THE WORLD IS OUT OF JOINT (E) by Wallerstein Immanuel

Author:Wallerstein, Immanuel
Language: eng
Format: epub
ISBN: 9781317248729
Publisher: Taylor & Francis (CAM)

A Look at Some Empirical Data

State Expenditures

This is one of the most controversial issues in contemporary policy debates. During the neoliberal tsunami the role of the state as a factor in economic development was largely disparaged as a negative interference with the smooth operation of the markets. But the fact is that capitalism needs the state, and with the passing of time capitalists became veritable addicts of state intervention (of course, on their behalf). This is a matter not only of size but especially of the quality or type of state interventions that favor capital accumulation.

Experience shows that in recent times the retreat of the state from some expenditure in areas such as health, education, and housing, for instance, went hand in hand with the inordinate expansion of many types of subsidies, tax cuts, and incentives for the rich and the megacorporations. This has been exemplified in the wake of the post-2008 economic difficulties by the huge multibillion-dollar rescue packages approved by the otherwise always exceedingly prudent and financially restrictive central bankers in Europe and the United States, who have sought to assist financial oligopolies and investment banks regarded as “too big to fail.”

All these forms of state expansion have become more and more necessary to carry out the crucial process of the “socialization of losses,” when they occur, and to ensure the adequate privatization of the profits and the stability of property rights in times of buoyancy. These megarescues provide sobering evidence that the neoclassical arguments of economic theory in favor of unfettered free-market dynamics are sheer ideological justifications in favor of capital, deprived of any real substantive evidence to support them.

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