Macro N Cheese – Episode 112
Neoliberalism – The Denouement with Thomas Fazi 
March 20, 2021

 

[00:00:04.000] – Thomas Fazi [intro/music]

This is really the tragedy of our era. So on one hand, you have the neoliberals peddling this narrative, which they know they know to be false, and on the other hand, you have the leftists, which to a large degree have actually bought into that narrative and actually believe it. And that’s why I’ve fallen out with a large part of the so-called progressive crowd, especially here in Europe.

[00:00:26.430] – Thomas Fazi [intro/music]

A single country that has implemented the biggest fiscal stimulus in response to the pandemic has been New Zealand. Little old New Zealand, with its tiny currency, has in fact been able to implement a huge fiscal stimulus with no adverse consequences whatsoever.

[00:01:35.230] – Geoff Ginter [intro/music]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43.060] – Steve Grumbine

Yes, this is Steve with Macro N Cheese. We have Thomas Fazi joining us. Thomas Fazi is a journalist and an author, and he has worked extensively with MMT royalty OG Bill Mitchell. And I’m very excited to talk to him because last year, around the April time frame, Thomas wrote a really powerful article in a publication called UnHerd. You can find it on UnHerd.com, and it’s called Could Covid-19 Vanquish Neoliberalism.

Now, this article made a lot of claims early in the pandemic, claims that I support, by the way. And we want to test the veracity of some of those claims here in 2021, as we’ve experienced about a year of pandemic living and the impacts of those. But one of the big things is Thomas is in Italy. And as a result of that, he has an EU perspective. He understands the European impacts of the Covid-19 virus as well.

And so I wanted to bring him on and also tie in not only the look back, but to look ahead and understand the great reset that is frequently talked about as a result of neoliberalism ending and moving on into a kind of a different world, whether you support the Great Reset or never heard of it or you’ve heard of it, but you heard about it in the wrong way. We’re going to try and touch on that as well. So without further ado, let me introduce my guest. Thomas Fazi, welcome to the show, sir.

[00:03:17.950] – Thomas Fazi

Hi, guys. It’s a pleasure to be back.

[00:03:20.590] – Grumbine

Thank you so much. So in this article, you really took a pretty thorough exam of the pandemic and how it – I love the word shibboleth. You basically attacked all these strongholds that neoliberalism trots out as the disinformation that they sell you on. And you took each one of these head-on. And I’m just curious, going back then, what was your impetus then to write this? What were some of the indicators that made you write this article?

[00:03:52.150] – Fazi

I guess it was a response to a lot of optimistic analysis that I was reading early on in the pandemic, especially coming from the left, whereby a lot of people reading the government’s reaction, the state’s reaction to a pandemic was that we were witnessing a deep crisis of neoliberalism.

In fact, some were predicting the death of neoliberalism and the rise of a new regime, one characterized by greater state intervention and greater state regulation of markets, more active fiscal policies and greater attention to the needs of societies, mostly brought on by the emergency, not due to sudden change of heart on behalf of elites, but nonetheless, a lot of people saw this sort of fact that elites were forced in a way to resort to these extraordinary measures as a sign that neoliberalism was coming to an end.

And I wasn’t as optimistic as these analyses. And what I say in the article is that these factors in and of themselves, the greatest intervention that we’ve seen, the massive use of fiscal levers and so on, doesn’t in itself mean that neoliberalism was dying or is dead today. And that’s because my understanding of neoliberalism is not the one that is usually given.

Neoliberalism is often seen as a theory and a political strategy aimed at curtailing the state and empowering the market. And essentially often seen as a small government ideology whereby all that neoliberalism wants to do is get rid of the state and let the market reign free. But that’s really not what neoliberalism is about.

I mean, if we look at the track record of neoliberalism, you see that neoliberalism has been and continues to be characterized by, in fact, quite an active state intervention in the economy. And that’s perfectly understandable because regardless of what neoliberal theorists and free market theorists might say, the truth is that markets aren’t able to regulate themselves, aren’t able to self-regulate.

They really aren’t able to function without constant state intervention aimed at creating the conditions for a market-based logic to function efficiently, but that doesn’t happen by itself. This requires governments constantly intervening in the economy in order to police workers, for example, to open up new markets, including through military means to privatize what may be previously state-owned public assets and so on.

And so these are all things that require very heavy-handed state intervention. So neoliberalism isn’t really about getting rid of the state. It’s about elites and especially big capital, taking control of the state, harnessing the state, and using the state to favor its own interests, to favor the interests of the top pyramid in society. And that’s basically what we’ve witnessed over the past 30 years, over the path of liberalism.

So if you look at neoliberalism this way, then everything that we’ve seen during a pandemic isn’t necessarily at odds with neoliberalism. And what we’re seeing, I would say, is kind of a different version of what we saw in the aftermath of the 2008 financial crisis, where, yes, we saw states  intervening massively in the economy, most notably to bail out banks, but more in general a bailout of the economy.

And even back then, a lot of people saw this as a resurgence of Keynesianism when, in fact, what we were witnessing was pure neoliberalism, when a state was used to essentially socialize losses after profits have been privatized for so long and to essentially recreate the conditions for accumulation or privatization. And I think 10 years on, we can clearly say that the financial crisis of 2008 did not signal the death of neoliberalism, in fact, as a lot of people predicted even at the time.

But in fact, it signaled and really paved the way to, I would say, an even harsher, fiercer version of neoliberalism, especially in Europe, but not only. And so I’m not  saying this is exactly how it’s going to play out this time around, but the point I was trying to make in the article was basically a warning to say, look, what we’re seeing could just be that elites realize that they have to temporarily use the levers of the state to essentially guarantee the survival of the system.

But this in and of itself doesn’t represent necessarily a change in the balance of power between classes or a change in the distributional status quo and so on. And we could simply be witnessing elites doing whatever it takes, to quote Mario Draghi, in order to stave off more radical alternatives that may emerge as a result of the crisis with the clear intention, though, to keep the balance of power in society completely unchanged and with the intention of reverting as soon as possible to a situation where the powers that be essentially remain in power and that position isn’t challenged.

And I think a year on, I think we can say that I was onto something because we can clearly see – we’re seeing a comeback, for example, of austerity-based narratives, especially in Europe. We keep hearing in Europe – probably a bit different than in the US, it’s a very different context – but in the European context, we’re hearing a lot of talk, which basically amounts to, OK, yes, we have to resort to extraordinary measures to fight the pandemic, but sooner or later and sooner rather than later, ideally, we’re going to have to go back to “normal,” quote-unquote.

And so I think this is really the challenge we have ahead. Of course, what we’ve seen does create an opportunity in a sense that, of course, the fact that all these neoliberal shibboleths have fallen and are falling does, of course, make it harder for elites to just go back to the way things were because certain lies and fallacies in the neoliberal narrative have been exposed to such an extent that we can see that the crisis of that narrative to try to push for a more progressive agenda. But it’s not something that’s going to be handed down to us. That was the basic point of my article.

[00:10:27.040] – Grumbine

As I read through this, first of all, I loved it when it came out and I still love it. It still holds up.

[00:10:32.830] – Fazi

Thanks, man.

[00:10:33.400] – Grumbine

And one of the big things that I want to start out with because it is the wellspring from where all the other nonsense comes from, the nature of sovereign currencies in nation-states, and the ability for these nation-states to meet the needs of the people without the austerity narratives that you mentioned. This has blown the lid off that.

If people haven’t figured that out by now, they’ve been sleeping or their head’s been in the sand. Take a shot momentarily at describing the lie, the shibboleth of the currency, and the austerity narrative just at the idea that we can’t take care of people, the insolvency lie.

[00:11:11.110] – Fazi

Sure. Well, I think above that we have an even greater lie which is the notion that we’ve been fed for decades, that states have become essentially powerless, that even if it might be desirable to have greater state intervention, greater regulation of markets, that’s simply not technically possible because of globalization and because we have this hyper internationalization of finance and because banks have become so powerful that it’s simply utopian to even think that states can stand up to finance.

And so we’ve been hearing this for ages. And, of course, some of us have been saying for quite some time that was a complete lie. As I was saying earlier, states haven’t been rendered powerless. To a large extent, they have wittingly and deliberately ceded power to international and supranational institutions with the aim of essentially severing the tie between macroeconomic policies and democratic decision-making processes.

[00:12:15.840] – Grumbine

In the United States, what you’ve just said, I want to state clearly we had a guy named Jimmy Dore who tried to get progressives to hold the new progressives in Congress to account to vote for Medicare for All. And the idea was they don’t have enough power, there’s not enough of them. They’re too young, they’re too small. They can’t do anything.

And so there was a paternalistic approach to shouting down activists who were agitating, who were advancing this idea that, yes, you can do things, but in light of what you just said, all I can think of is look at all these apologists trying to make it out that the state doesn’t have the power to take care of the people.

[00:12:58.979] – Fazi

Sure.

[00:13:00.170] – Grumbine

It’s just too great a lift. It’s impossible. And this is coming from people who are fellow travelers. This isn’t the powers that be doing it. This is the level of indoctrination and propaganda that they’ve ingested, that the state just simply isn’t strong, that it can’t do these things. And it’s very troubling because every time somebody steps up and tries to make a demand of these individuals, there’s another paternalist shouting down and scolding them for being divisive.

The idea of holding them to account to actually serve the people is treated like we’re being divisive. When what you’re telling me is that the state has plenty of power, they’re choosing to cede it to big business. They’re choosing to cede it to Wall Street and banking, not to the people.

And I think it’s in that moment of clarity that I think everybody needs to just take a step back and say, wow, I just wanted to clear that up, because in the United States, there is a huge contingent of fellow travelers that will tell progressives and activists to shut up, sit down, eat your peas, accept the fact that they’re just not strong enough and stop pushing for better. That’s scary, is it not?

[00:14:10.100] – Fazi

Yeah, absolutely. And it doesn’t surprise me at all. I think one of the paradoxes of our age is that I would say that, by and large, right-wing conservatives, call them how you want for lack of a better term, because what do these names mean anymore? But let’s say right-wing commentators and politicians, I would say, have a pretty clear understanding of how the system actually works and of the power that states and governments actually have.

But they had all this narrative that the state doesn’t have any power because this is functional to their aims. This is a way of disempowering demands for radical social change. And so in a way they’re pretending I would say to a large degree. A lot of them, I think, know perfectly well how the system works, but they see it as very much in their interests for the people to believe that the state doesn’t have any power.

Because what better way to stop people from demanding what is their God-given right – right to healthcare, right to a decent job, a right to a roof over their heads – than convincing people that these aren’t things that are not desirable, these are not things that are technically achievable. This has been really the great achievement of neoliberalism.

I mean, if we look at the great part of the postwar period, so-called Keynesian era, and even before that, what we saw was very much an ideological battle between different visions of society. You have the left on one side which argued for policies that were in the interest of workers, then you had the conservatives that would argue for policies that were in the interest of businesses and capital. And this was a battle of ideas.

No one came forward and said, no, what you are asking for is not technically achievable. So with the battle over what was the best way of organizing society and instead that whole debate was killed off by – basically it’s genius, in a way, the sleight of hand that neoliberals were able to achieve, which was to convince people that we’re not even going to debate whether what you’re proposing is desirable or not. We’re simply going to say it’s not technically achievable.

And so there’s not even any need to debate whether, yeah, I might even agree with you that that’s something that would be desirable but unfortunately it can’t be done. And that’s been a very powerful narrative in really disempowering demands for radical social change. On the other hand, on the left, what I see is a lot of people actually believe this narrative. This is really the tragedy of our era.

So on one hand, you have the neoliberals peddling this narrative, which they know to be false. And on the other hand, you have the leftists, which to a large degree have actually bought into that narrative and actually believe it. And that’s why I’ve fallen out with a large part of the so-called progressive crowd, especially here in Europe.

And this next, to your initial question, because the situation is even more extreme here in Europe, where you have leftists that have completely bought the argument that national states have no more power to the point that they had no choice but to cede currency sovereignty to the European Union. This was the only way you’ve got a leftist twist on European integration, which is, yes, we need to pool our sovereignty together.

And that’s going to make us more powerful. And that’s where we’re going to be able to stand up to big capital much more efficiently. So we’ve been hearing this argument for decades and we still hear it. Most leftists in Europe continue to support the European Union and even more tragically, the single currency, even though – and this is another one of the shibboleths that has really fallen – even though the pandemic has clearly demonstrated A – that this notion that if you’re bigger, you’re somehow stronger, that the European Union has completely botched the vaccination procurement and distribution program.

And in fact, the most paradoxical aspect of all this is that after years of hearing of the absolute tragedy that would have befallen the UK following its exit from the European Union, and funnily enough, you know, there was talk of shops not being able to have aspirins on the shelves, you know, and we’re going to have food shortages and it’s going to be absolute chaos.

And instead, what we see a year into that, a few months after the vaccines have started to be rolled out, is that the UK has vaccinated huge proportion of the population, while the European Union has been completely paved over by big pharmaceutical companies. And in fact, it’s really straddling behind practically every other advanced country in the world in terms of rolling out the vaccination program.

Again, if any of this was true, one thing you’ve taken away our currency sovereignty. You’ve taken away our democracies to a large degree. You’ve concentrated power at the helm of this hugely powerful supranational organization. If anything, that should help to organize something like a continent-wide vaccination program, getting vaccines to countries, striking better deals with the pharmaceutical companies than individual states would be able to do.

If there was any truth to that narrative, we should have at least seen this. And instead, what we saw, this massive bureaucratic monster, in fact, has been a huge obstacle to the efficient rolling out of vaccination programs to the extent that poor little-old UK which was supposed to be completely devastated by Brexit, is in fact very much better in terms of the vaccination program, but also economically than a number of European Union countries and especially euro countries.

And again, yes, the question of the absolute importance of currency sovereignty has been another thing that has been completely exposed by this crisis. Now we hear a lot of talk of the fact that, oh, the European Union has completely changed. Yeah, we’ve seen the ECB is engaged in a huge bond buying program. The European Union’s infamous fiscal rules have been suspended.

And therefore, you know, governments can now spend as much as they want. And so some have even argued that now you could say that European countries enjoy monetary sovereignty thanks to the pandemic. And there have also been some MMT exponents here in Europe that have argued for this. But that’s, of course, not at all true.

And in fact, if I was to look at the difference in the level of the fiscal stimulus that we’ve seen in advanced countries that have currency sovereignty compared to the fiscal stimulus of your other countries, and it’s just incomparable. I mean, if you look most advanced countries have monetary sovereignty, have basically engaged in fiscal stimuli in the order of 15, 20 percent of GDP.

And this is not just the United States, which is often said to be a special nation by virtue of its incredibly powerful currency. This goes for advanced nations, small, medium and big. And in fact, the single country that has implemented the biggest fiscal stimulus in response to the pandemic has been New Zealand, little old New Zealand, with its own tiny currency, which most people have never even seen or held in their hands, has in fact been able to implement the huge fiscal stimulus with no adverse consequences whatsoever.

And instead, Euro countries such as mine, Italy, which continue to be very heavily constrained by this absolutely diabolical architecture, whereby we continue to basically depend on the pittance of the European Union, on the kindness of the European Central Bank, and where our room for maneuver is essentially decided by the powers that are beyond our control.

We definitely have not regained currency sovereignty as a result of this crisis. The rules have been relaxed, but as I was saying earlier, all the talk is about how can we return to the kind of system of disciplining and punishment that the euro is based on, and that is based on the creation of an artificial scarcity of money. And we’re still in that paradigm.

Our leaders continue to say, yeah, well, but we can’t spend too much to save people’s lives because Italy has a very big public debt. So European Union has told us that we have to go easy on spending. And so that’s really the situation we’re in. And again, this crisis has really just proven to an even greater degree, just how tragic it is for a country – especially an advanced country such as Italy, that would have huge scope for maneuver if it had its own currency – just how tragic it is for a country to renounce its monetary sovereignty.

[00:22:41.230] – Grumbine

Let me tell you something. Within the United States, everybody spent four years. It started before Trump in office. This whole idea of getting rid of Trump and it was ridiculous. Look, Trump was horrible. Let me be crystal clear. There’s nothing about Trump that was good. But the pattern that they did, everything is just going to be OK if you just vote blue no matter who.

And you could almost feel the lack of thinking going on. It was so palpable how not thinking people were and they were making no demands. And then when they did make demands, even as we went through this ridiculous election, Biden promised everyone that he would give everyone $2,000 checks. Then he backed off of that and went down to $1,400. But we were able to find a way to immediately bomb Syria without any flinch whatsoever.

We’ve got Texas, who practically is another country in and of itself because they privatized everything and they just had a climate-driven deep freeze that caused pipes to bust. Electric was out for the entire state because glory of private markets, they’re charging these people $16,000 for their electric bills. It’s ridiculous the price gouging that’s going on.

And then what’s worse is we’ve got these what I call the power advocates, the power progressives, these super activists that are kind of seen as royalty, but they aren’t quite royalty and they’re pushing for state-based Medicare. We got California pushing for it. We got Washington State pushing for it. And they’ve never taken time to understand how the federal government operates.

So once again, they’re taking that neoliberal paradigm. They’re trying to use commercial banks. They’re trying to create public banks by funding them through the rich people to donate to them. They think that they can create a network of these state-based banks to finance a Green New Deal. None of them understand any of what they’re saying. And all of this is based on a currency user model. They don’t even fully understand what’s going on.

When you try and talk to them about it, they blow you off. It’s scary. And then when you do criticize the elected officials and the people that are pushing this stuff, it’s as if you slaughtered someone’s child. They’re so mortified and upset at you. It’s ridiculous. And this, my friend, is the great lie that you said that neoliberalism was masterful in presenting to these people.

Outside of California, try and do any of these major state plans in Delaware, in Alabama, or Mississippi, or Maryland. You can’t do it. And so these mega states that are basically countries unto themselves as currency users, though still, still haven’t quite figured out that there’s a reason why there’s FEMA, even for California or Texas, is because if there’s a horrible crisis, a hurricane or a tsunami or anything else, that they’re going to require the federal government to step in.

And the pensions that are state-based are all being dried up. They’re being converted to 401k’s. Privatization is real. They’re still trying to create state-based programs, not understanding the currency issuer or currency user model, and has gotten nuts. Because people are dying right now. And the well-meaning people, right, these people are people that we should be able to talk to and explain how this works.

They won’t even listen. It’s just as bad in the United States. In the second point you bring up, which is where I want to tail into this is the lie about how state and local solutions are somehow better – these public-private partnerships are somehow better than central planning and a federal government. Talk to me about central planning versus the alternative.

[00:26:23.880] – Fazi

Well, in very basic terms, I would say the question is, should the needs of society be subordinated to the needs of the market or should the needs of the market and more generally, of the economy be subordinated to the needs of society? The needs of people? And what neoliberalism has entailed is basically to reengineer and reorganize the society.

And again, this requires a state intervention to create the kind of legal framework for this to happen. But the system we’ve created is one where essentially, yes, the needs of society are dependent, subordinated to the functioning of the market. And the most obvious example, of course, is privatization of provision of energy and water and so on is absolute madness.

And we’re seeing this more and more. But even in more basic terms, just to understand just how deeply ingrained this notion is – this notion of, for example, only the private sector can provide jobs. And so the ability of someone to have a decent, well-paying job is dependent on the ability of private markets and private businesses to provide a job to that person.

And without even realizing it, most people on the left subscribe to this idea of the job market, where essentially jobs, of course, are much more than simply something that you need to pay the rent and to be able to live day to day. But we dedicate most of our time when we have one or two jobs, and so work is our lives. And so what you’re saying is that people’s entire lives and their ability to live fulfilling decent lives is essentially subordinated to the mechanics of private capitalist markets.

Now, that’s completely absurd. It’s basically like saying that human beings are a commodity like steel or oil. But a different way of organizing society, organizing our lives is one whereby the economy is there, and the market is there to serve the needs of people. But this can only happen if there’s an institution, if there’s an actor which regulates the state, which sets the rules, which says there are some things that cannot be left to the market.

There are basic social-economic rights that cannot be left to the market, and that requires the state not just setting the rules, but requires it to actually provide what people needed for the state to provide what the market isn’t able to provide. And that could be jobs, but it can also be the necessary investment and research that is needed, for example, to transition to a more sustainable economy.

That’s something that markets are never going to do by themselves. And we’re talking about literally the survival of life on earth. And even in the face of this massive, unprecedented crisis that we face as a human species, we’re not able to see the obvious, and that is that these changes the only actor, actors – because, of course, it’s not something that can be done through a centralized global authority, can only be done by individual nation states – the only actors that can do that are states and governments.

These are the only actors that are able to function according to a logic that is not that of profitmaking. So we’re talking of reorganizing a system where basically as communities, as societies, we decide collectively what kind of society we want to live in. And then we use the state to get us there. The system we’re living in now, if you think about it, it’s completely anarchic, where we have to hope that enough private companies realize that investing in green energy, just to give an example, is in their own interest and so our survival hinges on the decisions of private companies.

That’s absolute madness. Now, I mean, I can only imagine how a more evolved society will look back at the system and what it will think of it. We’re condemning ourselves to the brink of extinction by essentially betting our future on the decision of private profit-making entities, i.e. businesses. So all this requires the terrible thing that is central government planning.

Now, this means that the state and ideally, through the state, the people, decide where we want to be as a society in five, 10, 15 years, and we take the necessary steps to get there. Now, this doesn’t mean complete collectivization, this doesn’t mean the Soviet Union. Now, this is a system that allows for private enterprise to exist, indeed to flourish. Private markets can play a very important role in coming up with great gadgets and services that we use and that we love.

The point is, at the same time, this has to happen within a wider framework. What a state establishes, OK, this is where we want to be in 10 years in macro terms, as a society. Now, within that system, and so long as the profit-making needs of companies don’t infringe on the social and economic rights of society, private companies can flourish.

[00:31:47.970] – Intermission

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[00:32:37.130] – Grumbine

Let me ask you a question on that real quick. This is important. With intellectual property being a very key legal arrangement, not just in nation-states, but global IP, you’re saying as long as private property, private markets do not infringe upon the welfare or the well-being of the people. But what we’re seeing today is that IP is being used as a weapon against the people. It’s creating food shortages. It’s doing all kinds of things, throwing food away rather than giving it away. What are your thoughts on that?

[00:33:10.010] – Fazi

Well, this harks back to what I was saying earlier. So there are certain things in society that cannot be left to the market, and that includes the provision of jobs, the provision of life-saving medicines, the provision of social media networks where we basically spend most of our lives nowadays, the provision of access to energy, access to water.

There are certain things that simply cannot be left to the market. A lot of these are what we call natural monopolies, where you can’t even have a well functioning, competition-based system. So you can’t even justify the privatization of those assets based on purely capitalist logic. I mean, that is literally the private appropriation of public capital.

This, of course, doesn’t mean that you can’t have other domains where companies can keep their intellectual property rights. If someone has invented a really cool shoe, then I don’t see any reason why, you know, that company shouldn’t be able to exert its intellectual property rights over that great shoe design that they’ve come up with, which everyone wants.

Companies should have an incentive to come out with great shoes. That makes the world a much more stylish place. And I’m all for that. But at the same time, they shouldn’t be able to exercise that right over what we could call public goods. So this is the essential distinction. But at this point, it’s not even become a question again of the kind of system we would prefer to see.

It’s really become, again, a question of survival in general terms. But even what I think is most paradoxical about this whole situation is that we keep hearing that the West is engaged in this struggle and global competition with China, for example, and other rising Asian nations. And we don’t realize that it’s going to be absolutely impossible to compete with China, assuming that that’s an end that one should aim for.

And I’m not saying it is, but even taking mainstream logic, i.e., the notion that we have to compete with these rising powers, then we’re destined to lose. A system where a largely centrally planned economy like China, we don’t stand a chance as an economic system, I think, against that kind of centralized economic planning. So, again, you know, it would be, even if you’re an imperialist that thinks that the West has to win at least the economic war with China, then it makes no sense to continue to hold onto these failed models.

On the one hand, you have a system that is able to plan long term, that is able to direct resources where they’re needed to better form the development of the economy. And on the other hand, you have a system where private companies have become so powerful that to some extent we’re allowing these companies to dictate public policy.

And you can see how that’s not a system that can come out victorious in a struggle between these two systems. And so the point is not, OK, we’ll adopt the Chinese one-party system. But the point is recognizing that kind of level of centralized planning is more and more going to become a measure of a nation’s success, even purely in economic terms basically.

[00:36:22.920] – Grumbine

Your third thing, the item here about who enjoys the benefits, I think I want to take a crack at part of this, right. It seems like a lot of public space was created before neoliberalism ran out of fuel, before capital started having to eat itself. And there was a lot of really nice programs you can see around the world, especially Europe and Australia and New Zealand and Canada.

Everyone seems to have, you know, health care for their people. And the U.S. is busy exporting its neoliberalism around the world. You said something a little while ago that really shocked me in a good way or bad way, I don’t know. But it caught my attention. And that is you said it’s kind of anarchist the way this is happening. In other words, there are no state boundaries for these corporations.

These corporations are acting without any kind of boundaries. They have, in essence, created a stateless globe that they just treat as their own playground. And when they look at a place that they’d like to do business and they see that that is a public service, instantly they begin attacking that public service so that they can, in turn, privatize it and earn a buck off of it. Is that a fair statement?

[00:37:34.570] – Fazi

Well, again, shouldn’t exaggerate just how much these companies have – and I’m partially contradicting what I said earlier. Of course, these companies are incredibly powerful. That’s obvious. But it would be a mistake to think that they’re so powerful as to have transcended states and governments. In fact, I would say that is not really the case.

All these companies require being protected and having a sort of legal system, for example, concerning intellectual property rights that allowed them to survive in their home nations. But even when they go looking for profit opportunities abroad, again, their ability to make profit depends on nation states opening up their borders to these companies and allowing these companies to do whatever the hell they want to do.

And of course, that’s partially because having private capital become so powerful, it has essentially captured entire governments. That’s one of the big problems that we face is that not that states themselves and governments don’t have the power to regulate these companies or even to break them up if they want to do. We’ve done it before, we could do it again and we should do it again in the case of a number of these companies.

The question is, when you allow these companies, these private entities to become so powerful, then, of course, they tend to capture the political system, especially in so-called liberal democracies such as ours, where you can get a huge influence, even in terms of public debate by buying off the mass media, engaging in massive donations and collusion with officials and so on. And so that’s the real challenge that we face.

How do we push back through democratic institutions? How do we push back the power of these companies? How do we essentially reduce the strong hold they have over states and governments? And more in general, over our democratic systems, and you think that’s the real challenge. A lot of it really boils down to corruption. You don’t have to resort to crazy conspiracies to explain how they do this.

I mean, when you have basically endless amounts of cash that you can spend, which a lot of these companies have, it’s quite easy to practically buyout everyone, including the most honest politician in the world. And of course, we know that if need be, they can even go beyond that, especially in poor Third World countries. If money doesn’t buy influence, then they don’t think twice about pulling out the guns. But in the West, that’s quite rare. So all they have to do is basically open their wallet.

[00:40:14.310] – Grumbine

You bring up a great point. We have another podcast that’s a sister to this called The New Untouchables: The Pecora Files, and it’s all about how Wall Street and the Fed backstop a criminal enterprise, which really is the way they did the housing market here in the United States. But this is a larger problem, right? This is bigger than just the United States.

This is happening around the world. And this business model that we’re talking about, it is how, in fact, they capture governments. It is how they capture institutions such as the Fed and other central banks. And as long as they can backstop their losses and let us drown in it, the power never shifts. I find it interesting that your point about it’s not some grand conspiracy. True.

But by de facto, you said earlier that one of the greatest victories or genius, if you will, of neoliberalism is how it made the state look feckless and how it made corporations look omniscient and the state just simply can’t do anything about it. So whether it be real or whether it simply be the story we tell our kids at night before they go to bed, it doesn’t really matter.

It is by default, whether it be something we can easily change if we just got our states to act like they had power again, it is what it is. They are controlling these things. They have captured them. And that’s exactly why you see neoliberalism so ingrained around the globe. Everything is run with a neoliberal paradigm.

[00:41:42.870] – Fazi

No, absolutely. It really is in a way, a totalitarian system. It’s a form of extreme, I would say, neocorporatism that isn’t really that with all due differences, there are some fundamental similarities with the fascist systems that we saw in Europe in the 20th century. I mean, what was fascism if not a fusion of big capital and state?

And thus, to a large degree, what we have nowadays as really is, I would say, a modern form of economic fascism with in some cases it might have a smiley face. You might have Black Lives Matter stickers on bombs falling on Syria. I actually saw that on a picture and it seemed real.  But yes, this is a situation we’re in.

Again, what we’re talking about, what we say about what states and governments can do, we’re talking in theoretical terms. Yes, and we’re absolutely right. Question is, how do you take back power? How do you take back public and state and government institutions? Or how do you wrestle power away from these huge powers? And that’s a trick question.

I think what we do on a constant basis, trying to educate people is absolutely very important. Again, it can be easy to fall into a defeatist attitude when we talk about things in the terms that we’re using. What’s the point of trying to fight against these massive powers? But in fact, we shouldn’t ignore the fact that we have achieved a lot, even just if we look at the achievements of MMT. I think we’ve made huge strides forward, even just compared to a few years ago. And we shouldn’t ignore

[00:43:17.860] – Grumbine

Indeed

[00:43:18.460] – Fazi

How important that is. On a number of issues, public opinion is turning. And if we look at just the growth of the awareness of MMT, it’s happened, I wouldn’t say overnight, but almost, of course, it’s the result of the work of years. But it’s interesting how at some point we reach a tipping point where all the right pieces just seem to come together and you have this explosion of awareness.

I think that’s what we’ve seen with MMT over the course of a few years. And so I think we have reasons to be optimistic, but we also have reasons to be worried about, because what we’re witnessing is, in a way, a new revolt of the elites. I would say to quote a great book from a few years back whereby what was termed kind of the populist uprising that happened around 2016, 2017.

So you had Trump, you had Brexit, you had a number of new, more or less radical parties emerging across Europe. Now, a lot of that has been, in a way, pushed back. And I would say there’s many reasons for that. But that’s because, one of the reasons that there wasn’t a clearer understanding of how the system works, and that’s why I think the work we’re doing here is so important, not enough to get into power. You’ve got to get into power and know how the system works…

[00:44:36.400] – Grumbine

And maintain it

[00:44:37.930] – Fazi

… to get power you’ll truly have. And what you were saying earlier is that if these well-intentioned progressives were even able to get into government, to get in power, would they know what to do with it or would they continue operating based on a completely flawed idea of how the system works?

[00:44:54.230] – Grumbine

The last thing that I want to tell you, and that was spot on, that was a great way to enter into this next part. Your final thing was regarding the global supply chain, which clearly demonstrated all the weaknesses in that system as we shut down the world through the pandemic. And you see semiconductors being completely on back order, things that are required to keep dams going and security systems blowing, and there’s just not enough of them.

[00:45:19.910] – Fazi

True.

[00:45:19.910] – Grumbine

And you saw the shelves completely empty in a lot of stores. Now we’ve seen some of that come back, but still a lot of shortages in many key things. Discuss the global supply chain. But then I want you to talk a little bit about this concept of the “great reset.”

[00:45:35.870] – Fazi

Well, global supply chains really offer another example of just how flawed the neoliberal narrative is. We’ve been told that the more integrated the global markets are, the more integrated countries are, the stronger, more efficient we are. And in fact, what we saw was that by having these incredibly long supply chains that go all across the world through dozens of countries, you create a system where, as you’re saying, all it takes is for one link in that chain to come undone, for the whole system to come apart.

This isn’t a system that makes any country stronger. It made corporations hugely rich for a very long time, but didn’t make our societies stronger or better protected in any way. And I think we’re seeing an awareness of this even in elite circles. I think what we are witnessing in some respects and what we’re going to witness more and more in coming years is definitely a re-localization, if not re-nationalization, definitely re-regionalization of supply chains.

So supply chains are going to be brought closer to home by all major economies. And, I think what we’re going to see is the emergence of competing blocs of supply chain regions. So China is going to have its own largely self-sufficient supply chain and the United States is increasingly going to build its own, I would say, regional supply chain and so on. And a lot of that is already happening, especially with regards to really sensitive goods.

You know, you mentioned conductors, the semiconductors a lot of which have civil and military applications – a lot of production of a lot of these things is going to be, I think, slowly brought back home. And Biden has been very explicit about this. And that’s another funny thing – you mentioned progressives vis à vis Trump.

A lot of the criticism was addressed at Trump’s alleged protectionism and refusal to embrace the rules of global free trade. But if you look at Biden’s economic agenda, it’s almost even more protectionist than Trump’s one was. It’s all about “make American, buy American,” prioritize American companies when it comes to procurement.

These are secular, so to speak, dynamics which transcend individual politicians and individual governments. And I think, yes, this is the direction we’re going in. And I would say, in general terms, it’s a good thing, even purely in environmental terms. I would say that the strongest case for producing at home, whatever you can produce at home, is an environmental case.

It makes absolutely no sense to have products that you can build at home be shipped from the other side of the world, which just makes absolutely no sense, first and foremost in environmental terms. And so I think there’s an environmental need also to reduce the volume and the intensity of global trade. There’s, of course, a positive side to global trade.

There are things that are essential resources some countries don’t have, and they have to be able to access those through global markets. But so much of the stuff that gets shipped around is just a way for companies to make a greater profit by basically engaging in labor cost competition. That’s really all it boils down to. And there’s really no justification for that.

[00:49:00.510] – Grumbine

Very interesting, I guess the next question here is a lot of people are talking about this “great reset” and a lot of people are afraid of it. It sounds scary. There’s a lot of right wing talking points associated with this. Based on our conversation offline, it sounds like maybe that wasn’t really based off of the book or based off of the literature and documents. It was sort of based off of people painting conspiracy theory, misrepresenting what it stood for, maybe shading it a little differently. Can you explain the great reset and what it’s all about?

[00:49:36.440] – Fazi

This is a very tricky, tricky argument. Yes, you have these conspiracy theories which basically argued a pandemic – whether the virus was artificially created or not, subscribers to this theory believe at the very least, a pandemic is being used to reengineer societies and create hyper-totalitarian societies where we’re all going to be controlled as we go about our daily lives and how vaccine passports and so on are part of this project of controlling people.

And you’ve got infinite variations of those theories, some are wackier than others. But I’ve often been accused of being a conspiracy theorist, for example, just for criticizing the European Union. So I don’t dismiss conspiracy theories up front. I think they can often be a kernel or more than a kernel of truth in a lot of these theories.

I think before we move on to the great reset itself, I think it’s not outrageous to think that governments would use an emergency-like situation such as the one that we’re all living to promote their interests, to stay in power, to strengthen their power, to weaken democracies, to resort to more repressive methods when it comes, for example, to managing public security or big demonstrations or whatever.

I mean, I think all this, I think, is quite straightforward. I think we’ve seen a lot of cases where you just look at how convenient it has been, for example, for a government like the French one that has been rattled by huge antigovernment demonstrations for years now with the French president Emmanuel Macron enjoying the polling at record low levels.

How convenient it’s been, for example, for the French government to basically shut down all these protests by appealing to the need to keep the virus at bay. So this is a case where clearly the situation has gone to the benefit of that government, maybe without that government itself actually doing anything, but that just goes to show that there’s nothing particularly radical or outrageous in saying that whoever’s in power can welcome emergency-like situations to strengthen or solidify its power. I don’t think there’s anything particularly crazy about that. It’s always happened throughout history, and I don’t see why this should be different.

[00:52:00.000] – Grumbine

Rahm Emanuel, who is a neoliberal pitbull out of Chicago. This guy had the quote of the century, which plays right into this. He said, “Never let a good crisis go to waste.”

[00:52:11.550] – Fazi

Well, look. One of the darlings of the progressive left, Naomi Klein, has written a whole darn book called The Shock Doctrine, that she literally lists a very long list of examples where governments have used emergency-like situations. She mentions natural disasters and so on and so forth, and how governments exploit these situations to forward, sometimes nefarious ends.

So people that have been glorifying Naomi Klein for years have been reading these books, have been publicizing these books, have been raging at what they call shock doctrine capitalism for years now are at the forefront of shutting down any possible debate over the fact that governments might be tempted in some way or manner to use this crisis to strengthen their power, their strong hold over government, or to forward whatever means they had in mind.

Again, you know, it’s the idiosyncrasies and paradoxes of the left. The great reset itself, yes. I’m not so much of an expert. I know what some of the popular theories are. I would mentioned some of them earlier. Honestly, I mean, what I find unconvincing about these theories where they claim that governments want to introduce these totalitarian systems of control, is that I don’t think the governments were so out of control to start with.

We were coming from a 1970s like situation where societies were being literally rocked by civil conflicts and uprisings and political struggles. Alas, our societies are relatively pacified, especially compared to past times, even relatively recent decades. And so to think that they would have to go to such great lengths just to control people even more considering that we’re already very tightly controlled as it is, I don’t totally buy that.

It’s enough to look at official documents. So, for example, we’ve now got Mario Draghi, the saviour of the euro, at the helm of government. And the last document that he signed off as co-president of the G30, which is a think tank of the financial lobby, I would say. The last document that he put a signature to, which came out in December by the G30, essentially argued for the need for extreme measures of creative destruction, which harks back, of course, to Schumpeter’s definition of creative destruction.

But what they see as creative destruction is that, okay, this is an opportunity to get rid of what they call unproductive capital and to redirect resources towards more efficient production processes and so on. So they explicitly talk about the need or the opportunity this crisis offers for restructuring capitalism. Again, nothing particularly conspiratorial about that.

We know that throughout history, capital has always sought to restructure itself. We’ve had endless restructurings of capital. And if you look at a country like Italy, for example, we have a situation where you have in the restaurant sector and the service sector a very molecular kind of capitalism where capital is spread across hundreds of thousands of small, in many cases family run businesses.

Which is why, for example, Italy has a wealth inequality which is very low compared to other countries such as the United States, where capital is hugely concentrated. Italy has a situation where capital is still quite widely dispersed. And so when you hear Draghi in his first statement to parliament saying – which harks straight back to that G30 document I mentioned where he didn’t speak of creative destruction, but he does say we’re going to have to let go of some companies because some of these companies simply aren’t going to be able to make it in this new brave new world that’s emerging as a result of the pandemic.

It’s not completely crazy to think that there could be a very powerful interest, for example, that see, say, the restaurant sector as a huge business. Italians love to eat out. So you can imagine I mean, that’s a sector, an industry that’s worth billions of euros. But that money is now very evenly dispersed across hundreds of thousands of companies.

And I can see why some very powerful food businesses, for example, catering services or service sector companies, would want to get into that business and concentrate that capital in their hands. And letting hundreds of thousands of small and medium restaurants die is the ideal way to do that. So is that part of a Great Reset? Yes, in a way it is.

It doesn’t have to do with microchips being implanted into our bodies, but we are talking quite a radical form of capitalist restructuring that the pandemic has favored. And just to close, I’ve read the actual book. Maybe there are the documents out there, but I read the book that’s called The Great Reset by Klaus Schwab, who’s the head of the World Economic Forum and supposedly the great mastermind behind the great reset.

And I didn’t find, in the book, all these crazy social engineering theories. What I found was obviously quite a radical critique of neoliberalism and what he says in the book, he discusses in the book a lot of the things that we discussed tonight: the failure of hyper integrated global supply chains, the failure of extending a kind of market based logic to sectors such as public health care and so on.

The problem of unemployment and the need to rethink full employment policies. I mean, you could say that is quite a Keynesian approach. Now, that doesn’t mean that he’s a fellow traveler, as you would say. Not at all. What I took away from the book is that elites are scared shitless of the implications of this crisis. And I think they realize they’ve pulled a cord a bit too much and it’s about to break or it’s already broken, and as a result of the crisis, yes, the crisis can be an opportunity for them.

But a lot of them, I think, maybe even exaggerate their fears because I’m afraid we’re not so well organized. But you can almost read through the lines that some of them are kind of scared that heads might start rolling at some point, you know. They’re kind of afraid of the guillotines being rolled out again. And so what I took away from that book is that even at the highest echelons of global elites they’re saying we’ve gone a bit too far with this kind of extreme form of neoliberalism.

We’re gonna have to tone it down a bit, which means we will have to provide more jobs. We’re going to have to provide health care to more people. Otherwise, you know, they’re going to run out the guillotines at some point and the party’s going to be over.  And we’ve got to loosen the leash a bit. Otherwise, the dogs are going to turn on us. And again, you know, that’s not to say that we can just sit back and they’re going to give us socialism. But this situation does, again, open up some windows of opportunity, which if we’re good enough, we can seize.

[00:59:09.710] – Grumbine

This is a fantastic interview, Thomas, I really appreciate you taking the time here with me today. How can folks follow you? This is a lot of great information. How can we find you?

[00:59:20.500] – Fazi

I’m on all social media, so I mostly write in English on Twitter so you can follow me in English, on Twitter. And I mostly use Facebook in Italian. But Twitter is a good place to find me.

[00:59:31.960] – Grumbine

The Battle for Europe [@battleforeurope], you’ve got your website.

[00:59:34.630] – Fazi

Yeah, I’ve got ThomasFazi.net where I publish all my articles, so you can follow me there. If you want to read up on my most recent book that’s Reclaiming the State, which I co-wrote with Bill Mitchell. And we hope to have something new out at some point this year.

[00:59:51.310] – Grumbine

Very good. Look. It was wonderful to be with you here. I hope we can talk again soon. It’s been way too long. I think we did a full year since our last one.

[00:59:59.920] – Fazi

Yeah, it’s not right for so much time to go by.

[01:00:03.400] – Grumbine

All right. Well, look, folks, thank you so much for joining us. This is Steve Grumbine with Macro N Cheese with Thomas Fazi. We’re out of here.

[01:00:16.240] – Ending credits

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.