The future of neoliberal capitalism

We’ve all watched the train wrecks in Greece, Ireland, Portugal, Spain, and now Italy—where spending is running wild, completely detached from reality. Of course, that list includes America too, along with the ultimate capitalistic stronghold: the USA.

Pretty much the entire planet is drowning in debt. Maybe Russia, China, and a handful of oil-rich nations are safe for now, but let’s be real: in a few decades, they won't be wealthy anymore once the oil runs out. It’s a finite resource, isn't it?

And who is the whole world indebted to? The banks. These institutions don't care about borders or morality. Riding the waves of capitalism and hiding behind legal loopholes, they conjure money out of thin air. It allows them to essentially become the owners of everything we have.

Look at how the European Union handles Greece. They bail out the debt by squeezing taxpayers and selling off Greek assets just to pay interest on loans built from imaginary money. It’s a direct pipeline transferring real wealth from citizens' pockets straight into bank vaults.
It’s the exact same story happening right here in America. Sadly, it's already underway.

It makes you wonder: how long can this actually last? How much longer can this version of capitalism survive? From where I'm sitting, the whole system is already starting to crumble. I'd love to hear what you all think about this.

Also, do you think forcing a massive corporate tax on banks—say, at least 50%—combined with freezing interest rates and fees could actually save some economies? In America, we're talking about billions of kuna here.

That revenue could go straight toward slashing national debts. We could finally rein in this reckless habit of creating capital out of nothing. In my view, it would stabilize the system because governments could stop bleeding businesses and citizens dry and start making the banks foot the bill instead.

So, how do you see the future of capitalism playing out?

What's actually the difference between liberal and neoliberal capitalism?

Do you honestly think what we're seeing in the world today has anything to do with (neo)liberal capitalism?

The main point is that non-liberal capitalism isn't the culprit here. It’s the insane level of government overregulation. The fallout is mostly high public debt and unchecked deficits—meaning state spending, rather than corporate or individual spending, is what triggers these crises in places like Greece and Italy. Then you have the politicized interference in financial markets, like using bailouts to strip risk away from banks. That’s actually just more aggressive regulation of the financial market, since it isn't allowed to float freely based on supply and demand. In that environment, anomalies are expected. Profit maximization remains the priority, I guess, but the fundamental rules of the game get lost.
That’s about as concise as the current situation gets.

If we had actual free-market capitalism instead of all this constant state intervention, there might be a real chance for progress. Instead, everyone seems to be sliding "linearly" toward lower standards and a very long recovery period—at least for the European Union, where people are now talking about 15 years or more.

I have no idea how the OP managed to cram neoliberal capitalism and Greece, Portugal, and America all into the same sentence.

Countries are already drowning in debt—why would we ever bail out banks again? When is enough going to be enough? When will people finally snap, rush to the banks to pull their savings, and just stop paying off those loans? Who’s actually going to step in to save the banks from collapsing then?
...nobody. At that point, they'll finally get a taste of real capitalism, and the market will just do what it does best: correct itself.

The big issue with everyone shielding the banks is this:
- they act like they can operate without any risk, assuming every single loan they hand out is a guaranteed payday
- they think market laws don't apply to them and that they're basically "too big to fail"

Everyone else deals with risk, so why shouldn't banks? If they lend money to someone who can't pay it back—doesn't matter if it's Greece, Italy, or America—they need to face the reality that the money might be gone. Just like a regular guy who's already been bled dry by collectors. Also, if a bank goes under, sure, investors who thought they were playing it safe lose out. That's impossible to avoid. But honestly? When one (or a few) banks collapse, it just clears the way for new players who'll actually be smart with their capital. Until that happens, nothing really changes...

Patrick Moore3 said:Countries are already drowning in debt—why would we ever bail out banks again? When is enough going to be enough? When will people finally snap, rush to the banks to pull their savings, and just stop paying off those loans? Who’s actually going to step in to save the banks from collapsing then?
...nobody. At that point, they'll finally get a taste of real capitalism, and the market will just do what it does best: correct itself.

Fine by me. Money can be printed in infinite quantities at almost zero cost—or, if you want to produce it even cheaper while actually protecting resources and the environment, a simple electronic pulse does the trick.

Regulators—specifically central banks—are obviously worried about this rapid decay, so they end up engineering artificial stimulus to prop up the markets.
One interesting factor lately has been the capital adequacy weighting applied to sovereign bonds. Within the European Union, that weight was set at 1.0, which essentially creates an artificial imbalance by slashing regulatory costs. It made buying government bonds a sweet deal for banks, but now they’re stuck; they didn't value them properly according to market realities, and now they don't know what to do with them.

Amanda Allen4 said:Fine by me. Money can be printed in infinite quantities at almost zero cost—or, if you want to produce it even cheaper while actually protecting resources and the environment, a simple electronic pulse does the trick.

And just like that, the problem's "solved"... Flooding the system with "unlimited" cash just makes that money as worthless as all the debt backing it!

Moody's decided to slash the credit rating for Irish bonds down to junk status yesterday.

http://www.irishtimes.com/newspaper/...reaking54.html

Bradley Hayes6 said:Moody's decided to slash the credit rating for Irish bonds down to junk status yesterday.

http://www.irishtimes.com/newspaper/...reaking54.html

it's probably no surprise ☕

the USA rating is just weirder

/or maybe it’s just what someone else pointed out earlier: the fact that the European Union is in much worse shape overall./

William Mendoza6 As stated by:
We have already witnessed the fallout from crises in Greece, Ireland, Portugal, and Spain, and now we find ourselves watching Italy struggle under the weight of consumption that far outpaces its actual economic capacity. It is a predictable pattern, really. Of course, this group isn't limited to just those nations; it also includes the United States, the very capital of global capitalism.

Almost the entire world is drowning in debt—with the possible exceptions of Russia, China, and perhaps a handful of oil-rich nations. Though, even those petrostates shouldn't get too comfortable; in a few decades, that wealth will likely evaporate once we move past fossil fuels and realize oil isn't exactly a renewable resource.

The entire world is essentially in debt—to the banks. These institutions seem to operate without any regard for boundaries, whether they be national borders or basic moral compasses. By riding the waves of unchecked capitalism and anchoring themselves within the intricacies of legal frameworks, they’ve mastered the art of conjuring money out of thin air. It is this very mechanism that allows them to eventually position themselves as the ultimate owners of everything.

You seem to be overlooking a fundamental reality: banks aren't just monolithic entities; they are also beholden to their creditors and a vast array of other investors. To put this into perspective, look at the major American banks. They aren't just playing with house money; they owe hundreds of billions of dollars to everyday citizens—people like you and me who have their life savings sitting in deposit accounts. It’s a massive liability that shouldn't be ignored.

Beyond the central banks themselves, these institutions aren't beholden to anyone. They essentially conjure money out of thin air, which gives them the latitude to commit even the most catastrophic blunders without being held to account.

The way the European Union plans to bail out Greece is quite telling. They intend to stabilize the debt by essentially tapping into the tax revenue of ordinary citizens and liquidating Greek state assets. It’s a mechanism designed to service interest on loans that were essentially conjured out of thin air—fictitious money used to cover real-world obligations. Ultimately, this process serves to funnel actual capital directly from the pockets of taxpayers into the vaults of major banks.
It is an inevitable trajectory, and unfortunately, we are already seeing the beginning of it unfold right here in the States.

One eventually has to ask: how much longer can this actually last, and when will we reach the breaking point? From where I’m sitting, it looks as though the entire framework is already beginning to fray at the edges. It feels less like a steady decline and more like a systemic unraveling that's already well underway. I would be curious to hear your thoughts on the matter.

High levels of government spending paired with a ballooning national debt represent a fundamental departure from the tenets of "neoliberal" capitalism. It’s almost a contradiction in terms, really. When you consider that the core philosophy of that model relies on fiscal restraint and minimal state intervention, seeing the federal budget swell like this feels less like a market evolution and more like a complete pivot toward a different economic paradigm entirely. 🤷

Furthermore, do you believe that forcibly imposing a high corporate tax rate on banks—something in the realm of at least 50%—combined with freezing interest rates and fees, could serve as a lifeline for many struggling economies? In the US, we are talking about billions upon billions of dollars.

That budgetary revenue could be strategically deployed toward reducing national debt. By implementing stricter regulations on the reckless creation of capital out of thin air, we might actually see some systemic stability. In my view, this would provide the government with much-needed breathing room to lower the tax burden on businesses and everyday citizens, effectively offsetting those costs by increasing the levies placed on banks.

Of course not. If history has taught us anything at all, it’s that a government's hunger for capital is essentially insatiable. You can implement any tax you like or attempt to bolster state revenue through various means, but it will never truly satisfy that bottomless appetite.

How do you all perceive the trajectory of capitalism moving forward?

In my own estimation, we are likely looking at a continued cycle of expansion followed by aggressive contraction in government spending, much like the pattern we are witnessing right now.

This crisis is the direct fallout of botched government intervention (can it ever be any other way?) and heavy-handed regulation, not to mention price fixing—specifically regarding the most vital price of all: the cost of money. It’s honestly laughable to blame a non-existent laissez-faire approach, especially when we all know the modern banking system is one of the most regulated sectors on the planet. Central banks now wield more power than ever, yet somehow, we aren't supposed to call them market products?

As for "neoliberalism," it’s fascinating how frequently people toss that term around today while possessing criminally little understanding of what it actually means. For populists like Lesar and Kulić, the word is nothing more than a rallying cry to gather the herd. But checking the actual definition is embarrassingly easy. Just type the word into Google.

To classify an economic policy as "neoliberal," specific measures must be implemented, typically defined by the Washington Consensus. (http://en.wikipedia.org/wiki/Washington_Consensus). This framework consists of ten measures; I'll just highlight a few here.

1. Fiscal discipline. Governments shouldn't overleverage their citizens or chase budget deficits, as those inevitably lead to inflation and plummeting productivity.
2. Tax reform: reducing the tax burden to incentivize private investment and innovation.
3. Interest rates, which must be determined by market forces (!!!!)
4. Floating exchange rates (!)
5. Privatization of state-owned enterprises
6. Broad deregulation

Read more at:

http://en.wikipedia.org/wiki/Neoliberalism

Now, can anyone in their right mind argue that countries like the USA, Greece, Italy, Spain, or heaven forbid, America, have actually followed these principles??

If the politicians in charge of fiscal and monetary policy can successfully convince the public that exploding debt is the fault of capitalism and the free market, then I'm truly speechless. I might just sink into a deep depression; perhaps it's better if it all just goes down the drain. 😁

Jack Rodriguez85 Asks:
Fiscal discipline isn't just a buzzword; it's common sense. Governments really ought to stop treating their citizens like an endless ATM. Chasing massive budget deficits might feel easy in the moment, but it’s a trap. Eventually, you just end up fueling inflation and watching productivity tank. It's basic math, really.

Everyone followed this playbook, using Greece as their primary blueprint.

Tax reform. Specifically, the idea of slashing the tax burden to actually give people a reason to invest privately and chase innovation. It’s a classic move—lighten the load on capital so the engines of growth can actually start turning instead of just idling under the weight of the state.

France, Italy, and the United Kingdom took the lead here. They slashed their tax burdens so aggressively that the rest of the world is still looking at them with envy.

Interest rates—they really ought to be driven by actual market forces, for crying out loud. That’s how the system is supposed to function.

What exactly are we looking at here?

4. A floating exchange rate (!)

America and China served as the primary blueprints here.

5. The privatization of state-owned enterprises.

Canada just pulled off the biggest privatization masterstroke we've seen in the last decade.

6. General deregulation.

What exactly are we looking at here?

Andrew Barrett4 said:it's probably no surprise ☕

the USA rating is just weirder

/or maybe it’s just what someone else pointed out earlier: the fact that the European Union is in much worse shape overall./

heh
http://www.cnbc.com/id/43255117/Mood..._Credit_Rating

Capitalism doesn't actually mean a free market or liberalism.
To me, capitalism is just a method of management involving both production factors and the market itself.
On the production side, you have constraints like resource scarcity, ranging from raw materials to skilled labor. I guess nobody is going to start manufacturing computers in a place like Ohio; there simply isn't enough specialized talent that understands the tech deeply enough to build the machines that make the chips.
On the market side, you deal with supply and demand. Right now, the bottleneck seems to be demand—people just don't have the cash to buy everything being pushed on them.
This leads to inventory buildup. Companies that can't move product start to fail and lay off workers, who then get pushed out of the market because they lack the funds to participate in demand. It’s a cycle where lower corporate earnings lead to even less spending.

There was an attempt to regulate this via money supply through central banks, but I suspect that mostly just funded those closest to the flame—big capital. When a small player fails, nobody bats an eye. But if a massive conglomerate like Walmart were to collapse, it would trigger a crisis felt across the entire USA. The system seems designed to bail out big capital.

A colleague correctly noted that current consumption is down because the government takes huge taxes and redistributes them through its own spending, though it's hard to imagine us buying much else when the market is dominated by giants. We all know how much big retailers charge just for shelf space.

The core issue is the favoritism shown to large-scale capital. Once these entities reach a certain size, they stop growing through innovation and instead focus on crushing small competitors to protect themselves. Just look at how many giants have tried to pivot and failed; we all remember what caused the dot-com crash.

The fundamental problem lies in consolidation and how that concentration of power affects both production and market forces.

If we wanted to solve our own problems, I suppose we would have to spend nothing but the bare essentials on food and water for the next 50 years, reinvesting everything into education, science, and research. Only then might we become world leaders.
But since the giants maintain control, maybe eventually some new creators will emerge to unseat them, much like how Google displaced Microsoft.

Andrew Barrett4 said:it's probably no surprise ☕

the USA rating is just weirder

/or maybe it’s just what someone else pointed out earlier: the fact that the European Union is in much worse shape overall./

Greece, Portugal, and even Ireland all have junk ratings, yet nobody's letting them default.

The USA sits there with an Aaa rating while Ben Bernanke is out here sweating over the possibility of Congress triggering a massive default today.

We’re living in a total comedy of errors. 😂

Bradley Hayes6 said:Greece, Portugal, and even Ireland all have junk ratings, yet nobody's letting them default.

The USA sits there with an Aaa rating while Ben Bernanke is out here sweating over the possibility of Congress triggering a massive default today.

We’re living in a total comedy of errors. 😂

Perhaps it is all just a matter of synchronizing phase shifts.

Essentially, if everyone defaults at the exact same moment, perhaps no one will even feel the tremor.🤷

Does anyone actually wrap their head around this new economy? It feels like our current blueprint for growth is just tearing the country apart, and honestly, it seems like that old "invisible hand" couldn't care less about the fallout—it's like some entirely different beast is being cooked up amidst all this chaotic globalization.

Jack Rodriguez85 said:This crisis is the direct fallout of botched government intervention (can it ever be any other way?) and heavy-handed regulation, not to mention price fixing—specifically regarding the most vital price of all: the cost of money. It’s honestly laughable to blame a non-existent laissez-faire approach, especially when we all know the modern banking system is one of the most regulated sectors on the planet. Central banks now wield more power than ever, yet somehow, we aren't supposed to call them market products?

As for "neoliberalism," it’s fascinating how frequently people toss that term around today while possessing criminally little understanding of what it actually means. For populists like Lesar and Kulić, the word is nothing more than a rallying cry to gather the herd. But checking the actual definition is embarrassingly easy. Just type the word into Google.

To classify an economic policy as "neoliberal," specific measures must be implemented, typically defined by the Washington Consensus. (http://en.wikipedia.org/wiki/Washington_Consensus). This framework consists of ten measures; I'll just highlight a few here.

1. Fiscal discipline. Governments shouldn't overleverage their citizens or chase budget deficits, as those inevitably lead to inflation and plummeting productivity.
2. Tax reform: reducing the tax burden to incentivize private investment and innovation.
3. Interest rates, which must be determined by market forces (!!!!)
4. Floating exchange rates (!)
5. Privatization of state-owned enterprises
6. Broad deregulation

Read more at:

http://en.wikipedia.org/wiki/Neoliberalism

Now, can anyone in their right mind argue that countries like the USA, Greece, Italy, Spain, or heaven forbid, America, have actually followed these principles??

If the politicians in charge of fiscal and monetary policy can successfully convince the public that exploding debt is the fault of capitalism and the free market, then I'm truly speechless. I might just sink into a deep depression; perhaps it's better if it all just goes down the drain. 😁

Don't worry, you won't fall into a depression because a truly free market doesn't even exist. Look at the global economy—whether you're looking at "communist" China or "capitalist" USA—it functions as a planned economy where the political and fiscal privileges of certain nations act as a monopoly tool for their domestic currencies, effectively sabotaging the market. Today's version of capitalism is nothing more than a degenerate, grotesque caricature of a free market—much like the portrait of Dorian Gray.