The Myth of Neoliberalism Discourse and The Ordo Manifesto of 1936
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The critics on the contemporary neoclassical economics in Thailand have been rigorously intense since the Tom Yam Kung Financial Crisis in 1997 and also the Subprime Mortgage Crisis in 2008. However, the late critics from the leftwing in either the labeling of “Neoliberalism” or the proposal of “Welfare State” are both misleading. The origins of this idea from a “A Brief History of Neoliberalism” is inaccurate when considering the content in “The Ordo Manifesto of 1936”. The article will review both literatures in details including a proposal from “Varieties of Capitalism”, in which it will reinvestigate the versatility of capitalism nurtured in each country and their dynamism. It can be considered that the mentioned debate between the leftwing and the neoclassical economic school in the country has reflected the missing proposal of “Ordoliberalism”. The article will discuss a possibility to frame economic idea based on it in order to achieve an equilibrium both on the better economic performance, by regulating the monopoly on one hand, and the reduction of social inequality on the other hand.
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The Myth of Neoliberalism Discourse and The Ordo Manifesto of 1936
- 1. 1 PA CON 2022 Public Administration and Area-Based Development in the New Normal Era October 11 - 12, 2022, Suratthani Rajabhat University, Suratthani, Thailand The Myth of Neoliberalism Discourse and The Ordo Manifesto of 1936 Kan Yuenyong, Ph.D. (candidate) GSPA, NIDA, Thailand
- 2. Research Focus Meta-geopolitics • Public Administration Theory and Policy Science • Governance and Global Governance • ASEAN and Southeast Asian Study • Computational Social Science • Agent-based Model (ABM) • Phenomenology • Complexity Theory • Scenario Planning Current Research Project: • Positive Governance (dissertation proposal) • Cybernetic Governance Paradigm in Digital Era (presented in PATT’s annual conference 2021; research funding proposal submitted) • Modernization of Thailand • ASEAN Centrality, Interconnectivity and Indo-Paci fi c Strategy • Biodefence Preparedness Program • Global Governance, Meta-geopolitical Risk and Economic Development Policy Forthcoming Paper & Book • Book: “On Geopolitics” and a translation of Sir Halford John Mackinder’s “The Geographical Pivot of History” (in Thai) • Book chapter: “Katechon and Cognitive Revolution: An Emergence of the 21st Century Global Politics”, In “Handbook of Research on Current Advance and Challenge of Borderlands, Migration, and Geopolitics”. • Paper: “Thailand and ASEAN Centrality Geopolitics” (published) Kan Yuenyong, Ph.D. (Candidate) • Cofounder and Executive Director of Siam Intelligence Unit (SIU) • Academic Program: Doctor of Philosophy Program in Governance and Development (International Program) • Major: Public Policy and Development • School: Graduate School of Public Administration (GSPA) • University: National Institute of Development Administration (NIDA) • Permanent member of Public Administration Association of Thailand (PAAT) • Diploma on Quantum Computing & Programming during the QWorld Summer School 2021, focusing on fundamentals of classical and quantum systems, using QWorld’s introductory tutorial Bronze-Qiskit, Diploma Number: QBronze64-412 • Thailand representative in IVLP program on U.S. Foreign Policy and Decision- Making II convened by the U.S. Department of State in U.S.A during 2018 • Contact: info@geopolitics.asia; http://www.geopolitics.asia; http://gotoknow.org/blog/deconstruct; http://sikkha.medium.com; http://www.twitter.com/sikkha 2
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- 4. Pragmatism (Craftsmanship) -> Practical Wisdom (Ethics) -> To Know -> 4 In Ancient Greek the word praxis (πρᾶξις) referred to activity engaged in by free people. The philosopher Aristotle held that there were three basic activities of humans: theoria (thinking), poiesis (making), and praxis (doing). Corresponding to these activities were three types of knowledge: theoretical, the end goal being truth; poietical, the end goal being production; and practical, the end goal being action. Aristotle further divided the knowledge derived from praxis into ethics, economics, and politics. He also distinguished between eupraxia (εὐπραξία, "good praxis") and dyspraxia (δυσπραξία, "bad praxis, misfortune”) Heidegger recognises that ‘Aristotelian phenomenology’ suggests three fundamental movements of life including póiesis, práxis, theoría and that these have three corresponding dispositions: téchne, phrónesis (practical wisdom) and sophía. While (1) techne is a way of being concerned with things and principles of production and (2) theoria (sophía?) a way of being concerned with eternal principles, (3) phronesis is a way of being concerned with one’s life (qua action) and with the lives of others and all particular circumstances as purview of praxis.
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- 8. No Freiburg School / Ordoliberalism in this chart 8
- 9. 9 Key Thought Struggle (esp. Stag fl ation) Tend to be saltwater (Intervention during business cycle transitioning aka during crisis) Tend to be freshwater (Rational expectation)) See also di ff erences in “behavioral economics” (Robert Shiller) vs “market e ffi ciency” (Eugine Fama)
- 10. Post Covid 19 & War Stag fl ation: Cost Push or Demand Pull? Or Both? Geopolitical Factor? https://econ fi x.wordpress.com/2022/03/02/global-stag fl ation-and-the-threat-to-democracy/ 10 Their (FED and ECB) major concern now is that the war in Ukraine has increased the chances of a period of stag fl ation – stagnation and in fl ation at the same time. Therefore it is important that central banks are more sensitive to tightening their monetary policy as adding the Ukrainian crisis (with higher oil and food prices) to the present supply chain issues would increase the chances of stag fl ation and a signi fi cant downturn in the global economy. Cost-push = Geopolitical Factor, Demand-pull = Post-Covid reality and Fiscal Policy, FED is trying to curb demand-pull
- 11. https://www.wsj.com/articles/welcome-to-the-era-of-nonstop-stimulus-11609697936 11 Fiscal policy to maintain full employment potential ≠ Monetary policy to maintain in fl ation targeting Incompatibility between fi scal policy vs monetary policy
- 12. 12 https://twitter.com/ReutersJamie/status/1579821329095663616 8:08 PM · Oct 11, 2022 Cost push in fl ation > Demand pull Monetary policy can handle only demand pull in fl ation (situation after several FED’s interest rate rising
- 13. 13 The Rise and Fall of The Bretton Woods (And Rise Again?) See also https://www.academia.edu/45437037/Global_Governance_and_International_Organization_Evolution (2014) 1944 (2021) 1971 (2012) 1974 (2022) ?
- 14. Key Decisive Moment of the Monetary Triumph • Friedman was introduced to Goldwater in 1961 or 1962 by the senator’s adviser Bill Baroody of the conservative American Enterprise Institute, and the three often discussed how to put Hayek’s notions into practice. Friedman contributed to Goldwater’s speeches and found himself in great demand to explain the senator’s platform. “Centralized governmental control over the economy . . . has never been able to achieve either freedom or a decent standard of living for the ordinary man,” Friedman wrote in a Goldwater campaign submission to The New York Times. While declaring that Goldwater “fully supports” the 1946 Employment Act “to promote full employment and stable prices,” Friedman cautioned that he “would call fi rst on monetary policy” to ful fi ll those ends. • Friedman became an informal economic adviser to Nixon. “[Nixon] was intensely ambitious and seemingly ready to jettison his professed principles at the slightest sign of political advantage,”24 recalled Friedman. During the 1968 presidential campaign, in Mission Bay, California, Nixon told Friedman and the others on his economic advisory panel, who to a man believed in free trade, that he intended to back protective tari ff s on textiles imported into America. “He believed that his position on textile protection would determine whether he won or lost one or two crucial southern states,” recalled Friedman. “He knew that economically it was the wrong thing to do.”25 When Nixon was elected president, Friedman remained an adviser. • As we have seen, the year 1974 was an annus horribilis for Keynesians. Hayek’s reputation, however, was in the ascendant. His quest to restore the in fl uence of economic liberalism was given a major boost that year when he was awarded the Nobel Prize for economics. The award came as a surprise, not least to Keynesians. As Samuelson recalled, “In the 1974 senior common rooms of Harvard and MIT, the majority of the inhabitants there seemed not to even know the name of this new laureate.” • In 1974, von Hayek received the Prize in Economic Science in Memory of Alfred Nobel for his work on “the theory of money and economic fl uctuations” and his “penetrating analyses of the interdependence of economic, social, and institutional phenomena” (with the Swede Gunnar Myrdal). • (Keynes vs Hayek: The Clash That De fi ned Modern Economics, 2012) 14
- 15. Hans Grossmann-Doerth (1894 - 1944) Franz Böhm (1895 - 1977) • https://www.eucken.de/en/freiburg-tradition/franz-boehm/ • https://www.eucken.de/en/freiburg-tradition/walter-eucken/ • https://www.eucken.de/en/freiburg-tradition/hans-grossmann-doerth/ Walter Eucken (1891 - 1950) 15 The Freiburg School
- 16. Foucault’s lecture, 1979 Mont Pèlerin Society, 1947 Birth of Biopolitics (2004), trans 2008 1st trans 1989 Origins 1936/1937 2nd reprint 2017 Chilean Chicago Boys, 1975 A Brief History of Neoliberalism (2005) Soziale Marktwirtschaft Ludwig Erhard (CDU not SPD) Minister of Economics: 1949 - 1963 Chancellor: 1963 - 1966 16 From Ordoliberalism to “Neoliberalism” (Also called Neoliberalismus in Germany)
- 17. 17 • The origins of the communist movement in Thailand begin with the founding of the Siam Special Committee of the South Seas Communist Party between 1926 and 1927, established as Communist Party of Siam in 1930 by Ho Chi Minh, changed to Communist Party of Thailand in 1942 with 1st national congress ( สุ ธา ชั ย, 2547). • Politico-Economic Analysis -> War Strategy -> full capitalism (peace line) vs semi-feudalism/semi-colonization (armed struggle) (เชาว น์ , 2565: 317-318) • CPT had got a huge in fl uence from the Communist Party of China (thus to adopt similar analysis into semi-feudalism/semi-colonization) • The breaking between CPT and Communist Parties in Laos and Vietnam could be also viewed in the same line (followed CPC) (เชาว น์ , 2565: 414) • This trait has been carried further to another problematic analysis until nowadays, i.e. “auto-colonizing/crypto-colonizing” (to conform CPT’s analysis) • SEA (except Laos & Vietnam) has limitation to publicly mention communism (i.e. in Malaysia & Singapore), in Thailand to establish the new CPT has been rejected by the Election Commission of Thailand (ECT) -> The Cold War Hangover E ff ect The Leftist Dogmatism During The Cold War
- 19. War and Recession impacts on budgets 19
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- 22. 22 Schneider and Paunescu (2012: 740) “Markets and hierarchies are features of LMEs and CMEs but we stress the systematic variation found in the character of corporate structure (or hierarchies) across di ff erent types of economies and the presence of coordination problems even within hierarchical settings (Milgrom and Roberts 1992).”, 2001, p.14
- 23. 23 Varieties of Capitalism and East Asia: Long-Term Evolution, Structural Change, and the End of East Asian Capitalism (2018) Keun Lee and Hochul Shin
- 24. https://www.nber.org/system/ fi les/chapters/c0159/c0159.pdf Real GDP Growth Q-o-Q 24 What Happened During 1997 Asian Financial Crisis? Also Compared to American measures during 2007-2008 fi nancial crisis i.e. credit rating agencies and QE (and later forward guidance) What do cause di ff erences in economic policy to handle the crisis? (And also the development policy, aka Thai unequal development policy)
- 26. Con fl ict Ignorance Resources distributional challenges Political structural challenges Social and Educational challenges Present! (bifurcate point) Relationship of 3 scenarios Economic depression Inequality Environmental degrading Natural disaster Ideological con fl ict in democratic concept Political power concentration Corruption problems Reforms policy Thai identity Educational crisis (*** current con fl ict ***) Aging society Social problems, i.e. drugs tra ffi cking Me… Fight!!! Attack! Unity Consensus building No compromise, insist the fi ghting Let it go, bandwagoning The mural generate questions more than answer, therefore my own further research to the deeper study since Thailand coup in 2014, 7 years ago, long resolution process, no instant solution, it’s instead crafting the readiness preparation for the future “Concurrent trio challenges in the same time designates the changing of era, a changing from equilibrium -> near-equilibrium -> far-from- equilibrium” 26
- 27. CAS / Chaos Theory, Emergence and Feedback loop (both negative & positive) Netlogo computer simulation, ABM: Di ff erent type of Deisy (black & white) can generate di ff erent type of albedo and to taking an e ff ect to planet’s temperature, therefore either positive or negative feedback loop, and an emergence to control the sustainability to the whole system https://www.gotoknow.org/posts/688786 In the controlled lab In the natural environment http://www.netlogoweb.org/launch#http:// ccl.northwestern.edu/netlogo/models/models/ Sample%20Models/Biology/Daisyworld.nlogo 27
- 30. สรุป • เ มื องไทย ยั งขาด ข้ อถกเ ถี ยงเ รื่ อง Ordoliberalism และ Social Market Economy อ ย่ างเ ป็ นระบบ ตั วบทแปลอาจเ ป็ น จุ ดเ ริ่ ม ต้ น ที่ ดี ที่ จะ ทำ ใ ห้ มี การ พู ด ถึ ง มาก ขึ้ น • เรา กำ ลั ง พู ด ถึ ง สำ นั ก คิ ด IR (Neoliberalism) ห รื อ สำ นั ก คิ ดทางเศรษฐ กิ จ (Neoclassical Economics) ห รื อการค ลี่ คลาย ตั วระบบ คิ ดโลกา ภิ วั ฒ น์ (NPM + management science -- esp Peter Drucker + institutionalism + public choice, etc.) กั นแ น่ ? นิ ยาม ที่ ชั ดเจน คื ออะไร? • ข้ อเสนอ Welfare State ที่ พู ด กั นใน ปั จ จุ บั น เ ป็ น อิ ท ธิ พลจาก ฝ่ าย ซ้ าย (รวม ทั้ ง ส่ วน ที่ สื บทอดมาจาก พคท.) มากก ว่ าไอเ ดี ยแบบ Social Market Economy เ ป็ นป ฏิ กิ ริ ยาโ ต้ ก ลั บนโยบายการ พั ฒนาเศรษฐ กิ จอ ย่ างไ ม่ สม ดุ ลในส มั ย 2500 เคย มี ฐาน ที่ มั่ นอ ยู่ ที่ สำ นั กเศรษฐศาสต ร์ การเ มื อง ( จุ ฬาฯ-ธรรมศาสต ร์ ), ละเลยความสนใจเ รื่ องการ จั ดการการ ผู กขาดทางการ ค้ า (พรบ การแ ข่ ง ขั นทางการ ค้ า 2560 ยั งไ ม่ มี ผลป ฏิ บั ติ อ ย่ าง ชั ดเจน โดย ส่ วนให ญ่ ก ลุ่ ม ทุ นให ญ่ อ ย่ าง ทุ นเทคโนโล ยี โทรคมนาคมจะไ ด้ ประโยช น์ ) นโยบายป ฏิ รู ปภา ษี และนโยบายการกระจายความ มั่ ง คั่ งให ม่ อ ย่ างเ ป็ นระบบ เ ป็ น ต้ น • มี ข้ อแตก ต่ างระห ว่ าง ห ลั ก คิ ดแบบ Pragmatism Philosophy และการค ลี่ คลายในทาง ที่ เ ป็ นจ ริ ง (มองระบบเศรษฐ กิ จโลก ที่ ปรากฎจากกรอบ ฝ่ าย ซ้ ายแ ล้ ว แปะฉลาก ว่ าเ ป็ น “เส รี นิ ยมให ม่ ” แ ต่ ไ ม่ ไ ด้ ดู พั ฒนาการห ลั ก คิ ด สำ นั กเศรษฐศาสต ร์ ต่ าง ๆ อ ย่ างละเ อี ยด: Neoliberalism vs Neoclassical Economics?) ระบบเศรษฐ กิ จ ที่ ค ลี่ คลาย ตั วในโลก มี รู ปแบบหลายหลาย (variety of capitalism) จำ เ ป็ น ต้ อง คำ นึ ง ถึ งความเ ฉื่ อย (inertia) ในระบบจากการเป ลี่ ยนแปลง ด้ วย • ตามความ คิ ด “แองโกลโฟน” ไ ม่ ผิ ด แ ต่ ไ ม่ พอ และไ ม่ ใ ช่ เอาความเ ชื่ อ ท้ อง ถิ่ นไปแ ย้ งแบบไ ร้ ห ลั ก วิ ชาการ อะไร คื อทฤษ ฎี ที่ งอกงามจากเ นื้ อนา ดิ นของเรา เอง? • ต้ อง คำ นึ ง ถึ ง จุ ด Optimality ระห ว่ างหลาย ตั วแปร รวม ถึ ง มิ ติ ภู มิ รั ฐศาสต ร์ ( ตั วอ ย่ างเ ช่ น Economic Statecraft) • ยั งไ ม่ ไ ด้ พู ด ถึ งนโยบายการ พั ฒนาเศรษฐ กิ จ ( ดู ใน วิ ทยา นิ พน ธ์ “Positive Governance”, TBD, see also “Treble Track Policy” https:// www.slideshare.net/sikkha/reindustrialization-244279721) ดู คู่ กั บ Cybernetics Governance: https://www.academia.edu/62322497/ The_Public_Administration_s_Cybernetic_Governance_Paradigm_in_Digital_Era 30
- 31. 31 PA CON 2022 Public Administration and Area-Based Development in the New Normal Era October 11 - 12, 2022, Suratthani Rajabhat University, Suratthani, Thailand END/Q&A Thank you for listening
- 32. Backup Slides 32
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- 34. A New Bretton Woods Proposal • Global rules should be calibrated toward the overarching goals of social and economic stability, shared prosperity and environmental sustainability and be protected against capture by the most powerful players. • States should share common but di ff erentiated responsibilities in a multilateral system built to advance global public goods and protect the global commons. • The right of states to policy space to pursue national development strategies should be enshrined in global rules. • Global regulations should be designed both to strengthen a dynamic international division of labor and to prevent destructive unilateral economic actions that prevent other nations from realizing common goals. • Global public institutions must be accountable to their full membership, open to a diversity of viewpoints, cognizant of new voices and have balanced dispute resolution systems. 34 https://www.bu.edu/gdp/2022/04/20/a-new-bretton-woods-for-prosperity-and-the-planet/
- 35. A New Bretton Woods Proposal (cont.) • Reform the international fi nancial system: • Regulate and steer private capital fl ows toward productive economic activity that is low-carbon and socially inclusive. • Massively expand the scale and scope of the so-called “Global Financial Safety Net” of emergency liquidity facilities to help countries anticipate and mitigate fi nancially instability in a manner that accelerates green and inclusive prosperity—including a system of sovereign debt restructuring. • Reform governance and cooperation across the international fi nancial system and align it with shared climate and development goals. • Align the international trade and investment regime: • Curtail market global monopolization and global rent-seeking through strong global competition rules. • Re-orient global trade and investment incentives away from fossil fuels and toward green and inclusive globalization. • Replace privatized dispute resolution systems so disputes are resolved by nation states and stakeholders. • Scale up development fi nance: • Mobilize a stepwise increase in development fi nance toward a 21st century Marshal plan for green and inclusive prosperity. • Condition new fi nancing on alignment with shared climate and development goals. • Support massive green industrialization and employment e ff orts, as well as signi fi cant adjustment fi nancing for those in fossil fuel intensive industries. • Foster equitable cooperation among development fi nance institutions to coordinate for shared and sustainable prosperity. 35
- 36. (An example on how to apply reinforcement learning ABMs on policy analysis) Our experiments show the AI Economist can improve the trade-o ff between equality and productivity by 16%, compared to a prominent tax framework proposed by Emmanuel Saez, with even larger gains over an adaptation of the US Federal income tax and the free market. https://blog.einstein.ai/the-ai-economist/ The AI Economist: Improving Equality and Productivity with AI-Driven Tax Policies 36
- 38. Limitations: (1) Need to include di ff erent rebate program (including either negative income tax or earned income tax credit (EITC), (2) They do not yet model human-behavioral factors and interactions between people, including social considerations, and they consider a relatively small economy. See paper at: https://arxiv.org/abs/2004.13332 and code at: https://github.com/salesforce/ai-economist?utm_source=catalyzex.com , https://colab.research.google.com/github/salesforce/ai-economist/blob/master/tutorials/ economic_simulation_basic.ipynb#scrollTo=t2eR5M-r7Lgb 38
- 39. Output from Colab’s notebook 39
- 40. 40
- 41. Pragmatism Philosophy • Pragmatism originated in the United States around 1870, and now presents a growing third alternative to both analytic and ‘Continental’ philosophical traditions worldwide • William James (1842-1910) to extend Charles Sanders Peirce (1839-1914) by borrowing Kant: Distinguish between Pragmatic (a posteriori/ techne) vs Practical (a priori/phronesis) • John Dewey (1859-1952): The right to believe (esp in religion), Pluralism (not Monism) of metaphysics, Evolution, Practical of consequence (still stick to empirical knowledge and “power of prediction”), Imperfection of knowledge (fallibility), etc. Instrumentalism, however, assigns a positive function to thought, that of reconstituting the present stage of things instead of merely knowing it. [Postpositivist + Postmodern?] • Scholars claim classical pragmatism had a profound in fl uence on the origin of the fi eld of public administration. At the most basic level, public administrators are responsible for making programs "work" in a pluralistic, problems-oriented environment. Public administrators are also responsible for the day-to-day work with citizens. Dewey's participatory democracy can be applied in this environment. Dewey and James' notion of theory as a tool, helps administrators craft theories to resolve policy and administrative problems. Further, the birth of American public administration coincides closely with the period of greatest in fl uence of the classical pragmatists. [value-laden vs value-free] • Is Kissinger’s proposal of Taiwan question, the constructive ambiguity, leaving room for the future “evolution of Sino-U.S. relations from a philosophical perspective”, an “pragmatism philosophy”? • Dominated by analytical philosophy during 1950s • "Neo-pragmatism" is "a postmodern version of pragmatism developed by the American philosopher Richard Rorty (1931-2007) and drawing inspiration from authors such as John Dewey, Martin Heidegger, Wilfrid Sellars, W. V. O. Quine, and Jacques Derrida". It is a contemporary term for a philosophy which reintroduces many concepts from pragmatism. While traditional pragmatism focuses on experience, Rorty centers on language. The self is regarded as a "centerless web of beliefs and desires". 41