The Trap of Neoliberalism

NEW – May 27, 2022

An unhealthy fixation on the free market in the conditions of total war can have fatal consequences not only on the growth potential, but also on strategic economic stability and sustainability. In prospect, it jeopardises the survival of Russia.

The dominant postulate of neoliberalism is the narrowing of the channels of state influence on economic processes and the transfer of economic development to a chaotic free market. Blind and absurd belief in the principles of competition, self-regulation of the market and the priority of freedom of economic decision-making to economic entities on the assumption that the market will sort itself out.

There is no more monstrous delusion than the belief in the effective free hand of the market and competition.

So beloved in the West, neoliberalism is necessary exclusively for political purposes, conditioned by economic motives; dilution of the role and share of the state in the economy for the re-establishment of ownership rights to national assets to supranational structures (transnational corporations, syndicates under the control of international groups – the same IMF and World Bank), with the ultimate goal of seizing ownership, management levers and sales markets.

There is no freedom of competition, there is no free market. It’s dogsh*t. What else needs to happen for people to finally understand that dogmatism in relation to liberalism is nothing more than an instrument of manipulation through delusions within the framework of faith in universal values and principles. All these are lies and provocations.

▪️ When a business unilaterally breaks commercial contracts, violating long-term obligations to counter-parties and dumps them, casting aside everything in its path – is this liberalism and the principles of the free market?

▪️ When all existing legal norms were thrown into the trash, arresting everything that comes to hand and has a Russian trace, and it does not matter whether the subjects are involved in decision-making or not. Is this the absolute primacy of the letter of the law and impeccable adherence to the legal foundations of the protection of private property?

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▪️ When everything related to Russia is declared toxic, and Russian products (even non-energy and non-raw materials) are outlawed, prohibiting the sale. Are these the principles of healthy competition?

▪️ When the mass media coordinate what is consistent with the “party policy”, blocking everyone and everything that diverges from their point of view. Is this freedom of speech?

▪️ When some can be killed under the “humanitarian” carpet bombing of NATO countries, while others cannot protect national interests? Is this a protection of human rights?

Pay attention to how quickly this vile, hypocritical riff-raff abandons its fictitious principles when it is necessary and profitable for them. Just yesterday they played the righteous defenders of universal values, and now they use mechanisms of totalitarian control and influence on economic entities.

Anyone who does not support their methods of suppression is an enemy of the system, creating together with this an instrument of forcible coercion to “party politics”. Businesses operating in Western markets cannot say that “you are violating our economic interests and the principles of healthy competition,” because this business will inevitably go through declassification and lustration. Regardless of market principles, politics and ideology are above all.

Well, where is neoliberalism here?

What is the modern West? This is a unilateral rejection of trade, economic and financial obligations. These are arrests and expropriation of property for false and fictitious reasons. This is lustration without trial. This is an endless lie, provocation and substitution of concepts.

Everything is fictitious – democracy, freedom of speech, human rights, free market and competition. Everything is a hoax.

The real betrayal of national interests is playing by fictional rules, trying to create something that does not exist. I hope our authorities in the whole hierarchy understand that the concept of neoliberalism has burst like a soap bubble, exposing a fan of fictitious narratives and manipulation tools.

From an economic point of view, why do market mechanisms not work in conditions of total war? The motives of business lie in the plane of return on investment, because business is bound by obligations to shareholders, creditors, and therefore limited by deadlines and profitability.

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Investment decisions are designed with an eye on return coefficients – there can be no other way, except in cases when mega corporations of the Google and Apple level have so many resources that they can afford an extensive network of experimental projects, most of which end up as a prototype.

The problem lies in the fact that in the conditions of the restructuring of economic, trade, logistics and financial relations with a pronounced structural transformation (when the proportion of industries within the economy changes), business is unable to take on the risks of long-term projects (the profitability of which is not obvious).

In general, any crisis at its core always involves the collapse of the planning horizon up to operational timing and the transition to the stage of “survival”, closing cash gaps, balancing resource insufficiency, optimising business schemes and costs.

The principles of market economy and competition work well on the trajectory of economic development and, most importantly, in a formed system/environment where there is no structural transformation, i.e. a change in the proportion of sectors and branches of the economy according to the degree of influence in the economy (gross value added, profit, concentration of financial resources, and so on).

Crisis presupposes the scrapping of the old model and the birth of an intermediate configuration at the stage of crystallisation of new parameters and proportions according to which economic agents and society as a whole will function.

Therefore, it is necessary to clearly separate the phases and stages of economic development. The illusion of liberalism is present and has the right to live when everything works like clockwork. However, with structural transitions, any liberal construction is similar to death.

Russia in 2022 is the toughest and most difficult challenge, at least since the 90s. In these conditions, business is deprived of reference points, deprived of resources for development and has a chronic lack of trust.

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So far, I see that neither the Central Bank nor the government are working within the framework of a mobilisation development for project, otherwise the outlines would be visible right now. There is an attempt at self-eradication and a desire to give everything to the will of fate – to the free hand of the market, which itself will sort everything out according to the precepts of the adherents of the neoliberal concept. There is only spotty, local work on problem areas.

From the architect of a New Economic Policy, the Central Bank and the government turn into the led when they move from forming an impulse to responding to impulses formed from outside. Did something catch fire? OK, we’re extinguishing it. Nothing caught fire? We sit on the fence and watch what happens. Such a policy is, in the long run, a losing one, because it deprives the main attribute of victory in the economic battle – the game of being ahead of the curve and forming one’s own agenda.

So, there is an indisputable fact that Russia is in a severe crisis with unprecedented pressure from outside. There is an understanding that business in many aspects will withdraw for objective reasons due to the collapse of the planning horizon, due to a shortage of resources, the collapse of profitability and trust.

At these moments, economic policy can only be formed by the state, because the state can take on what business cannot take – long-term projects, the profitability of which is questionable. For example, infrastructure, energy issues, construction of logistics hubs, and so on. It is right to act in cooperation with business, but the impulse and direction should be set only by the state and in no other way.

Time passes, entropy increases, as does pressure from outside. The Central Bank and the government coped well with the task of stabilising the shock in February-March, now it’s time to move to development.

Spydell Finance

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