Technologies and Market Incentives – or How Neoliberalism Put You at Risk

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The US, under the sway of the neoliberal economic orthodoxies of the last 45 years, got itself into a mighty national security predicament with China. A dreary old thinktank, the Center for Security and Emerging Technology, outlined how in a paper entitled “The Huawei Moment” published in 2021.

While everyone else was freaking out about a global pandemic, CSET was freaking out about a much more boring subject, the way in which China galloped way ahead of the US in 5G technology. Huawei, the Chinese company that’s the market leader in a key telecommunications technology, doesn’t have to operate under the same market incentives that US and most Western companies do – and so it doesn’t.

And because Huawei doesn’t have to worry about small profit margins and long horizons, it’s able to invest for long-term dominance instead of short-term gains. Long-term dominance in critical technology is basically what enabled the U.S. to become the sole remaining superpower of the 20th century.

And then promptly upon the turn of the century, when George (‘W’) Bush was president, the U.S. abandoned thinking about the future in favor of panicking about the present. The U.S. took its eye off the China ball, at first for the fairly obvious reason that 9/11 happened. Later, the U.S. took its eye off the China ball because it was run, under the administration of W, by a pack of reality-challenged old men with equal parts devotion to terror and their own outmoded ideas.

So China waltzed ahead, not just in telecommunications but in many other technological areas, while the U.S. just watched and declined to do a damn thing. And it just kept waltzing ahead because the China doesn’t give a flying fuck what Milton Friedman thought about anything. China doesn’t believe government is the problem, because neither Ronald Reagan nor Milton Friedman told them so. China doesn’t believe capitalism is the same thing as freedom, because China doesn’t give a damn about freedom. What China gives a damn about is being the next pre-eminent superpower. And it has been investing in that, militarily and diplomatically, with quiet but unwavering intensity.

So China has been free to act with a self-interested ruthlessness that Milton Friedman would probably admire because it’s not beholden to an economic philosophy of self-interested ruthlessness. America’s obsession with the ‘competition of the free market’ has made it less competitive with other nations not so obsessed.

The universe does love irony.

China is free to pursue its interests, which is has been, because it doesn’t believe it has to defer instead to the interests of multinational corporations – which is what neoliberalism would have us believe we all have to do in the name of ‘freedom’.

Part of the problem with this idea is that very few of us (as in, like, zero) actually reside in a corporation and almost all of us live in an actual nation – such as the United States. It does us no good that Unilever is operating with maximum freedom and profit and an investment horizon of 90 days when the armed Chinese drones starting firing at people in Alaska.

Or whatever.

The risks posed to people in the US by China’s predominance in technological areas (like facial recognition) are in no way mitigated by the fact that it’s easy to buy Dove skin care products. It doesn’t help. It doesn’t help you in the national security arena that Unilever makes a profit on Dove products.

What’s actually happened in the world as a result of the Milton Friedman neoliberal GOP economic absurdity is the most staggering misallocation of resources in the history of humanity.

You may or may not remember that the big argument against socialism from an economic standpoint was that capitalism supposedly led to a much much more efficient allocation of resources. Socialism bad – misallocation of resources. Capitalism good – efficient allocation of resources. This supposed efficiency is part of the idea of the famous ‘invisible hand.’ Capitalism, unlike socialism, supposedly has the benefit of a magic ‘invisible hand’ by which the profit motive ensures that investment resources are allocated in the most efficient way.

It’s just the opposite. The capitalism of the last 50 years has massively invested in self-destruction via climate change, destabilizing technology and the economics of misinformation and disinformation, environmental degradation, disaster capitalism, and global economic inequality that favors the rise of autocratic movements. Milton Friedman’s economics have proven to be a worldwide freedom-killer.

None of this is to say that previous and alternate forms of economic theory have been shown to be all that spectacularly wonderful. Colonialism was no panacea. Communism sure wasn’t. And so on.

There’s no orthodoxy that taken to the extreme won’t manage to fuck things entirely up.

But that’s no excuse to cling to an economic orthodoxy that has already managed to fuck things entirely up. It’s time for Americans to start caring more about America than the ideas of a long-dead economist.

Get pretty fed up.

Tags: Economics, think tanks