News Front exclusive – Liberal economists are outraged by Sergei Glaziev’s proposal to Russia’s Security Council on how to promote growth despite sanctions. Are Glaziev’s economics crazy, or sane in a crazy world?
The proposal calls for the nationalization of the Bank of Russia and the dramatic lowering of interest rates to promote domestic investment. These measures are based on the view that current policy doesn’t serve the interest of the Russian economy and people, but rather the special interests of speculators and the US Federal Reserve. While mainstream neoliberal economists hysterically decry Glaziev’s proposal as mad, it is broadly in harmony with the views of an increasingly vocal group of dissenting western economists.
Cambridge economist Ha-Joon Chang is the author of Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. Chang points out that neoliberalism is an out-dated, repeatedly disproven economic theory. It is inherently undemocratic and considers the right to private property (originally human property- African slaves) the highest liberty and human right. Chang agrees with Glaziev that neoliberalism is dominant today only through the support of powerful special interests. Examples of its undemocratic nature include Yeltsin’s 1993 power grab, the EU’s disregard for the Greek referendum on austerity, the Portuguese president’s ban on anti-Euro parties-elect from forming the government, and the leaked phone call of US official Victoria Nuland appointing Yatseniuk to carry out neoliberal reforms in Ukraine.
Professor Chang has written extensively on how neoliberal policy advice which organizations like the IMF offer to developing countries like the Ukraine is given in bad faith. It is contrary to the policies which brought prosperity to today’s highly developed countries and is intended to cement the developing countries’ permanent subservience. In their book The Making of Global Capitalism: The Political Economy of American Empire Professor Leo Panitch and Sam Gindin describe how the EU was designed by the US Federal Reserve and US Treasury to bind Europe’s economy to America’s, ensure neoliberal monetary policy via the ECB, and remove all capital controls, allowing wealth to flow to Wall Street unimpeded. Like Glaziev they advocate nationalizing reserve banks.
Other dissenting economists share the view of neoliberal economic orthodoxy as being based on special interests rather than sound science. They include Professor Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy, and Professor Steve Keen, author of Debunking Economics – the Naked Emperor Dethroned? However, The most prominent critic of special-interest-driven free-market fundamentalism and IMF policy is Nobel Laureate Joseph Stiglitz. Stiglitz emphasizes that the neoliberal model has failed; no true recovery from the 2008 crisis is in sight.
Social Democratic policies like public healthcare, maternity leave and the eight-hour work day were not products of liberal values. In practically all cases they were adopted, often by right-wing governments, to avoid the spread of Bolshevik revolution to Western Europe. Now that the red threat is gone, these policies are gradually being removed under the neoliberal fig leaf of ‘austerity.’
The same liberals who are in hysterics over Glaziev’s proposal are silent on the illegality under WTO rules of the Atlantic bloc’s sanctions on Russia. They also promote the US-sponsored TPP and TTIP trade agreements. The South China Morning Post notes that these agreements are based less on sound economics and more on America’s desire to stem China’s rise. The intended impact on Russia is clearly similar. Meanwhile, the nuclear deal with Iran is designed to bring Iran into the Atlanticist alliance against the SCO bloc. Tehran has easily recognised this as a divide-and-conquer ploy and reaffirmed the principle of ‘death to America.’
Three million EU citizens have signed a petition against TTIP, yet implementation of it has begun even before it has been signed or ratified. The deal gives unprecedented power to big business while eroding democracy, civil rights, privacy, environmental protection and food safety in Europe. Stiglitz describes this kind of free-trade agreement as a charade allowing foreign investors to sue governments for laws which diminish profits.
There is no guarantee that Glaziev’s proposal will be implemented. But discussion of it is a sign that the Russian government is engaging in healthy policy debate, rather than mindlessly accepting questionable economic orthodoxy.
Jonathan Trefz especially for News Front agency