Global supply chain logjams and global credit/financial crises aren’t bugs, they’re intrinsic features of Neoliberalism’s fully financialized global economy.
To understand why the global economy is unraveling, we have to look past the headlines to the primary dynamic of globalization: Neoliberalism, the ideological orthodoxy which holds that introducing market dynamics to sectors that were closed to global markets generates prosperity for all.
This is known as Neoliberalism, as liberalizing markets means opening up sectors that had previously been restricted. Neoliberalism holds that global market forces introduce efficiencies and opportunities that then pave the way for growth. Global market forces include not just new buyers and sellers of goods and services but the introduction of vast new markets for credit and risk that far exceed what was available in local marketplaces.
So far so good: opening markets creates efficiencies and prosperity, blah blah blah. But the real dynamic behind this happy-story shuck-and-jive is unprecedented prosperity for those with access to low-cost credit generated out of thin air by central banks.
In other words, introducing market forces leads to the dominance of those who control those forces –banks and corporations. Once a local economy is exposed to global capital, those with the most expansive access to the lowest-cost credit can outbid local buyers, snapping up the most productive assets and dominating the local economy to their own benefit.
Since the core mechanism of Neoliberalism is access to low-cost credit, Neoliberalism concentrates financial power and risk in a handful of financial nodes which every market participant unknowingly becomes dependent on. When a developing-nation village was largely self-sustaining and not exposed to global markets, it was largely unaffected by global financial crises.
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