Monday, May 18, 2009

Dear Kate: Neoliberal

Dear Kate,

I observe a suddenly-famous term: "neo-lib". What is this "neo-lib" actually about? Why do people seem hate it? Is it some kind of virus?

Al @ Berge

Dear Al,

To tell you the truth, I don't know. But I got an impression from the media that all those protesters mean by 'neoliberal' is market-friendliness, trade with other countries, and everything American or western.

In other words, neoliberal is an Aunt Sally.

Take care,


  1. neoliberal is, in my opinion, a market system that keeps you cheap. yeah man, cheap!

  2. Yet, we're worth your time to read and comment? That can only mean your time is cheap, Anonymous.

  3. my apology, i might have been too far but that's what, i think, have happened to our country's cost of capital, products, labours, skilled workers, graduates, etc.

  4. Neoliberalism is a late-twentieth-century philosophy, actually a continuance and redefinition of classical liberalism, influenced by the neoclassical theories of economics. The term is most often applied by critics of the doctrine, to the point where one commentator remarked "the concept itself has become an imprecise exhortation in much of the literature, often describing any tendency deemed to be undesirable".[1] The central principle of neoliberal policy is free markets and free trade. The prime global advocate[citation needed] is the International Chamber of Commerce in Paris, whose self-defined trade and commerce mandate is

    to break down barriers to international trade and investment so that all countries can benefit from improved living standards through increased trade and investment flows

  5. compared to neoliberalism or freemarket capitalism i can say, economic populism is more suitable for Indonesia. despite having a lower cost of capital (sad fact), we still can bid for a higher selling price (hope/effort) while it's impossible in the freemarket capitalism system (where low means cheap) i think. so then, there's still some profit can be redistributed to the people. make sense?

    eg. you pay your labours just above minimum payment but when successfully generating profits then share some to your labours as bonuses.

  6. First off, to all commenters, please put your name, any name you like, and not just anonymous, to make it easier to us in addressing your comment.

    Anon II, you can't fool the market like that. Say, you want to set a higher baristas' minimum wage. The employed baristas like us will be happier, but not the unemployed who desperately want to work in the cafe and are willing to take lower than your minimum wage.

    Do you ever realize that you actually hurt them, the unemployed, because you just close their access for being employed?

    Kate, who initially wanted to hire additional baristas as she saw potential increase of espresso demand, upon seeing your higher minimum wage, has to cancel the plan. So we end up in a below optimal espresso production.

    And you know what, an increasing demand of espresso, if you let market mechanism to work, will bring higher wage to all aspiring baristas.

    You see, in the end market economy is all about people.

  7. Anon II -- I admire your ability (and the fact you have time) to type 447 characters without saying anything. Including your name.

    Let's get back to basic now. What's your definition of neoliberalism, economic populism, freemarket capitalism? We won't be able to discuss anything if we don't know what animals we are referring to.

  8. Thanks Rizal for your response. can you ask the unemplyd baristas to ask someone or government for help?

    A.p. later on ok. still have something to do now. sorry need to read some stuff to define them. you can find some in my comment perhaps... he he ;-)

  9. Anon II, you can not rely on a "help". You want them to work and produce something - a way more dignified than relying on the upper hand to give in.

    And the government never helps. What they do is to take people's money by law (tax) and give it to the others (subsidy and government expenditure). To ensure the money goes to the right persons and in the right amount, the government needs to have good information. Alas, it's never the case.

    Now, suppose the government want to "help" the unemployed. They have to raise tax on someone else. And suppose you want to charge Kate, the alleged capitalist, higher tax.

    Kate will take the additional tax into her cost of production account. And the story repeats: she will restrain from expanding espresso production, and we end up with lower espresso in the economy.

    Now, you say, why don't we tax those espresso drinkers? They too will take it as additional cost for having espresso. The demand will go down. All aspiring baristas will be unhappy.

    What about taxing others, like the donut lovers? Well, all the same. You just make lower quantity donuts in the economy.

    Just remember: the government does not make a "help", they take someone's money and give it to others.

  10. I am googling several days and found out that 'neoliberal' terms are only found in political and some 'pergerakan' website.

    How come someone (I mean Budiono) who is not a politician or member of 'pergerakan' branded as 'neoliberal'? He is economist, isn't he?

    Can anyone explain???

  11. Anon II, you said you've explained some in your previous posts? Until you come up with a unique identity, we won't be able to track down. There were a couple of anonymous postings, and who knows they were the same people?

    The only reference to a definition of neoliberal is "a market system that keeps you cheap". What does that mean? So those people who called for cheaper gas price are neoliberals?

    Confused -- you're right! Moreover, people tend to attribute all the bad things in the earth to neoliberalism. From global warming to mutilation. And I am not joking for the latter.

  12. Rizal, it's something we dont have to discuss cos if i'm populist i'll ask more taxes for more subsidies, vice versa for a neolib like Kate.

    A.p, someone is lucky if he can rate himself high when he's in fact from a neolib Indonesia in Euro, Aus, US, Can markets.

    in a populist indonesia, we don't have to go out to be expensive. it's like heaven, we can enjoy among us millions of people, our market from hong kong, bangkok, singapore, makassar to jakarta.

  13. Anon II, now you are making your own definition. It's your opinion, and you have the right to express it. But clearly it is not the usual definition of neoliberalism to which people are mostly referring too. Ergo, your definition is not the relevant basis for a discussion or debate about neoliberalism.

  14. Anon II, I don't know if you are either just being satirical or don't get the theory right.

    But allow me to take some of your (implicit) arguments:

    First, what make you think that Kate is a neolib? I assume that you know her only through her postings, and I can tell that there is no sufficient basis from her postings to know whether she is a neolib or not --whatever it may mean.

    Second, OK, tax and subsidies are probably a matter of degree --and depends on your ethical view of taking someone's money and giving it to others. But what about the problem of information? Does government know better than market mechanism do? Most of the time, they don't

    Third, when you say "being cheap", are you referring to the wage rate? Let's assume you are, as you say something about higher rate in the US, Can, etc.

    But do you realize that if you let the labor market work by allowing free flow of labor across nations; a labor wage equalization would kick in --a labor with similar quality will be paid the same wage rate across nations?

    In this market economy, for example, a low waged labor in Indonesian agriculture sector may want to move into high waged Australia's agriculture sector, up to the point that the wage rate between Indonesia and Australia no longer differs. Isn't it cool?

  15. Neo Liberal ? it really exist in Indonesia. For exmple: The gigantic Horizontal Integration of Food Industry with the Widespread of Stores (Indomart), actually cross border of Anti Trust and Competition it hazard (killing softly) for small entreprise. In coal mines, Capital easily buy the coal mines where it is opposite with article 33 UUD'45. It is so free...liberal, and tends to colonialize Ind.

  16. Put your identity in your order, whatever it is. It makes the barista's life easier.

    Anonymous, in my opinion, grocery retail chain stores will fall into anti competition practice only if there is government regulation (or the use of coercive power) discriminately against the smaller retailers or in favor to that chain stores.

    Do you think there are such regulations?

    In a slightly different issue, Smeru has a research report on the impact of supermarkets on traditional markets and retailers in Indonesia (in pdf). They find that there is no impact on earnings and profit, but on employment. I guess it implies that retailers in traditional market just become more productive --profit remains but employment declines.

    They also find that supermarket is not the primary cause for the decline of traditional markets.

    BTW, if you think that chain stores is a neolib institution --and you hate neolibs --, just don't shop there. If you still shop there, stop it now.

    And if there are sufficient number of anti neolibs like you, they would go bankrupt. So go exercise your power to get rid of those neolibs stores.

    But I am not joining you.

  17. i got the term free-market capitalism (neolib) and economic populism from the age of turbulence alan greenspan.

    i recommend you read it, so that can understand what i've been commenting about.

    it's about our govt who can peg the prices so that things aren't cheap anymore. our govt who can protect distribution, channeling, etc, so that some things have own closed market. our govt who can bailout so that no big corp going bankrupt and people own the corp, refer to PPIP (private-public investment program).

    thanks for the nice discussion. do you think this issue should have a particular post?