Good Evening Friends,

In all of this, please remember that we are talking about capitalism. Neoliberalism is just a historically opportunistic, hyper-aggressive approach to capitalism. Capitalism can never be permanently reformed or regulated, because when this happens, the capitalists feel their profits pinched, and they look for ways to evade, subvert, or destroy regulation.

When capitalism runs into its natural, physical and ideological barriers to growth, this system tends to trigger, both what I like to think of as virtual capitalism (1), and what Naomi Klein calls disaster capitalism (2).

And it is a fusion of elements of both virtual and disaster capitalism which comprise what we might think of as neoliberalism. Remember, neoliberalism - a creation of the seventies and eighties - is the exact equivalent of the capitalism of the pre-New Deal era. But I want to take a look at a tiny aspect of virtual capitalism, here.

Neoliberalism is very concerned about intellectual property rights, excessively so, as we shall see in a moment.

I would refer you to an excellent documentary called Enron: The Smartest Guys in the Room. This, of course, is available to view online in its entirety. Just type in the title in the search bar and you will be taken right there.

The CEO was a man called Jeffrey Skilling, Harvard whiz kid, just the kind of big thinking visionary Ken Lay had been looking for.

Now, one of the on-camera consultants for the documentary was a woman called Bethany McClean, co-author of the book, The Smartest Guys in the Room. She said that one of Skilling's conditions for taking the job, was that he be allowed to use mark-to-market accounting. Arthur Andersen "signed off on it," and "the SEC approved it."

Mark-to-market accounting allowed one to "book" the anticipated, future profits the moment a deal was signed, no matter how little money initially came in the door, as it were. These anticipated profits were written as actual, received profit. Bethany McClean said that Jeffrey Skilling believed that the idea was everything; and that one should be able to book the profits from that idea, right away; otherwise some "lesser" man could come along and profit from an idea that some "greater" man had come up with in the past.

This pre-booking of the hypothetical profits, was converted by the "free market," into very real profit, of course.

For one tiny example, according to the documentary, Enron had built a power plant in India, at a time when nobody else would do that. The risk was considered too great. India hadn't the money to pay for the power the plant produced. Enron lost a billion dollars on the project.

Even so, Enron paid its executives millions in bonuses, based on imaginary profits that, of course, never arrived. I suppose, the mere payment of the bonuses signalled to the "market" that the profits had, indeed, arrived, and this pushed the stock price up and....

No one else would do it, but Enron had taken the risk, had had the idea. They had been bold where others had been timid. They, the "greater" company, deserved to profit from their enterprising daring-do. A small detail like the inability of India to pay for the power should not get in the way of Enron's justly deserved profits. To allow such obstruction would be to re-enslave the free market, stifle creativity and self-expression, to de-incintivize innovation.

If we say - as I, indeed, do - that this idea, mark-to-market, is applied globally by the United States, the hegemonic implications in economic matters can be seen. Now cast your mind back to the 1990s. During this decade, the chattering classes would come on television - and from the vantage point of American prosperity - talked about China, a real up and comer, and so on and so forth.

There are two points the pundits always seemed to hit, in reference to China. They would always say that China was "manipulating" its currency; and that China was not very good at protecting intellectual property. One got the impression that the Chinese central government was nothing more than a group of vampiric, knowledge thieves.

In any event, if your were at all like me, during those years, you didn't know what the hell the pundits were talking about, shrugged, and changed the channel to watch The Simpsons. But note this mark-to-market scheme. I mention it because there is some indication that the U.S. government uses a kind of mark-to-market system in reporting certain statistics regarding the health of the American economy (3).

Could it be that criticism about China's lack of protection of "intellectual property," has something to do with the central government's wariness of, or reluctance if not refusal, to permit mark-to-market, thus signalling a moral failure on the part of the Chinese, in that they were not willing or able, yet, to fully embrace modernity, decency, and the free market, and thus join the happy community of capitalist nations? That is an uncomplete thought, and I leave it at that. I could be wrong.

1) It seems to me that Kevin Phillips's books, Wealth and Democracy, and Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism, are both chronicles of the continuing descent of the American political economy, deeper and deeper, into virtual capitalism - where nothing is what it seems. I'm talking about the increasing financialization of the economy. This virtual aspect of capitalism is also reflected in the corporate emphasis on "branding," as Naomi Klein would have us understand, in her book, NoLogo.

Enron seems to have been an extreme, "criminal" example, whose entire operations, almost, were of a virtual nature.

Also there seems to be a virtual aspect to official U.S. statistics with respect to the true health of the economy. We are all familiar with the unemployment rate, officially, ten percent. But the true unemployment rate - when you count all the people who have stopped looking for work because they think its hopeless, people working part time who would like to be working full time, and people who are simply excluded arbitrarily from the unemployment rolls after a certain period of time, etc - is probably something like twice that.

Kevin Phillips talks more about faulty statistics in his book, Bad Money, in places. Also, there seems to be problems about how GDP is officially calculated; in fact, it seems that half of what is called 'international trade,' from the American side and globally, is comprised of intra-firm transfers of goods across borders.

If Corporation A moves some equipment from its plant in Milwaukee to its plant in Calgary, that is called trade. I learned about this from Noam Chomsky's book, Free Market Fantasies. Again, I have to admit, I haven't read it yet, but I watched the five part YouTube video with Dr. Chomsky talking about it.

2) The term "Disaster Capitalism," of course, comes from Naomi Klein's book, The Shock Doctrine: The Rise of Disaster Capitalism. Virtuality is what capitalism resorts to when it runs up against its physical limits to expansion (environmental, overproduction, and what I like to think of as the inherently limited qualitative improvement and differentiation of products so that advertising [another dimension of the virtual economy, yes?], comes into play and it become necessary to assert vigorously that this ball point pen is infinitely different, more desirable, and cooler, than that ball point pen, and so on and so forth. But violence is the second phase capitalism resorts to when it runs up against its political and ideological limits, internationally. Shocked to learn it, but not everybody wants capitalism.

One thing we should note. In his book, A Brief History of Neoloberalism, David Harvey says that neoliberalization is not always initiated by the United States imposing that on a country through the International Monetary Fund. He cites the case of Chile in the seventies. He says that the Chilean case was a situation in which the Chilean bourgeoisie invoked U.S. support for an internal coup. The Class Connection. Harvey says that a lot of the IMF restructuring that goes on happens because some internal class formation, who cannot do it themselves, wants the IMF to do it, so they can have the economy they want, and have the additional benefit of "blaming" the IMF in a populist way.

wingedcentaur