Modern Monetary Theory, Unemployment, and the European Left
This post is a reprint - with minor alterations - from an article by Professor Bill Mitchell "The abdication of the Left – redux – Part 2" ( It begins with a short introduction about Modern Monetary Theory - MMT. This is the perspective he uses to argue his case in his article "The abdication of the Left" which I have retitled:


I have stated this point often but it still seems to escape the attention of many critics. MMT is not a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. Rather, MMT is a lens which allows us to see the true (intrinsic) workings of the fiat monetary system. It helps us better understand the choices available to a currency-issuing government. It is not a regime but an accurate perspective on reality. It lifts the veil imposed by neo-liberal ideology and forces the real questions and choices out in the open.

In that sense, MMT is neither right-wing nor left-wing – liberal or non-liberal – or whatever other description of value-systems that you care to deploy. I mean by that, that while MMT provides a clear lens for viewing the system, to advance specific policy platforms, one has impose a value system (an ideology) onto that understanding.

For the Labour advisor to talk about “MMT’s prescriptions” reveals he hasn’t fully understood that distinction. The point is that MMT is what is. Britain’s monetary system is governed and operates under the principles outlined by MMT. It is not a matter of moving to MMT. The MMT lens allows us to tease out and more accurately predict the consequences of such a policy choice. But there are no ‘non-MMT’ policy options. So when the Labour advisor talks about a state where MMT policy prescriptions are being chosen he is revealing his ignorance of these distinctions. What he is actually referring to are specific policy proposals that have been advanced.


In this article Bill Mitchell is disputing a claim by Stuart Holland that the social democratic left in the EU (Jacques Delors, António Guterres, and Yanis Varoufakis) has not abandoned the social democratic tradition of 50s and 60s in which a central policy of good government was to maintain full employment. Holland wants to say that these people are just as “progressive” as the politicians were in the past. Mitchell argues that their “new” policies are all totally within the neo-liberal economic framework which aims to limit debt, cut spending on social services, deregulate and privatise the economy.

This is the second and final part in my response to the Social Europe article by Stuart Holland (July 11, 2018) – "Not An Abdication By The Left" – where he attacks various writers who have dared to suggest that the “social democratic Left in Europe … has run out of ideas” or that “there has been an intellectual abdication by the Left”. He uses his experience as an advisor to Harold Wilson in the 1960s and to Jacques Delors in the early 1990s as an ‘authority’ for his rejection of the claims that the Left has abandoned its social democratic remit of full employment.

As part of his claim for progressive credentials but also more generally to claim that the likes of Jacques Delors and the privatising António Guterres were part of the grand social democratic Left tradition throughout their working lives, Stuart Holland refers to the Delors White paper – Growth, competitiveness, employment: The challenges and ways forward into the 21st century – which was published on December 5, 1993 as the European Commission’s response to mass unemployment.


The graph below shows unemployment rates in 1993 (red triangles) and 1994 (blue bars) for a selection of nations, mostly comprised on what would become the Eurozone.

The data is from the OECD and while the Euro area was not yet in operation the OECD provided estimates post Maastricht of that bloc in addition to the entire OECD membership. I included Japan and the USA for comparative purposes. The point is that mass unemployment was at very high levels in many European nations and was rising between 1993 and 1994 in most. It coincided with a major recession in the early 1990s, which impacted on most nations. However, while, for example, the US began growth again in 1993 and Japan endured its massive property crash at the time, Europe stayed mired in stagnation with elevated unemployment rates.

At that point it was obvious that aggregate spending was insufficient and output gaps were large, as the next graph shows.

A lot of my own research at the time clearly demonstrated that the rising unemployment was driven by the insufficient aggregate spending.

However, that view conflicted with the growing Monetarist (neo-liberal) orthodoxy at the time, which was intent on denying the relationship between spending and output and unemployment.
(This is an important part of neo-liberal spin. They want to deny that cutting government spending – their goal – actually causes unemployment in order to make their plans seem acceptable.) This was the period where neo-liberal supply-side propaganda began to dominate. Where mass unemployment was no longer constructed as a sign of a systemic failure of economies to generate enough work but, rather, as a sign that the unemployed, themselves, were deficient in one way or another – lazy, not prepared, not willing, priced out by trade unions and minimum wages, and all the rest of it. (Once you abandon the idea that there is unemployment because there is not enough spending you need to search for some other explanation that has nothing to do with the economic policies of the government – which they don't want to change.)

For example, the late Franco Modigliani, seriously reconsidered his position. He wrote in 2000 (pages 3 and 5):

Unemployment is primarily due to lack of aggregate demand. This is mainly the outcome of erroneous macroeconomic policies … [the decisions of Central Banks] … inspired by an obsessive fear of inflation, … coupled with a benign neglect for unemployment … have resulted in systematically over tight monetary policy decisions, apparently based on an objectionable use of the so-called NAIRU approach. The contractive effects of these policies have been reinforced by common, very tight fiscal policies …
Everywhere unemployment has risen because of a large shrinkage in the number of positions needed to satisfy existing demand.

The Delors White Paper was one of two major statements in the period on mass unemployment and its solutions, the other being the OECD Jobs Study, which was published in 1994. The OECD Jobs Study agenda has become the principle policy framework since the early 1990s among Western government and promoted privatisation, deregulation and massive welfare changes all aimed at weakening trade unions and making the most disadvantaged workers more desperate. The OECD followed the publication of the Jobs Study with almost constant pressure on governments to abandon the hard-won labour protections which provide job security and fair pay and working conditions for citizens.

Their endorsement of inflation-first macroeconomic policies where monetary policy plays the prominent role and uses unemployment to discipline the inflation generating process left a legacy of persistently weak growth, entrenched high unemployment and rising underemployment. The war on the victims of this folly in macroeconomic policy – the millions of unemployed – gathered pace through the 1980s and culminated in the OECD Jobs Study, which became the bible for those intent on ignoring the fact that the unemployed cannot search for jobs that are not there.

The problem is that experience has actually taught us that mass unemployment is a fairly easy thing to solve – you just have to create jobs. And if the private sector is not going to create sufficient jobs, then guess what, the public sector has to create them. Experience teaches us that once the private sector’s spending and saving decisions are taken, if there is mass unemployment then it reflects a choice made by government.

As MIT economist Michael Piore wrote in his 1979 book – Unemployment and inflation, institutionalist and structuralist views (page 10):

Presumably, there is an irreducible residual level of unemployment composed of people who don’t want to work, who are moving between jobs, or who are unqualified. If there is in fact some such residual level of unemployment, it is not one we have encountered in the United States. Never in the post war period has the government been unsuccessful when it has made a sustained effort to reduce unemployment.

It also tells us that if national governments are hell bent on running fiscal surpluses or restricting their deficits below some arbitrary rule that restricts their ability to adequately respond to private spending fluctuations then mass unemployment will usually be the result. There was no surprise when unemployment in France skyrocketed after Delors hacked into net public spending in 1982 and again in 1983. Real GDP growth 1.6 per cent per annum in 1992 and by 1993 it had fallen to minus 0.613 per cent. There was nothing structural about that. And if one tracks movements in aggregate spending they bear a very close correspondence with the dynamics of employment growth (in a positive way) and unemployment (in a negative way).

The Delors Report largely denied this reality, with only a fleeting mention to cyclical unemployment as being an issue. Instead, its main analysis was how Europe could extend the “single market”, make it easier for “small and medium-sized enterprises” to enjoy less regulation, and to construct “trans-European infrastructure networks” by deregulation, private investment in transport and energy. On Page 16, we read that:… "growth is not in itself the solution to unemployment". That is denying the obvious link between growth and employment. Instead, we read that the problem is “inflexibility of the labour market … which is responsible for a large part of Europe’s structural unemployment”. The party line being rehearsed. And, as the supply-side approach always leads:
1. More training.
2. “greater flexibility in businesses”.
3. “reduction in the relative cost of low-qualified work” – aka wage cuts. We read “on the demand side there is the problem of price” (that is, Delors claimed wages were too high).
4. “on the supply side there is reticence to take jobs” – so workers choose unemployment over “unskilled or semi-skilled work”.
and the rest of it.

UK academic, the late John Grieve Smith, who wrote in the old Keynesian tradition, produced a review of the Delors White Paper in in the International Review of Applied Economic. He wrote:

That the Commission and ministers should at last address themselves seriously to this critical problem is encouraging – although it is noticeable that they do not even pay lip service to re-establishing full employment as a goal … the document …. provides disappointingly little indication that governments are likely to take effective action to tackle unemployment. (2)

The White Paper considered the mass unemployment to be structural, which meant that it cannot be reduced by increasing aggregate demand. Grieve Smith said that “This assertion is untenable. At current levels of unemployment there can be little doubt that demand would have to rise a long way before the reduction of unemployment began to be affected by the emergence of ‘structural’ problems …." He summed up in this way:

The major weakness of the White Paper is that it fails to recognise that the key problems at the present time are those of demand management and that the immediate questions in tackling unemployment are thus macroeconomic ones. Instead, the report concentrates on what it calls ‘rigidities in the labour market’, which seem to provide a pretext for attacking all forms of legislation or agreements to protect labour, combined with a general call to cut labour costs. (3)

The summary of all that is that the Delors White Paper was neo-liberal central. It reflected an abandonment to the progressive Left commitment to full employment. It reflected an abandonment of the idea that governments should create sufficient work for all after the private sector has made its choices. It reflected the idea that the unemployed were largely to blame for their own circumstances or that government regulations, minimum wages, and income support schemes were to blame or a mix of the two. It represents the intellectual poverty of our neol-liberal time. A progressive Left person would never refer to this Report in any favourable light.

Finally, Stuart Holland believes that the claims that the conduct of Syriza during the bailout crises and after is symptomatic of the abdication of the Left are unwarranted. He argues that he, and the then Finance Minister Yanis Varoufakis (later to be joined by James Galbraith) published several versions of what they called the “Modest Proposal” as a solution to Greece’s problems, which were evidence of a progressive Left approach to the problems. Holland writes:

A key claim of the Modest Proposal has been the case endorsed by Delors that a Eurobond-funded recovery in the EU on the model of the US New Deal is feasible without Treaty revisions, without fiscal transfers between member states and therefore also without ‘ever closer union’ …
A share of the national debt of all member states over the 60% Maastricht limit could be mutualised in the sense of a Eurozone equivalent of a deposit account, which could be serviced by the member states but not drawn on for credit, and therefore would not be liable to downgrading by credit agencies.

Note the reference to Delors again – as if he understood all along the folly that the Eurozone became even though he was overseeing and driving the process. By way of background, the ‘Modest Proposal’ is a variant of another debt-mutualisation scheme that emerged in 2010 called the Blue Bond Proposal (BBP) under the guise of Jacques Delpla and Jakob von Weizsäcker. At the time, as the crisis deepened in the Eurozone, these debt-mutualisation schemes started jumping out of the woodwork as if there was no tomorrow.

The essence of all these schemes is that a Member State’s public debt would be split into a “Blue Bond” component with “joint and several liability” (under the BBP up to 60 per cent of debt, that is, the allowable maximum under the Stability and Growth Pact, would be pooled in this way) and a “Red debt” remainder, which would be subordinated to the Blue Bonds. In theory, this is meant to lower the funding costs of the Blue component and push up the borrowing costs in the Red component, which the authors claim would provide incentives for Member States to reduce their debt to conform with the Maastricht threshold.

Further rules were proposed to tie down governments participating in the scheme, all of which would reduce the options available to Member States and reinforce the austerity straitjacket. For example, the proposal might allow nations such as Germany to add the full 60 per cent of its debt to the pool while nations such as Greece would be restricted to borrowing much lower proportions. Given the immediate problem was (and is) mainly one of default risk, the proposal’s perverse incentives (punish those most at risk) would not seem to be part of any viable solution.

The underlying bias in the proposals is that the authors considered that all debt above the Maastricht threshold are due to the pursuit of unsustainable fiscal policies. The BBP authors, for example, claimed that the financial markets failed Greece by “continuing to provide cheap funding while fiscal policy was reckless” (page 2). It was difficult to square this view against the situations of Spain and Ireland, which were models of fiscal rectitude leading up the crisis?

Moreover, imagine that the current slowdown in China intensifies and the world is plunged into a further economic spending crisis or that Donald Trump’s trade war results in recession. Under current arrangements, Eurozone public debt levels and fiscal deficits will rise sharply again, even though the governments are locked into the austerity mentality. It is likely that many nations would go beyond the 60 per cent debt threshold given the elevated debt levels already in place following the GFC.

The proponents of the BBP stated that the 60 per cent threshold is the “debt level deemed sustainable for any EU member state according to the Maastricht Treaty” (p.6). But in the event of a sequence of slowdowns, exacerbated by the austerity bias, the BBP proposal would punish many nations, even if they were following the mindless fiscal path specified by the Treaty. It is hard to see how that could ever represent a viable solution. All these schemes implicitly deny that the Eurozone is biased towards crisis.

And then we come to the so-called “Modest Proposal”, put out by economists Yanis Varoufakis and Stuart Holland, which is just a variant of the BBP scheme. As I wrote in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – one recalls Jonathan Swift’s satire of the same name, published in 1729, where Irish parents were encouraged to ease their economic travails by selling their children as food to provide culinary pleasure to the rich.

The aim of the ‘Modest Proposal’ was to address four “interrelated” problems: a banking crisis, involving banks that are the responsibility of the national governments, who do not have the currency capacity to guarantee deposits; a debt crisis where nations cannot borrow from private bond markets; an investment crisis, where both the level of investment has fallen sharply and the imbalance between the trade surplus and deficit nations has widened; and a social crisis, with high unemployment, rising homelessness and poverty, and falling incomes.

Like all the ‘hybrid’ schemes, they are motivated by the assertion is that “a Eurozone breakup would destroy the European Union, except perhaps in name” which would pose a “global danger” (Varoufakis et. al., 2013: 2). Dramatics aside, when assessing the proposal it was hard to see how a scheme that involves no fiscal transfers or changes to the Treaty can provide a lasting solution to the mess. The proposal would never have solved the inherent problems within the Eurozone, which are defined by the very political constraints that the authors recognise force them to adopt these ‘modest’ proposals, in lieu of more effective and lasting solutions. Their debt manipulation proposal was similar to the BBP, outlined above.

The obvious question is why bother? The ECB has through its QE programs demonstrated that they can deal the private bond investors out of the equation when it came to setting yields on government bonds. The ECB can effectively set yields at any level it desires including zero, which means that a Member State can only run out of money if the ECB refuses to exercise its power to buy unlimited volumes of the government’s debt. The SMP program kept the Eurozone together, but by imposing austerity as a pre-condition for participation, it failed to address the core problem that Southern Europe is in depression and the only way out is for fiscal deficits to expand. The most direct way forward would have been for the ECB to invoke its OMT facility and facilitate increased government spending.

Varoufakis, Holland and Galbraith (2013: 5) acknowledged that the OMT program “has succeeded in taming interest rate spreads within the euro-zone” but conclude that the implicit threat against bond markets, described above, is “non-credible”. Allegedly, bond dealers will eventually call the ECB’s bluff and expose the OMT program as a paper tiger. This criticism is without foundation. How exactly can the private bond markets “test the ECB’s resolve”? (p.5). The ECB has unlimited euro capacity to purchase all the secondary market bonds it desires. To think otherwise is hardly progressive or Left. The belief that the bond markets have the power over the state is core neoliberal thinking.

It was also difficult to see the ‘Modest Proposal’ as being consistent with Article 104 of the Treaty if a Member State failed to make payments as agreed. In that case the ECB would have to fund the deficiency, which would be equivalent to offering the prohibited ‘overdraft facility’ to the state. The ‘Modest Proposal’ would also probably promote perverse bond market behaviour and deliver massive corporate welfare to the investment banks. The debt policy would see the ECB take bank reserves out of the system in return for ECB-bonds. It wouldn’t take long for the bond markets to work out that they could ask for a premium on the ECB-bonds and the ECB would be under pressure to concede. With interest rates low, the private banks could then borrow from the ECB to buy the bonds, which would pay a return higher than the short-term cash.

I felt the need to respond to the Stuart Holland article because it is a good example of how the progressive, social democratic Left has lost itself in the woods of denial, historical revisionism and plain stupidity. I know the Europhile Left will be tweeting it and feeling good about it because it provides validation for their own cognitive dissonance. But as a view of what has happened over the last 40 or so years within the political Left it definitive – completely losing track of reality.


1. Modigliani, Franco (2000), “Europe’s Economic Problems”, Carpe Oeconomiam Papers in Economics, 3rd Monetary and Finance Lecture, Freiburg, April 6.

2. 1994, Volume 8, Issue 3.

3. Ibid.

Is There a Replay of the Euromaidan Psy-op in Ukraine Before a Coup in USA?
Guest Post by Denis Churilov:

The anti-Russian “indictment” hysteria that we currently observe in the United States has so many similarities with the Euromaidan psy-ops that was waged by the “glocal” media against people in Ukraine in 2013-2014.

(1) In both cases, there has been a strong appeal to identity. During Euromaindan, they were agitating people by tackling into their national identity, with the concepts of sovereignty (“nezalezhnost’”) being peddled endlessly back then. In present case, with American liberals, there’s a constant emotional appeal to “democratic values”: “We, as a democratic nation, should build ties with other democracies, not tyrannies”. or “Our democracy came under attack!”, etc.

(2) In both cases, there’s a definite boogeyman. During Euromaidan, it was “evil tyrant” Yanukovich and his supposed Russian bosses. In present day US, it is “traitor” Trump and his supposed Russian curators.

(3) In both cases, people have been agitated to hysteria with a constant stream of baseless, emotionally charged propaganda and fear-mongering, when you get one “shocking news” after another, so there’s less time to stop and process all the information consciously and logically. Eventually, it all forms a multi-level narrative, leading to a toxic mixture of confirmation bias, the bandwagon effect, and what social psychologists would call availability cascade (or availability heuristics), when people are more likely to believe or remember something if it falls in line with what they have been hearing lately.

(4) In this way, even if something appears too bizarre to be true, people are more likely to believe it anyway because they have been hearing so many similar stories in recent past, regardless of whether those stories actually turned out to be true to begin with. But, hey, if everyone says it’s true, then it must be true, right?. So, after a certain period, people get completely brainwashed into a parallel reality. And if emotional agitation is intense enough, people fall into “hysteria” mode, loosing their capacity for logical reasoning, at least, when it comes to this particular subject. From then on, people become easier to manipulate, and it only gets worse.

(5) So, in both cases, we’ve seen masses of people being brainwashed with heavily charged mantras, emotionally loaded slogans and codewords in a coordinated manner. For example, try to see how many times the US mainstream media said that Trump “threw intelligence agencies under the bus”. This appeals to their values and identities, forming an image of an external threat, fear-mongering to the extent that people actually began to experience sleep issues, panic attacks, and other unpleasant symptoms.

(6) Interestingly, in both cases, the psy-ops/information campaign was run in the interest of people who appear close to the American neoconservatives
such as Victoria Nuland and her husband Robert Kagan. Remember the role they played in the Euromaidan regime change? Coincidentally, people from those circles are strongly pro-NATO, they hate Russia as a sovereign geopolitical player and they are less than comfortable with Trump and the promises he made during his election campaign in regards to foreign policy.

Could it be that some power groups in Washington D.C. are currently dusting off the schemes that were perfected during the Arab Spring and Euromaidan years ago and applying them on the US soil?

Just a speculation, though.

What is Happening in the US Empire Today: The US has Three Choices
This article is a reprint of comments by B.F. at Saker blog*:

NATO was created to keep the US in Europe and Germany under control, preventing it forming an economic alliance with Russia. The EU is the civilian component of NATO, based on the US Federation. It’s job is to curtail the sovereign status of European nations and place them under the control of private bankers. Both the US and EU have private central banks. Both NATO and the EU started moving towards the East after the Warsaw Pact collapsed in 1989. The final aim was the destabilization and break up of Russia, after which NATO would move in followed by Western corporations. It did not happen.

NATO’s sole aim today (from the US point of view) is to keep Western Europe out of the Russian-Chinese economic alliance and prevent European nations from joining eastern organizations like the Eurasian Economic Union, which Wall Street wants to destroy. NATO is becoming a financial burden. Trump has the audacity to demand that EU states spend 4 % of their GDP on NATO, ie. to finance Wall Street’s further occupation of Europe. It will never happen.

And the EU ? It’s on the road to break up. It will either have to be reformed, returning to EU member states their full sovereign rights, or else dissolved.

Trump and Wall Street have now found themselves into a situation of not fully knowing what to do. The US has the largest foreign and domestic debt in the world, while the dollar is printed backed by nothing. The US cannot go on financing NATO, nor does Europe wish to make any more contributions. Both NATO and the EU are looking into dissolution. The US is seeing it’s foreign policy being defeated in Ukraine, Syria and Afghanistan. The US Naval expedition against North Korea achieved nothing, except bring North and South Korea closer to each other.

On the other hand Trump and Wall Street are looking at the rise of the East, Russia and China and the organizations they have created: The Shanghai Cooperation Zone, the Eurasian Economic Union, the BRICS and the Silk Road. Worse for Wall Street, Europe is looking towards the East too...

If Trump wants isolationism, he can always get it. However, this cannot be a false isolationism which the US practiced in it’s history, saying one thing and doing something else. Trump will soon be two years in office. I fail to see what he has achieved, except continue what Bush and Obama did before him. He will try to uphold Wall Streets globalist, imperial agenda. He will fail. I have my doubts if he can even rebuild Americas infrastructure, bearing in mind it’s cracking up, with 70.000 factories being closed down.


Finally, all Putin needs to do is continue what he has been doing so far, namely continue working with China and wait for Europe to come to him, as it will. The US has the simple choice of either dissolving it’s globalist empire or seeing itself financially implode, as it will if it continues on the present path. 

NOTE: The author B.F. only lists TWO alternatives for the US. There is of course a third alternative: WAR WITH CHINA.

1) Dissolve it’s globalist empire.
2) See itself financially implode.
3) Attack China.


As Interest Rates Rise, the Debt Bubble is in Trouble
The following is an excerpt from Graham Summers' weekly investment service, Private Wealth Advisory. Interest rates are creeping up after years of being very low. Low interest rates have kept the debt bubble going but NOW with interest rates on the rise the DEBT BUBBLE IS IN TROUBLE. This article gives the origin of the problem and the reasons the end of the debt bubble is in sight.

July 12, 2018

The Everything Bubble Hits a New Record... Right As Bonds Begin to Drop

The Everything Bubble hit a new record in 1Q18… with total global Debt to GDP exceeding 318%. All told, the world now has some $247 TRILLION in debt. As I explain in my bestselling book The Everything Bubble: The Endgame For Central Bank Policy, when the US abandoned the Gold Standard completely in 1971, it opened the door to a massive debt expansion.

Why? Because from that point onwards, the US would be paying its debt solely in US dollars… dollars that the Fed could print at any time. What followed was truly parabolic debt growth, with total US debt growing exponentially relative to its GDP. By the way, this chart is denominated in TRILLIONS of US Dollars.

By the time the mid-90s rolled around, the US financial system was so saturated with debt the Federal Reserve opted to start intentionally creating asset bubbles to stop debt deflation. In the late ‘90s it was the Tech Bubble. When that burst, the Fed opted to created a bubble in Housing… a more senior asset class. As a result, in the mid-00s we had the Housing Bubble.

When that bubble burst, the Fed opted to create a bubble in US Treasuries… the MOST senior asset class in the entire system, representing the risk-free rate of return against which all risk is valued. Put another way, the Fed opted to create a bubble in the bedrock of the financial system. By doing this, literally EVERYTHING went into bubble-mode, hence my coining the term The Everything Bubble back in 2014.

Which brings us to today. Yields on Treasuries have broken their long-term 20-year trendline.

This is a MAJOR problem. The entire debt bubble requires interest rates to remain LOW in order for it to be maintained. If bond yields continue to rise, bond prices will collapse. If bond prices collapse, the Everything Bubble bursts.
The Fed now has a choice… continue to support stocks or defend bonds… and unfortunately for stock investors, it’s going to have to choose bonds.

Put another way, I believe there is a significant chance the Fed will let the stock market collapse in order to drive capital BACK into the bond market to force bond yields down. Yes, the Fed has screwed up with monetary policy. And it is doing so intentionally to try to sustain the Debt Bubble. Currently the downside target for the collapse is in the 2,300-2,450 range.

Neo-liberal Studies: Part I – We NEVER VOTED for Neo-Liberalism
This is taken from a pdf entitled "NEOLIBERALISM - BED MATE TO FASCISM" by Robert Golden. It has been edited by Australian Voice.

Why? Because it is the almost unknown but dominating cultural, social, political and economic idea in our time which has redesigned our lives for the worse. It was germinated by a group of right wing economists between the early 1950’s through the 1970’s.(1) Then it was financed by wealthy American corporations and rich individuals until it almost invisibly became policy imposed upon us after 1980. It was advocated first by Reagan and Thatcher and later by their pet fascist, Pinochet in Chile. Since then it has contaminated most other economies and cultures and completely pervaded the Anglo-Saxon countries such as the US, the UK, Australia and Canada.

A few years ago a man was asked to institute a redesign of the Financial Times. He was told to take the overall plan and break it down to 1000 changes. Every day for three years he instituted one of those changes. By the end of the third year the paper looked entirely different. As the editors suspected, no one knew when the changes began. It was as if somehow the changes had occurred before the reader’s eyes, but without them recognizing how or when they happened.

This is how we missed seeing the construction of our new neo-liberal society. At no one moment did we recognise a new policy or a new sell-off of the Commonwealth Bank or Telecom - now Telstra - was a part of the long-term plan to transfer all wealth to the richest 1%.


The policies introduced to Australia after WWII have been completely changed. There is no commitment to full employment, to Australian manufacturing, no provision of low-cost public housing, and the system of free university education introduced by Whitlam has been destroyed. The basic Medicare system is underfunded and extra private health insurance is becoming prohibitively expensive.

Since the time of Reagan and Thatcher neo-liberal policies have brought us:

falling wages with rising prices,
decreases in the age pension,
less support for single parents,
rising house prices and rents,
jobs lost in Australian manufacturing,
Australian jobs sent overseas,
imported workers replacing Australians,
increasing unemployment,
victimising the unemployed,
increasing homelessness,
cuts to education and health services,
cuts to technical education, and
privatising virtually all public utilities.

The Australian Fact Sheet put out by Oxfam in January 2018 shows the results of years of neo-liberal policies.

The latest Credit Suisse data shows that the share of wealth concentrated in the hands of the top 1% of Australians in 2017 has grown to 23% – up from 22% in 2016. As was the case in 2016, the top 1% of Australians continue to own more wealth than the bottom 70% of Australians combined.

Wealth inequality in Australia has been on the rise over the past two decades, with the gulf between the amount of wealth held by the top 1% and the bottom 50% now the greatest at any time over this period. The wealth share held by the top 1% in Australia has been growing almost continuously over the past two decades, while the wealth share held by the poorest 50% of Australians has been falling almost continuously over the past two decades.(2)

The increasing share of Australian wealth held by the 1% is no accident of history. This is exactly what neo-liberal policies were created to do.


1. Friedrich Hayek, Milton Friedman, and Ayn Rand, George Stigler, Ronald Coase and Gary Becker.


The Road to Ruin – A Short History of the US Economy and Similar Changes in Australia
This account is taken from a recent article by Paul Craig Roberts. The sequence of events outlined here should be familiar: manufacturing and other jobs go overseas, jobs and incomes decline, consumer debt replaces incomes, bank's debts covered by governments, interest rates decline to zero, speculation increases and investment returns disappear. Then what?

High debt levels mean no consumer spending, no growth and falling tax revenue for paying off debt or funding social services, pensions, health care, education. Welcome to austerity. Notice that all important policies are introduced to maximise corporate profits, drive down wages and decrease tax revenue. This is clearly a war by the wealthy to increase their wealth at our expense. Many decades ago this was called Class War.

When China “opened up” to the West many US and Australian corporations moved their manufacturing and other jobs offshore. Offshoring to China or other countries is a substantial benefit to these corporations because of much lower labor and compliance costs. Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many—the former employees who formerly had a middle class income and expectations for their children.


The loss of middle class jobs has had a dire effect on the US and Australia economies. Because the incomes of ordinary people fell, this meant that states and the Federal governments received less in taxes, so it became harder for them to meet pension obligations and provide public services. For the same reason the tax receipts which pay for Social Security, Centrelink payments and Medicare also fell.

The Federal Reserve under Alan Greenspan substituted an expansion in consumer credit for the missing growth in consumer income in order to maintain aggregate consumer demand. The Reserve Bank of Australia has followed the same path here.
The credit expansion and consequent rise in real estate prices, together with the deregulation of the banking system, especially the repeal of the Glass-Steagall Act, produced the real estate bubble and the fraud and mortgage-backed derivatives that gave us the 2007-08 financial crash. The result in Australia has been an increase in loans for houses and a significant rise in the cost of housing in the major cities. Since incomes are static or falling, fewer people can afford to buy houses, and some working people cannot even afford the higher rental costs.

The Federal Reserve responded to the crash not by bailing out consumer debt but by bailing out the debt of its only constituency—the big banks. The Federal Reserve let little banks fail and be bought up by the big ones, thus further increasing financial concentration. The multi-trillion dollar increase in the Federal Reserve’s balance sheet was entirely for the benefit of a handful of large banks. Never before in history had an agency of the US government acted so decisively in behalf only of the ownership class.

The way the Federal Reserve saved the irresponsible large banks, which should have failed and have been broken up, was to raise the prices of troubled assets on the banks’ books by lowering interest rates. To be clear, interest rates and bond prices move in opposite directions. When interest rates are lowered by the Federal Reserve, which it achieves by purchasing debt instruments, the prices of bonds rise. As the various debt risks move together, lower interest rates raise the prices of all debt instruments, even troubled ones. Raising the prices of debt instruments produced solvent balance sheets for the big banks. In the end, the Federal Reserve had to lower the interest rates to zero, which even the low reported inflation reduced to negative interest rates.

These low rates had disastrous consequences. On the one hand low interest rates caused all sorts of speculations. On the other low interest rates deprived retirees of interest income on their retirement savings, forcing them to draw down capital, thus reducing accumulated wealth among the 90 percent. The under-reported inflation rate also denied retirees Social Security cost-of-living adjustments, forcing them to spend retirement capital.

The low interest rates also encouraged corporate boards to borrow money in order to buy back the corporation’s stock, thus raising its price and, thereby, the bonuses and stock options of executives and board members and the capital gains of shareholders. In other words, corporations indebted themselves for the short-term benefit of executives and owners. Companies that refused to participate in this scam were threatened by Wall Street with takeovers.

Consequently today the combination of offshoring and Federal Reserve policy has left us a situation in which every aspect of the economy is indebted—consumers, government at all levels, and businesses. A recent Federal Reserve study concluded that Americans are so indebted and so poor that 41 percent of the American population cannot raise $400 without borrowing from family and friends or selling personal possessions.

A country whose population is this indebted has no consumer market. Without a consumer market there is no economic growth, other than the false orchestrated figures produced by the US government by under counting the inflation rate and the unemployment rate. Without economic growth, consumers, businesses, state, local, and federal governments cannot service their debts and meet their obligations.

The Federal Reserve has learned that it can keep afloat the Ponzi scheme that is the US economy by printing money with which to support financial asset prices. The alleged rises in interest rates by the Federal Reserve are not real interest rates rises. Even the under-reported inflation rate is higher than the interest rate increases, with the result that the real interest rate falls.

There are three reasons. One is that the central banks of the other three reserve currencies—the Japanese central bank, the European central bank, and the Bank of England—also print money. Their Quantitative Easing, which still continues, offsets the dollars created by the Federal Reserve and keeps the US dollar from depreciating. A second reason is that when suspicion of the dollar’s worth sends up the gold price, the Federal Reserve or its bullion banks short gold futures with naked contracts. This drives down the gold price. The third reason is that money managers, individuals, pension funds, everyone and all the rest had rather make money than not. Therefore, they go along with the Ponzi scheme.


A Ponzi scheme like this falls apart when it becomes impossible to continue to support the dollar as burdened as the dollar is by debt levels and abundance of dollars that could be dumped on the exchange markets. Notice that the other three reserve currencies are completely under the political control of the US.


There is some movement in the EU away from the US policies. Some leaders are talking of closer economic ties with Russia and China. At the same time Russia and China are increasing their holdings of gold and selling off their US Treasury bonds. If these continue it is possible that a mix of the ruble, the yuan, the Euro and gold could replace the US dollar for international trade.

This is why Washington is determined to retain its hegemony. It is Washington’s hegemony over Japan, Europe, and the UK that protects the American Ponzi scheme. The moment one of these central banks ceases to support the dollar, the others would follow, and the Ponzi scheme would unravel. If the prices of US debt and stocks were reduced to their real values, the United States would no longer have a place in the ranks of world powers.

Only time will tell.

About the Author:
Paul Craig Roberts served as United States Assistant Secretary of the Treasury for Economic Policy under President Reagan in 1981. Later he was editor and columnist for The Wall Street Journal and other US publications. Then he was appointed professor of economics at George Mason University and held the inaugural William E. Simon Chair in Political Economy at Georgetown University.

How Long Can The Federal Reserve Stave Off the Inevitable?

Peak Oil is a Myth! Gas, Crude Oil, Tar and Coal Do NOT Have an Organic Origin.
This post was written by F. William Engdahl ( My interest in this topic came from a paper written by one of my students many years ago. EVERYONE thinks of oil and coal as "fossil fuels" but there is virtually no evidence for this theory. It is the Gospel Truth of the US oil industry, and - like Peak oil - is used to present oil is SCARCE SO it is ACCEPTABLE that it is EXPENSIVE. Instead Russian scientists discovered oil and gas originates not near the surface – as conventional fossil fuel theory assumes – but rather at great depth in the Earth, some two hundred kilometers deep. Their tests confirmed that the oil and gas had indeed originated from great depth. One consequence of this theory is that oil can be found almost anywhere, and not just in special places as all US trained oil geologists assume.

How I came to Realize I was Wrong About Peak Oil

Dear Reader,

For this edition of my free newsletter I have decided to share with you some personal intellectual history. Namely, how I realized that I was completely wrong about accepting the idea that hydrocarbons--oil, gas and even coal--were a depleting, finite resource that was at or near its "peak" in production worldwide.

I want to give here a personal account of the change in my own belief about the genesis of hydrocarbons as I feel it will become increasingly important in the near future to grasp precisely what the Oil Game of the Big Four Anglo-American oil giants--ExxonMobil, Chevron, Shell and BP--is truly about. It's about creating myths, lies and ultimately oil wars based on those myths and lies.

It was during the period in late 2002 as it became clear that the Bush-Cheney US Administration was determined to destroy Iraq and depose Saddam Hussein. How a US government could risk a potential break with its European and other major allies for any real or imagined threat from Iraq at that point puzzled me greatly. There must be a deeper ground, I told myself.

Then a friend sent me an article from a now-defunct website, From The Wilderness, founded by the late Mike Ruppert. The article laid out a major argument as to how the volume of oil in the ground was finite and disappearing rapidly. It argued that the single largest oil field in history, Ghawar in Saudi Arabia, was so depleted that it needed water injection of millions of barrels daily to get an ever declining output of crude oil. They argued that Russia was past the "peak" in its oil. They illustrated their notion with the famous Gaussian bell curve graph. The world, after more than a Century in the hydrocarbon era, had consumed so much oil that we were near to "absolute peak." Or so they claimed.

I dug deeper, found other articles on the peak oil theme. It seemed to offer an explanation for the mad Iraq War. After all, Iraq according to estimates had the world's second largest undeveloped reserves of oil after Saudi Arabia. If oil was in such short supply, it would offer an explanation.

I decided I should go deeper on such a pivotal question as the future of world oil and its potential impact on the very questions of war and peace, world prosperity or famine.

I went to the annual conference of something calling itself the Association for Study of Peak Oil (ASPO), held in May 2004 in Berlin. There I met the gurus of Peak Oil--Colin Campbell, a retired Texaco geologist whose research on well production had given the peak oil movement a seeming scientific foundation; Matt Simmons, a Texas oil banker who had writen a book titled Twilight in the Desert claiming Ghawar was well past peak. Mike Ruppert was also there as was peak oil author Richard Heinberg.

Far from being treated to a high level scientific demonstration of the geophysics behind peak oil, however, I was gravely disappointed to be witness to bitter, acrimonious verbal battles between peak oil critics such as an energy expert from the Paris International Energy Agency and various peak oil advocates who managed to lob mere ad hominem attacks on the Paris speaker rather than lay out serious science.

I decided to make a meeting with the then-President of ASPO International, Swedish atomic physicist, Kjell Aleklett, a few weeks later, at his University in Uppsala, Sweden, in an attempt to get a deeper scientific argument for Peak Oil. There Aleklett treated me to his latest slide show. He argued that, as oil was a fossil fuel, we knew, through study of plate tectonics, where all major oil deposits were to be found. Then, citing depletion of production in the North Sea, in Ghawar, Texas and a few other spots, Aleklett claimed, "voila! The case is proven." For me it was anything but proven.

At that point, presented by Aleklett with what could only be described as a slide show loaded with unproven assertions, I began to question my earlier conviction about peak oil. Months before, a German researcher friend had sent me a paper by a group of Russian geophysicists on something they called "abiotic origins" of hydrocarbons. I had filed it for future reading. Now I opened it and read. I was impressed, to put it mildly.

As I searched more translations of the Russian scientific abiotic papers, I dug deeper. I learned of the highly-classified Soviet era research begun in the 1950s at onset of the Cold War. Stalin had given a mandate to the leading Soviet geo-scientists to, simply put, insure that the USSR was entirely self-sufficient in oil and gas. They should not repeat the fatal error that had contributed to Germany's losing two world wars--lack of oil self-sufficiency.

Being serious scientists, they took nothing for granted. They began their work with an exhaustive search of world scientific literature for rigorous proof of the genesis of hydrocarbons, beginning with the accepted fossil fuel theory. To their shock, the found not one serious scientific proof in the entire literature.

I then read of the cross-disciplinary researches by academics such as Professor V.A. Krayushkin, head of the Department of Petroleum Exploration in the Institute of Geological Sciences of the Ukrainian Academy of Sciences in Kiev, one of the leading abiotic scientists.

Krayushkin presented a paper following the end of the Cold War to a 1994 Santa Fe, New Mexico conference of DOSECC (Drilling, Observation and Sampling of the Earth's Continental Crust). There Krayushkin presented his researches of the Dnieper-Donets region of Ukraine. Traditional mainstream geology would have argued that that region would be barren of oil or gas. Traditionally-trained geologists had argued it senseless to drill for oil or gas there because of the complete absence of any "source rock" -- the special geological formations which, according to Western geological theory, were the unique rocks from which hydrocarbons were generated or were capable of being generated – presumably, the only places where oil could be found, hence the term "source."

What Krayushkin presented to the disbelieving audience of American geologists and geo-scientists went against their entire oil genesis training. Krayushkin argued that the oil and gas discoveries in the Ukraine basin came from what geologists called ‘crystalline basement,’ deep rocks where Western geological theory claimed oil and gas (which they termed ‘fossil fuels,’) could not be found. No dinosaur fossils nor tree remains could have been buried so deep, the Western theory went.

Yet the Russians had found oil and gas there, something tantamount to Galileo Galilei telling the Holy Inquisition that the Sun -- and not the Earth -- was the center of our system. According to one participant, the audience was not at all amused by the implications of Russian geophysics.

The speaker from Kiev went on to tell the scientists at Santa Fe, New Mexico that the Ukrainian team’s efforts to look for oil where conventional theory insisted no oil could be found had, in fact, yielded a bonanza in commercial oil and gas fields.

He described in detail the scientific tests they had conducted on the discovered petroleum to evaluate their theory that oil and gas originated not near the surface – as conventional fossil fuel theory assumes – but rather at great depth in the Earth, some two hundred kilometers deep. The tests confirmed that the oil and gas had indeed originated from great depth.

The speaker clearly explained that the Russian and Ukrainian scientists' understanding of the origin of oil and gas was as different from what the Western geologists had been taught as was day from night.

More shocking to the audience was Krayushkin’s report that during the first five years of exploration of the northern part of the Dneiper-Donets Basin in the early 1990's, a total of 61 wells had been drilled, of which 37 were commercially productive, a success rate of more than 60%. For an oil industry where a 30% success rate was typical, 60% was an impressive result. He described, well-by-well, the depths, oil flows and other details. [1]

Several of the wells were at a depth of more than four kilometers, a depth of roughly 13,000 feet into the Earth and some produced as much as 2600 barrels of crude oil a day, worth almost $3 million per day at 2011 oil prices.

Following such reading, I came into personal contact with one of the leading Russian abiotic scientists, Vladimir Kutcherov, then a professor at the Swedish Royal Institute of Technology, Sweden's ETH or MIT. We met several times and he tutored me in the confirmed deep earth origins of all hydrocarbons. Not from dead dinosauer detritis and biological remains. Rather oil is being constantly generated from deep in the core of the Earth in the giant nuclear oven we call the core. Under enormous temperature and pressure, the primal methane gas is forced to the surface through what they term migration channels in the Earth's mantle. [2] Indeed, Kutcherov demonstrated that existing "depleted" oil wells, left capped for several years, had been proven to "refill" with new oil from deep under. Depending on the elements the methane migrates through on its upwards journey, it remains gas, becomes crude oil, tar or coal.

The implications of the deep Earth genesis of hydrocarbons were profound and forced me to change my previously-accepted belief. I read further the fascinating geophysical theories of the brilliant German scientist, Alfred Wegener, the true discoverer of what in the 1960s was dubbed Plate Tectonics. I came to realize that our world is, as the Dutch oil economist, Peter O'dell famously put it, "not running out of oil, but running into oil." Everywhere, from offshore Brazil to Russia, to China, to the Middle East. I wrote what became one of my most read online articles, "Confessions of an Ex-Peak Oil Believer," in 2007. [3]

Indeed I realized that the entire foundations of Western petroleum geology was a kind of religion. Rather than accept the Divine Birth, Peak Oil "church-goers" accepted the Divine Fossil Origins. No proof needed, only belief. To this day there exists not a single serious scientific paper proving the fossil genesis of hydrocarbons. It was posited in the 1760's as an untested hypothesis, by Russian scientist Mikhail Lomonosov. It has served the American oil industry, especially of the family Rockefeller, to build an immense fortune based on a myth of oil scarcity.

Today, clearly the new US Administration under a President Trump, with his ExxonMobil Secretary of State Rex Tillerson, is returning to the era of Big Oil after eight years of Obama and alternative strategies. If our world is to avoid yet more carnage and unnecessary wars over bountiful oil, it would be important to study the true history of our Age of Oil. In 2012 I published a book based on this work titled Myths, Lies and Oil Wars. For those interested, I'm convinced you will find it a useful alternative.


[1] F. William Engdahl, Myths, Lies & Oil Wars, edition.engdahl, Wiesbaden, 2012, pp. 150-151.

[2] Fossils From Animals And Plants Are Not Necessary For Crude Oil And Natural Gas Swedish Researchers Find,

[3] F. William Engdahl, Confessions of an "Ex-Peak Oil" Believer, September 14, 2007,

Is the US Empire Breaking Up Right Before Our Eyes?
Just this year we have seen three striking new developments around the world. Each on its own is of great importance, but together they constitute a geo-political event which marks the end of the world political system set down at the end of WWII.

Several years after WWII ended in the Asia-Pacific region a war began on the Korean Peninsula. I have little doubt that it was started by the US. The US invasion of Democratic People's Republic of Korea was perhaps even more savage than the Vietnam war. Since the US could not occupy and control DPRK, they simply destroyed it. Now after decades of US organised hostility, the two Korea's acted independently of the US to begin a process of unification. And they have powerful friends in Russia and China who for their own reasons want a united Korea to integrate with their long term economic planning.

Unlike the inconclusive invasions of Iraq and Afghanistan, the efforts by many thousands of mercenaries supported by almost everybody in the Middle East and the EU to remove the democratically elected government of Syria has failed. The US may have had several reasons to start this proxy war, but the single most significant problem they faced was that Assad had agreed to support a pipeline between Iran and EU. This meant that the Assad government refused to sign a proposed agreement with Qatar that would have run a Gas Pipeline from its North gas field through Saudi Arabia, Jordan, Syria and on to Turkey, with a view to supply European markets. The clear intention of this pipeline was to transport gas to the EU as competition with and/or replacement for gas from Russia and Iran.

Although this is probably a less spectacular loss for the US than the Vietnam war, it means that both Russia and Iran are poised to increase their role supplying energy to the EU and Israel's dream of removing both Syria and Iran as competitors in the Middle East is dead. And as we shall see shortly, this is not all the victory in Syria will make possible in the future.


Perhaps even more surprising than the sudden suggestion of a unified Korea is the equally sudden shift of Germany and the EU to honour the Treaty negotiated with Iran and reject US moves to sabotage the treaty and cut all economic ties with Iran. If this development continues, it will re-draw the political map of Europe in a way which limits US influence to levels not seen since 1914.

When Angela Merkel arrived in Russia for negotiations with Vladimir Putin in May, the European Union activated the legislation that blocks American sanctions against Iran. Furthermore the national governments of EU countries have the opportunity to compensate for the damage incurred by their companies should they suffer because of the direct effect of the American sanctions.

“This means that the European Union, which teetered on the brink of an economic war with the US, didn’t simply opt for a confrontation, but added a political standoff to the economic conflict. For the US the refusal of Europe to join the anti-Iran sanctions is, first of all, a political slap in the face – the refusal to recognise the right of Washington to individually determine the policies of the West. But if the US isn’t recognised by the EU as indisputable authority any more, then it means that the US isn’t the world hegemon any more.”(1)

Certainly the US will not let this decision stand without a fight. Apart from financial pressure, the US could stir up a conflict with Russia in the Ukraine which might force Germany to reconsider its decision. Also the US has a much more dangerous card to play in the EU and in Germany in particular. It is quite possible that the US has connections with some neo-Nazi groups in the EU. It is also likely that they have connections with some of the demobilised fighters from Syria and elsewhere in the Middle East who have moved to Europe as asylum-seekers or migrants.

The recent migration to the EU has created a massive social crisis which the EU elites have been sitting on for years. If the US decides to ignite these simmering tensions the characteristic “sectarian” conflicts we have seen in many other places like Iraq, Syria, Libya, Egypt, Myanmar will pose a unique challenge to the leaders of the EU.

We must remember the standard US policy in these situations: If they cannot control or politically direct the EU then they will work to destroy it, so it becomes a liability for Russia and China, not an asset.

So far I have discussed these as three separate events, but not to far in the background is the well known Chinese New Silk Road, or Belt and Road Initiative (BRI), an essential plank in their Eurasia integration project. This is a colossal economic project of railroads, roads, pipelines, ports which will span the Eurasian continent from the Xi'an to Rotterdam. Notice Iran is central to this project as well as Germany, Russia, Poland, Greece and Turkey.

There is little doubt that the Chinese Belt and Road Initiative will provide an economic boost for all who take part. Russia and Germany are natural partners and the dead-in-the-water economies of the EU should grasp this opportunity with both hands. And what can the US offer as an alternative? More expensive energy and the dead hand of US/UK banks.

Who knows how all this will turn out? Geo-politics is not a fairy-story where all can live happily for ever after. The point is, however, that if the solid economic progress offered by China and Russia is going to materialise, the US Empire will need to be kept at bay. This is what the fighting will be all about.


Notice also that there is no place in the BRI for the Anglo-Zionist countries: USA, UK, Canada, Australia, and New Zealand. In our area, the US reply to the BRI is the Indo-Pacific strategy deployed by the Quad – US, India, Japan, Australia. This is a barely disguised containment of the China follow-up mechanism to the Obama administration’s pivot to Asia. Notice that even India is not a whole-hearted supporter of US policies in the region. Like Germany, the US does not have much to offer India compared with the Chinese BRI.

Will all of this decided by military force alone? This is all the US has, and thanks to its rejection of the Iran treaty, they have just turned some of their supposed best friends into enemies in a matter off weeks. But the risks of force are also high.


How Neo-Liberalism Came To Australia
Neo-liberalism is both an economic and a political doctrine. Its economic policy is the unrestricted pursuit of private profit. The political policy is called small government, meaning that governments should not regulate or engage in economic activity. They believe these two policies will produce the best outcome for all of society. What I have called the four pillars of neo-liberalism are 1) privatisation of most government services including health and education, 2) serious reductions in government expences, 3) no tax increases, only tax cuts, and 4) deregulation of all economic activity.(1)

Australians must realise that these neo-liberal policies are applied to varying degrees in virtually all Western countries. They are not unique to Australia. They are part of an open conspiracy organized by some of the wealthiest people in the world to remove all the positive, progressive political and economic policies from the Depression until the 1970s. The neo-liberals might claim to be supporters of “liberal democracy”, but in the end they are happy to toss democracy aside because people elected in democracies tend to ask for policies which put limits or restrictrions on the maximisation of profit.

It is an “open” conspiracy because as we will see there is a reasonable amount of information on where it was first formunated and how it has been spread around the world. However it is an open “conspiracy” because these details are seldom explained in the mass media and the media always presents the policies as beyond political discussion and dispute. In the words of Margaret Thatcher “There Is No Alternative” or TINA. In reality it is an economic/political dogma which if considered as a theory would be found to be false.

We have seen all of these neo-liberal policies in Australia starting with the privatisation of the Commonwealth Bank between 1991 and 1996 under both Labor and the Liberals. In 1992 the Keating Labor government in effect privatised the age pension by setting up the current superannuation system to replace it. In this system money for each persons' old age is invested in the financial system. This system is deregulated and liable to sustain significant losses. In the meantime the money becomes a plaything of the super-rich investors and the system as a whole does not provide adequate support for many older people. Since then most public utilities and public transport systems have also been privatised by state governments. In 2014 Medibank was privatised by the Abbott government. Recently the LNP has started to privatise Medicare and “outsource” work from Centrelink.

Neo-liberal “austerity” has been with us for some time. For example, the unemployment support now called Newstart has not been raised for 20 years, so it has been a policy for both the ALP and the LNP. It is hard to find a sector of government other than “security” that has not had its funds cut. It is clear that broadly speaking “welfare” takes up a significant part of the Federal Budget.

“According to the the pie chart titled “Total Social Security and Welfare expenditure” in the 2014-15 Budget, the vast majority of expenditure on social security and welfare, excluding tax expenditures, goes to support seniors (29%), family tax benefits (13%), people with disability (12%), carers (5%), veterans (5%), parents income support (4%), and child care assistance (4%) and “other welfare expenditure” (21%). Only 7% of the “welfare bill” goes to support the unemployed and sick.”

However, all discussions follow on from the logic of the so-called “Audit Report” which only concentrates on cutting payments and cuting taxes. The most recent suggestion is the LNP plan to cut taxes for big business with a loss of $15 billion in income per year. The Audit Report was funamentally flawed because when any business is audited, one looks at both expenditure and income. Increasing income of course means increasing taxes, which is not part of the neo-liberal agenda.

Deregulation has taken many forms in Australia. One example is the recent abolition of penalty rates for weekends and holidays. Another form of deregulation can be found when the organisations which are required to assess and collect taxes like the ATO, or Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) which regulate the financial sector, either do not do their job, or are hindered from doing their job by a shortage of staff. The current Banking Royal Commission has found many “irregularities” which should not have happened with adequate supervision.

The first international gathering to discuss what we now know as neo-liberalism was held in Paris 1938, just before the start off WWII in Europe. The meeting was made up of intellectuals mainly from France and Germany to discuss the ideas put forward by Walter Lippmann in his work The Good Society published in 1937.

The modern neo-liberal policies were formulated in the 50s and 60s at the University of Chicago by economists like Milton Friedman. They were first enacted in Chile after the 1973 coup against the Allende government. They have been imposed by the International Monetary Fund (IMF) on most 3rd world countries. While the neo-liberal, free-market ideas did not gain acceptance immediately in the West, they were spread through the creation of “think tanks” in many different countries. These organizations were funded by corporations and banks to teach and develop ideas which were first ignored by mainstream economists and politicians.

The first of these think tanks, the Mont Pelerin Society, was created in April, 1947 at a conference organized by Friedrich August von Hayek (1899-1992) in Switzerland. 39 economists, political scientists, and philosophers attended this conference including Milton Friedman and Karl Popper. Von Hayek wanted to combat the "state ascendancy and Marxist or Keynesian planning [that was] sweeping the globe". Keynsian economics was adoped by the USA in the New Deal and advocates a managed market economy with a significant private sector, but also advocates an active role for government intervention during recessions and depressions.(3) Of course complete central planning of the economy was fundamental to the socialism of the USSR.

While the Mont Pelerin Society itself was new, the ideas behind it were as old as economics itself. The first economist, Adam Smith (1723- 1790), wrote in his book The Wealth of Nations that if people pursue their own interests they frequently promote the wealth of society more successfully than when they really intend to promote it. He held there was an “invisible hand” in the market which would turn each individuals' private pursuit of profit into the greater good for all. In other words, a free market in society without any government intervention is actually the best economic – and political – policy. This idea never had the universal assent of economists before 1947, and it was considered completely discredited after the results of the 1929 Depression. The goal of von Hayek and his friends in the Mont Pelerin Society was to bring these ideas back to life.

Sir Antony Fisher (1915-1988) was a British businessman and a member of the Mont Pelerin Society who organised free-market think tanks during the second half of the twentieth century, including the Institute of Economic Affairs (1956) and the Atlas Network (1988). He was impressed with the ideas of Friedrich August von Hayek. In The Road to Serfdom, von Hayek insists that central planning inevitably erodes individual liberty and enables tyranny. The Institute of Economic Affairs gradually gained credibility in the UK and laid the intellectual groundwork for what later became the Thatcher Revolution. The Atlas Network now consists of over 450 free-market think tanks in 90 countries.

Historical Note: The Atlas Network is no doubt named after the well-known free-market bible by Ann Rand, Atlas Shrugged, first published in 1957. Ann Rand was born Alisa Zinovyevna Rosenbaum in Russia in 1905. She became one of the first women educated at no cost in the USSR after the fall of the Tzarest regime. At the end of her life, despite her initial objections, she allowed Evva Pryor, an employee of her attorney, to enroll her in Social Security and Medicare, the kind of safety net institutions she opposed most of her life. Nothing like biting the hand that feeds you.

The reason the Mont Pelerin Sociey and the Atlas Network are of great importance to Australia can be seen by looking at the list of Australian members in Appendix 1. Of the 187 members of the Mont Pelerin Society listed in Wikipedia, the 17 Australian members given here make up about 10% of the total. Seven of the 450 neo-liberal think-tanks in the Atlas network are in Australia and can also be found in Appendix 2.

Probably the best known Australian members of the Mont Pelerin Society are John Howard, Prime Minister from 1977 to 1983, and John Stone, Secretary to the Treasury between 1979 and 1984. Members who are more prominent today are Janet Albrechtsen, a journalist and Director of the Institute for Public Affairs, Bob Day, Senator from South Australia from 2014-2016, and John Roskam, Executive Director of the Institute for Public Affairs.

What we know as the IPA – the Institute of Public Affairs – is older than any of the think-tanks discussed so far and did not begin with a neo-liberal approach to economics. 1943 it was created as the Institute of Public Affairs Victoria, with Charles Denton Kemp as the first director and George Coles as the first chairman. The founders were prominent businessmen, and current executive director John Roskam admits: “Big business created the IPA.”(4)

The founders of the original IPA are a virtual who's who of Australian business at the time including Sir Keith Murdoch. In the beginning the IPA advocated anti-socialist Keynesian economics and protectionist policy for industry. However with the appointment of Rod Kemp, the son of C.D. Kemp, to the position of executive director in 1982 it changed its policies to the neo-liberal and free-market ideas we see today.

The economic ideas of the Mont Pelerin society were generally ignored in the 50s and 60s. However they were first implemented in Chile after the US-backed overthrow of the Allende Government in September 1973. At least 10,000 people were killed to establish the new regime of General Pinochet. So what did the new government do?

“Pinochet cut government spending by 27%, with education and health hit hardest, while adopting a 'pro-business package' and a move towards 'complete free trade' which removed 'as many obstacles as possible that now hinder the private market'.” (5)

Here we see two of the standard neo-liberal policies: (1) cutting governement spending on health and education and (2) deregulation of economic activity. The Pinochet government also deregulated the public school system. It was replaced by vouchers and private charter schools. Another neo-liberal policy (3) privatization was imposed on Chile. 500 state-owned companies, kindergartens, cemeteries and the country’s social security system were privatised.

These policies were justified by insisting they are “better for the economy”, but the results in Chile are scary. The neo-liberal guru Milton Friedman deliberately plunged the country into a recession by insisting on cuts to government spending. His neo-liberal “reforms” - called “shock treatment” - caused the economy to contract by 15% in its first year and unemployment hit 20%.

“Contrary to Friedman’s predictions, joblessness and recession persisted for years. Around 74% of the average Chilean income went to buying bread, forcing households to choose between bread or milk or a bus fare to get to work. (...) By 1974, inflation had reached 375%.” (6)

This is what this neo-liberal “experiment” did to Chile:

“By the end of Pinochet’s reign, 45% of the population was living below the poverty line. But over the same time period, this bloody, economic crisis saw wealthy Chileans catapulted into the ‘uber-rich’ category. The richest 10% of Chileans saw their incomes increase by 83%. The gulf between rich and poor continues to this day.”(7)

By the end of the eighties, neoliberals were able to put the theories of Friedman and Hayek into action in the USA, the UK, and with the help of the International Monetary Fund, eventually, almost everywhere. How have these policies been spread around the world?

“In countries where leaders needn’t be overthrown, Mont Pelerin Society members, affiliates and sympathisers have intellectually captured and taken over whole governments, from the US Republican & Democratic Parties, to Australia’s Liberal National Government, and the British Labour party who are the opposition, to Britain’s neoliberal Tories.”

APPENDIX 1: Australian Members of the Mont Pelerin Society(9)

Janet Albrechtsen
Director of the Institute for Public Affairs
Member of the Board of the Australian Broadcasting Corporation
Written for The Australian, The Age, Australian Financial Review

James Allan
Garrick Professor of Law at the University of Queensland

Geoffrey Brennan
Faculty member in the Research School of Social Sciences at the Australian National University

Bob Day OA
Federal chairman of the Family First Party
Previously member of Liberal Party of Australia
Senator for South Australia from July 2014 to November 2016
Day's Home Australia group went into liquidation in November 2016

Ray Evans
Founder and President of H.R. Nichols Society
Executive Officer at Western Mining Corporation

Ronald Max Hartwell
Neo-liberal economic historian
President of the Mont Pelerin Society 1992-94

John Howard OM, AC
While Federal Treasurer (1977–83) adopted neo-liberal economics
Prime Minister from 1996 to 2007

Wolfgang Kasper
Foundation professor of economics at the University of New South Wales from 1977 to 1999
Senior fellow of the Centre for Independent Studies (1999-2007)

Greg Lindsay OA
founded Centre for Independent Studies
President of the Mont Pelerin Society (2006-08)

Ron Manners
Founder and formerly the Chairman of Croesus Mining
Founded Mannkal Economic Foundation
Board Member of Australian Taxpayers Alliance

Maurice Newman
Executive Chairman the Deutsche Bank Group in Australia (1985-1999)
Chairperson of the Australian Broadcasting Corporation
Chancellor of Macquarie University

Andrew Norton
Advocates market-based approach to higher education
Research Fellow at the Centre for Independent Studies
Higher Education Adviser to Dr David Kemp, Federal Minister for Education
Program Director of Higher Education at the Grattan Institute

Suri Ratnapala
His book Welfare State or Constitutional State? was awarded a Sir Antony Fisher International Memorial Prize
Editorial Advisory Council of the Centre for Independent Studies

John Roskam
Chief of Staff to Dr David Kemp, the Federal Minister for Employment, Education, Training and Youth Affairs
Executive Director of The Menzies Research Centre
Executive Director of the Institute for Public Affairs
Worked on a contract with the federal government to develop proposals to limit the role of nongovernmental organisations on public policy
Manager of government and corporate affairs for Rio Tinto Group

Peter Robert Saunders
Research Manager at the Australian Institute of Family Studies (1999-2000)
Social Research Director at the Centre for Independent Studies (2001–2008)

John Stone
founded H.R. Nichols Society
Secretary to the Treasury between 1979 and 1984
Senator for Queensland representing the National Party from 1987 to 1990.
John Howard's Shadow Finance Minister

Tim Wilson
Policy director of the Institute of Public Affairs
Australian Human Rights Commissioner from 2014 to 2016
Represents Goldstein in the Australian House of Representatives since 2016 as a member of the Liberal Party.

APPENEDIX 2: Seven Neo-liberal Think-tanks Connected to the Atlas Network


The AIP promotes the classic rights – freedom of expression, freedom of association, property rights, freedom of worship, and freedom of markets. It is the view of the AIP that human ingenuity is indomitable and lies at the heart of human progress. We believe that individuals – not governments – are best placed to direct their own futures, and that it is their ideas and efforts that help shape a collective future.

Sydney South

The Australian Taxpayers' Alliance believes in advocating of behalf of taxpayers' rights, ensuring that they are fairly and accurately represented in the political process.
Promoting a fair tax system and less government regulation.

From Sourcewatch:
Australian Taxpayers Alliance (ATPA) is the parent organisation of Menzies House, a website for "conservative, centre-right and libertarian thinkers and activists".(10)

Menzies Research Centre (1994)

The Menzies Research Centre promotes freedom, enterprise and empowerment to Australia and the world through an extensive national research, communications and engagement program.
Since its establishment in 1994, the Centre has been an independent voice for liberty, free speech, competitive enterprise, smaller government and democracy through its policy research, publications, public lectures and discussions.

St. Leonards

The Centre for Independent Studies seeks to create a better Australian society through ideas, research and advocacy that support individual liberty and responsibility, free enterprise, the rule of law and limited, democratic government.

From Wikipedia:
The Centre for Independent Studies (CIS) is an Australian libertarian think tank. It was founded in 1976 by Greg Lindsay. In 2018 Tom Switzer became the new Executive Director. The CIS focuses on classical liberal issues such as free market economics and reducing the size and scope of government.
According to the 2014 Global Go To Think Tank Index Report (Think Tanks and Civil Societies Program, University of Pennsylvania), CIS is number 101 (of 150) in the "Top Think Tanks Worldwide"
Simon Cowan, Research Manager and Senior Research Fellow (11)


To promote discussion about the operation of industrial relations in Australia including the system of determining wages and other conditions of employment.
To promote the rule of law with respect to employers and employee organisations alike.
To promote reform of the current wage-fixing system
To support the necessity for labour relations to be conducted in such a way as to promote economic development in Australia.

From Wikipedia:
The Society supports the deregulation of the Australian Industrial Relations System, including the abolition of the award system, the widespread use of individual employment contracts and the lowering of minimum wages. The Society only believes in limited labour market regulation, as it believes that excessive minimum wages and employment inflexibility lead to higher unemployment and lower productivity.
It was created in March 1986 after John Stone, Peter Costello, Barrie Purvis, and Ray Evans organised a seminar aimed at discussing the Hancock Report and other industrial matters. (12)


Does not seem to have a clear mission statement or set of aims posted on the Internet.

From Wikipedia:
The Institute of Public Affairs (IPA) is a public policy think tank based in Melbourne, Australia. It advocates free market economic policies such as privatisation and deregulation of state-owned enterprises, trade liberalisation and deregulated workplaces, climate change skepticism, the abolition of the minimum wage[6], and the repeal of parts of the Racial Discrimination Act 1975.
The Institute of Public Affairs was founded in 1943 as the Institute of Public Affairs Victoria, with Charles Denton ("CD") Kemp as its inaugural director and George Coles as its inaugural chair.
The appointment of Rod Kemp (CD Kemp’s son) as executive director in 1982, along with other administrative changes that had occurred in the late 1970s and early 1980s, marked a shift to neo-liberal ideology that continues to this day.
The IPA was not influential again until the 1980s, when C.D. Kemp's son, Rod Kemp took up the leadership. Rod Kemp transformed it from a conservative organisation to a neoliberal one, funded mainly by major corporations groups, and pursuing a pro-free-market, pro-privatization, pro-deregulation and anti-union agenda.(13)


The mission of LibertyWorks is to:
1. Stand firm and protect our current freedoms from regulatory attack, and
2. Expand liberty further by campaigning for change and further adoption of our principles.
LibertyWorks Inc. is an Australian based not-for-profit organisation that advocates for a drastic reduction in government control over people’s economic and personal lives.
Free Market Capitalism is a Win-Win System
Free markets allow buyers and sellers to willingly engage in interactions that create value for both parties. Buyers reward sellers who produce goods and services that appeal to them and sellers are encouraged to take risks and work hard to develop new ideas, products and services to appeal to potential buyers. Neither buyers nor sellers are coerced into proceeding with any transaction, they are entirely voluntary, and move forward if both parties perceive they get something out of it. It’s only free markets that produce these voluntary win-win interactions and each time they do, they economic pie expands.
Governments Operate Win-Lose Systems
In contrast to free markets, government provided services are always win-lose transactions. Governments tax unwilling citizens to redistribute the proceeds to others in the form of cash or “services”. While the recipients of the largess are typically happy to take the handouts, we should remember that everything that is given to them has been forced from someone else.
Under this system, “winners” seek to maximise their wins and the coerced seek to avoid additional losses. Government created transactions do not create value, they take value from some people and give it to others without increasing the economic pie. Therefore, Government heavy economies produce poor economic results and are morally inferior to free markets because they rely on coercion to function.
Individuals should be free to lead their lives in the way that they believe is best for them provided that in doing so they do not diminish anyone else’s right to do the same. Free markets operate best when individuals are free to pursue their interests. It’s the combination of empowered and unfettered individuals living and operating in efficient free markets that powers progress for all.


Mannkal Economic Education Foundation is a private, not-for-profit organisation established in 1997 by Mr Ron Manners. Mannkal’s mission is to develop future leaders of the free market. We promote free enterprise, limited government and individual initiative for the benefit of all Australians.
As enthusiasts of the economist F. A. Hayek, our Mannkal team believes that insights from classical liberal thinkers and their application to local conditions are important for understanding why Australia has been successful. Mannkal has published a detailed history of the Australian experience in The Libertarian Primer  which serves as the definitive introduction to students and scholars on this vital topic.


1. I have written another article which goes into neo-liberalism in more detail entitled: Do You Know How Ruthless The Neo-Liberals Are?





6. Ibid.

7. Ibid.

8. Ibid.






Was Stalin Responsible For More Deaths Than Hitler?
Guest Post by Denis Churilov

People who say that Stalin killed three (five? six? twenty eight!?) times more people than Hitler haven’t grown beyond moronic Cold War propaganda.

These days we know the exact number of people who fell victims to the so called Stalin repressions, with all the dynamics already taken apart by researchers month by month. The NKVD were documenting everything they were doing pretty pedantically for internal use. All their archives have been studied thoroughly throughout the late 1980s and the 1990s since they became open for historians and statisticians during the Perestroika years, most notably by the international research group led by Zemskov.

As such, we know that the GULAG population reached its historic maximum in the post-War time, in the year 1950 at 2,561,351 people. The percentage of “politically repressed” out of the total number of inmates reached its maximum of 59% in 1945-1946. Lots of people were accused of Nazi collaboration, often rightly so, after occupied territories were liberated. 

By the way, many people don’t seem to realise it these days, but GULAGs were correctional labour camps, where inmates were working, sometimes they were even paid for their labour, with the results of their labour being used by the government/society. Even though, in the majority of cases, working conditions were tough, GULAGs weren’t “death camps” unless you believe in fiction written by Solzhenitsyn. Any comparison to the Nazi concentration camps, which were specifically built to eliminate people in large quantities, should be viewed as nothing but ahistorical nonsense. 

As for those who were sentenced to death for “counter-revolutionary” actions, which often included any serious crimes against the state, e. g. armed robberies during or shortly after the Civil War, large scale fund embezzlement, and such, between 1921 and 1953, around 800,000 were sentenced to death by shooting and around 600,000 died in prisons/GULAGs due to illnesses and harsh conditions. Therefore, the total number of people who died because of political repressions during Stalin’s rule – almost 30 years - is around 1.4 million. 

Obviously, there were also people who died during the civil war in the late 1910s and the 1920s, as well as those who fell victim to the famines in the early 1930s. And, no, those famines weren’t engineered. (I will talk about them in-depth some other time.) But attributing those deaths to Stalin - Marxism/Socialism/Communism/etc. - would be facile, as both sides in the civil war were equally brutal to each other. Besides, civil wars and famines are not exclusive to the history of Soviet Russia or even to the history of Russia in general. 

The total Soviet population increased by about 50 million during Stalin’s era despite WWII. So, when we look at the EMPIRICAL, verifiable data, we see that there were 2.5 million people locked up in GULAGs during the worst times. 

As a side note, there were 2,220,300 adults in the US federal and state prisons in 2013, according to the US Bureau of Justice Statistics, and that’s not including people who were on probation and parole. And, unlike the Stalin’s Soviet Union, the modern day United States hasn’t experienced any major revolutions/regime changes, civil wars or foreign invasions in over 140 years. 

How does Stalin compare to Hitler? Well, I haven’t studied it in such depth, but the general estimates give a figure of around 6 million Jews (Jews alone!) exterminated by the Nazis during the Holocaust. And that not including the people who died as a result of the Nazi military aggression against other states. The Soviet Union, for instance, lost up to 27 million lives due to Nazi invasion. Stalinism stands nowhere near Hitlerism/Nazism when measured by the death toll for each of them. 

There’s also one crucial point that many people fail to understand about history, either deliberately or due to the fact that no-one bothered to explain it to them. Unlike Stalin’s Soviet Union, Hitler’s regime was exterminating millions of people based on their ethnicity ON PURPOSE. Yes, Stalin was a merciless dictator responsible for death of many innocent people (Still some would argue that, given all the tragic complexities of those times, Stalinism saved Russia form far worse tragedy that could’ve happen if the country failed to stabilise and industrialise in time.) Stalin wasn’t killing people just for the sake of it. Again, repressions and mass executions have been happening during and after every major civil war throughout the entire history of mankind. But Hitler was a whole different level of pure evil. Genocide was a deliberate, ideological function of Nazism. Look into the works of Himmler, the ideas expressed by Goebbels, or even Hitler’s own Mein Kampf. People who happened to rule German back then were all pretty explicit about their views, making them into official policies and facilitating one of the worst genocides in modern history. 

Again, those who died under Stalin died because of historical tragedy, like people who died during and after the French Revolution, with authorities inventing guillotine to behead people faster, or during the land reforms in England, or during the American Civil War. But people who died under Hitler, those who died during the Holocaust, they were the victims of direct, DELIBERATE genocide that was directed against people based on their ethnicity. 

Not being able to see the difference between the two requires a special kind of intellectual dishonesty and moral underdevelopment. 


So, was Stalin responsible for more deaths than Hitler? No, neither empirical research nor inferential analysis, that is looking into demographic data and its dynamics over the years, support this assertion. And casually comparing the victims of Stalinism to the victims of Nazism is like comparing a lethal traffic accident on a busy road to a deliberate, cold-minded killing spree.
Besides, there’s only one logical step between saying that Stalin was worse than Hitler - he wasn’t - and saying that Hitler was better than Stalin. Not surprisingly, most of the “communism death toll” nonsense is really just old Goebbels propaganda that was repackaged by the Cold War think tanks to slander the Soviet Union. 

Too sad many people still believe this horseshit.


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