On the 28th August 1976, Orlando Letelier, a Chilean economist and former minister in the government of Salvador Allende, published an open letter in the US magazine ‘The Nation’. Describing the effects of “Chicago School”, neoliberal economics upon his country, Letelier avowed that the policies being pursued by the junta under General Pinochet were nothing more than a deliberate attempt to remake Chilean society.

“It would seem to be a common-sensical observation that economic policies are conditioned by, and at the same time, modify the social and political situation where they are put into practice. Economic policies, therefore, are introduced in order to alter social structures.”

For Letelier, it was inexcusable – incomprehensible even – that the Chicago economists could plead ignorance and disavow responsibility for the political and social consequences of applying their theories. Throughout his exile, following the military coup of 1973, the former Chilean minister was an outspoken critic of the junta’s economic strategy and the state-sponsored brutality and repression required to make it succeed.

In the end, too outspoken. Because one month after the publication of ‘The Nation’ article, Orlando Letelier was dead, murdered in Washington by a car bomb almost certainly placed under the direct orders of the Chilean president, General Pinochet.

Looking back almost forty years later, Letelier’s analysis of the draconian ‘laissez faire’ policies inflicted upon his country under the guidance of Milton Friedman and other neoliberal economists seems eerily prescient.

“In such a context, concentration of wealth is no accident, but a rule; it is not the marginal outcome of a difficult situation—as they would like the world to believe—but the base for a social project; it is not an economic liability but a temporary political success.”

In 2016, as the global economy continues its struggle to escape the effects of the 2007-2009 financial crash, this has become a consideration of paramount importance not just for economics, but for our notions of democracy itself. Most people on the left argue that the massive inequality evident in many advanced countries is the inevitable result of policies that, far from being essential or necessary, have been artificially imposed by a wealthy class of elites that has manipulated the crisis to protect its own interests, regardless of the social and environmental cost to their fellow citizens.

Back in the 1970s, Letelier optimistically talked about the concentration of wealth being a “temporary political success” for the ruling classes. Today, however, that ephemeral ascendancy is in danger of becoming irreversible. Unimagined technological change, coupled with profound economic disruption has led to unprecedented inequality in wealth and power that threatens to turn the status quo into a permanent hegemony.

Advocates for neoliberal ideas regard unrestrained competition as the fundamental principle governing human affairs. By regarding individuals simply as consumers or vendors, making entirely rational choices on the basis of whatever results to their best advantage, they argue that weakness and inefficiency can be eliminated with universal benefits. Over time, this should mean that the dynamism of the market place delivers supremely optimised systems to maxmise output and performance in almost any field. Theoretically, such market-based ‘survival of the fittest’ should inevitably yield the greatest prosperity by enabling the most successful exponents to emerge, from which outcome, every one else prospers via the trickle down effect.

Any attempt to inhibit this competitiveness – whether it be via taxation, legal regulation, public (free) service, trade union collective bargaining – is a brake on efficiency and a distortion of the market and can be regarded as immoral because it prevents the system from doing the greatest good for the greatest number.

This is an extremely devious form of solipsism, however, because it allows even the most myopic neoliberal to regard their selfishness as a just cause.

As George Monbiot commented recently:

“Inequality is cast as virtuous: a reward for utility and a generator of wealth….Efforts to create a more equal society are both counterproductive and morally corrosive.  The market ensures that everyone gets what they deserve.”

That, at least is the theory. The problem with this approach, as we have seen repeatedly and especially during present difficult times is that the theory is bullshit.

Everyone Gets What They Deserve?

“Our society constantly proclaims that anyone can make it if they just try hard enough, all the while re-inforcing privilege and putting increasing pressure on its overstretched and exhausted citizens…..We’re forever being told that we are freer to choose the course of our lives than ever before, but the freedom to choose outside the success narrative is limited. Furthermore, those who fail are deemed to be losers or scroungers, taking advantage of our social security system.”

Paul Verhaeghe

Although ‘The Shock Doctrine’ was published before the 2007 financial crash, it foretold many of the trends we have witnessed since, not just in finance, but in interwoven areas of social, political and economic importance: austerity and anti-Keynesianism; the unrelenting assault on the role of government and the public sector; the vilification of welfare spending; the demonising of migrants and refugees; the invasive reach of state-sponsored intelligence mechanisms revealed by Edward Snowden; and the extension of multinational corporate interests in countries like Libya, Iraq and Tunisia that were opened up to foreign investment following military conflict and revolutions in the Arab Spring.

Klein was stunningly successful in pulling back from the randomness of day to day details to expose the underlying neoliberal grand design behind macroeconomic shock therapy, the same forces that Orlando Letelier railed against in the months before his death.

Today, it is concerning for those who believe in social justice, fairness, equality and democracy that so little has changed – even though the methods of disaster capitalism are increasingly visible for all to see.  Contemporary events, such as the chaos of the Greek debt crisis, increasingly conform rather than deviate from the template outlined in ‘The Shock Doctrine’.

Greece is a perfect example of shock therapy at work. Few economists, not even the IMF, feel that the excoriating terms of the bailout are remotely achievable, but nevertheless, they have been enforced at enormous social and economic cost. The agreement signed by the Greek prime minister, Alexis Tsipras, in the spring of 2015, was forged in an atmosphere of urgent crisis and haste. It mandated massive reductions in public spending, reforms of labour laws, placed sharp limitations on trade union rights and permitted the privatisation of key public assets like the shipbuilding industry. Most observers believe the cure will kill the patient long before Greece shows signs of economic recovery, that the problems have merely been postponed for another day.

Greece may be a corner case but at the time of writing (Spring 2016) all major Western economies are struggling to emerge from the strong headwinds of low growth, low productivity, rising levels of inequality, persistent unemployment and weak consumer confidence. In spite of chronically low oil prices, deep cuts in interest rates and massive quantitative easing, the economic outlook seems extremely fragile, and is possibly teetering on the brink of a fresh collapse.

One of the criticisms of how governments have sought to recover from the crash of 2007 is that too little has been done to reform the global financial system. Meanwhile, much of the cost (and the blame) for private debt has been passed onto the public sector through bailouts and cutbacks in public spending. Even though inflation remains low, wage freezes and a rise in self employment and contract hiring have eradicated any benefit to consumers.

From a Keynesian point of view, the fiscal policy of bank bailouts, low interest rates and QE was a half way house that stopped the headlong slide into full blown depression. But the reluctance to go further – to use government spending to stimulate the economy, accepting higher deficits as a means to reduce debt through growth, rather than cuts, and to restrict capital movements and speculation – has left the recovery half complete.  Like an aircraft attempting to take off using only one engine, the project is in danger of stalling and crashing back down to earth.

Like Talleyrand’s Bourbons, the neoliberals remain in control, having learnt nothing and forgotten nothing. Meanwhile, a frustrated populace is increasingly turning to more uncompromising politicians in the US and Europe seeking recompense for their difficulties. While campaigners like Donald Trump polarise opinion and invite ridicule and cynicism, fascism is on the rise again. Firebrands like Marie Le Pen, Frank Franz and Gerdt Wilders are tapping into a smouldering frustration at the inequality and lack of opportunity in Western society. What’s disturbing is that the target of many ordinary voters’ frustrations is usually not the neoliberal elite that caused the downturn and have prospered from it. Instead, they blame liberal institutions and political leaders like Barack Obama who have attempted in vain to clear up the mess, largely hampered by the challenge of trying to make reform without being fully able to dismantle the hegemony of right wing corporate and political interests that still dictate the economic and social agenda. I would argue that, in keeping with Naomi Klein’s theories about shock doctrine, that civil unrest – whether it be through anti-austerity protests, religious intolerance or social prejudices – is welcomed and encouraged by a strata of society that regards such disruptions as an excuse to retrench even further. It’s as if the population is blaming the fire crew for starting the fire, and instead is backing away into the flame itself.

greek-parliament

Neoliberalism And Tyranny: Not Such Uneasy Bedfellows

t seems ironic to me that Friedrich Hayek’s seminal neoliberal treatise, ‘The Road to Serfdom’ was written as a warning against totalitarianism. At a time when anti-Communist sentiment was beginning to coalesce into the opening stages of the Cold War, Hayek argued that central government planning – all planning – would ultimately destroy individual will and lead to hard line authoritarianism. Followers of Hayek, like Milton Friedman, never acknowledged the rather obvious fact that their ideal vision of a free market required authoritarian rigour to make it stick.

But how can markets be possibly perfectly “informed” and “rational” if the exponents are terrified? If you torture someone, the rational thing for them to do is to agree with whatever you say, and tell you whatever it is you want to know. Ask any ordinary worker living in Friedman’s totalitarian laboratory whether their lot was better than it was before and undoubtedly they would assure you that General Pinochet and his advisers had saved the nation from the Marxist folly of Salvador Allende. But ask them privately, in trust, behind the dead stare and the flat expression, and the answer would certainly be different.

To Friedman, economic policies were entirely separate from political and social consequences. He much preferred to regard economics as an empirical discipline, like physics, where cause and effect were bounded by natural and irrefutable rules. But the obvious flaw in this thinking is that there is one, and one only, outcome of Newton’s First Law, whereas there are multiple approaches to economics depending on your social and political viewpoint. Whether one is better than the other is a matter of interpretation, whereas if you are sitting under a tree when an apple falls from a branch, it will hit you on the head.

The ongoing award of a ‘Nobel’ prize for economics has always been controversial. Whilst the awards for physics, chemistry and medicine recognise excellence in the sciences, and were established by Alfred Nobel himself in the nineteenth-century, the economics award was invented by the Bank of Sweden in the 1960s as a means for promoting a neoliberal agenda.

“The Economics Prize has nestled itself in and is awarded as if it were a Nobel Prize. But it’s a PR coup by economists to improve their reputation.  It’s most often awarded to stock market speculators …. There is nothing to indicate that [Alfred Nobel] would have wanted such a prize.”

 Peter Nobel (Alfred Nobel’s great great nephew), 2005

In his recent book, ‘Economics: A User Guide”, Ha-Joon Chang identifies nine major schools of economic theory, of which the neoclassical is but one branch, and he argues that:

“Economics can never be a science because….different theories make different ethical and political assumptions, so even if you agree with the logic of the theory, you might not agree with the theory. Hayek is a very good example: Hayek is one of the most profound thinkers in the history of economics, but for him, the protection of private property rights has to trump everything, so he was openly supportive of the Pinochet regime in Chile. If you’re trying to protect the right of people to freely use their property, which for him is the greatest value, then what are the lives of three thousand people?

Ha Joon Chang

I feel Professor Chang is too respectful in his assessment of Hayek, who went so far as to publish an article called “Internationaler Rufmord” (International Character Asassination) in a German conservative magazine called Politische Studien, in which he complained that the regimes in Chile and South Africa were receiving a bad press from the international media, that their economies were performing much better than was being reported. On the disgusting apartheid regime, he had nothing to say. This degree of obtuseness is almost unbearable, as are the convoluted attempts to deny or explain it from Hayek’s supporters. But Hayek didn’t stop there. In a letter to The Times in 1978, he wrote that:

“I have not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.”

Perhaps because those who would have spoken out were dead and those who survived were too terrified lest they ended up the same way. This was wholly consistent with Hayek and Friedman’s primary obsession that government inevitably led to tyranny – even though tyranny was the only means to deploy neoliberal ideas in Chile.

Forty years ago, Orlando Letelier poured scorn on the notion that economic theory and the means violent measures necessary to make it stick were somehow exclusive of each other.

“It is nonsensical, consequently, that those who inspire, support or finance that economic policy should try to present their advocacy as restricted to “technical considerations,” while pretending to reject the system of terror it requires to succeed.”

Tragically, Letelier’s assassination was to prove this more terribly and truly than he could ever have wished. There can be no clearer exposé of the tyranny and moral failure of neoliberalism than the need to murder those who argue passionately, yet reasonably, for its alternatives.

Nevertheless, the notion that de-regulated free markets and democracy are opposite sides of the same coin has metamorphosed into one of the most cherished ideals of our time. And yet:

“This fundamentalist form of capitalism has consistently been midwifed by the most brutal forms of coercion, inflicted on the collective body politic as well as on countless individual bodies. The history of the contemporary free market – better understood as the rise of corporatism – was written in shocks.”

‘The Shock Doctrine’ – Naomi Klein

Milton Friedman and Friedrich Hayek may have been brilliant intellectuals but they seem bereft of compassion and empathy for their fellow men. To me, Friedman’s emotional stagnation stemmed from his inability to separate theoretical economics from the requirements of a fair and just society.

“I do not consider it evil for an economist to render technical economic advice to the Chilean government, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean government to help it end the plague”

Milton Friedman in Newsweek, June 14 1976.

The use of the word ‘technical’ implies dry theory devoid of any moral or emotional obligation, neatly freeing Friedman from having make a judgement call on the ethics of consulting with a government that was slaughtering thousands of its citizens in order to roll out his “technical” advice. Friedman was utterly myopic on the fundamental issue, namely that neoliberal ideas on this scale didn’t work unless you had a totalitarian state to make them stick. There was no way to implement his technical theory unless you were prepared to accept the human consequences as justifiable, even necessary. Keynes famously said that “in the long run, we’re all dead”, to counter the claim that unregulated free market ideals, however controversial at first, would eventually yield success. But in Chile, the opposite was true. People died in the short term, in their thousands, in pursuit of a theory that simply did not work.

Orlando Letelier saw right through this sophistry.

“It is curious that a man who wrote a book ‘Capitalism and Freedom’ to drive home the argument that only classical economic liberalism can support political democracy can now so easily disentangle economics from politics when the economic theories he advocates coincide with an absolute restriction on every kind of democratic freedom”.

The moral vacuum of neoliberalism

To me, untrammelled neoliberal economic models are incompatible with a just, fair and harmonious society. Like most systems, they can be implemented, but the penalty in terms of lives, potential and social harmony is so vast as to make any ‘success’ in economic terms almost meaningless. Unlike Keynes, who advocated for a mixture of public and private enterprise, protected by checks and balances of regulation and governance, Friedman was a zealot. Like all forms of zealotry, his uncompromising beliefs, and those of his fellow neoliberal disciples, completely disregarded any form of opposition. And in Chile, they had an army to make sure there was no opposition.

Time and again through human history, the rationality and supreme decision-making wisdom Friedman attributed to laissez faire markets has been proved to be utterly false. From the South Sea Bubble, through the Wall Street Crash, to the Sub Prime Crisis of 2007: any time markets are given a free hand to be efficient, they cease to become effective.

Nowhere in recent times is the Efficient Market Theory exposed more brutally than by Larry Summers’ remark, made in 1998, to justify de-regulating the derivatives trades that would, as a consequence, become a major contributor to the future meltdown of the global economy.

“the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.”

Summers was arguing that those managing the complex financial systems of the derivatives market were extremely clever individuals and had specialised expertise beyond the grasp of ordinary people (and regulators). Using advanced mathematical models and their almost divine powers of insight, they could identify potential risks and weaknesses in the fiendish labyrinth of trades and counter-trades and guide their organisations to unprecedented levels of growth and profit. As we now know, however, the mathematical models were worthless, the special insight was blind and the only thing that was unprecedented were the losses incurred by the deregulated financial institutions. Left entirely to its own devices, an efficient market implodes long before the theoretical promised land is reached. It will always implode but its advocates, like Milton Friedman, are too blind or vested, to accept this.

Here in the UK, George Monbiot points out that the consequences of neoliberal market failure now beset us in far more areas than just the banking sector.

“Not only are the banks too big to fail, but so are the corporations now charged with delivering public services. As Tony Judt pointed out in ‘Ill Fares the Land’, Hayek forgot that vital national services cannot be allowed to collapse, which means that competition cannot run its course. Business takes the profits, the state keeps the risk.”

Accordingly, our energy industry is at the mercy of foreign companies, like EDF, Rheinisch-Westfälisches Elektrizitätswerk AG (nPower) or Iberdrola (Scottish Power), to make investments in future power stations and maintain existing ones. If they were to refuse, who else but the state could intervene?

When Tata, the Indian company that owns almost all the remnants of the once-nationalised British steel industry, announced it was closing its UK factories, the British government had no option but to announce it was riding to the rescue with a part-nationalisation and generous support for any buyer willing to take on the ailing business. Repeatedly, corporations, not just banks, privatise the rewards and socialise the risk.

In 2009, National Express East Coast decided to walk away from its unprofitable East Coast Mainline contract (it had bid too aggressively to win the original tender), forcing the taxpayer via the Department of Transport to shoulder the burden of keeping this vital service in operation. And in Edinburgh, it emerged recently that dozens of schools originally built under lucrative PFI contracts would need urgent, state-funded, repairs to stop them from falling down.

Again, George Monbiot, echoing Naomi Klein:

“The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public sector.”

But as long ago as the mid-1970s, the neoliberal economic miracle can be seen to have been anything but. In Chile, the application of Friedman’s ideas wrought devastation on the Chilean economy.

In the year before the violent revolution that toppled Salvador Allende’s government, his left wing administration received just $2.1 million in foreign aid from the World Bank. Contrast this with the $470 million in loans handed out to the junta in the first six months following the military coup that installed General Pinochet as the head of state. One of the reasons Chilean finances were in such desperate straits was because the World Bank had decided, on ideological grounds, that Allende’s government had to fail. As a result, normal lines of credit and support were withdrawn before being dramatically re-instated when the junta took power. By the end of 1975, Pinochet’s regime had received a staggering $2 billion in loans and credit to implement the Chicago School’s economic manifesto.

With such a massive influx of capital, combined with Chicago School acolytes in key advisory positions, one would naturally have expected the economy to soar from the rubble of Marxism, but far from transforming Chile into a powerhouse, neoliberal economics turned the country into a basket case.

Inflation reached 341 per cent. Unemployment in Santiago ran at six times the level it had under Allende. And all the while, income and wealth was transferred into fewer and fewer hands, which is arguably the only immutable law as far as neoliberalism is concerned. In 1972 Chilean workers and government employees received 62.9 per cent of total national income, whilst the wealthy, properties classes received 37.1 per cent. In just two years, however, the situation had reversed, so that in 1974, wage earners received 38.2 per cent of the nation’s prosperity and the propertied sector, 61.8 per cent. The Wall Street Journal wrote a sneering editorial criticising Letelier the day before his death, which began “As Chairman Mao so aptly phrased it, “a revolution is not a dinner party” and nowhere would that apply more aptly than to the people of Chile.” This summed up the cossetted, smug and quite repulsive view of Friedman and his cohorts that a little hardship was a small price to pay for economic nirvana. This was easy for them to say; they weren’t the ones disappearing in the middle of the night, or, if they were luckier, simply starving as Chile’s economy came grinding to a halt. Combine a credit boom with a tyrannised and terrified population and indeed, the results are likely to be spectacular.

In his book, Capitalism and Freedom, Friedman wrote:

“The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free market regime designed by principled believers in a free market.”

This is utter nonsense in my view, as is Friedman’s other comment, “capitalism is a necessary condition for political freedom.” In Chile, the diametric opposite was true. Free market capitalism was brutally imposed by an authoritarian government that left individual workers with no meaningful alternative, lest they fear for their lives.

Allende

Capitalism, with its excesses carefully controlled and regulated in some kind of Keynesian framework, may indeed be the economic system with the greatest potential for economic liberty and personal freedom, but the Chilean example tells us nothing about that. What the Chilean example tells us is that given free rein, free market economics is a truly appalling system of organising human affairs, as bad in its own way as its left wing counterpart, Bolshevik Communism.

Nothing could be more ironic than hard right conservatives proclaiming the virtues of freedom and warning against diabolical socialism, whilst subscribing to an economic model that is just as repressive and just as flawed. And whilst it is true that people in the US or the UK, for example, would not necessarily fear for their safety from a brutal state police as citizens once did from the Stasi or the KGB, the experiences of certain minority sections of the community – Afro-Americans, Muslims, anyone perceived to be a migrant, legal or otherwise – may be a lot closer to those societies than white, middle-class conservatives could even begin to imagine. And that’s even before we consider the Snowden revelations or the Panama Papers and what they mean for “democracy”.

Inevitably, laissez faire policies in any sphere gravitate towards the ultimate truth that you can have too much of a good thing. Regulation, governance and oversight are needed to keep markets functioning optimally and protect them from the animal spirits evoked by John Maynard Keynes. But Friedmanites continue to pour scorn on the notion of animal spirits even as the rationality of markets is discredited, bubble after bubble, crash after crash.

Using this intellectual sleight of hand, Milton Friedman was unwilling to accept any of the consequences of neoliberal failure. Whilst quick to attack regulation and restraint on free enterprise in the political space and in the war of ideas, Friedman and his cohorts conceded no culpability for the repression, hunger, unemployment and state brutality that inevitably accompanied Chicago school economics wherever they were applied for real in the 1970s and 1980s. This moral cowardice can be seen in his comments in an interview in 2000, where he said:

“The Chilean economy did very well, but there is something more important: in the end, the central government, a military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society.”

There it is again. In the end. In the end things turned around. But to claim they turned around because of Chicago School economics is preposterous. The junta was replaced, but only after 3,000 Chileans were killed, some 20,000 were tortured and some 200,000 forced to flee into exile. And in 1986, per capita consumption was 11% lower than it had been in 1970. Real wages fell by some 20% during the 1980s and by 1989, the unemployment rate was still 10% (it had been 5.7% in 1970) and the real value of the minimum wage, adjusted, was 8% lower than under Allende. Over a third of all workers were employed in the informal sector where wages were lower and benefits non-existent. The proportion of the population below the poverty line increased from 20% to 44.4% between 1970 and 1987. The percentage of Chileans with inadequate housing increased from 27% to 40% during the same period.

True to his zealous beliefs, the fault always lay with the unbelievers for being unwilling to go far enough to put his principles into practice, not with the faith itself for being too extreme. If social unrest broke out because de-regulation of price controls meant people were starving, the problem was that the market had not been freed sufficiently to perform as expected. That was the real tragedy, in Friedman’s eyes, not the malnutrition of children. Had he been a surgeon, no doubt Friedman would have lamented the weakness of a body to survive an illness having removed all of its limbs and major organs.

As with Greece some thirty years later, it was ordinary folk who were compelled to repay the punitive IMF loans used to bail out Chile’s collapsed privatise banks. The financiers and capitalist elites privatised the rewards but socialised the risks. There is no doubt that untrammelled market forces enrich the already wealthy, reduce opportunities and incomes for ordinary people, increase instability, reduce health outcomes and force everyone apart from the super wealthy to accept life in a threadbare civic society whose meagre resources do not just block social and economic progress, but actually reverse it. In other words, extreme capitalism is supremely anti-capitalistic.

Is Greed Ever Good?

All of this gives rise to the question of whether markets can be (or should be) moral forces. Gordon Gekko’s famous epigram has become almost a cliché for both sides of the debate: the idea that ‘greed is good’ implies a sense of moral purpose, that avarice, and its consequences, are a positive virtue rather than a malign and negative force.

In my opinion, what we increasingly see is that greed is not good. Greed controls, curtails and narrows the horizons of millions of people for the benefit of just a handful. Greed teaches its practitioners that risk taking is perfectly acceptable, even heroic, but it blinds them to the consequences of what happens when the risk fails to pay off. This is because they have gamed the system to keep the rewards whilst off-loading the responsibility for what happens if things go wrong. This might just about be acceptable if ‘trickle down’ theory actually worked, if the riches generated by these titans we permit to do battle on our behalf, were shared around. But anyone can see that this is not the case. Prosperity is not pushed downwards. It is always sunny in the stratosphere but far, far below, ordinary lives are compromised and the clouds are thickening, not lifting.  The 2013 film, ‘Elysium’ is a fabulous allegory of the end point of neoliberalism if we fail to halt the destructive forces that now threaten democracy and civil society, caught between rampant inequality and fanatical extremism, the perfect recipe for the mother of all shocks.

I live in Barcelona but often take the L1 Metro line to its eastern and western suburbs. Riding the train outwards from Plaça de Catalunya, close to the totems of capitalism lining the wide boulevard of Passeo de Gracia – Apple, Nike, Starbucks and a dazzling array of luxury brands – you leave the twenty first century and head back in time. Out in the suburbs, where the elegant octagonal tenements of Eixample are replaced by anonymous, dreary apartment blocks, brutally functional cubes intersected by gyratory flyovers and a spaghetti of bewildering junctions, life is a never-ending battle to see out the day. It seems to me that people do not live here, they merely exist.

For all that there must undoubtedly be some happiness and joy in their lives – from friends, families, lovers, children – it sometimes appears that these are by-products, luxuries that cannot be over-indulged or allowed to distract from the job of simply surviving. Whilst well-heeled tourists breeze in and out of Armani and Gucci, and rarely venture outside the gilded centre, the people who serve them – the retail assistants, caterers, cleaners, bar staff – travel on the red L1 line to the suburbs with blank faces and no real expectation of things improving. They work brutal hours for chronically low salaries, have limited holiday and other entitlements, probably face challenges to eat well and take care of their health and make their homes in crowded, chaotic neighbourhoods that jar and clash against each other. Asian, Pakistani, African, Middle Eastern, Eastern European: all brought and hurled together to service the needs of the shining jewels in the centre of the city. Diversity is a very good thing in my opinion but when diverse communities are thrown together and forced to compete for scraps, the unnecessary tensions and rivalries are hardly conducive to social harmony.

Don’t get me wrong. I realise that the inhabitants of these communities aren’t living in nineteenth-century levels of squalor and hardship, but thanks to the gains made during the post war period, expectations are higher now. Decent working conditions, health care, education, social and public services: these are the ideals that people cherish and cling to, the things that neoliberalism has assiduously attempted to smother under the pretence of constructing a recovery. I take the point often made by conservatives that there may be something positive and uplifting about the energy and dynamism of these suburbs, forcing people to be more self-reliant in communities where nothing is wasted, and enterprise, borne of ingenuity and necessity can thrive. But there is a difference between the necessity of invention and the necessity of desperation and conservatives all too readily dismisses the distinction as irrelevant.

I believe that the fundamental problem with our capitalism today is that these people realise that none of it matters. No matter how hard they work, how many hours, how many jobs, they will never leave the red line. And all the while, as in Chile in the 1970s, market forces are making their lives more difficult and stressful. Those distant expressions, gazing down at their smartphones or through their reflections in the glass, will gradually line and wrinkle, from youth to age, in the same place, the same station and this will be the inheritance they pass down to the children I see fooling around on the platforms or on the floors of the carriages. Eight years of ‘recovery’ and there’s little evidence that anything is going change.

Most people accept inequality is one of the fundamental reasons why policy makers have failed to achieve a genuine recovery and that the persistence of neoliberal ideas continues to hamstring the global economy. And as I was wrapping up this essay news broke about the Panama Papers, a leaked trove of documents showing the extent to which those at the apex of the pyramid are unfairly amassing more wealth than millions of their fellow citizens beneath.

I don’t have a problem with people being wealthy per se, but when it’s obvious that this enrichment is obtained through corruption or a broken and immoral system that privatises wealth and socialises risk, then it’s clear that something needs to change. The extent to which any individual needs a net worth of even $1 billion, let alone $2 billion (here’s looking at you, Vladimir) is a debate that may begin to rage more fiercely the longer controlling elites hold out against the rising tide of social democracy. I quoted Talleyrand earlier and personally, I think the 1% would be well advised to study the lessons of history as to what happens to bastions of privilege when they exploit their position for personal gain and try to deny greater social, political and economic equality. I am certainly not advocating revolution or saying that I think it is likely to happen tomorrow, or next month, but I do believe the potential is there for a major rebalancing which, like most seismic shocks, may then not be within the power of existing governmental and civil structures to contain. As for most peaceful, decent and essentially ordinary people, the chaos that could emerge from such conflict frankly terrifies me.

Letting off steam is always a better option than waiting for the engine to rupture.

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”

John Maynard Keynes, General Theory of Economics.