Neoliberalism - The Ideology at The Root of All Our Problems - Books - The Guardian

20/4/2016
Neoliberalismtheideologyattherootofallourproblems|Books|TheGuardian
Neoliberalismtheideologyatthe
rootofallourproblems
Financialmeltdown,environmentaldisasterandeventheriseofDonaldTrump
neoliberalismhasplayeditspartinthemall.Whyhastheleftfailedtocomeupwithan
alternative?
NoalternativeRonaldReaganandMargaretThatcherattheWhiteHouse.Photograph:Rex
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GeorgeMonbiot
@GeorgeMonbiot
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magineifthepeopleoftheSovietUnionhadneverheardofcommunism.The
ideologythatdominatesourliveshas,formostofus,noname.Mentionitin
conversationandyoullberewardedwithashrug.Evenifyourlistenershaveheardthe
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termbefore,theywillstruggletodefineit.Neoliberalism:doyouknowwhatitis?
Itsanonymityisbothasymptomandcauseofitspower.Ithasplayedamajorroleina
remarkablevarietyofcrises:thefinancialmeltdownof20078,theoffshoringofwealth
andpower,ofwhichthePanamaPapersofferusmerelyaglimpse,theslowcollapseof
publichealthandeducation,resurgentchildpoverty,theepidemicofloneliness,the
collapseofecosystems,theriseofDonaldTrump.Butwerespondtothesecrisesasif
theyemergeinisolation,apparentlyunawarethattheyhaveallbeeneithercatalysedor
exacerbatedbythesamecoherentphilosophyaphilosophythathasorhada
name.Whatgreaterpowercantherebethantooperatenamelessly?
Inequalityisrecastasvirtuous.Themarket
ensuresthateveryonegetswhattheydeserve.
Sopervasivehasneoliberalismbecomethatweseldomevenrecogniseitasanideology.
Weappeartoacceptthepropositionthatthisutopian,millenarianfaithdescribesa
neutralforceakindofbiologicallaw,likeDarwinstheoryofevolution.Butthe
philosophyaroseasaconsciousattempttoreshapehumanlifeandshiftthelocusof
power.
Neoliberalismseescompetitionasthedefiningcharacteristicofhumanrelations.It
redefinescitizensasconsumers,whosedemocraticchoicesarebestexercisedbybuying
andselling,aprocessthatrewardsmeritandpunishesinefficiency.Itmaintainsthat
themarketdeliversbenefitsthatcouldneverbeachievedbyplanning.
Attemptstolimitcompetitionaretreatedasinimicaltoliberty.Taxandregulation
shouldbeminimised,publicservicesshouldbeprivatised.Theorganisationoflabour
andcollectivebargainingbytradeunionsareportrayedasmarketdistortionsthat
impedetheformationofanaturalhierarchyofwinnersandlosers.Inequalityisrecast
asvirtuous:arewardforutilityandageneratorofwealth,whichtricklesdownto
enricheveryone.Effortstocreateamoreequalsocietyarebothcounterproductiveand
morallycorrosive.Themarketensuresthateveryonegetswhattheydeserve.
Weinternaliseandreproduceitscreeds.Therichpersuadethemselvesthatthey
acquiredtheirwealththroughmerit,ignoringtheadvantagessuchaseducation,
inheritanceandclassthatmayhavehelpedtosecureit.Thepoorbegintoblame
themselvesfortheirfailures,evenwhentheycandolittletochangetheir
circumstances.
Nevermindstructuralunemployment:ifyoudonthaveajobitsbecauseyouare
unenterprising.Nevermindtheimpossiblecostsofhousing:ifyourcreditcardis
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maxedout,yourefecklessandimprovident.Nevermindthatyourchildrennolonger
haveaschoolplayingfield:iftheygetfat,itsyourfault.Inaworldgovernedby
competition,thosewhofallbehindbecomedefinedandselfdefinedaslosers.
Neoliberalismhas
broughtouttheworst
inus
PaulVerhaeghe
Readmore
Amongtheresults,asPaulVerhaeghedocumentsin
hisbookWhatAboutMe?areepidemicsofself
harm,eatingdisorders,depression,loneliness,
performanceanxietyandsocialphobia.Perhapsits
unsurprisingthatBritain,inwhichneoliberal
ideologyhasbeenmostrigorouslyapplied,isthe
lonelinesscapitalofEurope.Weareallneoliberals
now.
***
ThetermneoliberalismwascoinedatameetinginParisin1938.Amongthedelegates
weretwomenwhocametodefinetheideology,LudwigvonMisesandFriedrich
Hayek.BothexilesfromAustria,theysawsocialdemocracy,exemplifiedbyFranklin
RooseveltsNewDealandthegradualdevelopmentofBritainswelfarestate,as
manifestationsofacollectivismthatoccupiedthesamespectrumasnazismand
communism.
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InTheRoadtoSerfdom,publishedin1944,Hayekarguedthatgovernmentplanning,
bycrushingindividualism,wouldleadinexorablytototalitariancontrol.LikeMisess
bookBureaucracy,TheRoadtoSerfdomwaswidelyread.Itcametotheattentionof
someverywealthypeople,whosawinthephilosophyanopportunitytofreethemselves
fromregulationandtax.When,in1947,Hayekfoundedthefirstorganisationthat
wouldspreadthedoctrineofneoliberalismtheMontPelerinSocietyitwas
supportedfinanciallybymillionairesandtheirfoundations.
Withtheirhelp,hebegantocreatewhatDanielStedmanJonesdescribesinMastersof
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theUniverseasakindofneoliberalinternational:atransatlanticnetworkof
academics,businessmen,journalistsandactivists.Themovementsrichbackersfunded
aseriesofthinktankswhichwouldrefineandpromotetheideology.Amongthemwere
theAmericanEnterpriseInstitute,theHeritageFoundation,theCatoInstitute,the
InstituteofEconomicAffairs,theCentreforPolicyStudiesandtheAdamSmith
Institute.Theyalsofinancedacademicpositionsanddepartments,particularlyatthe
universitiesofChicagoandVirginia.
Asitevolved,neoliberalismbecamemorestrident.
Hayeksviewthatgovernmentsshouldregulate
competitiontopreventmonopoliesfromforming
gavewayamongAmericanapostlessuchasMilton
Friedmantothebeliefthatmonopolypowercould
beseenasarewardforefficiency.
Signuptoour
Bookmarksnewsletter
Readmore
Somethingelsehappenedduringthistransition:the
movementlostitsname.In1951,Friedmanwas
happytodescribehimselfasaneoliberal.Butsoon
afterthat,thetermbegantodisappear.Strangerstill,
evenastheideologybecamecrisperandthemovementmorecoherent,thelostname
wasnotreplacedbyanycommonalternative.
Atfirst,despiteitslavishfunding,neoliberalismremainedatthemargins.Thepostwar
consensuswasalmostuniversal:JohnMaynardKeynesseconomicprescriptionswere
widelyapplied,fullemploymentandthereliefofpovertywerecommongoalsintheUS
andmuchofwesternEurope,topratesoftaxwerehighandgovernmentssoughtsocial
outcomeswithoutembarrassment,developingnewpublicservicesandsafetynets.
Butinthe1970s,whenKeynesianpoliciesbegantofallapartandeconomiccrises
struckonbothsidesoftheAtlantic,neoliberalideasbegantoenterthemainstream.As
Friedmanremarked,whenthetimecamethatyouhadtochange...therewasan
alternativereadytheretobepickedup.Withthehelpofsympatheticjournalistsand
politicaladvisers,elementsofneoliberalism,especiallyitsprescriptionsformonetary
policy,wereadoptedbyJimmyCartersadministrationintheUSandJimCallaghans
governmentinBritain.
Itmayseemstrangethatadoctrine
promisingchoiceshouldhavebeenpromoted
withtheslogan'thereisnoalternative'
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AfterMargaretThatcherandRonaldReagantookpower,therestofthepackagesoon
followed:massivetaxcutsfortherich,thecrushingoftradeunions,deregulation,
privatisation,outsourcingandcompetitioninpublicservices.ThroughtheIMF,the
WorldBank,theMaastrichttreatyandtheWorldTradeOrganisation,neoliberal
policieswereimposedoftenwithoutdemocraticconsentonmuchoftheworld.
Mostremarkablewasitsadoptionamongpartiesthatoncebelongedtotheleft:Labour
andtheDemocrats,forexample.AsStedmanJonesnotes,itishardtothinkof
anotherutopiatohavebeenasfullyrealised.
***
Itmayseemstrangethatadoctrinepromisingchoiceandfreedomshouldhavebeen
promotedwiththesloganthereisnoalternative.But,asHayekremarkedonavisitto
PinochetsChileoneofthefirstnationsinwhichtheprogrammewas
comprehensivelyappliedmypersonalpreferenceleanstowardaliberaldictatorship
ratherthantowardademocraticgovernmentdevoidofliberalism.Thefreedomthat
neoliberalismoffers,whichsoundssobeguilingwhenexpressedingeneralterms,turns
outtomeanfreedomforthepike,notfortheminnows.
Freedomfromtradeunionsandcollectivebargainingmeansthefreedomtosuppress
wages.Freedomfromregulationmeansthefreedomtopoisonrivers,endanger
workers,chargeiniquitousratesofinterestanddesignexoticfinancialinstruments.
Freedomfromtaxmeansfreedomfromthedistributionofwealththatliftspeopleout
ofpoverty.
NaomiKleindocumentedthatneoliberalsadvocatedtheuseofcrisestoimposeunpopularpolicieswhilepeople
weredistracted.Photograph:AnyaChibisfortheGuardian
AsNaomiKleindocumentsinTheShockDoctrine,neoliberaltheoristsadvocatedthe
useofcrisestoimposeunpopularpolicieswhilepeopleweredistracted:forexample,in
theaftermathofPinochetscoup,theIraqwarandHurricaneKatrina,whichFriedman
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describedasanopportunitytoradicallyreformtheeducationalsysteminNew
Orleans.
Whereneoliberalpoliciescannotbeimposeddomestically,theyareimposed
internationally,throughtradetreatiesincorporatinginvestorstatedispute
settlement:offshoretribunalsinwhichcorporationscanpressfortheremovalof
socialandenvironmentalprotections.Whenparliamentshavevotedtorestrictsales
ofcigarettes,protectwatersuppliesfromminingcompanies,freezeenergybillsor
preventpharmaceuticalfirmsfromrippingoffthestate,corporationshavesued,often
successfully.Democracyisreducedtotheatre.
Neoliberalismwasnotconceivedasaself
servingracket,butitrapidlybecameone
Anotherparadoxofneoliberalismisthatuniversalcompetitionreliesuponuniversal
quantificationandcomparison.Theresultisthatworkers,jobseekersandpublic
servicesofeverykindaresubjecttoapettifogging,stiflingregimeofassessmentand
monitoring,designedtoidentifythewinnersandpunishthelosers.Thedoctrinethat
VonMisesproposedwouldfreeusfromthebureaucraticnightmareofcentralplanning
hasinsteadcreatedone.
Neoliberalismwasnotconceivedasaselfservingracket,butitrapidlybecameone.
Economicgrowthhasbeenmarkedlyslowerintheneoliberalera(since1980inBritain
andtheUS)thanitwasintheprecedingdecadesbutnotfortheveryrich.Inequality
inthedistributionofbothincomeandwealth,after60yearsofdecline,roserapidlyin
thisera,duetothesmashingoftradeunions,taxreductions,risingrents,privatisation
andderegulation.
Theprivatisationormarketisationofpublicservicessuchasenergy,water,trains,
health,education,roadsandprisonshasenabledcorporationstosetuptollboothsin
frontofessentialassetsandchargerent,eithertocitizensortogovernment,fortheir
use.Rentisanothertermforunearnedincome.Whenyoupayaninflatedpricefora
trainticket,onlypartofthefarecompensatestheoperatorsforthemoneytheyspend
onfuel,wages,rollingstockandotheroutlays.Therestreflectsthefactthattheyhave
youoverabarrel.
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InMexico,CarlosSlimwasgrantedcontrolofalmostallphoneservicesandsoonbecametheworldsrichest
man.Photograph:HenryRomero/Reuters
ThosewhoownandruntheUKsprivatisedorsemiprivatisedservicesmake
stupendousfortunesbyinvestinglittleandchargingmuch.InRussiaandIndia,
oligarchsacquiredstateassetsthroughfiresales.InMexico,CarlosSlimwasgranted
controlofalmostalllandlineandmobilephoneservicesandsoonbecametheworlds
richestman.
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Financialisation,asAndrewSayernotesinWhyWeCantAffordtheRich,hashada
similarimpact.Likerent,heargues,interestis...unearnedincomethataccrues
withoutanyeffort.Asthepoorbecomepoorerandtherichbecomericher,therich
acquireincreasingcontroloveranothercrucialasset:money.Interestpayments,
overwhelmingly,areatransferofmoneyfromthepoortotherich.Aspropertyprices
andthewithdrawalofstatefundingloadpeoplewithdebt(thinkoftheswitchfrom
studentgrantstostudentloans),thebanksandtheirexecutivescleanup.
Sayerarguesthatthepastfourdecadeshavebeencharacterisedbyatransferofwealth
notonlyfromthepoortotherich,butwithintheranksofthewealthy:fromthosewho
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maketheirmoneybyproducingnewgoodsorservicestothosewhomaketheirmoney
bycontrollingexistingassetsandharvestingrent,interestorcapitalgains.Earned
incomehasbeensupplantedbyunearnedincome.
Neoliberalpoliciesareeverywherebesetbymarketfailures.Notonlyarethebankstoo
bigtofail,butsoarethecorporationsnowchargedwithdeliveringpublicservices.As
TonyJudtpointedoutinIllFarestheLand,Hayekforgotthatvitalnationalservices
cannotbeallowedtocollapse,whichmeansthatcompetitioncannotrunitscourse.
Businesstakestheprofits,thestatekeepstherisk.
Thegreaterthefailure,themoreextremetheideologybecomes.Governmentsuse
neoliberalcrisesasbothexcuseandopportunitytocuttaxes,privatiseremaining
publicservices,ripholesinthesocialsafetynet,deregulatecorporationsandre
regulatecitizens.Theselfhatingstatenowsinksitsteethintoeveryorganofthepublic
sector.
Perhapsthemostdangerousimpactofneoliberalismisnottheeconomiccrisesithas
caused,butthepoliticalcrisis.Asthedomainofthestateisreduced,ourabilityto
changethecourseofourlivesthroughvotingalsocontracts.Instead,neoliberaltheory
asserts,peoplecanexercisechoicethroughspending.Butsomehavemoretospend
thanothers:inthegreatconsumerorshareholderdemocracy,votesarenotequally
distributed.Theresultisadisempowermentofthepoorandmiddle.Aspartiesofthe
rightandformerleftadoptsimilarneoliberalpolicies,disempowermentturnsto
disenfranchisement.Largenumbersofpeoplehavebeenshedfrompolitics.
Slogans,symbolsandsensationDonaldTrump.Photograph:AaronJosefczyk/Reuters
ChrisHedgesremarksthatfascistmovementsbuildtheirbasenotfromthepolitically
activebutthepoliticallyinactive,theloserswhofeel,oftencorrectly,theyhaveno
voiceorroletoplayinthepoliticalestablishment.Whenpoliticaldebatenolonger
speakstous,peoplebecomeresponsiveinsteadtoslogans,symbolsandsensation.To
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theadmirersofTrump,forexample,factsandargumentsappearirrelevant.
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Judtexplainedthatwhenthethickmeshofinteractionsbetweenpeopleandthestate
hasbeenreducedtonothingbutauthorityandobedience,theonlyremainingforcethat
bindsusisstatepower.ThetotalitarianismHayekfearedismorelikelytoemergewhen
governments,havinglostthemoralauthoritythatarisesfromthedeliveryofpublic
services,arereducedtocajoling,threateningandultimatelycoercingpeopletoobey
them.
***
Likecommunism,neoliberalismistheGodthatfailed.Butthezombiedoctrine
staggerson,andoneofthereasonsisitsanonymity.Orrather,aclusterof
anonymities.
Theinvisibledoctrineoftheinvisiblehandispromotedbyinvisiblebackers.Slowly,
veryslowly,wehavebeguntodiscoverthenamesofafewofthem.Wefindthatthe
InstituteofEconomicAffairs,whichhasarguedforcefullyinthemediaagainstthe
furtherregulationofthetobaccoindustry,hasbeensecretlyfundedbyBritish
AmericanTobaccosince1963.WediscoverthatCharlesandDavidKoch,twoofthe
richestmenintheworld,foundedtheinstitutethatsetuptheTeaPartymovement.We
findthatCharlesKoch,inestablishingoneofhisthinktanks,notedthatinorderto
avoidundesirablecriticism,howtheorganisationiscontrolledanddirectedshouldnot
bewidelyadvertised.
Thenouveaurichewereoncedisparagedby
thosewhohadinheritedtheirmoney.Today,
therelationshiphasbeenreversed
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Thewordsusedbyneoliberalismoftenconcealmorethantheyelucidate.Themarket
soundslikeanaturalsystemthatmightbearuponusequally,likegravityor
atmosphericpressure.Butitisfraughtwithpowerrelations.Whatthemarketwants
tendstomeanwhatcorporationsandtheirbosseswant.Investment,asSayernotes,
meanstwoquitedifferentthings.Oneisthefundingofproductiveandsociallyuseful
activities,theotheristhepurchaseofexistingassetstomilkthemforrent,interest,
dividendsandcapitalgains.Usingthesamewordfordifferentactivitiescamouflages
thesourcesofwealth,leadingustoconfusewealthextractionwithwealthcreation.
Acenturyago,thenouveauricheweredisparagedbythosewhohadinheritedtheir
money.Entrepreneurssoughtsocialacceptancebypassingthemselvesoffasrentiers.
Today,therelationshiphasbeenreversed:therentiersandinheritorsstylethemselves
entrepreneurs.Theyclaimtohaveearnedtheirunearnedincome.
Theseanonymitiesandconfusionsmeshwiththenamelessnessandplacelessnessof
moderncapitalism:thefranchisemodelwhichensuresthatworkersdonotknowfor
whomtheytoilthecompaniesregisteredthroughanetworkofoffshoresecrecy
regimessocomplexthateventhepolicecannotdiscoverthebeneficialownersthetax
arrangementsthatbamboozlegovernmentsthefinancialproductsnoone
understands.
Theanonymityofneoliberalismisfiercelyguarded.Thosewhoareinfluencedby
Hayek,MisesandFriedmantendtorejecttheterm,maintainingwithsomejustice
thatitisusedtodayonlypejoratively.Buttheyofferusnosubstitute.Somedescribe
themselvesasclassicalliberalsorlibertarians,butthesedescriptionsareboth
misleadingandcuriouslyselfeffacing,astheysuggestthatthereisnothingnovel
aboutTheRoadtoSerfdom,BureaucracyorFriedmansclassicwork,Capitalismand
Freedom.
***
Forallthat,thereissomethingadmirableabouttheneoliberalproject,atleastinits
earlystages.Itwasadistinctive,innovativephilosophypromotedbyacoherent
networkofthinkersandactivistswithaclearplanofaction.Itwaspatientand
persistent.TheRoadtoSerfdombecamethepathtopower.
Thelefthasproducednonewframeworkof
economicthoughtfor80years.Thisiswhy
thezombiewalks
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Neoliberalismstriumphalsoreflectsthefailureoftheleft.Whenlaissezfaire
economicsledtocatastrophein1929,Keynesdevisedacomprehensiveeconomic
theorytoreplaceit.WhenKeynesiandemandmanagementhitthebuffersinthe70s,
therewasanalternativeready.Butwhenneoliberalismfellapartin2008therewas...
nothing.Thisiswhythezombiewalks.Theleftandcentrehaveproducednonew
generalframeworkofeconomicthoughtfor80years.
EveryinvocationofLordKeynesisanadmissionoffailure.ToproposeKeynesian
solutionstothecrisesofthe21stcenturyistoignorethreeobviousproblems.Itishard
tomobilisepeoplearoundoldideastheflawsexposedinthe70shavenotgoneaway
and,mostimportantly,theyhavenothingtosayaboutourgravestpredicament:the
environmentalcrisis.Keynesianismworksbystimulatingconsumerdemandto
promoteeconomicgrowth.Consumerdemandandeconomicgrowtharethemotorsof
environmentaldestruction.
WhatthehistoryofbothKeynesianismandneoliberalismshowisthatitsnotenough
toopposeabrokensystem.Acoherentalternativehastobeproposed.ForLabour,the
Democratsandthewiderleft,thecentraltaskshouldbetodevelopaneconomicApollo
programme,aconsciousattempttodesignanewsystem,tailoredtothedemandsof
the21stcentury.
GeorgeMonbiotsHowDidWeGetintoThisMess?ispublishedthismonthbyVerso.
Toorderacopyfor12.99(RRP16.99))gotobookshop.theguardian.comorcall
03303336846.FreeUKp&pover10,onlineordersonly.Phoneordersminp&pof
1.99.
11/11

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