There is an interesting dynamic present in Europe, these years. The European Union and European Central Bank are demanding that debt-strapped Greece sell off its prime tourist land, ports, transport systems and other assets in the public domain. That is perfect example of classical liberalism grab for basic infrastructure as part of the overall asset stripping. However, the trend is evident elsewhere.
The past decades have been marked by the classical liberalism demonstrated through worldwide financial engineering. Financial and banking sector has already proved to be a paradise for liberal laissez-faire economics. In the new debt-strapped low-interest environment, prevalent in North America and European countries recently, there is an increased activity on the part of the financial and investment elite using their pooled investment vehicles to buy up countries and large chunks of hitherto public infrastructure. All classes of private equity firms, hedge funds, and buyout funds are currently reported to have been doing something that has not been seen in nearly a century: they are buying up assets, starting with the inventory of foreclosed properties and ending up with consolidating their inventories by buying assets directly for cash.
As a result, additional financial charges and tollbooth rents are being actively built into the prices charged for access to what is essentially public services (i.e. roads, schools, hospitals, parks, etc.). As a result, prices are rising. However, the prices began to rise not because costs and wages were rising, but because of monopoly rents and other rent-extraction activities.
In the process of increasing consolidation, a new neo-feudal rentier class is forming eager to buy roads and bridges to turn into them toll roads and bridges, to buy parking-meter rights, to buy prisons, schools, hospitals, parks, public services and other basic infrastructure.
Since the 1980s, we have witnessed a predominantly worldwide bubble economy. Falling interest rates almost guaranteed capital gains. However, currently near-zero interest rates cannot fall any further. They can only rise, threatening capital losses. That is why there is panic in today’s bond and stock markets. The near-zero interest rate regime is about to end. Therefore, there is little incentive for bond buying. Once interest rates rise, the world will enter an “anti-bubble” economy. Instead of capital gains driving “wealth creation” Alan Greenspan style, the world has enjoyed the asset-price deflation.
So the world is now in the Bubble Economy’s legacy. In place of a new bubble, financial elites are demanding privatization sell-offs from debt-strapped governments. The same dynamic is present in both the U.S. and Europe.
As Michael Hudson, a research professor of economics at University of Missouri, Kansas City (UMKC), USA has put it, “this post-bubble environment of debt-strapped austerity is empowering the financial sector to become an oligarchy much like landlords in the 19th century. It is making its gains not by lending money – as the economy is now “loaned up” – but by direct ownership and charging economic rent. So we are in the “economic collapse” stage of the financialized bubble economy. Coping with this legacy and financial power grab will be the great political fight for the remainder of the 21st century”.
This tragic transfer of public infrastructure is nothing short of a denationalization of public assets which is taking place currently in the UK. Regardless of how much Mr. Cameron applauds the privatization of England’s most essential public services, including the Royal Mail, the danger of even greater consolidation of public assets, and therefore of political power, in the hands of the financial and banking elite cannot be overestimated.
So much more sarcastic and untrustworthy is the call by Mr. Cameron for his country to "celebrate the success" of the privatization of the Royal Mail, as it if is good for employees, shareholders and "the company itself" as if it is purely an economic issue. It is not!
It is necessary to repudiate the status quo notion of a "purely economic" science to understand that even very fundamental economic and political issues can only properly be understood in the overlapping of those issues in a political-economic context.
When examined in detail, economic phenomena can be comprehended as purely political situations which are in fact being driven, or at least conditioned, by deeper economic issues. Taking into consideration the often well-masked economic structures and political intentions involved, in a particular configuration of social forces, a purely economic explanation is often destined to be highly misleading.
This "political economic" approach was the dominant means of dealing with much of social phenomena throughout the 17th, 18th and 19th centuries. That is when classical liberalism began to take effect and in view of the scope of the proposed transformation of the British and thereafter global economy introduced under the guise of mathematical models the kind of analysis of the contemporary advances as simply "Economics."
It was believed that “Economics” would be considered far too closer to the subject of political science. Nonetheless, "Political Economics," during the last forty or so years has gained its earlier nomenclature and methodology once again academically respectable. To a great extent, this has become possible due to the epic shifts in political landscape regarding the highest levels of the global socio-economic hierarchy.
The crisis of 2008 has marked the beginning of a new phase in the financial power “grab”. Therefore, such separate instances of transfer of public assets into the hands of private banks must be viewed in the context of global power struggle. Summarizing the economic theories, as well as current economic developments, one cannot fail to notice how they lead to subjecting governments of various countries to unfair trade. That leads to depleting natural resources and privatizing infrastructure that is sold at distressed prices. That parasitic finance techniques generally being used to extract the maximum amount of the country's surplus rather than providing a price-competitive service.
Therefore, looking at the current transfer of communal services into the hands of the increasingly politically and economically powerful financial elites, there is little for the people in the UK, or the US, to celebrate for that matter. As public infrastructure in the UK is being transferred, and denationalized economically, in effect the whole country is slowly being handed over into the hands of the future landlords, like those in times when the very ideas of classical liberalism first became popular.
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