Contours Of Descent [Hardcover]

Clinton ran a "putting people first" campaign, but at some point a "center-right, Washington Consensus" direction was pursued. It was a neoliberal agenda that emphasized smaller government, free trade, and deregulation of financial markets. Inflation, fueled by wage demands, was kept in check through the threat of outsourcing jobs. Welfare rolls were drastically reduced by forcing welfare recipients to work at sub-poverty level wages. The Clinton administration and Alan Greenspan made no attempt to curb the speculative excesses of the financial markets. Stocks rose to unsustainable price to earning ratios. The economy was driven by both increased consumer debt and private investment. The obsession with larger and larger budget surpluses precluded making needed investments in infrastructure and education and training.

Part of the Washington Consensus is the participation of globally-oriented financial and trade bodies, such as the IMF, the World Bank, and the WTO, who impose neoliberal policies when possible. The opening for these international bodies is when debt-ridden countries find themselves in untenable positions. But relief from these bodies is not unconditional. The countries are forced to privatize, eliminate subsidies for domestic purposes, cut government spending, and remove all restrictions on foreign investment. In addition, the countries are invariably pressured to pursue a strategy of producing for export to acquire the cash to pay off debts. Keeping wages low by disciplining workers is part of the strategy of exporting and attracting foreign manufacturers. The author shows that these neoliberal policies have had harsh effects in many countries, such as Mexico and Argentina.

Of course, the stock market bubble collapsed. The Federal Reserve had failed to exercise its power to limit speculation and now was unable to spur a recovery with huge cuts in the Federal Funds interest rate. The excessive investment during the Clinton boom had created excess capacity. The author continues with the Bush administration, which is even more committed to pursuing a neoliberal program. The massive tax cuts that are being pursued by Bush have added to the huge increase in inequality that occurred in the Clinton years. The resulting huge deficits preclude any increase in domestic spending but do allow the pursuit of a military agenda that seems geared to benefit multinational corporations. Again, it is hoped that inflation will be checked by worker insecurities.

It seems rather obvious that neoliberalism is unsustainable in the long-run. In an interesting take, the author presents neoliberalism as presenting problems that Marx, Keynes, and Polanyi delineated. He calls for the re-regulation of financial markets, limits on free trade, and more domestic investment, including full employment. But it is a glaring shortcoming of the book that no attempt is made to describe how such a redirection could or will come about. Can it happen only politically or must a major collapse on the scale of the Great Depression first occur?

For those who need convincing that the Clinton years were not as good as they seemed, this may be the book for you.