The bankruptcy of economic liberalism and neoliberalism: From political deadlock toward war

The 250th anniversary of the book "The Wealth of Nations" will arrive next March. "Whatever, therefore, raises in any country the rate of profit higher than what it otherwise would be, necessarily subjects that country to both an absolute and a relative disadvantage in every branch of trade of which she has not the monopoly," wrote Adam Smith in 1776.

Leaving aside for later the criticisms Karl Marx wrote specifically against Ricardo and Smith, we will naturally give priority to the contemporary reflection of the liberal understanding of A. Smith, who is also considered the founding father of economics. We know that he systematized and highlighted the commodities he acknowledged were produced by the value of labor through the division of labor and specialization with the profit-making capitalist. 1776 is also the year the American Declaration of Independence was announced and the United States was founded. In the meantime, let us not overlook the declaration of independence in the 1789 French Revolution.

All of this describes the political plane where empires dissolved within the borders drawn by nation-states and "equal" citizens wrested their economic welfare from the clutches of the aristocracy. Would the liberal economic understanding of profit/loss, where the individual is the central unit of analysis, be able to ensure both the productivity of labor and the efficiency of capital and produce social welfare?

In the 1770s, when the book was written, workers who produced nails could spend the nails they brought in their pockets when they went to a pub to drink beer. Although small workshops do not explain the scale of capital, the trade monopolies that Adam Smith mentioned above would naturally strengthen their monopolistic positions in industry as liberalism progressed.

Finance capital, which is identified with the banking system, will undoubtedly protect these monopolies and prevent small capital from becoming a competitor.

Even if we call the system liberalism, the name capitalism suited it better because it constantly worked for the profitability of capital from an economic perspective. The massive classical political economy that came through this system was able to create a literature toward the middle of the 19th century. The 20th century was entered with the classical imperialism phase that came from the 1870s.

"BELLE EPOQUE" AND THE BRUTALITY OF LIBERALISM

The French for some reason call this first global era, in which classical imperial capitalism opened up to the world and colonies were directed by the profitability calculations of international companies, but where the aristocracy was still dominant in land ownership, "belle epoque" (beautiful era). Yet, "belle epoque" is the period when land ownership derived from the aristocracy and wealth inequality reached its peak throughout Europe. It is already evident from the fact that these "beautiful years," which were not politically convincing, ended with a bloody world war.

Let it not be thought that there was a slight departure from liberalism between the two world wars. Let us just keep in mind that foreign investments decreased, that US finance caused the 1929 crisis at the peaks of overproduction during the years of customs protectionism, and that economic liberalism fell into a pit of severe unemployment and poverty. About half of the approximately 50-56 million soldiers and civilians who died in World War II were in the USSR (27 million according to official sources). If we add to this the nearly 30 million deaths caused by disease and famine, the scale of the brutality created by economic liberalism becomes even more terrifying.

The American peace, known as "Pax Americana" after 1945, could never establish a social welfare state because it entered into a mutual arms race with the Soviets. Although Europe partially experienced social welfare, this period could not direct either the excessive profit of the capitalist or the productivity of labor to the equal sharing of surplus value on a common ground. On the contrary, the system created "individuals" who did not feel good unless they consumed goods and services they did not even need, while being in need of the basic goods they did need (alienation).

Monopolies, of course, seized more with international agreements in the 1990s. With the Washington Consensus, it was announced through the chief economist (J. Williamson-World Bank) channel that this new economic order (neoliberalism) was beneficial to everyone, especially developing countries.

Of course, homework was assigned to semi-peripheral and peripheral countries, especially regarding capital inflows, the tax system (transfer pricing), and trade... Do you think the World Bank chief economist (1989) John Williamson, who followed the path opened by Adam Smith, was aware of this?

The conceptual framework of economic liberalism, produced by the hands of dead and living economists, either ignored the brutal side of capitalism, slave labor, oppressed workers, and exploited nations, or gave the advice to "wait your turn." In the last 35 years, in countries that have fulfilled their homework to the letter, neither has labor productivity reached the desired level, nor have the local capitals of those countries been able to increase their profits sufficiently without foreign partners. Moreover, apart from China, there is no one among the group of countries that make up about 80 percent of nearly 200 countries that has reached the ability to direct its own surplus value. This, of course, leads to political deadlocks.

POLITICAL DEADLOCK AND WAR

China's capacity to produce surplus value has increased with capitalist practices. However, because it has reached an economic competence where it can direct this and turn it into capital investments, it has been declared almost an adversary by the US. US President Trump, who will go to China next April, surely knows that economic competition leads to political deadlock.

Political problems with Iran, Venezuela, and Russia continue with the threat of war.

We cannot think that the political and military problems the US has with Europe are independent of economic problems and neoliberalism. "NATO is brain dead," Macron said recently. Don't you think the European military union discussion meetings held in Munich and the increase in defense spending indicate that political tension is rising?

So, what do the large expenditures allocated to defense, for example, the 47 percent increase in the share allocated from the budget in Turkey and the fact that it has long exceeded 2 percent of the national income, and the creation of a giant 800 billion euro defense fund in Germany tell us?

If the disinflation policy based on the increase in the current account deficit in Turkey ignores distribution and allocates a share to defense, this is a painful situation..

Don't all these things describe the threat of war, which is the most violent stage of politics and even its "dead end"?

Is it neoliberalism, the model of economic liberalism for the last 40 years, that has become obsolete, or has the space of freedom and welfare that economic liberalism claims to offer the individual narrowed?

You decide which one... I think both...

Even AI cannot save us... The nation-state will find well-being as it protects the individual, society, and labor, but it has become clear that this cannot happen with economic liberalism...

Don't you think the constant threat of war and past great world wars are enough evidence for this fact?