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GDS Chapter 1 Reading Notes

CHAPTER 1: The Paradox of Preeminence

A note about the reading notes: These are not intended as a substitute for reading the book itself. If you read only the reading notes and not the book you will miss a great deal. The reading notes also do not attempt to discuss all of the important points. The notes approach selected major points from slightly different angles of approach than the book does, thus providing another way of looking at the material. Generally speaking, the notes approach the chapter material from a meta-level, that is, one step up from the text, commenting on its significance and providing some supplementary commentary and material to that of the book.

The book itself is written in a highly accessible manner so that anyone can read it and learn a great deal, but the content is quite complex and very sophisticated. A lot is going on within any given sentence and paragraph and there are many layers of meanings and inter-connections being made, so readers will find it helpful to use these notes in getting more from the book. To get the most out of this book, pay especial attention to the way that Loo uses theory as a means of illuminating what is beneath the surface appearance of things and how seemingly disparate developments are in fact part of a larger pattern.

These notes were compiled by a writing team of students who have read and discussed the book. Their notes were reviewed and added to by Dennis Loo.

This chapter explores various expressions of what could be described as paradoxes of power. This includes ironies within neoliberalism's philosophical foundations and the way in which victory for the U.S. in its rivalry with the socialist camp and its putative "war on terror" have greatly increased insecurity on both the societal and the personal levels, rather than enhancing security.

Loo sets the stage for this examination by pointing out that despite its status as the greatest military and economic power in history, the U.S. has been marred by “record-breaking economic disparities, rising immiseration, increasingly punitive laws, ever-growing incarceration rates, and so on. If victory for the American way of life and capitalism looks like this, then what must defeat look like?” (p. 31)

How can life be getting so much worse for most Americans if America is the big winner of the Cold War? Why is life so much worse for most of the world’s people? As Loo's argument proceeds through the book, it becomes increasingly clear that capitalism's victory over socialism and the communist movement in the latter part of the twentieth century actually sets the stage for the increasing degradation of the public's living conditions overall rather than the reverse. The very wealthy top 1% become the big winners, but the vast majority of people see their conditions getting worse, not better. (Gadgets such as cell phones, by the way, are only one, and not even the best, indicator of living conditions.) This is analogous to a predator consuming its own feeding grounds at a non-sustainable rate because of the disappearance of any rivals. Examples of this include the U.S.S.R.'s Sputnik's positive impact on U.S. education. The 1950s' and 1960s' civil rights movement, to a very significant degree, owes its triggering to the post-World War II world alignment of a new socialist camp versus the capitalist world. This new alignment meant that a large chunk of humanity now had an alternative to capitalism's inequities and divisions by, for example, race. The Supreme Court's famous Brown v. Board of Education decision was prompted by the need of the U.S. to officially end segregation by race in order to have any chance of appealing to the Third World which is made up largely of people of color. The Brown decision was not, in other words, because the U.S. ruling class suddenly woke up one day and slapped their heads saying: "I can't believe we've been savagely repressing blacks all of this time! What were we thinking?" Had the communist movement not made tremendous advances during and after WW II, then, the U.S. rulers would not have felt a need to desegregate. (The civil rights movement is discussed in Chapter Two.)

The most common response of those who recognize the U.S.'s growing inequities and problems is that the solution is to control capitalism through regulation rather than conclude that there is something fundamentally wrong with capitalism as a system. Many people, for example, advocate a return to the New Deal economics of the F.D.R. years in which the government “provided a safety net for those that capitalism had temporarily or permanently cast off by supplying unemployment compensation, social security, welfare and so on.” (p. 31)

In response to that view Loo points out:

All systems have rules and inherent logic. You do not change those systems by putting different individuals in charge of them. Systems do not operate the way that they do primarily because of the nature of the people who occupy them. In the Stanford Prison Experiment, for example, the “guards” and “inmates” were all Stanford students. Yet they one and all readily and quickly adopted roles that eerily mimicked real prisons’ occupants and repressive atmosphere. To stop the Stanford students from behaving like prison guards and prisoners, Philip Zimbardo, the experiment’s lead investigator, brought an early end to the simulated prison. You change system outcomes, in short, by changing the system. (p. 31)

What is this system’s logic?

“Capitalism,” he states, “is a system whose governing logic is the pursuit of profit. Neoliberals and libertarians can speak of ‘freedom’ and ‘liberty’ all they want, but profit as the economic system’s cardinal goal inevitably produces certain outcomes.” (p. 31)

Loo thus puts these issues into the overall framework of a systemic problem, governed by system logic, and not one that can be fixed by simply electing the right people or imposing term limits. This is in line with sociology's and anthropology's premise that social structures and social context determine people's actions more than individuals' personal values, attitudes, and choices. (In sociology this is reflected, for example, in Emile Durkheim's term "social facts" and in American sociologist C. Wright Mills' "sociological imagination.") This is certainly not the argument one generally hears in major media, in most books, or even in much of higher education.

As central as this perspective is to social science, even among many social scientists there is a tendency to be inconsistent about this when social scientists address themselves to public policy questions. Even most of those in the U.S. who express great misgivings about the direction of political and economic policy and who suggest change as a solution to that, tend to do so by seeking solutions within electoral politics.

When you think about it, it is not surprising that most people, wherever they live, will spontaneously tend to suggest reforms of the existing systems rather than revolutionary changes. It's much easier, for one thing, to envision small changes rather than big changes and to believe that small changes are more "realistic." 

Events and conditions in the nation and the world, however, are propelling increasing numbers of people in the direction of seeking deeper answers and grappling with why things are the way that they are. This book is specifically designed to give people the level of understanding that they need in order to act effectively rather than acting based on the conventional and mistaken views about how economics, politics, and social dynamics operate.

Does the advice we get on health care over the mainstream media give us enough scope, depth and detail to allow us to treat ourselves and be our own physicians? Certainly not. Why would political advice dispensed via mainstream media and existing governmental institutions be any better? Is it reasonable to expect that reliance upon the major parties’ campaign pitches and the injunction “just vote” could possibly be all you need to know to change society? The richest 497 individuals in the world have more wealth than the bottom fifty percent of the world’s population. If you had such extreme wealth and power and enjoyed your luxuries more than justice, would you let your possessions be subject to the whims of the principle of “one person, one vote?” Would you let your extraordinary wealth be outvoted? You would be crazy to do so. (Pp. 23-24)

Following this prelude, Loo evaluates neoliberalism's theoretical godfather Frederick Hayek’s reasoning. Loo demonstrates that Hayek's theory’s central premise is fatally flawed because Hayek negates the very notion of society, treating it as a hindrance to liberty rather than the foundation for human life, and because Hayek in a more general sense spurns objective necessity's reality.

In the second part of the chapter, Loo illustrates some of neoliberalism’s devastating impacts upon society and the environment.

Neoliberalism stems from the same tenets advocated by economist Adam Smith (i.e., laissez-faire and the invisible hand). Society is better off, Smith argued, when each individual pursues his or her individual business interests unfettered by any regulatory agency such as government. The theory of neoliberalism introduced by Austrian economist Friedrich Hayek in the 1930s is largely based on Smith’s theory but brings it to another level.

Hayek argued that human rights are commensurate with property rights. He further argued that liberty means that one should be free to act according to his or her will with nobody, e.g., the government or other people, getting in his or her way. If only those who own “property rights” are entitled to “human rights,” however, then obviously not everybody is entitled to the right of liberty. Only those who have capital can be free; the others will be restricted in their ability to follow the course of action they strive for by their restrictive material conditions.

Loo also points out that Hayek’s logic is flawed at another level. Hayekian logic is based on the premise that all that matters in life is what one wants, regardless of whether or not it reflects objective reality or violates the community's interests and needs and the common good. Objective reality, however, is something that one cannot simply dismiss. Objective reality compels us to distinguish between what is true and false. We are surrounded by examples that reflect the fact that human beings make decisions, not solely on the basis of our own desires, but also on the basis of objective reality. Loo writes:

If objective reality does in fact exist, and if science, medicine, navigation, exploration, and technology all rely upon objective reality’s existence to work (a fact evident to anyone using a car or airplane, for instance), then the ongoing effect to determine at any given time in society what the best ideas are … it not merely an idle intellectual exercise but one with powerful material consequences. … If what matters more than anything, on the other hand, is that individuals should have the right to pursue their ideas and plans based on their “own” ideas, then the question of what is true and its impact on the whole of society becomes moot. (Pp. 35-36.)

Objective reality must be considered before one can attempt to fulfill one’s desires, Loo argues. Necessity is one component of objective reality that must be taken into account. For instance, wishing that gravity did not exist so one could fly is not a sufficient condition for one to be able to fly. Similarly, the fact that one needs water and food to survive is not a sufficient condition for one to be able to drink and eat, for the water and the food must be available. Based upon first recognizing necessity and objective reality, humans have been able to create more freedom such as the ability to fly, but only because humans recognized that gravity exists, studied animals and insects that do fly, and developed the science and technical innovations that made human flight possible.

Another component of objective reality is that we are also social beings. Loo illustrates this as follows:

Individuals … can only exist because of groups .… We become human through this socialization process and we become individuals. Becoming human isn’t something that happens by our simply being alive. We do not become humans solely or principally because of our DNA. We become human through our interaction with other humans. (p. 36)

If we look at the course of history, Loo argues, it is obvious that individuals often have to bypass their individual desires and adapt to the group desires/needs in order to survive. If individuals had not learned to pool their efforts towards the group's needs, our species would not have survived, and all the amazing scientific achievements that we take for granted would have never occurred. This further illustrates the fact that, contrary to what Hayek argues, necessities are rarely created by individuals’ desires alone, but rather by necessities inherent in the fact that individuals are social human beings and the fact that we live in a world that is not the Garden of Eden but one in which objective laws, objective realities, and necessities exist.

The interaction between the individual and the group is “organic,” Loo argues. It is comparable to the interaction between a tree and its leaves: the tree needs leaves to remain alive, and the leaves need to remain attached to the tree in order to survive. Likewise, the individual and the group need one another to survive and function as a society. Even the most successful individuals within our society utilize and need the group to some degree. For instance, a leader (a legitimate leader) is appointed by a group of people to represent the group’s interests. A leader can have tremendous power, but his/her power is only as good as long as the group is satisfied with how s/he represents the group’s interests. The leader is not free to act solely upon his/her own personal desires because s/he is accountable for the group, and his/her legitimacy is based upon him/her fulfilling the role of leader. The group needs its leaders just as much as itself, Loo argues, for it “needs its leaders to protect, sustain, and retain them. Without leaders a group cannot organize itself and it cannot act” (p. 39)

As long as there will be (and must be) social groups, Loo asserts, the individual and the group will remain part of the same dynamic/dialectic, and so will freedom and coercion:

It is impossible, for one thing, to have unanimity, and where there is disagreement, some people’s opinions and preferences must perforce be subordinated to the opinion that holds the day, if people are to remain in groups at all. (p. 41)

If one accepts this premise as true, then one can no longer presume, as Hayek does, that the group has no influence on an individual’s action, and that the individual is entirely free to act according to his or her own desires. Yet, many act as if this premise does not hold true. Neoliberals are among those people. Thatcher and Reagan were the first major national leaders to implement neoliberalism for they were both fervent Hayekians. (Chile's fascist leader Gen. August Pinochet was the first to implement neoliberal policies after his CIA-backed coup over the first elected socialist, Dr. Salvador Allende on 9/11/73). 

As Loo points out, both Republicans and Democrats have embraced neoliberalism since the 1980s and this has been the trend internationally.

Neoliberalism’s advocates re-define government's role as that of supporting market policies at all costs. Loo summarizes the role of government under the rule of neoliberals as follows:

According to neoliberalism’s proponents, government’s role … isn’t to support and safeguard people, unless, of course, you are already one of the elect, in which case government’s role is to protect you at all costs. It is a free market for everyone except those who are already monopolists. For the monopolists, government’s role is to facilitate and protect your privileges rather than to regulate or curb your power, all the while invoking the name of the free market.” (Pp. 47, 48) … Since the 1980s, governments in the advanced capitalist centers have obliged the interests of globalization, vigorously carrying out successive waves of deregulation and privatization, shredding the social safety net, and opening the floodgates to merger mania. (p. 50)

Those who most benefit from neoliberal policies are the “super wealthy,” aka the elite or 1%. This should not come as a surprise, Loo points out, considering the fact the political candidates and the political arena depend heavily upon society's elite members' funding and that the very existence of government itself indicates that class divisions and class conflict exist. Loo further notes that neoliberal economic policies have widened the disparity between the rich and the poor to unprecedented levels. According to Loo, globalization, which is neoliberalism' political expression, is the main culprit. It compels workers (from the working and middle classes) to work harder for less, while bestowing the elite with an ever increasing amount of wealth and power.

Loo further adds that the level of insecurity and coercion has also reached unprecedented levels in the U.S., but also around the world. Loo argues that coercion, or what Max Weber refers to as the “means of legitimate violence,” must be utilized more heavily and widely by neoliberals because neoliberal policies are systematically undercutting the people's living conditions and political rights. Force must, therefore, be used to contain the resistance and suppress uprisings.

In contrast to neoliberal rhetoric that claims that it promotes prosperity for all, neoliberal policies are driven by the logic of dispossessing wider and wider swaths of the people and therefore promote growing insecurity by their very nature and intention.

Globalization and neoliberalism’s mantra is to privatize that which has been public; outsource that which has been in-house and in-nation; deregulate so that the “free market” may be unfettered; ceaselessly downsize the workforce, cutting payroll and reducing benefits, making job security and a secure, guaranteed retirement things of the past. Not surprisingly, the inevitable outcome of these measures means that insecurity—the more, the better—is the ineluctable, inevitable, desired outcome. From the standpoint of corporations, the more perilous the jobs and the economic status of the labor force overall the better, since this will compel employees to accept less in return for working ever harder and longer. (Pp. 52-53)

This is also the institutional and organizational level foundation for the "war on terror." In other words, neoliberalism's intensification of insecurity in the domestic arena is directly related to its actually stoking the danger of anti-state terrorist attacks. Loo points out, for example, that several Republican public officials (such as former Senator Rick Santorum) have publicly welcomed the idea of another devastating terrrorist attack on the U.S. because it would reaffirm the value of the Patriot Act and other measures instituted in the name of the "war on terror." Neoliberalism is the greatest source of instability in the world. This is a theme that the book develops even further in Chapters Three and Four.

Loo notes that with the rise of neoliberalism, the funding of programs that support coercion and social control have taken precedence over the funding of social and public safety programs, not fundamentally as a choice but out of necessity given the nature of neoliberalism's undercutting of the basis for the public's willing co-operation. The level of funding for the criminal justice system in comparison to the level of funding for the educational system over the past decades is a prime example of that. The grievous mismanagement of Hurricane Katrina, both before the disaster and in its aftermath, also illustrates this point, as do many other examples he lays out in the book, including the numerous wars the U.S. has launched and continues.

Since the basis for people to cooperate, to behave normatively (for example, to abide by the law) is constantly and deliberately undermined under neoliberal regimes, and since, for the most dispossessed, even less of what was available to them in welfare states with Keynesian economic policies is now offered, governments must increasingly rely upon coercive means with spending on “security” (law enforcement, military, immigration control, prisons, surveillance and so on) rising inexorably. This point bears underscoring: more repression and more coercive means of social control are not principally a policy choice in the sense that people might think of the GOP favoring more coercion and the Democrats less. The overall direction of neoliberal regimes dictates that more coercion will be required, regardless of the party in power and the individuals in office. (Pp. 53-54)

In a passage that reads as if it's a description of how the Occupy Movement got underway (but was written before Occupy appeared), Loo describes the effects of neoliberal policies on the various strata:

The net results under neoliberalism are extraordinary increases in wealth for the upper class, a shrinking middle class, and swelling ranks of the working class (who in turn find it harder and harder to find work) and of the indigent. As outsourcing of work continues apace, and in recent years as even intellectual and white-collar labor is now being exported to places like India, reversing the long-standing brain drain to the US from elsewhere (notice where people live who are giving you most of your technical support now days), the middle class finds itself under siege in ways unprecedented in US history.

Social order in neoliberal regimes becomes more precarious because the guarantee or at least reasonable assurance of work at livable wages for people becomes more and more elusive since those jobs are increasingly disappearing. Persuasion based on actual rewards for going along consequently becomes less and less of a practical tool. Neoliberalism and globalization dictate that positive incentives will be systematically whittled away to make the workforce more adaptable and more “flexible." (Pp. 63-64)