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Monday, April 30, 2012

The Golden Hammer of Neoliberalism



The Golden Hammer fallacy is a form of very simple answer fallacy. It seen when the proponent offers the same kind of solution to every problem. If all they have is a hammer then everything begins to look like a nail.

Orthodox neoliberals consider the core neoliberal policies (financial sector deregulation, privatisation of state infrastructure, tax cuts for corporations and the rich, welfare cuts, ceding of fiscal autonomy to central banks) to be economically essential no matter what the economic circumstances. Even when the economic problems of the day (the global economic crisis) can clearly be traced back to previous neoliberalisation policies (financial sector deregulation in the UK, USA, Eurozone, Iceland.....) the orthodox neoliberal will offer only the Golden Hammer of further neoliberalisation (austerity) as a solution.

The use of Golden Hammer fallacies can be seen throughout history. Countless organised religions have used the golden hammer fallacy in order to explain away natural disasters such as droughts or earthquakes. The religious order of the day would claim that the natural disaster occurred only because the followers had not been praying hard enough, making enough religious sacrifices or engaging in heretical behaviour. Thus in order to prevent further earthquakes or to end the drought, the people must pray harder, make more religious sacrifices and avoid heretical behaviour. Thus whatever the circumstances, the answer must always be for the followers to devote more effort and resources to the maintenance of the religious order.


Dr Samuel Solomon became rich selling his
Cordial Balm of Gilead as a cure all medicine, even though
it was nothing more than a herbally infused fortified wine.
Another example of the Golden Hammer fallacy can be seen in the activities of 19th Century quack doctors hawking their patented "cure all" elixirs. These quack "medics" used the modern practices of branding and aggressive marketing to sell unproven, ineffective, and often dangerous medicines to the public. The English quack Dr Samuel Solomon claimed that his Cordial Balm of Gilead could cure almost any medical complaint, even though it contained only brandy and a mixture of herbs. He sold it for for 33 Shillings a bottle (nearly £100 in today's money) making him a rich man, whilst doing absolutely nothing to alleviate the suffering of his patients.

An example of the Golden Hammer fallacy being used to promote a particular political ideology can be seen in the attitude of 20th Century totalitarian communist regimes. When such totalitarian regimes suffered economic crises (often caused by the overcentralisation of the economy or the fear of harsh reprisals against those that would speak out against corruption or inefficiency), the response of the communist state would be to blame the actions of "anti-revolutionary elements" or the interference of "imperialist western agitators". Thus the response to the failings of the isolated totalitarian economic systems would be to adopt an even more totalitarian stance by orchestrating witch hunts against political opponents, or to increase the state of economic isolation through the prevention of trade with the "imperialist west".

Returning to the neoliberal ideology, it is quite clear that the causes of the current economic crisis can be traced back to the neoliberal policy of financial sector deregulation. These financial sector deregulations led to the creation of vast speculative bubbles built on easy credit. Once the bubbles burst, the Western economies were dumped into prolonged periods of recession. The neoliberal response to this crisis was to divert attention away from the causal link between neoliberal financial sector deregulation and the economic crash and instead blame the "cost of welfare" for the crisis. Thus, to the orthodox neoliberal the only solution to the ongoing economic crisis is further neoliberalisation of the economy under the guise of economic austerity.


Neoliberalism is not the first political ideology to rely on the
Golden Hammer fallacy, the communist Soviet Union even
incorporated a golden hammer into their flag!
It is quite clear that neoliberalism is a fundamentalist economic ideology, which on the opposite side of the coin of economic extremism to the equally dogmatic communist ideology, in that faults in the system can always be explained away with post hoc excuses and any inherent problems caused by this kind of economic extremism will always be presented as a need for more fundamentalist reforms.

Neoliberalism and totalitarian communism can both be seen as faith based ideologies, forms of political fundamentalism that have filled in the voids left by decline in organised religion, which has come about due to the deliberate suppression of religious expression in communist regimes or through the rise of self-interested individualism in the West. Both of these political ideologies rely on core indisputable principles. Just as adherents of the organised religions of the past had faith in a God capable of and willing to intervene to punish or reward them for their behaviour, the modern neoliberal has an unshakable faith in the ability of unregulated markets to regulate themselves. Even when faced with overwhelming and undeniable evidence that deregulated markets lead to vast anti-competitive monopolies and oligopolies that become too big to fail, needing vast state interventions to prevent widespread economic chaos (the 2007-08 financial sector meltdown), the neoliberals quickly cobble together some lame post hoc excuses about how the market only failed to regulate itself properly because it wasn't free enough.


The neoliberals like to dress up their argument in the language of maths and science in order to create a veneer of expertise and legitimacy, even though the track record of failed neoliberal experiments is a very long one indeed (brutal South American dictatorships, Russian oligarchs, the south-east Asian crisis, increased poverty in post Apartheid South Africa, the Argentine economic meltdown, the global banking crisis, the Spanish property crisis, the Icelandic financial crisis, the Eurozone crisis). 

Neoliberalism is a form of pseudo-science, since it is a practice which is presented as scientific, yet refuses to acknowledge the litany of failed neoliberal experiments, simply relying on post hoc excuses to explain away the latest failure in the application of their theories. Just like the quack doctors of the 19th Century, the proponents of the neoliberal ideology don't seem to care that huge numbers of people have suffered the terrible side effects of their toxic economic elixirs. 

That so many people lap up the pseudo-scientific drivel of the neoliberals comes as no surprise, people seem inclined to believe in simplistic Golden Hammer explanations. Without widespread public gullibility, religious fundamentalism would never have thrived for Milena, the snake oil salesmen of the 19th Century would have been unable to prosper and any politician spouting defunct neoliberal pseudo-economic gibberish would have been booted out of office back in 2008.                
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1 comment:

Sonali said...

Thanks for your posts, I would be waiting for similar interesting posts in future.

Thanks
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