6 Everyday Neoliberalism

have become dependent on those processes and we accordingly, under the spell of neoliberal ideology, hesitate to question innovation. To keep this going it requires that a certain buy-in from the population that the solution to any problem is renewed fnancial market innovation.

Marxist intellectual Antonio Gramsci wrote most of his important work while sitting behind prison bars in Mussolini’s Italy in the 1930s. Like so many others throughout human history, Gramsci was severely punished for his ideas. Te most important of which is his theory of cultural hegemony. He observed that as capitalist institutions became entrenched into, it was unnecessary for the political establishment to use force to gain acceptance and compliance from the population of working people. Instead, the corporate class exercised its control over cultural production to massage the values, beliefs, and norms into the accepted belief of all. Gramsci describes cultural hegemony as “the spontaneous consent given by the great masses of the population to the general direction imposed on social life by the dominant fundamental group.”44 Te dominant group of our time is the corporate hegemony—a powerful network of corporate institutions, and its attending social class, and its subordinate institutions in government. Its control over the American economy and society stands largely unchallenged and extends its infuence everywhere. As we will see in the next chapter, the American population hold onto a popular consensus around the core elements of neoliberalism, which prevails as both corporate ideology and as popular folklore. American believe wholeheartedly that their economic society is exemplifed as a system of free markets, individualism, and innovation. Neoliberalism is so deeply entrenched in the popular imagination that most Americans are unable to see that economic institutions even exist.

Tere is a popular myth that runs through certain new age circles that tells a peculiar story about when the large ships of European explorers frst arrived in coasts of North America, they were considered invisible to the indigenous people. Tey were invisible to these people, so the story goes, because such ships and foreign ways were so alien to their collective mindset and shared experience that they were unable to actually see the ships. In all likelihood, the story is not true, but like all myths there is an element of truth value in the fction. When people

believe in something so wholeheartedly, they become blind to facts that contradict the belief and hold onto to it every more steadfastly, even though it eventually leads them toward their own destruction.

Notes

1. Zachary Tracer and Alex Nussbaum, “Heath Insurance Exchanges,”

Bloomberg, January 5, 2017. 2. See Kaiser’s data on health statistics at https://www.kf.org/reportsection/ehbs-2015-section-one-cost-of-health-insurance/. 3. Allan Gruchy, Te Reconstruction of Economics: An Analysis of the

Fundamentals of Institutional Economics (New York, NY: Greenwood

Press, 1987), p. 133. 4. Philip Mirowski, Never Let a Serious Crisis Go to Waste: How

Neoliberalism Survived the Financial Meltdown (New York, NY: Verso, 2013), pp. 42–43. 5. Ibid., p. 28. 6. Joseph Dorfman, Torstein Veblen and His America (New York, NY:

Augustus Kelley, 1966), p. 74. 7. Te phrase “survival of the fttest” was coined by Spencer, though often incorrectly used as synonymously with Darwin’s “natural selection.” 8. Herbert Spencer, Te Principles of Sociology (New York, NY: D.

Appleton and Co., 1876–1896), Vol. III, p. 594. 9. Dorfman, 1966, p. 43 10. William Graham Sumner, What Social Classes Owe to Each Other [1883] (New York, NY: Harper and Brothers, 1911), pp. 43–48. 11. Te Sherman Act was passed in 1890 during a time when the federal government was becoming more concerned about labor strikes turning into revolutions. Te strikes at Carnegie’s steel mills were in the middle of violent conficts at this time. 12. Andrew Carnegie, “Wealth,” North American Review, June 1889, No.

CCCXCI, p. 1. 13. Ibid. 14. Ibid. 15. Ibid., pp. 1–2. 16. Ibid., p. 2. 17. Ibid., p. 3.

18. Ibid. 19. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of

Nations [1776] (Te University of Chicago Press, 1976), Book I,

Chapter II, p. 18. 20. See the “marginal analysis” sections on consumer and business theory in any standard neoclassical economics textbook. 21. John M. Keynes, Collected Writings, Donald E. Moggridge, ed. (London: Macmillan, 1971),Vol. IX, pp. 329, 331. 22. George Cooper, Te Origin of Financial Crises: Central Banks, Credit

Bubbles and the Efcient Market Fallacy (New York, NY: Vintage, 2008), pp. 4–5. 23. Karl Marx, “Te Fetishism of Commodities and the Secret Tereof,”

Capital, Vol. 1, p. 77. 24. Eugene F. Fama, “Efcient Capital Markets: A Review of Teory and

Empirical Work,” Te Journal of Finance, Vol. 25, 1970, pp. 383–417. 25. Johnson and Kwak, 2010, p. 70. 26. Bradford DeLong, Andrei Shleifer, Lawrence H Summers, and Robert

J. Waldmann, “Noise Trader Risk in Financial Markets,” Te Journal of

Political Economy, Vol. 98, 1990. 27. Cooper, Te Origin of Financial Crises, p. 11. 28. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of

Nations [1776] (Chicago: University of Chicago Press, 1976), Book V, pp. 213–244. 29. Ibid., p. 244. 30. Mirowski, 2013, p. 54. 31. Ibid. 32. Karl Polanyi, Te Great Transformation: Te Political and Economic

Origins of Our Time (Boston, MA: Beacon Press, 1944), p. 73. 33. Ibid, p. 141.. 34. Mirowski, 2013, p. 56. 35. Penelope Simons and Audrey Macklin, Te Governance Gap: Extractive

Industries, Human Rights, and the Home State Advantage (New York,

NY: Routledge, 2014), p. 53. 36. See the full text of Coolidge’s speech at http://www.presidency.ucsb. edu/ws/?pid=24180. 37. Ibid. 38. Ibid.

39. Robert Merton, “Financial Innovation and the Management and

Regulation of Financial Institutions,” Journal of Banking and Finance,

Vol. 19, 1995, pp. 461–481. 40. Alan Greenspan, “Technological Change and the Design of Bank

Supervisory Policies,” May 1997. See https://fraser.stlouisfed.org/ title/452/item/8597. 41. Timothy F. Geithner, “Risk Management Challenges in the U.S.

Financial System,” February 26, 2006. See https://www.newyorkfed. org/newsevents/speeches/2006/gei060228. 42. Johnson and Kwak, 2010, p. 108. 43. Joseph Schumpeter, Business Cycles: A Teoretical, Historical, and

Statistical Analysis of the Capitalist Process (New York, NY: McGraw-

Hill, 1939), Vol. 2, p. 613. 44. T.J. Jackson Lears, “Te Concept of Cultural Hegemony: Problems and Possibilities,” Te American Historical Review, Vol. 90, No. 3, June 1985, p. 568.

References

Carnegie, Andrew. “Wealth,” North American Review, June 1889, No.

CCCXCI. Cooper, George. Te Origin of Financial Crises: Central Banks, Credit Bubbles and the Efcient Market Fallacy (New York, NY: Vintage, 2008). Coolidge, Calvin. “Address to the American Society of Newspaper Editors,” 1925. http://www.presidency.ucsb.edu/ws/?pid=24180. DeLong, Bradford, Andrei Shleifer, Lawrence H. Summers and Robert J.

Waldmann. “Noise Trader Risk in Financial Markets,” Te Journal of

Political Economy, Vol. 98, 1990, pp. 703–738. Fama, Eugene F. “Efcient Capital Markets: A Review of Teory and

Empirical Work,” Te Journal of Finance, Vol. 25, 1970, pp. 383–417. Geithner, Timothy F. “Risk Management Challenges in the U.S. Financial

System,” Federal Reserve Bank of New York, 2006. https://www.newyorkfed. org/newsevents/speeches/2006/gei060228. Greenspan, Alan. “Technological Change and the Design of Bank Supervisory

Policies,” Federal Reserve Bank of Chicago, 1997. https://fraser.stlouisfed.org/ title/452/item/8597.

Gruchy, Allan. Te Reconstruction of Economics: An Analysis of the Fundamentals of Institutional Economics (New York, NY: Greenwood Press, 1987). Johnson, Simon and James Kwak. Tirteen Bankers: Te Wall Street Takeover and the Next Financial Meltdown (New York, NY: Pantheon, 2010). Kaiser Foundation. “2015 Employer Health Benefts Survey,” 2015. https://www.kf.org/report-section/ehbs-2015-section-one-cost-of-healthinsurance/. Keynes, John M. Collected Writings, Donald E. Moggridge, ed. (London:

Macmillan, 1971), Vol. IX. Lears, T.J. Jackson. “Te Concept of Cultural Hegemony: Problems and

Possibilities,” Te American Historical Review, Vol. 90, No. 3, June 1985, p. 591. Marx, Karl. “Te Fetishism of Commodities and the Secret Tereof,” Capital,

Vol. 1. (Moscow: Progress Publishers, 1970), p. 76. Merton, Robert. “Financial Innovation and the Management and Regulation of Financial Institutions,” Journal of Banking and Finance, Vol. 19, 1995, pp. 461–481. Mirowski, Philip. Never Let a Serious Crisis Go to Waste: How Neoliberalism

Survived the Financial Meltdown (New York, NY: Verso, 2013). Polanyi, Karl. Te Great Transformation: Te Political and Economic Origins of

Our Time (Boston, MA: Beacon Press, 1944). Schumpeter, Joseph. Business Cycles: A Teoretical, Historical, and Statistical

Analysis of the Capitalist Process (New York, NY: McGraw-Hill, 1939), Vol. 2. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations [1776] (Chicago, IL: Te University of Chicago Press, 1976), Book I,

Chapter II. Simons, Penelope and Audrey Macklin. Te Governance Gap: Extractive

Industries, Human Rights, and the Home State Advantage (New York, NY:

Routledge, 2014). Spencer, Herbert. Te Principles of Sociology (New York, NY: D. Appleton and

Co., 1876–1896), Vol. III. Sumner, William Graham. What Social Classes Owe to Each Other [1883] (New York, NY: Harper and Brothers, 1911). Tracer, Zachary and Alex Nussbaum. “Heath Insurance Exchanges,” Bloomberg,

January 5, 2017.

6

Everyday Neoliberalism

After three decades into the Greenspan Era, the project of consolidating corporate power entered into its fnal stage. All the major economic institutions had become either directly under corporate control or were rendered irrelevant to corporate interests and pushed to the margins. Organized labor had all but disappeared from the private sector and government watchdog agencies were either defunded or ignored. Media became wholly absorbed into the sphere of corporate interests as a sales tool and propaganda machine. Neoliberalism became the unquestioned ideology for policymakers regardless of their political party afliations. Democrat and Republican parties have absorbed themselves into what is now a single institution that transcends political afliations—the corporate hegemony. In this fnal stage, corporate neoliberalism has captured the imagination and intellect of the general population and has forged itself into a popular consensus. Neoliberalism stands largely as the accepted ideology of the American population, though when put into practice it largely runs against the economic interests of most people. Genuine advocacy for models that truly stand outside business as usual is barely audible in public discourse. Most economic models in the United States that are included in public discourse as standing

© Te Author(s) 2018 J. Magnuson, Financing the Apocalypse, Palgrave Insights into Apocalypse Economics, https://doi.org/10.1007/978-3-030-04720-7_6

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outside the mainstream have been co-opted into a neoliberal framework. As we will explore in later chapters, so-called alternatives such as peer-to-peer fnance, microfnance, and green capitalism are mainly ersatz alternatives—alternatives in form but not substance.

In his theory of cultural hegemony, Gramsci articulated that popular consent is often ambiguous as a result of a confict between people’s own conception of things and that which they adopt. Even with a consensus, there remains opposition and public demonstration in defance of corporate rule. Tough rare, we can even encounter attempts to create counter-hegemonic institutions. But in the main, most fnd it too difcult to maintain an outlook that runs counter to dominant culture, no matter how bootless that outlook may be. Consent, for Gramsci, entails a complex mindset in which there is an ideological mixture ranging from staunch adherence to orthodox ideology to approval held with apathy to resistance held with resignation. Te dominant ideology is not merely a set of beliefs refecting interests and structures of power but is a more complex “spontaneous philosophy” that is nestled within “the entire system of beliefs, superstitions, opinions, ways of seeing things and of acting, which are collective bundled together under the name of folklore.”1 In this sense, the often repeated American shibboleths such as “rugged individualism” or “the marketplace of ideas” where everyone is “free to choose” are part of this folklore that is extrapolated from both tradition and neoliberal ideology. Te elements of neoliberalism that problematize government or the blind worship of innovation have worked their way up to the status of conventional lore. Tese are symbols of piety that represent “the American way” and carry much weight. Perhaps the most compelling of all is the popular and ephemeral notion of equating the capitalist market system with democracy.

Gramsci’s theory of cultural hegemony is consistent with the holistic view in institutional economics in which powerful institutions and ideological consensus among the population are bound together in the whole of culture. Gruchy and Dugger echoes Gramsci as they both assert that American corporate hegemony uses popular belief systems rather than military force to sustain itself. As C. Wright Mills also argued, Americans are fond of saying that they are free individuals living in a free country, though actual political and economic actions are

delimited by what is conditioned for them by corporate institutions that control media, education, fnance, and political choices.

In popular neoliberalism, the Janus-face of government is evident. Troughout the Greenspan Era, deregulation movements were dressed in anti-government rhetoric which resonated with the public. Tere exists a near total consensus that maligns as an unwanted encumbrance to American prosperity. Yet even with the popular view of government as being “the problem” most Americans expect to beneft from public institutions. Te result is a general state of confused ambivalence.

A recurring theme found in popular surveys of Americans is that they are both for government involvement in economic afairs and against. One survey conducted in 2011 found that 95% of the respondents support cutting government spending, yet the vast majority oppose cutting the largest pieces of the budget pie: Social Security, Medicare, Medicaid, and the defense budget.2 In another survey in 2008 showed that nearly half of the recipients of Social Security, Medicaid, and unemployment insurance benefts, claim to have never been a benefciary of government social programs. At a Republican town hall meeting, South Carolina citizens met with their representative from Congress and a person stood up and demanded from the representative to “keep your government hands of my Medicare.”3 Te constant push of neoliberal ideology and programs during the Greenspan Era has deepened this state of confusion. A highlight moment of this came around the turn of the new millennium as corporate and government ofcials were making promises of economic miracles and fortunes for everyone in what they called “the New Economy.”

Hype, Irony, and the New Economy

Te Berlin Wall tumbled on November 9, 1989. Cable network pundits, motivational speakers, columnists, and market analysts were shouting with jubilation that the Cold War had come to an end. It was a historical milestone that coincided with the beginning of the Greenspan Era, and the Wall Street-Washington establishment began celebrating the notion that American capitalism had emerged triumphantly in

the world as the premier economic system with neoliberalism guiding belief system. A new global division of labor was to establish itself as a “New World Economic Order” in which Americans were promised to become the more afuent information workers, while the workers in the emerging markets of Asia and elsewhere would become the labor force for a globalized manufacturing sector. Robert Reich, Secretary of Labor in the Clinton Administration, told American workers they were to become better-paid, highly skilled “information” workers and manipulators of symbols (words, computer codes, and numbers) rather than assembly line workers in factories.4 Tey were going to deal with ideas rather than things. Newly minted millionaires and well-paid information workers alike were all promised to be on the path to riches on America’s “information superhighway.”5 And so it went with all the hyperbole and fanfare, the new order was called the New Economy and it promised miracles.

Part of the miraculousness of it all stemmed from tremendous increases in computing power and internet technology brought the world of fnance much closer together and dramatically facilitated the movement of fnance capital around the world. Millionaires and billionaires were popping up almost every day as entire new industries were erupting like volcanoes in the dot.com sector. New technology companies were breeding, and with each new company there were initial public oferings of stocks that ofered fresh opportunities for fnancial market innovation and speculation.

Incidentally, 1990s were remarkably similar to conditions in 1920 leading up to the great stock market crash of 1929. Te mood of euphoric optimism of the 1920s was given the dramatic name of the New Era, refected again in the New Economy. Both eras were at the end of global confict as the New Era came at the end of World War I in 1918, and the New Economy emerged after the end of the Cold War in 1989. Both were boom periods characterized by get-rich-quick schemes, furries of technological innovation and growth industries, media hype, and a general feeling of capitalist triumph. Te roaring twenties and the booming nineties were periods during which fnancial speculation became all the rage, both had massive market bubble infation, ended in profound fnancial market crashes and meltdowns.

In the Greenspan Era, historical patterns and parallels were ignored and the New Economy was hyped as a veritable cornucopia of wealth creating opportunities for everyone.

It was also a political opportunity for Washington to direct countries into a global neoliberal system. American foreign policy leaders traveled the globe pressuring countries, particularly the “emerging markets” in Eastern Europe, East Asia and elsewhere to begin restructuring their economies along guidelines that conformed with neoliberalism. Tese policy prescriptions came through the traditional Washington D.C.based institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury Department, and subsequently came to be known as the “Washington Consensus.”

Te Washington Consensus preached to the world a vision of a global system of capitalism in which fnancial investments could travel seamlessly from one country to another. It was important, therefore, for countries to liberalize their fnancial markets so that they could be part of the new system where fnance capital could be allocated around the world most efciently by following neoliberal principles. In a global free market environment, capital will automatically fow around the world to wherever it is needed the most, that is, where it is scarcest and where it pays higher returns.

Wall Street investment companies were eager to jump on high returns in the so-called emerging markets and pushed the global neoliberal agenda. Wall Street became a kind of surrogate foreign policy institution. Investment frms pressured the largely compliant government to deregulate fnancial markets as quickly as possible thereby making it easier for these companies to move their money in and out of these countries as they pleased. Accordingly, everyone was promised to be a potential stakeholder in the New Economy, regardless of where they were located, and they could share in the benefts of economic growth stimulated by capital investments.

Everyone in the world was promised to have the opportunity to become rich, though such promises were most popular among Americans. Neoliberalism had already been established as gospel in the United States by that time. On this, historian and author Tomas Frank provides important insights, “Aside from the technological advances of

recent years… very little of the ‘New Economy’ is new. What the term describes is not some novel state of human afairs but the fnal accomplishment of the long-standing agenda of the nation’s richest class.”6 Justifcation of extreme afuence during the Greenspan Era resonates with Carnegie’s sublimation of the rich and became part of popular culture. Te afuent members of the corporate class extended neoliberal ideology to the general public to infuence how people view wealth. Te ideology of economic individualism provided justifcation as it spread the belief that billionaires were self-made and those who were left of the fortune-making business simply lacked ambition. Te opportunities are there, so the argument goes, all is required is a bit of initiative to take advantage of them.

Tomas Frank describes development during the Greenspan Era as the rise of “market populism.” Market populism was partially a byproduct of a shift in politics in which traditionally progressive political parties were embracing corporate infuence and neoliberal ideology. “From Deadheads to Nobel-laureate economists,” writes Frank, “leaders in the nineties came to believe that markets were a popular system, a far more democratic form of organization than (democratically elected) governments.” Frank notes that markets were being refashioned not as just mediums of exchange, but as models for democratic consent in which members from all socio-economic classes are seen equal market players. “Markets were serving all tastes, markets were humiliating the pretentious, markets were permitting good art to triumph over bad, markets were overthrowing the man, markets were extinguishing discrimination, markets were making everyone rich.”7 Market populism in America conveyed the myth that it was becoming a classless society even though it was becoming more class divided.

Multimillionaires and billionaires have been reconstructing their public images in ways that give the appearance of blurring socio-economic distinctions. Rather than staying aloof in exclusive estates far from the rabble in the world of Mills’s power elite, they could be seen hanging out at popular nightclubs, doing poetry slams at Starbucks, or commuting to work on bicycles (ibid.).8 Tey can be seen doing TED talks in casual attire, eating fast food, donating money for progressive or environmental causes, and working long hours at the ofce. Te rich portray

themselves as one of us and thus they earned their position with a newly energized sense of righteous indignation. Te wealthy investor class morphs into the working class; the working class given the opportunity and the right portfolio, morphs into the leisure class and everyone becomes equal.

Te process of fashioning capitalism into something hip and egalitarian is nothing new in the American experience. In Te Making of a Counter Culture (1969), Teodore Roszak observed it as a kind of commercial verminization that captured youth culture in the sixties,

[I]t is the cultural experimentation of the young that often runs the worst risk of commercial verminization—and so of having the force of its dissent dissipated. It is the cultural experiments that draw the giddy interest of just those middle-class swingers who are the bastion of the technocratic order… Visiting bohemia to peer at the ‘fower children,’ dropping by the rock clubs, laying out the $5.00 minimum it costs to play voyeur at Le Cimetiere des Voitures, has become the contemporary version of ‘slumming for our big spenders: a breezy firtation with the of-beat inevitably destroys the genuineness of the phenomenon.9

Te Greenspan Era, however, stands apart as the coopting of dissenting styles and images took on a new fervor and presented itself as democratizing: that consumer trends in the marketplace are a force for popular sovereignty.

Te political administrations of Bill Clinton in the US and Tony Blair in the UK exploited the culture of market populism. Tey worked to forge a consensus around a belief that economies of the world are best served by free markets shaken loose from government regulation. Trade and banking deregulation policies followed in a furry, along with the global presence of institutional investors and hot money. Market speculation became all the rage. People focked to speculation schemes on the internet. Te media buzzed so profoundly about the promises of new markets and technologies at the turn of the millennium, it was sublimated as nothing short of a miracle.

At the end of the Cold War and the beginning of the Greenspan Era, the American foreign policy establishment took the ideas of economic

individualism, disdain for organized labor, efciency of free markets, and contempt for government regulation to the rest of the world as gospel. Frank observes, “the determination of American leaders to extend it to all the world the general belief among opinion-makers that there is something natural, something divine something inherently democratic about markets.”10 Te widespread acceptance of the neoliberal movement in America at the turn of the twenty-frst century is a salient example of Gramsci’s conception of cultural hegemony. In the Marxist view, contemporary neoliberalism is the part of the superstructure extending from the economic base of corporate capitalism. Also, from the view of institutional economics, culture is never neutral. It is the same forces that cause the evolutionary drift of our economic institutions that cause changes in cultural symbols and our mindset. Both views point in the same direction to the ideology of corporate imperialism that magically aligns itself with the treasures of democracy that now can span the globe in the post-Cold War era.

Once the notion of equating markets with democracy was drilled into the American population and into the ears of anyone else who would listen, it was not difcult to forge a neoliberal consensus worldwide. Neoliberalism gained widespread and spontaneous acceptance while the corporate sphere extended is imperial dominance and cultural infuence everywhere. Frank asserts that “…making the world safe for billionaires has been as much as cultural and political operation as an economic one.”11

Te free market version of liberty, equality, fraternity was popularized by bestselling books such as Te World is Flat (2015), by journalist Tomas Friedman. Friedman was best-selling book celebrated global neoliberalism as a profound equalizing force by providing access to the structure of opportunity to raise living standards for everyone through free commerce, individual initiative, and competition. Great masses were drawn to the promises of easy money through speculation in emerging markets. It was as if an epidemic of gambling addiction spread everywhere and was sustained on a delusion that markets were not only democratic, they would remain bullish for all time—the delusion that everyone would become rich by playing the markets because fnancial markets will always continue to rise in value. As we see from

the historical record, wherever and whenever the general population is caught up in fnancial market get-rich schemes, mass instability follows. Tis reality was brought into full view through a series of global fnancial crises over a few decades culminating in the epic turbulence that began in 2008.

It did not take long for a more sobering vision of reality to set in. Global neoliberalism and the imperial dominance of the corporation caused the distribution of wealth to move in the opposite direction away from fattening equality to widening polarization. Te new global division of labor did create millionaires and billionaires all over the world, but it also caused much ruin and was never really a promise that extended to anyone who wasn’t already wealthy anyway. Wealth and income distribution have become profoundly more unequal since then. Perhaps the most outstanding characteristics of the New Economy were dramatically widening wealth inequality and fnancial instability— the two most foreboding signs of apocalyptic economic ruin to come. We will explore the fnancial instability part of these stories in the next few chapters.

The World Is Far from Flat

Perhaps the most noticeable economic indicator of the New Economy is that it became rapidly characterized by widening inequality. Te great prosperity generated from the new technology and globalization did not trickle down to the majority of American working people as promised. As would be expected under corporate hegemony, the corporate sphere was doing well as stock prices soared with massive corporate profts, and superstar CEO compensation ballooned while the wages of the average worker either fell or stayed constant with infation. For decades the top 10% wealthiest members of society have been collecting the largest percentages of income generated in the US economy. Te chart below shows that the share of the wealthy remained relatively constant for nearly four decades, then with the onset of the Greenspan Era it took a signifcant jump and has been on a steady climb upward since.

Concurrent with rising incomes of the top 10% is more polarized income distribution. One of the most commonly used measurements for income distribution in a country is the Gini Index or Gini Coefcient. It is a numerical index scaled between zero and one where an index of zero would signify an extreme case of “perfect equality” meaning that the incomes received by all households in the country are exactly equal. An index of one, or perfect inequality, would be the other extreme, one household receives all the income earned in the economy and everyone else receives nothing. Obviously neither extreme is possible, so the Gini stands as a fraction somewhere between zero and one.

Te next chart below shows Gini numbers for the United States on a time series between 1967 and 2015. Te trend line shows a steady upward march of inequality. Tis data set was developed by the Federal Reserve District Bank of St. Louis goes up to 2016. But it is probably safe to assume that after the changes in tax law that occurred in 2017 that overwhelmingly favors the wealthy and the corporate class, the Gini is heading upward. Te United States has achieved the most unequal distribution of after-tax income compared to any other developed country.12 Tis is not by accident, it is by economic policy design— neoliberalism (Fig. 6.1).

Notice that the long-term trend is basically the same upward slope of about a 2.5% increase each year, but the whole structure jumped upward at the onset of the Greenspan Era and the full implementation of neoliberal policies; that is when the income shares of the wealthy pull away from the rest of the population.

Te neoliberal agenda was globalized and where it spread, it dismantled the structure of opportunity for working people to gain from economic growth. Mass layofs accompanied the sizeable corporate mergers of that decade and downsizing and outsourcing were made more possible with a global race to the bottom in labor markets, all of which was celebrated as sound business practices that improved the corporate bottom line. Working people everywhere suddenly found that their jobs were far less secure as they were thrown into a ferce competition for a decent job with a globalized labor force. For Greenspan Era neoliberal economists, this is necessary for keeping down price infation. Corporate industries became more concentrated and creating fantastic

0.500 0.480 0.460 0.440 0.420 0.400 0.380 0.360 0.340

1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

2003 2005 2007

2009 2011 2013

2015 Fig. 6.1 Gini Index for the United States, 1967–2015 (Source Federal Reserve District Bank of St. Louis, https://fred.stlouisfed.org/graph/?graph_ id=212325&updated=2000 and Luxembourg income study, https://www.lisdatacenter.org/our-data/lis-database/)

wealth for those at the top of the food chain, while the labor markets became a global game of survival of the fttest. Despite the economic models present in most textbooks, higher productivity rates measured by output/labor ratios did not lead to higher incomes for workers. Productivity soared while wages stagnated.

Wealth inequality of the nineties was becoming much more visible as the corporate class pulled away from the rest. Rising levels of wealth and income for the upper-income families provide them with access to a structure of opportunity for further gain that is inaccessible to middle and low-income classes. Wealthier families have the resources to send their children to prestigious schools and universities, assuring access to the highest paying jobs and income security. Te afuent typically use their top-tier incomes to gain even more wealth as they buy income-earning property and make fnancial investments. Te income derived from these assets can be used to acquire more assets, and so on. Wealth begets wealth in the virtuous ascent to prosperity.

Low-income families, on the other hand, have been largely shut out of the structure of opportunity, and the vast majority experience little

upward class mobility. Most tend to borrow and rent, and thus are paying the rent and interest income that fows to the wealthier property owners. Low-income families fnd it more difcult to accumulate wealth in the form of income-earning assets as ownership remains and accumulates in the hands of the wealthiest segment of American society. Lowincome families stand as the most likely to be drained of resources as they spend all their income mainly to pay their bills, have higher debt burdens, and thus are far more likely to descend into a vicious circle of poverty, foreclosures, and lack of decent health care.

In the era of Donald Trump, class distinctions are becoming more rigid, and social mobility for those at the bottom is becoming increasingly difcult, if not impossible. Under the boot of corporate hegemony, the economic system will not result in class equity because this is not a priority of such a system. Te livelihoods of working people are held down as much as possible to keep the corporate class in its upward spiral of afuence. As inequality climbs higher and faster, it is just a matter of time that the Gini will top over the .50 mark. Tis will signify that the income distribution pattern will resemble something closer to slavery than a democratic commonwealth. Te common features of all nations of the world where the Gini is .50 and over is splendid afuence standing alongside poverty in a society that fundamentally lacks democratic institutions. Nonetheless, the American population views this as the untampered natural order of things as it should be. Te question begs as to why would such a lopsided, unequal be supported by a group of people who stand little or nothing to gain from it.

Living with Our Moral Discord

Over half a century ago the Nobel laureate institutional economist, Gunnar Myrdal, noted this contradiction in his Rich Lands and Poor (1958). Myrdal saw that in countries like the United States there exists a “moral discord” between the common adherence to egalitarian principles of governance such as the basic political rights and enfranchisement of all persons and the starkly inegalitarian conditions of real life where

corporate power rules. Te mythology of neoliberalism provides an easy way out of this contradiction because for many it is easier to live with moral discord than to face the deeper problem of institutional changes needed for resolution. And it is even easier still if it can be dismissed with economic theory. On this Myrdal writes, “Economic theory is only a segment of total culture. It becomes modulated to serve opportunistic rationalization needs. In order to live as comfortably as possible with the moral discord in their hearts, people [in America] need an economic theory that diverts attention from this moral discord.”13

Cultural historian Morris Berman addresses this question in the third installment in his trilogy on America: Why America Failed: Te Roots of Imperial Decline (2012). For Berman, the country from the beginning has never been committed to creating a democratic commonwealth and is incapable of reconciling the moral discord Myrdal observed. Evidence of this lies in the historical tendency for Americans to be more interested in building institutions aimed at fnancial accumulation than social provisioning. For Berman, a commonwealth is “a truly human way of life, that Americans had largely rejected from early on.”14 From the start, the vision for America was torn between that of a land destined for unrepentant acquisitiveness on the one hand, or that of a nobler commonwealth for the collective good on the other. Under the evolving corporate hegemony, acquisitiveness won out. Americans accept this discordant way of life because they envision that in the neoliberal scheme of things, even if it’s mostly fctional, all can rise to be members of that very afuent class. To question this vision is to question the “American Dream” no matter how ephemeral that dream may be. On this, Berman writes,

…if the American Dream is really about unlimited abundance, and if we are addicted to that as a goal, then alternatives to that way of life are simple too scary to contemplate. Try telling a full-blown alcoholic to put down that glass of Scotch… addiction has a certain ‘systemic’ pattern to it that is typically not self-corrective. Both capitalism and alcoholism are characterized by cycles of increasing dysfunction, ‘runaway,’ and breakdown, and the system can do this for a fairly long time.15

Berman is looking in retrospect at what Veblen was seeing for the future a century ago. Te image is essentially the same—the interests of the Interests are dominant, including what constitutes the most cherished American values. Te US post-colonial history began simultaneously with the rise of the corporation. Te history of the corporation is inextricably tied to the history of the corporation. Corporate-dominated cultural hegemony has woven itself into folklore or popular beliefs such that markets are seen as freedom, corporations are entrepreneurs, and all forms of innovation, including fnancial innovation, should not be questioned. Tese beliefs are deeply attached to the collective brain stem, which leads to strict acceptance of anything that resonates with the American Dream, even if they are destructive, nondemocratic, or blatantly false. Te institutions of corporate capitalism in America are seen as a natural, normative aspect of life. Suggestions that this system is fostering inequality, instability, environmental damage, or anything but growing prosperity are met with suspicion even when the evidence is overwhelming. In other words, an important dimension to this particular brand of cultural hegemony is the phenomenon of cognitive dissonance.

Cognitive Dissonance, Delusion, and Apocalypse

Along with rising inequality, fnancial market instability, and environmental damage, cognitive dissonance is another pathological system condition associated with corporate cultural hegemony. When it afects a wide segment of the population, it becomes a general condition of mentally whitewashing Myrdal’s state of moral discord. It is a general state of anxiety in which people are unable to reconcile deep schisms in their beliefs about the social and physical reality around them. To alleviate anxiety, the population distances itself from reality and retreats into a state of denial.

Leon Festinger, one of the most infuential fgures in modern social psychology is renowned for his trailblazing work on cognitive dissonance theory. He was inspired after reading a story about a series of rumors that began to spread in India after a mild earthquake.

Among the people who experienced the earthquake rumors began to circulate that this was just the beginning of more apocalyptic earthquakes and other disasters on the way. Te rumors turned into beliefs, and when the disaster did not arrive, a schism opened between the beliefs and actual experiences. Tis inconsistency, or dissonance, between belief and experience caused widespread anxiety. In order to reduce their anxiety, people hold more frmly to their beliefs and reject experience or information that would present a contradiction no matter how fanciful or bizarre the belief.16

A common example of cognitive dissonance is a smoker who decides to hold on to a belief that there are certain health benefts from smoking and rejects information that would suggest otherwise, including conclusive health research data. Festinger points out that if an individual believes something wholeheartedly then it is presented with “unequivocal and undeniable evidence that his belief is wrong: what will happen? Te individual will frequently emerge, not only unshaken, but even more convinced of the truth of his beliefs than ever before.”17

As we have argued, standard economic theory assumes consumers to be rational choice-makers in the open market, but such a concept of rationality gets fuzzy in social and economic life. Tis assumption, too, is an example of cognitive dissonance. Mainstream economists believe with their whole hearts that we are all rational and respond to objective reality, yet the evidence of greed-inspired irrationality in fnancial market speculation is obvious evidence of widespread irrationality. Economists cling to the Efcient Market Hypothesis even though such a condition of efciency is statistically impossible. Nonetheless, economists cling to these assumptions and hypothesis even more tightly when presented with contrary evidence.

Understanding cognitive dissonance as a widespread phenomenon helps our understanding of how so many of us choose to hold on such beliefs as fnancial markets are riding an elevator of prosperity that always goes up even though there is a mass of evidence that indicates otherwise. Tat physical limits to economic growth do not exist even though the basic realities of the fniteness of our planet and anthropogenic climate change are unequivocal. We hold onto to these beliefs because our corporate system needs us to. It is perfectly natural for us