pensions, affordable housing, environmental protections, public health and safety regulators, healthcare and more. It means prioritizing export production at the expense of production for local consumption. Austerity also requires labor market reform, which in addition to cutting wages, benefits and state pensions; also requires eliminating or weakening labor laws that protect the health, safety and job security of workers, including their collective bargaining rights. These labor market reforms are code for what is referred to as a “flexible workforce” (Council of Canadians; Global Exchange; Lissovoy).
The winners of SAPs are the rich, their corporations and their financial institutions (those who control both supply and demand), who are not only the direct beneficiaries of austerity as investor creditors but also as those who take over ownership of government services and infrastructure while receiving a range of government subsidies and bailouts. Of course, the survival, safety and security of the rich do not depend on the public services and programs that are being reduced, eliminated and privatized. Austerity, as the Council of Canadians reminds us, “takes from the poor and transfers it to rich multinationals, bondholders and other financial capitalists. …The more governments are held hostage by private credit rating agencies and the financial elite, the more austerity becomes the norm.”
According to ActionAid International Kenya, IMF/World Bank-targeted countries that fail to enact SAPs see their access to international finance cut off. Such threats to impoverished countries amount to blackmail, since many have no choice but to comply. According to a 2009 IMF working paper, if a borrower country defaults on its IMF/World Bank loans, there are two possible penalties: “reputational costs, which in the extreme could result in absolute exclusion from financial markets, and direct sanctions such as legal attachments of property and international trade sanctions imposed by the countries of residence of creditors.” Thus, as Anup Shah affirms, the ultimate goal of SAPs is to open up a nation’s economy and natural resources to the profit-seeking interests of powerful international investors and corporations, while undermining the fundamental rights and interests of its people. Africa Action went on to point out how:
The albatross of illegitimate debt diverts money directly from spending on health care, education and other important needs. African countries are forced to spend almost $14 billion each year servicing old, illegitimate debts to rich country governments and their institutions, the World Bank and the International Monetary Fund (IMF). Much of Africa’s foreign debt is illegitimate in nature, having been incurred by unrepresentative and despotic regimes, mainly during the era of Cold War patronage. More generally, many Africans question the notion of an African ‘debt’ to the U.S. and European countries after centuries of exploitation. They ask, ‘Who really owes whom?’
Over the past forty years, neoliberalism has escalated the United States’ imperialistic practice of covertly and militarily intervening in countries as a means to install authoritarian governments as part of its inherent and enduring empire-building mission. SAPs have served the important purpose of establishing U.S. outposts to function as logistical techniques of empire and correspondingly with the objective of building neoliberal and financial infrastructural power within client states and their geographic regions. These interventions also served as geopolitical strategies during the Cold War, rationalizing intervention into sovereign nations as a means to stop the expansion of communism (Steven Hiatt; Meltem Yılmaz Sener).
Since SAPs are an instrument of financial colonization and have therefore met with mass resistance that has widely exposed their violent and despotic nature, in 1999 the IMF and World Bank “put lipstick” on the SAP model, rebranded it and thereafter referred to it as a Poverty Reduction Strategy Paper (PRSP). Accordingly, Jenina Joy Chavez Malaluan and Shalmali Guttal pointed out how “little has changed in the substance, form and process of World Bank and IMF programmes. ‘Poverty’ is used as window dressing to peddle more or less the same Structural Adjustment Programmes (SAPs) to low-income countries that led them into a state of chronic economic crisis to begin with.” Malaluan and Guttal went on to explain:
[This model] has clearly failed over the past twenty years in numerous countries across Asia, Africa and Latin America. Countries as diverse as Kenya, Ghana, Ethiopia, Bolivia, the Russian Federation, Sri Lanka, Bangladesh and Indonesia were all forced to apply the Bank-Fund development model at one time or another, and all have suffered from deep and shattering economic crises as a result… [Y]et today, the same policies continue to be supported even more ardently than before…in a new package called the PRSP.
It is reasonable to question if this model has actually failed or, in fact, is a complete success according to its intended purposes.
In its own defense, the IMF claims that its collaboration with its multilateral partners only promotes “good governance” to “combat corruption” (code for countries that pursue more participatory and redistributive political economies) by supporting market integrity, competition and economic development. The IMF goes on to explain that with its instruments of “surveillance, lending, and technical assistance, the IMF covers economic governance issues that fall within its mandate and expertise, concentrating on issues that are likely to have a significant impact on macroeconomic [neoliberal] performance and the sustainability of sound economic policies.” Sound indeed, for those who are on the winning end of its efforts.
Since neoliberal hegemony has ensured that financialization reigns supreme in the 21st century, SAPs/PRSPs are more freely being imposed and enforced in every region of the planet. In the wake of the European debt crisis beginning in 2008, which was a predictable outcome of the dynamics of global financialization, SAP/PRSP austerity-based conditionalities are being attached to loans for indebted Eurozone nations. In the case of Europe, three institutions known as the “Troika” (European Central Bank, the European Commission and the International Monetary Fund) are the drivers of wide-scale austerity. Depending on one’s ideological point of reference or personal interests, Greece has become a poster child for being either a victim of SAPs/PRSPs or a fiscally irresponsible nation. According to Warren Weertman, when SAPs/PRSPs were offered up to the Greeks, they “didn’t have to look far to see what impact the [PRSP] policies would have on them. Just across the Mediterranean lay an entire continent littered with examples of failed IMF policies.” This model has served as a final deathblow for many of the social democracies across Europe.
Ireland serves as both a unique and prime example of how the neoliberal revolution is restructuring nations in the northern hemisphere. With its long history of British colonization, Ireland has systematically been recolonized as an outpost for multinational corporations and banks beginning in the 1950s, and even more so in the 1980s. After the 2008 Eurozone crisis, Ireland was thus well positioned to serve as a laboratory for austerity in the era of financialization. Since then, Ireland has been mythologized by the financial press—and propagandized by the larger corporate media—as the “austerity-and-recovery-model” to be replicated in Greece and across Europe (Hearne; Mercille & Murphy; Tax Justice Network,
In line with what I have previously pointed out, from a winner’s perspective, the Irish model is indeed a success, as reported by economist Cillian Doyle in 2015:
Oh sure, there’s been a recovery for some. Ireland’s richest 250 individuals saw their combined wealth increase by 16% to a whopping 75 billion in the last year alone, so it’s fair to say they’re doing ok. Then there’s the multinationals, whose massive profits continue to enjoy de facto tax immunity. And things are even looking up for the politicians, who are planning to give themselves a pay increase as recognition for masterminding this great “recovery.”
What Doyle is referring to is Ireland’s sixty-year history of saving wealthy investors billions as an offshore financial center by offering low corporate tax rates, loopholes and laxity as incentives for transnational corporations to relocate to Ireland (often only on paper). In 1987, the “Wild West” of financialization occupied Ireland via a deregulated financial zone called the Dublin-based International Financial Services Centre (IFSC). The zone became notorious for being a host of choice for international “shadow banks.” Today Ireland or “Treasure Island” (as some corporations affectionately refer to it) is the home of over half of the world’s largest fifty banks and ten out of twenty of the top insurance corporations, while its stock exchange hosts about a quarter of all international bonds (Mercille & Murphy). There is little wonder why Ireland is promoted as the model to be replicated by the financial elite and their proxies in the media—it is an epicenter for global financialization and its instruments of intermediation, securitization, derivatives and hedge fund gambling. Accordingly, the Tax Justice Network reported in 2015 that “many toxic developments in ‘subprime’ markets that triggered the global financial crisis from 2008 can trace their lineage back to Ireland.”
As Rory Hearne reported in the Irish Examiner in July 2015, the Irish losers of the Troika who imposed austerity measures following the 2008 Eurozone crisis have been forced to endure the usual hardships. Between 2008 and 2014, unemployment, child-poverty and single-parent poverty have soared in Ireland. There have been major cuts in public housing and a marked increase in home repossessions, leading to a homelessness crisis in many parts of the country. Cuts to welfare benefits are decimating children’s benefits, fuel assistance programs, access to clothing and footwear and rent support.
These cuts are especially hard for one-parent families and people with disabilities and their caretakers. Ireland’s poor face higher user fees that limit their access to essential services, including water distribution, school transport, prescription drugs, accident and emergency services, chemotherapy treatment, etc. Spending on public infrastructure such as hospitals, schools, roads, transportation, internet and water and sewage treatment has been drastically reduced. Studies show that the quality of secondary- and primary-level education is declining due to cuts in public school funding along with teacher and other student support reductions. School dropout rates are on the rise, while spending on postsecondary education is being cut. Funding for youth organizations and drug prevention and treatment has been significantly reduced.
As is always the case in austerity-ravaged countries, large numbers of Irish youth are being forced to emigrate to find work. In addition, a recent study by Ireland’s National Suicide Research Foundation found that since these austerity measures have been in place, there has been an increase in self-harm rates by 31% in men and 22% in women and the male suicide success rate has increased by 57% (Hearn).
In the United States, the SAP/PRSP model has been imposed more duplicitously over the course of the last 40 years. The successful imposition of this model has involved a succession of corporate-inspired and state-facilitated policies that are reflective of SAP/PRSP conditionalities that have led to creeping austerity. These policies were complemented by a series of both related and unrelated events beginning in the 1970s, including an influx of women (resulting from the women’s movement) and immigrants (due to mass dispossession throughout Latin America) into the labor force, along with technological advances in production and new corporate governance models that prioritized the maximization of shareholder profits by cutting labor costs. All together, these events, along with intensifying attacks against organized labor, led to a surplus of workers and perpetual wage stagnation that enabled debt to become the fundamental catalyst for aggregate demand. Capitalism in the U.S. was once again being unbound from any form of democratizing and redistributive elements, while simultaneously being empowered by the deregulation of banking and finance along with the Federal Reserve’s intentional lowering of interest rates (Wolff).
According to Tayyab Mahmud and David Harvey, this new “state-finance nexus” extensively unleashed the reach of financial markets throughout society, primarily entangling Black, Brown and Indigenous people, poor whites and the working-class in general in a new credit-debt driven economy. Costas Lapavitsas points out that in the wake of escalating neoliberal austerity mandates, finance capitalism and its predator creditor character thus became the supreme arbiter of wages, job security and working conditions as well as a means to access essential (and privately controlled) goods and services including housing, public utilities and infrastructure (including education), social services, health care, pensions, etc.
According to the United Nations International Labor Organization (ILO), “the international integration of financial markets has been a major driver of falling wage shares…in advanced economies.” Referring to the ascendance of neoliberalism, the ILO went on to claim that the “switch in the 1980s to corporate governance systems based on maximizing shareholder value and the rise of aggressive returns-oriented institutions, including private equity funds, hedge funds and institutional investors, put pressure on firms to increase profits, especially in the short term.” Greased by neoliberal ideology and practices, finance capital’s call for even more profits has only intensified demands for even greater worker flexibility within a landscape with very little to no worker protections and union density.
Lost within financialization, according to Byasdeb Dasgupta and Eckhard Heine, is the long run perspective for a “real economy” (one that produces goods and services) and sustainability of emerging surplus accumulation patterns and trends. Instead, the financialized economy prioritizes buying and selling in financial markets and depends on a short-term and quick time approach to maximizing shareholder power, enticing speculative returns from every circuit of global capital and exploiting variations in interest and foreign exchange rates in different capital markets. As Dasgupta points out, since it cannot derive high rates of surplus from the real economy for expansion, it depends on “labor in transit” in order to guarantee the requisite surplus generation to further the cause of finance. Continuous movement is its primary feature in that workers move from job to job and back and forth from unemployment to employment while also continuously moving from one location to another. Naturally, these dynamics make labor solidarity even more difficult.
Working in concert with financialization, neoliberal ideology reinforces the market-based belief in individual responsibility, which complements the restrictive legal parameters by which subjugated groups are expected to engage in desperate strategies for survival. People are therefore made to think, feel and act as neoliberal subjects who are expected to engage in the speculative financialized economy as risk-taking “debt instruments” who alone are responsible for determining if they survive or thrive. As Max Haiven aptly put it:
[Financialization] offers up a toolbox for understanding social life. In an age of neoliberal austerity, we are all encouraged to approach ourselves as isolated risk-managers, judiciously investing our energies towards our own personal goals and objectives and seeking always to better our position and “corner the market” in whatever sphere of life.
The regime of austerity that is attached to unfettered capitalism requires those who are systematically impoverished to endure a perpetual gauntlet of unemployment, low-wages, job and housing insecurity, food insecurity, exposure to toxins, psychological stress, chronic health conditions, medical emergencies, expensive and highly inadequate health care and no social safety nets. This forces the most vulnerable in society to take on insurmountable debt as targets of predatory lending tactics through the provision of “overextension” (loans or extensions of credit that are larger than what the borrower can repay) (Mahmud). Overextension is also known as subprime lending, which is a term that found its way into the national lexicon via the mortgage crisis associated with the “Great Recession” of 2008.
Overall, the unleashing of financial capitalism on already inequitable societies, such as that of the U.S., has only intensified neoliberalism’s debilitating impact on social movements worldwide, notably through “the mechanisms of the debt crisis in the Global South and mass layoffs at the heart of the labor movement in the Global North” (Arrighi & Silver). This is a landscape where debt is sutured with discipline and where mass suffering fuels an economy that strengthens pre-existing power structures, while creating immense wealth for a few from nothing of intrinsic value (Korten; Mahmud).
Plagued by overwhelming debt from mortgages, student loans, credit cards, automobile loans and other predatory schemes; workers are even more fearful of upsetting their employers. This especially holds true in terms of workers taking collective action to make basic improvements in their wages and working conditions. For those whose wages do increase, instead of buying the consumer goods they produce, it is immediately extracted by creditors, health and other insurance companies and drug monopolies. Those who still aspire to live “The American Dream” by becoming homeowners are forced to lock themselves even further into debt serfdom through high cost and high interest home mortgages. Within this landscape, those who are targeted most by the predatory nature of the financialized economy are serially being exploited as workers, indebted “customers” and increasingly in “pay for success” derivative schemes, otherwise known as Social Impact Bonds (Hudson; Greenwood & Scharfstein; Martin, Kersley, & Greenham).
As has always been the case under capitalism, desperation, uncertainty, exploitation, inequity and inequality are central to its power. Financialization is considered to be a natural stage of capitalist development and takes these realities to a whole new level. Its power structures are aligning domestic and international policy agendas to fit its interests, resulting in the expansion and intensification of militarism, imperialism, colonization, genocide, exploitation, inequity and disenfranchisement. Since these forces are driven by Western powers, white supremacy and Christian hegemony (and their associated constructs of patriarchy) are deeply embedded within their ideologies and practices, particularly in the United States.
It is important to remember that capitalism was born from the imperialist settler colonial and chattel slavery empires of Europe and the Americas. This made for a perfect union between the ideology of white supremacy and the economic and political relations under capitalism, especially since imperialistic aspirations, settler colonial rule and capitalist structures all require certain people to be ideologically constructed as inferior to enable them to be identified as disposable and/or exploitable labor. Capitalist production was well positioned to be an integral component of structural racism, therefore incentivizing more intensive and expansive racialized methods of resource appropriation and accumulation by dispossession. These structural dynamics provided fertile ground for neoliberalism and financialization to flourish in the 21st century.
As Paula Butler claims, “Racism—more precisely, white supremacy—has been a constitutive element of colonialism and the establishment and expansion of capitalism in the modern era, from the 15th century to the present.” According to Bhattacharya, Gabriel and Small, “capitalist expansion has depended so heavily on mythologies of race and their attendant violence that the double project of racial and economic subjugation is a constitutive aspect of this expansion.” In effect, capitalism and white supremacy are structurally bound.
Neoliberal-fueled financialization strengthens capitalism’s imperialist propensity to seize and occupy territory and material and virtual sources of wealth in order to racialize and subjugate its occupants so as to exploit and dispose of them at will. According to Bhattecharyya et al. “The power of whiteness lies in its capacity to impoverish, starve, contaminate and murder, all seemingly within the bounds of legality.”
Arturo Escobar named these horrific global realities “social fascism,” while S.B. Banerjee referred to these forms of structural violence as “necrocapitalism” or death capitalism.
Banerjee defines necrocapitalism as, “contemporary forms of organizational accumulation that involve dispossession and the subjugation of life to the power of death.” Necrocapitalism “creates states of exceptions where ‘democratic rights are confined to a political sphere’ while continuing forms of domination, exploitation and violence in other domains.” Paula Butler claimed that the term necrocapitalism “captures the ideological and material context of unfettered market forces in which capital’s right to profit legally and legitimately eradicates livelihoods and subjugates life, thus producing death.”
As the corporate media continues to focus on how the fallout of the European debt crisis and the Central Banks’ (the Troika) austerity prescriptions are affecting (or inflicting) European countries, finance capital continues its original mission of targeting and pillaging entire continents populated by Black, Brown and Indigenous people. In this persistent quest, billions of people are subjected to a life of unrelenting hardship and suffering, while the perpetrating institutions and governments refuse to acknowledge the racialized power structure that is fueling the global political economy. Since the Western power structures that are responsible for the brutality of neoliberalism and financialization are the “rule of law,” formal redress and accountability is nonexistent. Instead, racial violence is effectively denied and veiled by racially coded discourses that invoke color-blindness, soft multiculturalism, and philanthropic intent or by hiding behind airs of neutrality and economic rationalism. The slick beneficiaries and agents of neoliberalism and financialization deflect and spin charges that their wealth is derived from exploitation and barbaric practices of dispossession structurally tied to historic and ongoing manifestations of white supremacy and colonization.
Under this globalized cultural political economy, seeking relief or justice within state institutions and civil society is largely futile. In the 21st century, civil, political and economic rights are more than ever at odds with the interests of capital. Governments either function as proxies for finance capitalism or face being subjugated by it. This ensures that national governments are even more unresponsive to the needs and demands of those who reside within their borders, borders that are non-existent for financial investors and increasingly punitive for dispossessed groups, often referred to as “illegal immigrants” and “refugees.” As Nancy Fraser put it, there is “a new form of imperialism that doesn’t have the clean geography of the colonists there and the colonized here.”
In this landscape, banks and other global financial institutions are setting and enforcing the rules that govern social relations in societies across the globe, including relations between states and their citizens. States have largely become subjects of bond markets and Central Banks, (such as the Troika). These are the layers of power that operate above states and control what states can or cannot do. In sum, the plutocrats of this finance empire have no national loyalties, they possess no conscience, their domain knows no borders, their institutions have no center and their wealth has no real material value. Thus, looking to the state for protections or engaging in traditional strategies of resistance needs to be seriously reconsidered.