A Brief History Of Neoliberalsim (2005)
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Neoliberalism is in the first instance a theory of political economic practices that proposes that human well being can best be advanced by liberating individual entrepreneurial freedoms and skills within an international framework characterised by strong private property rights, free markets and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets. Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks, the state should not venture. State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state intervention (particularly in democracies) for their own benefit.
Redistributive effects and increasing social inequality has in fact been such a persistent feature of neoliberalisation as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévey, after careful reconstruction of the data, have concluded that that neoliberalisation was from the very beginning a project to achieve a restoration of class power.
In October 1979 Paul Volker, chairman of the US Federal Reserve Bank under President Carter, engineered a draconian shift in US monetary policy. The long standing commitment in the US liberal democratic state to the principals of the New Deal, which meant broadly Keynesian fiscal and monetary policies with full employment as the key objective, was abandoned in favour of a policy designed to quell inflation no matter what the consequences might be for employment.
Thus began ‘a long deep recession that would empty factories and break unions in the US and drive debtor countries to the brink of insolvency, beginning the long era of structural adjustment’.
And so began the momentous shift towards greater social inequality and the restoration of economic power to the upper class.
The US imperial tradition had been long in the making, and to a great degree defined itself against the imperial traditions of Britain, France, Holland, and other European powers…The paradigm case was worked out in Nicaragua in the 1920s and 1930s, when US marines were deployed to protect US interests…The answer was to find a local strongman…and provide economic and military assistance to him and his family and immediate allies so that they could repress or buy off the opposition and accumulate considerable wealth and power for themselves. In return they would always keep their country open to the operations of US capital and support, and when necessary promote US interests both in the country and the region...
In the post-war period, much of the non-communist world was opened up to US domination by tactics of this sort…The stories told in John Perkins’s Confessions of a Economic Hit Man are full of ugly and unsavoury details of how this was all too often done.
While the consent of local ruling elites could be purchased easily enough, the need to coerce oppositional or social democratic movements associated the US with a long history of largely covet violence throughout much of the developing world.
The IBM and the World Bank thereafter became the centres for the propagation and enforcement of ‘free market fundamentalism’ and neoliberal orthodoxy. In return for debt rescheduling, indebted countries were required to implement institutional reforms, such as cuts in welfare expenditures, more flexible labour market laws and privatisation.
What the Mexico case demonstrated, however, was a key difference between liberal and neoliberal practice: under the former lenders take the losses that arise from bad investment decisions, while under the latter the borrowers are forced by the state and international powers to take on board the cost of debt repayments no matter what the consequences for the livelihood and well-being of the local population.
In the event of conflict between Main Street and Wall Street, the latter was to be favoured. The real possibility then arises that while Wall Street does well the rest of the US (as well as the rest of the world) does badly…While the slogan was often advanced in the 1960s that what was good for General Motors was good for the US, this had changed by the 1990s to the slogan that what is good for Wall Street is all that matters.
One substantial core of raising class power under neoliberalism lies, therefore, with the CEOs, the key operators on corporate boards, and the leaders in the financial, legal, and technical apparatus that surrounds this inner sanctum of capitalist activity.
While there are obvious links between these sorts of activities and the world of finance, the incredible ability not only to amass large personal fortunes but also to exercise a controlling power over large segments of the economy confers on these few individuals an immense economic power to influence political processes.
In complex societies he [Karl Polanyi] pointed out, the meaning of freedom becomes contradictory and as fraught as its incitements to action as compelling. There are, he noted, two kinds of freedom, one good and the other bad. Among the latter he listed ‘the freedom to exploit one’s fellows, or the freedom to make inordinate gains without commensurable service to the community, the freedom to keep technological inventions from being used for public benefit, or the freedom to profit from public calamities secretly engineered for private advantage.
‘Planning and control are being attacked as a denial of freedom. Free enterprise and private ownership are declared to be essentials of freedom. No society built on other foundations is said to deserve to be called free. The freedom that regulation creates is denounced as un-freedom; the justice, liberty and welfare if offers are decried as camouflage for slavery’.
The idea of freedom ‘thus degenerates into a mere advocacy of free enterprise’, which means ‘the fullness of freedom for those whose income, leisure and security need no enhancing, and a mere pittance of liberty for the people, who may in vain attempt to make use of their democratic rights to gain shelter from the owners of property.
Liberal or neoliberal utopianism is doomed in Polanyi’s view to be frustrated by authoritarianism, or even outright fascism. The good freedoms are lost and the bad ones take over.
How is it then that ‘the rest of us’ have so easily acquiesced in this sate of affairs?
What Gramsci calls 'common sense' (defined as sense held in common) typically grounds consent.
Common sense is constructed out of long standing practices of cultural socialisation often rooted deep in regional or national conditions. It is not the same as 'good sense' that can be constructed out of critical engagement with the issues of the day. Common sense can, therefore be profoundly misleading, obfuscating or disguising real problems under cultural prejudices. Cultural and traditional values (such as belief in God and country or views about the position of women in society) and fears (of communists, immigrants or 'others') can be invoked that mask specific strategies beneath vague rhetorical devices.
An open project around the restoration of economic power to a small elite would probably not gain much popular support. But a programmatic attempt to advance the cause of individual freedoms could appeal to a mass base and so disguise the drive to restore class power. Furthermore, once the state apparatus made the neoliberal turn it could use its powers of persuasion, co-optation, bribery, and treat to maintain the climate of consent necessary to perpetuate its power. This was Thatcher and Reagan’s particular forte…
Coercion can produce a fatalistic, even abject, acceptance of the idea that there was and is, as Margaret Thatcher kept insisting, ‘no alternative’.
The worldwide political upheavals of 1968, for example, were strongly inflected with the desire for greater personal freedoms. This was certainly true of the students…they demanded freedom from parental, educational, corporate, bureaucratic, and state constraints. But the ’68 movement also had social justice as a primary objective.
Values of individual freedoms and social justice are not, however, necessary compatible. Pursuit of social justice presupposes social solidarities and a willingness to submerge individual wants for, say, social equality or environmental justice.
Why it is not impossible to bridge such differences, it is not hard to see how a wedge might be driven between them. Neoliberal rhetoric, with its foundational emphasis upon individual freedoms, has the power to split off libertarianism, identity politics, multi-culturalism, and eventually narcissistic consumerism from the social forces ranged in pursuit of social justice through the conquest of state power.
Neoliberalism did not create these distinctions, but it could easily exploit, if not foment, them.
In the early 70s those seeking individual freedoms and social justice could make common cause in the face of what many saw as a common enemy. Powerful corporations in alliance with an interventionist state were seen to be running the world in individually oppressive and socially unjust ways.
But capitalist corporations, business, and the market system were also seen as primary enemies, requiring redress if not revolutionary transformation: hence the threat to capitalist class power. By capturing ideals of individual freedoms and turning them against the interventionist and regulatory practices of the state, capitalist interests could hope to protect even restore their position.
In 1971, Lewis Powel, about to be appointed as a Supreme Court judge by Richard Nixon, wrote in a confidential memo to the US Chamber of Commerce that - criticism of and opposition to the US free enterprise system had gone too far and that 'the time has come - indeed it is long overdue - for the wisdom, ingenuity and resources the American business to be marshalled against those who would destroy it'. 'Strength' he wrote, 'lies in organisation, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organisations'. The National Chamber of Commerce', he argued, 'should lead an assault upon the major institutions - universities, schools, the media, publishing, the courts - in order to challenge how individuals think 'about the corporation, the law, culture and the individual'. US business did not lack resources for such an effort, particularly when pooled.
...the American Chamber of Commerce subsequently expanded its base from around 60,000 firms in 1972 to over a quarter of a million ten years later. Jointly with the National Association of Manufacturers it amassed an immense campaign chest to lobby Congress and engage in research. The Business Roundtable 'committed to the aggressive pursuit of political power for the corporation'...The corporations involved accounted for 'about half of the GNP of the United States' during the 1970s...Think tanks...were formed with corporate backing both to polemicise and where necessary...to construct serious technical and empirical studies and political-philosophical studies in support of neoliberal policies.
Nearly half of the financing for the highly respected National Bureau of Economic Research came from the leading companies on the Fortune 500 list. Closely integrated with the academic community, the NBER was to have a very significant impact on thinking in the economic departments and business schools of the major universities.
In singling our universities for particular attention, Powel pointed out an opportunity as well as am issue, for these were indeed centres of anti-corporate sentiment. But many students were affluent and privileged, or at least middle-class, and in the US the values of individual freedom have long been celebrated as primary. Neoliberal themes could here find fertile ground for propagation.
But exactly how was state power to be deployed to reshape common sense understanding? One line of response to the double crisis of capital accumulation and class power arose in the trenches of the urban struggles of the 1970s. The New York fiscal crisis was an iconic case.
As the recession gathered pace, the gap between revenues and outlays in the New York City budget increased. At first the financial institutions were prepared to bridge the gap, but in 1975 a powerful cabal of investment bankers refused to roll over the debt and pushed the city into technical bankruptcy. The bail out that followed entailed the construction of new institutions that took over the management of the city budget. The effect was to curb the aspirations of the city’s powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision and to impose user fees. The final indignation was the requirement that unions should invest their pension funds in city bonds.
This amounted to a coup by the financial institutions against the democratically elected government of New York City, as it was every bit as effective and the military coup that had earlier occurred in Chile. Wealth was redistributed to the upper class in the midst of a fiscal crisis. It was an early, perhaps decisive battle in a new war, the purpose of which was to show others that what was happening in New York could and in some cases would, happen to them.
The management of the New York fiscal crisis pioneered the way for neoliberal practices both domestically under Reagan and internationally through the IMF in the 1980s. It established the principal that in the event of a conflict between the integrity of financial institutions on bondholders’ returns, on one hand, and the well being of the citizens on the other, the former was to be privileged. It emphasised that the role of government was to create a good business climate rather than look to the needs and well being of the population at large.
During the 1970s, business refined its ability to act as a class, submerging competitive instincts in favour of joint, cooperative action in the legislation arena.
In order to realize this gaol, business needed a political class instrument and a popular base. They therefore sough to capture the Republican Party as their own instrument. The supposedly ‘progressive’ campaign finance laws of 1971 legalised the corruption of politics.
The Republican Party needed, however, a solid electoral base if it was to colonise power effectively. It was around this time that Republicans sought an alliance with the Christian right. This political base could be mobilised through the positives or religion and cultural nationalism and negatively through coded, if not blatant, racism, homophobia, and anti-feminism. The problem was not capitalism and the neoliberalisation of culture, but the ‘liberals’ who had used excessive state power to provide for special groups.
The effect was to divert attention from capitalism and corporate power as in any way having anything to do with either the economic or the cultural problems that unbridled commercialism and individualism were creating.
From then on the unholy alliance between big business and conservative Christians backed by the neoconservatives steadily consolidated, eventually eradicating all liberal elements from the Republican Party, particularly after the 1990s, and tuning it into the relatively homogenous right-wing electoral force of present times.
The Democratic Party, on the other hand, was fundamentally riven by the need to placate, if not succour, corporate and financial interests while a the same time making some gestures towards improving the material conditions of life for its popular base. During the Clinton presidency it ended up choosing the former over the latter and therefore fell directly into the neoliberal fold of policy prescription and implementation…Social policy was in effect put in the care of Wall Street bondholders, with predictable consequences
Reagan’s election in 1980 was only the first step in the long road to consolidating the political shift necessary to support Volker’s turn to monetarism and the prioritisation of the fight against inflation.
The Labour Relations Board…was converted by Reagan appointees into a vehicle for attacking and regulating the rights of labour at the very moment when business was being deregulated. It took less that six months if 1983 to reverse nearly 40 percent of the decisions made in the 1970’s that had been, in the view of business, too favourable to labour. Regan construed all regulation (except of labour) as bad.
All this demanded a rationale, and to this end the war of ideas did play and important role…The business press, with the Wall Street Journal very much in the lead, took up these ideas, becoming an open advocate for neoliberalism as the necessary solution to all economic ills...Charting the spread of ideas is always difficult, but by 1990 or so most economic departments in the major research universities as well as the business schools were dominated by neoliberal modes of thought. The importance of this is should not be underestimated. The US research universities were and are the training grounds for many foreigners who take what they learn back to their countries of origin – the key figures in Chile’s and Mexico’s adaption to neoliberalism were US-trained economists for example – as well as into international institutes such as the IMF, the World Bank and the UN.
During the 1970s, the political wing of the nation’s corporate sector staged one of the most remarkable campaigns in the pursuit of power in recent history.
The construction of consent in Britain occurred in a very different way. In Britain there was no Christian right to speak of to be mobilised into a moral majority. Corporate power was little inclined to support overt political activism, preferring instead to exercise influence through the network of class and privilege that had long connected government, academia, the judiciary, and the permanent Civil Service with the leaders of industry and finance. The political situation was also radically different, given that the Labour Party had largely been constructed as an instrument of working-class power, beholding to strong and sometimes quite militant trade unions. Britain has consequentially developed a far more elaborate and all-encompassing welfare state than would have ever been dreamed of in the US…Even when the Conservative Party took power for prolonged periods after the Second World War it largely refrained for any attempt at dismantling the welfare state it had inherited.
The commonality between the US and UK cases most obviously lies in the fields of labour relations and the fight against inflation. With respect to the latter, Thatcher made monetarism and strict budget control the order of the day. High interest rates meant high unemployment. The bargaining power of labour was weakened. And in an action that paralleled Reagan’s provocation of the PATCO in 1981, Thatcher provoked a miners’ strike in 1984…The strike lasted for almost a year and in spite of a great deal of public support, the miners lost. The back of a core element of the British labour movement had been broken.
Thatcher further reduced union power by opening up the UK to foreign competition and foreign investment. Foreign competition demolished much of traditional British industry in the 1980s…The overall effect was to transform the UK into a country of relatively low wages and a compliant labour force within ten years. By the time she left office, strike action had fallen to one-tenth of its former levels. She had eradicated inflation, curbed union power, tamed the labour force, and built middle-class consent for her policies in the process.
But Thatcher had to fight the battle on other fronts…Denigrating the progressive labour councils as ‘loony lefties’ she then sought to sought to impose neoliberal principals through a reform of municipal finance…Thatcher also set out to privatise all those sectors of the economy that were in public ownership…The legitimacy of the whole movement was underpinned, however, by the extensive selling off or public housing…It satisfied traditional ideals of individual property ownership as a working-class dream and introduced a new, and often speculative, dynamism into the housing market that was much appreciated by the middle classes, who saw their asset values rise – at least until the property crash of the early 1990s.
Thatcher forged consent through the cultivation of a middle class that relished in the joys of home ownership, private property, individualism, and the liberation of entrepreneurial opportunities. With working-class solidarities waning under pressure and job structures radically changing through deindustrialisation, middle class values spread more widely to encompass many of those who had once had a firm working-class identity. Neoliberalism entailed the transformation of the older British class structure, at both ends of the spectrum.
While the Thatcher revolution was prepared by organisation of consent within the traditional middle-classes who bore her to three electoral victories, the whole programme, particularly on her first administration, was far more ideologically driven by neoliberal theory than was ever the case in the US.
The success of Reagan and Thatcher can be measured in various ways. But I think the most useful to stress is the way in which they took what had hitherto been minority political, ideological, and intellectual positions and made them mainstream.
Reagan and Thatcher seized on the clues they had (from Chile and New York City) and placed themselves a the head of a class movement that was determined to restore its power…Those who followed, like Clinton and Blair, could do little more than continue the good work of neoliberalism, whether they liked it or not.
According to the theory, the neoliberal state should favour strong individual private property rights, the rule of law, and the institutions of freely functioning markets and free trade...The legal framework is that of freely negotiated contractual obligations between juridical individuals in the market place…The state must therefore use its monopoly of the means of violence to preserve those freedoms at all costs.
Neoliberal theorists are, therefore, profoundly suspicious of democracy. Governance by majority rule is seen as a potential threat to individual rights. Democracy is seen as a luxury, only possible under certain conditions of relative affluence coupled with a strong middle-class presence to guarantee political stability. Neoliberals therefore tend to favour governance by experts and elites.
While individuals are supposedly free to choose, they are not supposed to construct strong collectives institutions (such as trade unions) as opposed the weak voluntary associations (like charitable organisations). To guard against their greatest fears – fascism, communism, socialism, authoritarian populism, and even majority rule – the neoliberals have to put strong limits on democratic governance, relying instead upon undemocratic and unaccountable institutions (such as the Federal Reserve and the IMF) to make decisions.
Faced with social movements that seek collective interventions, therefore, the neoliberal state is itself forced to intervene, sometimes repressively, thus denying the very freedoms it is supposed to uphold. In this situation…international competition and globalisation can be used to discipline movements opposed to the neoliberal agenda within individual states. If that fails, then the state must resort to persuasion, propaganda or, when necessary, raw force and police power to suppress opposition to neoliberalism.
It the event of a conflict, the typical neoliberal state will tend to side with a good business climate as opposed to either the collective rights (and quality of life) of labour or the capacity of the environment to regenerate itself.
Internally, the neoliberal state is necessarily hostile to all forms of social solidarity that put restraints on capital accumulation. Independent trade unions or other social movements (such as the municipal socialism of the Greater London Council type), which acquired considerable power under embedded liberalism, have therefore to be disciplined, if not destroyed.
The general outcome is lower wages, increasing job insecurity, and in many instances loss of benefits and of job protections…it would seem that labour control and maintenance of a high rate of labour exploitation have been central to neoliberalisation all along. The restoration or formation of class power occurs, as always, at the expense of labour.
As the state withdraws from welfare provision…the social safety net is reduced to a bare minimum in favour of a system that emphasises personal responsibility. Personal failure is generally attributed to personal failings, and the victims are all too often blamed.
Behind these major shifts in social policy lie the important structural changes in the nature of governance. Given the neoliberal suspicion of democracy, a way has to be found to integrate the state decision-making into the dynamics of capital accumulation and the networks of class power that are in the process of restoration.
Neoliberalisation has entailed, for example, increasing reliance on private-public partnerships. Business and corporations not only collaborate intimately with state actors but even acquire a strong role in writing legislation, determining public policies, and setting regulatory frameworks (which are mainly advantageous to themselves).
In many instances of private-public partnerships, particularly at municipal level, the state assumes much of the risk while the private sector takes most of the profits. If necessary, furthermore, neoliberal state will resort to coercive legislation and policing tactics (anti-picketing rules for example) to disperse or repress collective forms of opposition to corporate power.
While some sates continue to respect the traditional independence of the Civil Service, this condition has everywhere been under threat in the course of neoliberalism. The boundary between the state and corporate power has become more and more porous. What remains of representative democracy is overwhelmed, if not totally (though legally) corrupted by money power.
But all is not well with the neoliberal state, and it for this reason that if appears to be either transitional or an unstable political form. At the heart of the problem lies a burgeoning disparity between the declared public aims of neoliberalism – the well being of all - and it’s actual consequences - the restoration of class power.
Most conventional analysis of the forces at work concentrate on some combination of the power of neoliberal ideas, the need to respond to financial crises of various sorts, and a more pragmatic approach to reform the state apparatus to improve competitive position in the global market.
While these have all been elements of some significance, the lack of any examination of the class forces that might be at work is quite startling. The possibility, for example, that the ruling ideas might be those of some ruling class is not even considered, even though there is overwhelming evidence for massive intervention on the part of business elites and financial interests in the production of ideas and ideologies: through investment in think-tanks, in the training of technocrats and in the command of the media.
The possibility that financial crises might be caused by capital strikes, capital flight, or financial speculation, or that financial crises are deliberately engineered to facilitate accumulation by dispossession, is ruled out as far to conspiratorial, even in the face of innumerable suspicious signs of co-ordinated speculative attacks of this or that currency.
Weakening, bypassing, or violently destroying the power of organised labour is a necessary precondition for neoliberalisation.
The degree that neoliberalisation has become integral to common-sense understandings among the populace at large has varied greatly depending on the strength of belief in the power of social solidarities and the importance of traditions of collective social responsibility and provision.
Even the most draconian of IMF restructuring programmes is unlikely to go forward without a modicum of support from for someone. It sometimes seems as if the IMF merely takes responsibility for doing what some internal class forces want to do anyway.
But one persistent fact…has been the universal tendency to increase social inequality and the expose the least fortunate in any society - be it in Indonesia, Mexico of Britain – to the chill winds of austerity and the dull fate of increased marginalisation.
The incredible concentrations of wealth and power that now exist in the upper echelons of capitalism have been not seen since the 1920s.
The very idea that this it might be – just might be – the fundamental core of what neoliberalism has been about all along appears unthinkable.
It has been part of the genius of neoliberal theory to provide a benevolent mask full of wonderful-sounding words like freedom, liberty, choice, and rights, to hide the grim realities of the restoration or reconstitution of naked class power, locally as well as transnationally, but most particularly to the main financial centres of global capitalism.
The spectacular emergence of China as a global economic power after the 1990s was in part an unintended consequence of the neoliberal turn in the advanced capitalist world.
What can be said with precision, is that China, by not taking the ‘shock therapy’ path of instant privatisation later foisted on Russia and central Europe by the IMF, the World Bank, and the ‘Washington Consensus’ in the 1900s, managed to avert the economic disasters that beset those countries.
But the reforms also led to environmental degradation, social inequalities, and eventually something that looks uncomfortably like the reconstruction of capitalist class power.
The US is currently*…running up enormous federal deficits and consumer debt while insisting that everyone else must obey neoliberal rules. This is not a sustainable position, and there are now many influential voices in the US suggesting that it is steering right into the hurricanes of a major financial crisis. (* 2005)
For China, this would entail switching from a politics of labour absorption to a politics of labour repression. Whether or not such a tactic can succeed, as it did on Tiananmen Square in 1989, will depend crucially upon the balance of class forces and how the Communist Party positions itself in relation to those forces.
If we lay aside…the claim that neoliberalisation is merely an example of erroneous theory gone wild or a case of senseless pursuit of a false utopia, then we are left with the tension between sustaining capitalism, on the one hand, and the restoration/ reconstitution of ruling class power on the other.
Furthermore, a global financial crisis in part provoked by its own reckless economic policies would permit the US government to finally rid itself of any obligation whatsoever to provide for the welfare on its citizens, except for the ratcheting up of that military and police power that might be needed to quell social unrest and compel global discipline.
But we can usefully scrutinize the historic-geographical record of neoliberalisation for evidence of its powers as a potential cure-all for the political-economic ills that currently threaten us. To what degree has neoliberalism succeeded in stimulating capital accumulation? It’s actual record turns out to be nothing short of dismal.
Only in East and South East Asia, followed now to some extent by India, has neoliberalisation be associated with any positive record of growth, and there the not very neoliberal states played a very significant role. The contrast between China’s growth and the Russian decline is stark. Informal employment has soared worldwide and almost all global indicators on health levels, life expectancy, infant mortality, and the like show losses rather than gains.
The reduction and control if inflation is the only systematic success neoliberalisation can claim
Why, then, are so many persuaded that neoliberalisation through globalisation is the ‘only alternative’ and that it has been successful?
First, the volatility of uneven geographical development has accelerated, permitting certain territories to advance spectacularly (at least for a time) at the expense of others.
Secondly, neoliberalism, the process rather than the theory, has been a huge success from the standpoint of the upper classes. It has either restored class power to ruling elites or created conditions for capitalist class formation.
With media dominated by the upper classes, the myth could be propagated that states failed economically because they were not competitive. Increased social inequality within a territory was constructed and necessary to encourage the entrepreneurial risk and innovation that conferred competitive power and stimulated growth.
If conditions among the lower classes deteriorated, this was because they failed, usually for personal and cultural reasons, to enhance their own human capital. In a Darwinian neoliberal world, the argument went, only the fittest should and do survive.
The main substantive achievement of neoliberalisation, however, has been to redistribute rather then generate wealth and income…under the rubric of ‘accumulation by dispossession’. These include the commoditisation and privatisation of land and the forceful expulsion of peasant populations; conversion of various forms of property rights into exclusive private property rights; suppression of rights to the commons; commodification of labour power and the suppression of alternative forms of production and consumption; monetisation of exchange and taxation, particularly of land; the slave trade; and usury, the national debt and, most devastating of all, the use of the credit system as a radical means of accumulation by dispossession. The state, with its monopoly of violence and definitions of legality, plays a crucial role in both backing and promoting these processes.
The rolling back of regulatory frameworks designed to protect labour and the environment from degradation has entailed the loss of rights. The reversion of common property rights won through years of hard class struggle (the right to a state pension, to welfare, to national health care) into the private domain had been one of the most egregious of all policies of dispossession, often procured against the broad political will of the population.
Deregulation allowed the financial system to become one of the main centres of redistributive activity through speculation, predation, fraud, and thievery. Stock promotions, ponzi schemes, structured asset destruction through inflation, asset-stripping through mergers and acquisitions, the promotion of levels of debt incumbency that reduced whole populations, even in advanced capitalist countries, to debt peonage, to say nothing of corporate fraud, dispossession of assets (the raiding of pension funds and their decimation by stock and corporate collapse) by credit and stock manipulations – all of these became central features of the capitalist financial system.
The neoliberal state also redistributes wealth and income through revisions in the tax code to benefit returns of investment rather than incomes and wages, promotion of regressive elements in the tax code (such as sales tax), the imposition of user fees and the provision of a vast array of subsidies and tax breaks to corporations.
The rise of surveillance and policing and incarceration of recalcitrant elements of the population indicates a more sinister turn towards intense social control. The prison-industrial complex is a thriving sector in the US economy. In the developing countries, where opposition to accumulation by dispossession can be stronger, the role of the neoliberal state quickly assumes that of an active repression even to the point of low-level warfare against oppositional movements.
To presume that markets and market signals can best determine all allocative decision in to presume that everything can in principal be treated as a commodity. Commodification presumes the existence of property rights over processes, things and social relations, that a price can be put on them and that they can be traded subject to legal contract. The market is presumed to work as an appropriate guide – an ethic – for all human action.
The loss of social protections in advanced capitalists countries has had particularly negative affects on lower-class women, and in many of the ex-communist countries of the Soviet Block the loss of women’s rights through neoliberalisation had been nothing short of catastrophic.
With some 2 billion people condemned to live on less than $2 a day, the taunting world of capitalist consumer culture, the huge bonuses earned in financial services, and the self-congratulatory polemics as to the emancipatory potential of neoliberalism, privatisation, and personal responsibility must seem like a cruel joke.
Stripped of the protective cover of lively democratic institutions and threatened with all manner of social dislocations, a disposable workforce inevitably turns to other institutional forms through which to construct social solidarities and express a collective will. Everything, from gangs and criminal cartels, narco-trafficking networks, mini-mafias and favela bosses, through community, grassroots and non-government organisations, to secular cults and religious sects proliferate. These are the alternative social forms that fill the void left behind as state powers, political parties and other institutional forms are actively dismantled or simply wither away as centres of collective endeavour and social bonding.
To live under neoliberalism also means to accept or submit to that bundle of rights necessary for capital accumulation. We live therefore in a society in which the inalienable rights of individuals (and recall corporations are defined as individuals before the law) to private property and the profit rate trump any other conception of inalienable rights you can think of.
But the objection to this regime of rights is quite simple: to accept it is to accept that we have no alternative but to live under a regime of endless capital accumulations and economic growth no matter what the social, ecological, or political consequences. Reciprocally, endless capital accumulation implies that the neoliberal regime of rights must be geographically expanded across the globe by violence, (Chile and Iraq) by imperialist practices (World Trade Organisation, the IMF, and the World Bank) or through primitive accumulation (China and Russia) if necessary. By hook or crook, the individual rights of private property and the profit rate will be universally established. This is precisely what George Bush meant when he said the US dedicates itself to extend the sphere of freedom across the globe.
The neoliberal debasement of the concept of freedom ‘into a mere advocacy of free enterprise’ can only mean, as Karl Polanyi points out, ‘the fullness of freedoms for those whose income, leisure and security need no enhancing, and a mere pittance of liberty for those people who may in vain attempt to make use of their democratic rights to gain shelter from the power of the owners of property’.
For those left or cast outside the market system – a vast reservoir of apparently disposable people bereft of social protections and supportive social structures – there is little to be expected from neoliberalisation except poverty, hunger, disease, and despair. Their only hope is somehow scramble aboard the market system either as petty commodity producers, as informal vendors (of things or labour power), as petty predators to beg, steal, or violently secure crumbs for the rich man’s table, or participate in the vast illegal trade of trafficking in drugs, guns, women, or anything else illegal for which there is a demand.
Obliged to live as appendages of the market and of capital accumulation rather than as expressive human beings, the realm of freedom shrinks before the awful logic and hollow intensity of market involvements.
There is abundant evidence that neoliberal theory and rhetoric (particularly the rhetoric concerning liberty and freedom) has also all along primarily functioned as a mask for practices that were all about the maintenance, reconstitution and restoration of class power. The exploration of alternatives has therefore to move outside the frames of reference defined by this class power and market ethics while staying soberly anchored in the realities of our time and place.
There is a far, far nobler freedom to be won than that which neoliberalism preaches. There is a far, far worthier system of governance to be constructed than that which neoliberalism allows.