Fifty years from Nixon's shock: The moment the gates of hell opened to release neoliberalism and financial capitalism

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Half century passed from Richard Nixon's economic reform. The "Nixon shock" included "the unilateral cancellation of the direct international convertibility of the United States dollar to gold. Although Nixon's actions did not formally abolish the existing Bretton Woods system of international financial exchange, the suspension of one of its key components effectively rendered the Bretton Woods system inoperative. While Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, all attempts at reform proved unsuccessful. By 1973, the Bretton Woods system was replaced de facto by the current regime based on freely floating fiat currencies."

 

And so, one of the worst presidents in the history of the United States opened the door to the domination of financial capitalism and the correlated destructive neoliberalism. 

 

Two years after Nixon's shock, in 1973, neoliberalism found its first big testing ground in Chile. For that purpose, a big barrier had to be removed. This barrier was the democratically elected Chilean president, Salvador Allende. Ruthless Nixon didn't hesitate and gave the order: "Make the economy scream", in order to economically suffocate the country and overthrow the Marxist president. 

The US-backed military coup brought dictator Augusto Pinochet to power. Milton Friedman and the Chicago boys advised  him to kill the state and privatize everything. Chile was occupied by big cartels, US interests companies, people suffered from poverty and from Pinochet's cruel regime.

In 1975, the bankers took over New York. What happened that year was a radical shift in power. The banks insisted that in order to protect their loans, they should be allowed to take control of the city. The city appealed to the President, but he refused to help. It was the start of an extraordinary experiment where the financial institutions took power away from the politicians and started to run society themselves. The city had no other option. The bankers enforced what was called "austerity" on the city, insisting that thousands of teachers, policemen and firemen were sacked. 

In 1976, it was first established the right of corporations to make unlimited money contributions to political parties and political action committees.

As David Harvey describes:

            The supposedly ‘progressive’ campaign finance laws of 1971 in effect legalized the financial corruption of politics. A crucial set of Supreme Court decisions began in 1976 when it was first established that the right of a corporation to make unlimited money contributions to political parties and political action committees was protected under the First Amendment guaranteeing the rights of individuals (in this instance corpor- ations) to freedom of speech.

           Political action committees (PACs) could thereafter ensure the financial domination of both political parties by corporate, moneyed, and professional association interests.

In 1978, banks and corporations took over the Republican party, asserting political power. According to Harvey:

 

          The Republican Party needed, however, a solid electoral base if it was to colonize power effectively. It was around this time that Republicans sought an alliance with the Christian right. The latter had not been politically active in the past, but the foundation of Jerry Falwell’s ‘moral majority’ as a political movement in 1978 changed all of that. 

 

          The political structure that emerged was quite simple. The Republican Party could mobilize massive financial resources and mobilize its popular base to vote against its material interests on cultural/religious grounds while the Democratic Party could not afford to attend to the material needs (for example for a national healthcare system) of its traditional popular base for fear of offending capitalist class interests. Given the asymmetry, the political hegemony of the Republican Party became more sure. 

 

Also, "in 1978 the companies were allowed to take all the benefits of patent rights without returning anything to the state, assuring the industry of high and highly subsidized profits ever after."

From the early 80s to early 90s, banks and corporations took over completely almost the entire political system in the West. Harvey concludes:

 

          The conclusion is, I think, clear. ‘During the 1970s, the political wing of the nation’s corporate sector’, writes Edsall, ‘staged one of the most remarkable campaigns in the pursuit of power in recent history.’ By the early 1980s it ‘had gained a level of influence and leverage approaching that of the boom days of the 1920s’. And by the year 2000 it had used that leverage to restore its share of the national wealth and income to levels also not seen since the 1920s. 

Throughout all these decades since Nixon opened the gates of hell, neoliberalism completely prevailed in the entire West and elsewhere through a peculiar cultural totalitarianism. The fraudulent ideology hypnotized the masses by offering a fake prosperity that came out mainly from the excessive money-borrowing from households to cover even their basic needs.

Yet, the first signs of the epic failure of the neoliberal fraud were already evident by the mid-90s. 

 

Neoliberalism's "shock therapy" blatantly failed to help Russian economy to recover in the early 90s. On the contrary, the effects were devastating.

 

By 1996, production figures failed to increase, but profits were nevertheless rising. Alan Greenspan worried that unsustainable speculative bubbles were forming, but after political attacks from all sides, Greenspan changed his reasoning and suggested that new efficiencies had emerged that his data wasn't measuring.

 

Little later, the neoliberal bubbles finally burst during the late 90s South-East Asia big crisis.

 

The 2008 big financial crisis was almost inevitable. Yet, instead of seeing a mobilization by the state similar to that after the 1929 crisis, we saw the opposite.  The state intervened to save the advocates of the free market, at the expense of the taxpayers and the working class. 

Roosevelt's New Deal during the 1930s was directed specifically towards the working class rescue, through social programs, public investments and thousands of new federal jobs.

Today, we had an Occupy Wall Street movement that finally faded and some new Leftists from the Bernie Sanders faction in the Democratic party, who failed to bring real change. They restricted to a Leftist rhetoric around a Green New Deal, while it seems that they are already compromised with the powerful establishment of the corporate centrists inside the party.

This was an inevitable result considering the total cultural domination of neoliberalism during previous decades, together with the systematic degeneration of trade unions. And instead of paying the price for their irresponsible behavior, banks and corporations became bigger and stronger than ever.

Fifty years of absolute domination of one of the most regressive doctrines, managed to multiply financial and corporate power to the point of paving the way for a 21st century corporate feudalism. The dawn of this new totalitarian system is taking place today under our noses.