6 Major Facts That Neoliberal Market Fanatics Ignore
By Caleb T. Maupin,
Founder and Director of the Center for Political Innovation
The flim-flam economics of Milton Friedman, Ayn Rand, and Alan Greenspan is treated as holy gospel in US society. Certain broad sweeping claims are repeated as if they are facts. “Markets always produce the best results.” “Government intervention in the economy only makes people poorer.” “The free market lifts people out of poverty, while state central planning only makes people poor.” “The market creates innovation and leads to new technology being invented, while government suppresses creativity.”
These claims fly in the face of numerous undisputed facts. I have assembled six indisputable historical realities that demonstrate how clearly the free market fanaticism routinely preached in America and assumed to be true simply doesn’t match reality.
1. Russia and China became modern industrial countries and superpowers with 5-year plans under the leadership of Communist Parties.
Prior to 1917, Russia was a rural agrarian country with almost no electrification. By 1936, it was the world’s leading producer of steel and had the world’s largest hydroelectric facility. In the 1930s, the world marveled at how rapidly the USSR industrialized with Stalin’s program of “Five-Year Plans,” which mobilized the country to build and rewarded those who worked especially hard and set records in programs called “Stakhanovism.”
China was the “sick man of Asia,” one of the poorest countries in the world prior to 1949. It was under the leadership of the Communist Party, which still to this day carries out Five-Year Economic Plans and maintains a large number of state-controlled industries and state-directed private corporations, that China rose to being the second-largest economy on earth.
“Communism has just never worked anywhere.” “Communism just makes people poor.” These statements don’t match reality. Pointing to famines that took place during efforts to expand agricultural production, or human rights violations, or atrocities doesn’t change this reality. The central premise of neoliberal economics and standard American anti-communism and political “common knowledge” since the 1990s is just false.
2. The Asian Tiger countries utilized massive government control and state planning to achieve their successes.
Libertarian, neoliberal, free market literature is full of praise for the Asian Tigers. South Korea, the island of Taiwan, and Singapore were all led by non-communists, and they all did business primarily with Western investors. This is supposed to be proof that the free market is the answer.
The problem with this common neoliberal claim is that the Asian Tigers utilized massive government control. In South Korea, the military dictatorship of Park Chung Hee created government-sponsored monopolies like Samsung, Hyundai, and POSCO. Singapore, from the early days of Lee Kuan Yew right up to today, has an economy where the state is heavily involved and private corporations operate under the complete control of government overseers and planners. The same is true for Taiwan during its massive expansion in the 1980s.
Claiming these countries are proof that the free market is the answer is an absurd distortion of reality. The fact that these governments are anti-communist or that Western investors were the primary business partners doesn’t change the fact that the economy was still heavily controlled by the government. State-run industries were major players, often created by the state itself, and under heavy military dictatorships private companies were told what they could and could not do with a very heavy hand. These bonapartist military states were seen as a barrier against Communism by the US government, and were enabled to implement central planning and rapidly build themselves up.
To present South Korea, Singapore, or Taiwan as examples of the free market or arguments in favor of “letting the economy take care of itself” and “getting the government out of the private sector” is almost laughable. One would assume that Ayn Rand, Milton Friedman, and Alan Greenspan knew this, not being completely ignorant about the countries they spoke of. They simply pandered to their audience’s ignorance, in what appears to be dishonesty.
3. The Computer Revolution in the West was largely the result of government planning.
Free market literature and rhetoric love to point us toward Bill Gates, Steve Jobs, and other Silicon Valley pioneers. These were just nerds tinkering around in their garages and doing math, we are told. The market enabled them to use their individual brilliance to rise to the top and completely revolutionize technology.
This is a nice fairy tale, and there’s no doubt that Silicon Valley’s rise involved a lot of smart people. However, it was largely the intervention of the government, particularly the defense and intelligence sector, that created the computer revolution.
The internet’s origins are in Defense Department technology. Loans and oversight from the National Security Agency, the US Central Intelligence Agency, and the Pentagon are a key part of the origin story of IBM, Microsoft, Apple, Amazon, Google, and so many other tech giants. The strategy of placing the United States at the center of “informational technology” goes way back to the Cold War writings of Zbigniew Brzezinski. His text Between Two Ages: America Enters the Technetronic Era argues for placing the United States at the center of the global information apparatus in order to “Americanize” the world as far back as 1970.
Even earlier, the groundbreaking “thinking machine” of Alan Turing, created to decode Nazi communications during the Second World War, was created not by the private sector but with the complete oversight of the British military as part of a state-industrial mobilization for the war. This key innovation in the computer revolution was not the result of the free market either.
It’s also worth noting that the Soviet Union did pretty well in terms of technological advancement. In the face of the NATO Treaty forbidding any sharing of high technology with the Eastern Bloc, the Soviet Union patented its own home computer system in 1981, Elektronika BK-0010. The USSR invented LED lighting and space travel. The USSR and Warsaw Pact may have had their shortcomings, but inability to carry out technological innovation was not one of them.
And even in the West, the computer revolution was not the result of the free market magically rewarding hard work. Al Gore was ridiculed for saying “We invented the internet” during the 2000 election, but he was pointing to an indisputable fact. Government planners in America decided the computer revolution was necessary to beat the Soviet Union. They found the people, lent the money, arranged the projects, and made it happen. No, it wasn’t free market magic.
4. The majority of poverty alleviation in the world is tied to anti-imperialist governments.
“No system has ever lifted as many people from poverty as capitalism,” they tell us. “The market is the greatest poverty alleviation mechanism ever created—we don’t need the government,” we are told. A common cliché among advocates of neoliberal economics, such as Argentine President Javier Milei, is to point to the origins of capitalism in the 1700s and all the people lifted from poverty since then.
Well, the fact is that no other country on earth has ever lifted as many people from poverty within its own borders as China. China is responsible for lifting 800 million people from poverty, bringing them into modern conditions with running water, electricity, modern education, etc. China’s government has five-year economic plans, major state-run industries, and a Marxist-Leninist ideology.
But China’s contribution to poverty alleviation does not stop on the mainland. China’s Belt and Road Initiative, carried out through the Asian Infrastructure Investment Bank, is responsible for many more millions being lifted from poverty. The exact count is incalculable. China has electrified regions of Africa and South America. China has connected regions to investment with high-speed railway lines. To add up all the people in the developing world lifted out of poverty by projects tied to or directed by China’s state-run economy would be impossible.
But even beyond China, other examples of non-market poverty alleviation having massive success are numerous. Libya rose to have the highest life expectancy on the African continent under the leadership of Muammar Gaddafi, with nationalized oil used to build the world’s largest irrigation system, create a number of state-run industries, and eradicate unemployment and homelessness. Electrification was brought to Egypt by the Great Aswan Dam, created by Arab Socialist President Gamal Abdel Nasser in coordination with the Soviet Union.
The 800 million people lifted from poverty in China, the millions who rose from poverty under Arab Socialist or Baathist governments, and the millions who gained access to doctors or literacy for the first time in their family’s history in places like Eastern Europe or Latin America due to Communist or Bolivarian Socialist programs far outstrip development and poverty alleviation overseen by the West and its markets. The massive economic expansion taking place in the Union of Sahel States (AES) in West Africa is just the most recent example.
This claim that “only the market” eliminates poverty or has eliminated poverty is just another falsehood. The bulk of the poverty alleviation that occurred in the 21st and 20th centuries is directly linked to Marxist, anti-colonial, and socialist states.
Meanwhile, the sections of the planet that remain under western domination are scenes of chronic underdevelopment. Nigeria has been a western client state and produces a huge amount of oil, but its people remain deeply poor. The people of Guatemala and Honduras live in very dire conditions compared to their neighbors in Nicaragua. Haiti has been the victim of US domination under the “free trade” system, and the results are very apparent.
5. Market liberalization during the 1990s was a disaster.
After the fall of the Soviet Union, the world experienced a wave of neoliberal economic reforms. In the Eastern Bloc, countries sold off their state assets to the highest bidder and endured major economic suffering as a result. The 1990s is considered a dark time in the history of Russia, when unemployment soared, along with suicide rates, drug deaths, crime, and poverty as the state-run economy was dismantled.
In Latin America during the same period, cuts in public services and the selling off of nationalized industries did not produce prosperity. Much like in the former Eastern Bloc, the result was massive poverty. Ecuador sank into a nutritional crisis in the late 1990s after being forced to adopt the US dollar. Bolivia was devastated by selling off its state-run oil industry. Cuts in public services resulted in the “Caracazo” riots in Venezuela.
Even in the West, the free market pivot of the 1990s was a nightmare. Bill Clinton’s Democratic Leadership Council and Tony Blair’s “New Labour” brought a free market orientation to the so-called “left” of America and Britain. NAFTA, prisons for profit, elimination of welfare state benefits, and weakening of labor unions all resulted in creating more poverty in these prosperous Western nations. America in particular has seen its infrastructure decay, with unpaved roads, collapsing bridges, power grid failures, and other issues. American education has deteriorated further with more and more implementation of “school choice” privatization policies over the decades.
Neoliberal market reforms have had plenty of time to show their results. In the former Eastern Bloc, in Latin America, and even within the West itself, they have not created prosperity. The fairy tale that getting the government out of the economy creates prosperity just doesn’t fit the actual results.
6. The British Empire & Western free trade colonialism has the highest body count.
Another cliché among defenders of the free market is to rattle off massive numbers of deaths attributed to communism. The idea of the “body count argument” is that state central planning automatically leads to mass death due to inefficiency or authoritarianism, and while the free market may have its problems, the alternative is so murderously authoritarian or inefficient it kills hundreds of millions.
The massive numbers given for those “killed” by communism are highly disputed even among the academics who create them. For example, these scholars routinely list famines and episodes of malnutrition as examples of “mass murder,” when such famines routinely happened in Russia and China before the Communists took power, and it was communists who cured these famines by bringing electrification and modern farming technology. Individuals executed for collaborating with the Nazis during the Second World War are commonly counted as “victims of communism.” The moving of populations on the basis of nationality during the Second World War is described as “ethnic cleansing.” These massive death numbers simply don’t represent individuals willfully murdered, even according to those who present them. They represent deaths in the context of situations such as rapid industrialization and massive wars.
But even if one accepts the dramatically large death figures attributed to “communism,” the deaths directly tied to the free market system and Western colonialism are ASTRONOMICALLY LARGER. The British Empire presided over devastating famines in Ireland, India, and elsewhere in which millions needlessly died. Colonial massacres in Africa, the Congo under King Leopold, the Philippine-American War, and the various places Western powers sent their forces to brutalize and exterminate populations to maintain their dominion are massive. This all culminated in the First World War, when the Western powers battled each other over control of the colonial world, and 20 million people died in the trenches amid the use of poison gas and chemical agents.
From the millions killed in Vietnam and Korea, to the hundreds of thousands killed in Indonesia following the 1965 coup, to the US-trained death squads of Latin America and the subsequent rise of murderous drug cartels that emerged from them, the body count of the West just keeps rising. The US occupied Afghanistan for 20 years and oversaw it becoming the world’s leading opium producer and enduring loads of chaos at the hands of competing terrorists and warlords. Iraq was blown to bits, as was Libya, with thousands and thousands killed. Since the US “regime change,” the country has not become more stable, and millions have fled as refugees. The US imposed a civil war on Syria that killed hundreds of thousands and created millions of refugees.
The very origins of the Western system were genocidal. The enclosure and clearing of the medieval commons displaced the peasants, with thousands killed in the process. From there, we saw the slaughter of native peoples and the transatlantic slave trade. Without massive genocide and displacement, the system would never have developed in the way it did. The very origins of the Western free trade system, the “primitive accumulation of capital,” was mass murder on a scale that far surpasses the allegations made against communism.
The idea that free trade and neoliberal economics are necessary because the alternative is associated with a high body count is a false argument. The body count of “free trade” and the Western colonial order is massive.
Reject Austerity Propaganda
The reality is that serious economists do not accept free market fantasies, even in prevailing Western institutions. Keynesianism, the notion that the state should stimulate the economy with spending, is the prevailing view among Western economists. The economic propaganda labeled “Libertarian,” “Austrian School,” “Chicago School,” and “Anarcho-Capitalism” is not taken seriously among those who set policy.
Neoliberal economics is simply propaganda for the masses, intended to justify policies that will further impoverish the population. In order to convince Americans that somehow it is in their interest to further erode the infrastructure and let it decay, cut social benefits, reduce access to education, and decrease protections for workers on the job, it is necessary to peddle these fairy tales. That is the purpose they truly serve.
What America needs is not cuts in public spending and deregulation of the economy. What is needed is a pro-growth, anti-monopoly state. We need a government that actively invests in communities, the working people, and small business owners whose activities generate the real wealth of society. The United States should break free from the grip of the big monopolies and bankers who seek to maintain their power with endless wars and a low-wage police state. We should connect with the rising new economy in the East, finishing the American revolution and defeating the British Empire system.
We need a government of action to fight for working families!