Economic elites, crises, and austerity in 21st century capitalism.

Author:Solimano, Andres

24 September 2014

The era of neoliberal capitalism starting by the late 1970s and early 1980s promotes free trade, capital mobility, fragmented migration, privatization, deregulation and marketization. On the social side neoliberalism seeks the weakening of labour unions and the strengthening of big capital. My book [1] examines the main effects of this variant of global capitalism such as the rise of economic elites, the internal differentiation of the middle class and the marginalization of the traditional working classes, the higher frequency of financial crisis followed by austerity policies, the rise of the politics of nationalism and intolerance, the globalization of elites, migration and social movements. We end with some thoughts of an alternative based on the principles of economic democracy.

Rising economic elites and fragmented middle and working class

The leading actors in this new play are the rich economic elites. This segment is more than a statistical share depicted by the top 5 per cent or the top 1 per cent; it is a somewhat cohesive group with a high command of economic assets and unyielding political influence. Given their unparalleled capacity to appropriate the economic surplus these elites are able to mobilize ample financial resources to influence the working of political institutions through mechanisms such as contributions to political campaigns; lobbying activities to shape legislation; the message of the mass media; the mobilization of public intellectuals and academics to provide technical arguments in favour of pro-elite policies. Economic elites not only capture main productive and financial assets, but they extend their reach to the democratic process.

Another set of impacts of neoliberal policies on the social structure of capitalism is the internal differentiation of the middle class between a group of high-middle class segment of managers, financial experts, successful professionals, and a lagging portion of mid-level public employees, school-teachers and small firm owners. In addition, we observe a weakening of the traditional working class in advanced capitalist countries due to various factors such as the relocation of domestic firms to low wage countries, growing immigration to rich countries, labour-saving technical progress and weakened labour unions.

Crises, austerity, and the rise of extreme politics

In contemporaneous global capitalism financial and economic crisis have shifted to the core...

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