The Trajectories of Neoliberalism

How will neoliberalism change in the light of the “Pacific Pivot” and US energy independence?

By Giulio Amerigo Caperchi

We are all well acquainted with the narratives embedded in the ideology of neoliberalism. Its emancipatory promise of a globalized world where the free exchange of goods, ideas and cultures would lead to peace, interdependence, prosperity, and the spread of democracy are well known. On the heels of the fall of the Soviet Union, so the story went, no alternative was left other than to embrace that dynamic American mix of capitalism and democracy. Borders would increasingly blur, nations and nationalisms would be rendered irrelevant as the new world order would be benevolently guided by international institutions such as the World Bank, the World Trade Organization and the United Nations. If only countries would deregulate, privatize and liberalize their economies democracy and prosperity would eventually follow. Human rights and free trade, we were told, go hand in hand.

Of course, the utopia came crashing down on 9-11, and then in Iraq and Afghanistan. It came crashing down in the financial meltdown of 2008. It came crashing down with the rise of nations such as China which demonstrated that authoritarianism can simply do capitalism better. Pundits now predict the end of the American hegemony and hail the advent of the “Asian Century”.  The future, as of today, seems pretty bleak for neoliberalism.

Two paradigm-shifting occurrences, however, might question the apparent neoliberal decline: the so called “Pacific Pivot” and the realistic possibility of US energy independence in the near future. In the light of these two issues, the global geopolitical panorama will of necessity undergo dramatic changes. Two key questions must be addressed here. Firstly, how will these changes impact the emancipatory narratives of neoliberalism? And secondly, how will they affect the military, financial and political institutions exercising neoliberalism’s global power?

The Pacific Pivot is the White House’s response to China’s growing military and economic clout. The Economist reports that China, although nowhere close to the US (yet), has upped its annual spending on defense from $30 billion in 2000 to $120 billion in 2010. In 2012 China will have spent $160 billion on modernizing its military. Analysts predict that China will outspend the US by more than half a trillion dollars by 2050 on defense related expenses.

Accordingly, as the wars in the Middle East wind down, the Obama administration has decided to revamp America’s reputation as a Pacific power. In its latest Strategic Guidance document, the White House states that “while the U.S. military will continue to contribute to security globally, we will of necessity rebalance toward the Asia-Pacific region”. Pacific deployments of marines are well under way, while joint military training operations have increased with the region’s pivotal allies, namely Japan, South Korea, Thailand and the Philippines. In the coming years, the DoD will be spending over $10.6 billion establishing a rotational force of 8000 marines stationed in Guam, Hawaii and Australia.

EIA Energy Production and Consumption. Photo Credit: eia.gov

On another front, energy analysts predict near energy independence in the US around the year 2050. According to the US Energy Information Administration, bolstered by technologies allowing the tapping of previously inaccessible shale gas and petroleum reserves, the US will dramatically reduce energy imports. In the adjacent graph, the EIA predicts a decrease in the gap between US energy consumption and production, resulting in a decline of energy imports of around 10% in 2040 compared to the year 2011. Within only three years the EIA estimates that the US will become a net exporter of liquid natural gas. It is no surprise that both presidential candidates of the 2012 Presidential election have made domestic energy production a priority of their respective electoral campaigns.

So what will these future changes entail for the emancipatory promises of neoliberalism? What of the world where free exchange of ideas and products would lead to international cooperation and render petty nationalisms and conflicts a distant memory of a barbaric past? Of course, the wars in Afghanistan and Iraq have overwhelmingly disproved neoliberalism’s promises of spreading democracy. But the Pacific Pivot does not even try to mask its ambitions with a concern for peace and democracy. There is no apology for the Pacific deployments: it is Machiavellian Realism 101 devoid of humanitarian underpinnings and defined by the pursuit of national interest. The Pacific Pivot is not justified by the ambitious projects of exporting human rights or engaging in nation-building as past US foreign policy so often has.

Energy independence could bolster this belligerent attitude, freeing the US from dependence on a turbulent Middle East and allowing it to increasingly concentrate its influence on Asia. Energy independence might actually fuel uniltaeralism and free the US from the need to calculate energy geopolitics within its foreign policy, potentially allowing it to forgo cooperation in international fora.

Moreover, this attitude is reflected in the key political, financial and military institutions which articulate neoliberal ideology. Let us take a brief look at these. Out of the financial crisis institutions such as the World Bank and the IMF have emerged stronger than ever, with countries at the heart of Europe ceding them national sovereignty. The “too big to fail” investment banks responsible for fraudulent lending and illegal practices (LIBOR and HSBC scandals –to mention the most recent) have been bailed out and are continuously sustained by tax payer money worldwide. Multinational corporations have posted record profits and are presently sitting on enormous piles of cash, with many of them refusing to raise wages and accept higher taxes. Military operations such as drone warfare and Special Forces incursions increasingly operate unaccountable and well out of the reach of international law. Neoliberalism’s most powerful players are probably stronger today than they were in the previous decade.

The ambivalent binomials inherent in neoliberalism, namely those of globalization and prosperity, of free trade and human rights, of military interventions and free societies have unraveled. The US neoliberal project has shed its emancipatory promises and embraced the pragmatic pursuit of military and financial interests. What it has left behind is an architecture of world government devoid of the spirit of Wilsonian idealism which had incipiently conceived it; bereft of a democratic ethic and fuelled by its unsustainable hydrocarbon bonanza.

So even if neoliberalism has crashed and burned, and, as stated by Slavoj Zizek, amply demonstrated that the marriage between capitalism and democracy has effectively ended, it is nonetheless emerging stronger, leaner and meaner than ever. The Pacific Pivot along with energy independence will be the chief contributors to the rebound of a new neoliberalism which will have definitely abandoned its humanitarian and democratic justifications. Perhaps, it will be incorrect to refer to it as neoliberalism at all, for there is nothing “new” nor anything “liberal” left in it any longer.