[WSF-Discuss] Fwd: [Debate-List] (Fwd) Neoliberalism, phansi (George Monbiot)
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From: Patrick Bond <pbond at mail.ngo.za>
Date: Sat, Apr 16, 2016 at 3:45 AM
Subject: [Debate-List] (Fwd) Neoliberalism, phansi (George Monbiot)
To: DEBATE <debate-list at fahamu.org>, progeconnetwork at googlegroups.com
Friday, April 15, 2016
– The 'Zombie Doctrine' at the Root of All Our Problems
Crisis after crisis is being caused by a failed ideology. But it cannot be
stopped without a coherent alternative.
George Monbiot <http://www.commondreams.org/author/george-monbiot>
It’s as if the people of the Soviet Union had never heard of communism. The
ideology that dominates our lives has, for most of us, no name. Mention it
in conversation and you’ll be rewarded with a shrug. Even if your listeners
have heard the term before, they will struggle to define it. Neoliberalism:
do you know what it is?
Its anonymity is both a symptom and cause of its power. It has played a
major role in a remarkable variety of crises: the financial meltdown of
2007-8, the offshoring of wealth and power, of which the Panama Papers
offer us merely a glimpse, the slow collapse of public health and
education, resurgent child poverty, the epidemic of loneliness
the collapse of ecosystems, the rise of Donald Trump. But we respond to
these crises as if they emerge in isolation, apparently unaware that they
have all been either catalysed or exacerbated by the same coherent
philosophy; a philosophy that has – or had – a name. What greater power can
there be than to operate namelessly?
So pervasive has neoliberalism become that we seldom even recognise it as
an ideology. We appear to accept the proposition that this utopian,
millenarian faith describes a neutral force; a kind of biological law, like
Darwin’s theory of evolution. But the philosophy arose as a conscious
attempt to reshape human life and shift the locus of power.
Neoliberalism sees competition as the defining characteristic of human
relations. It redefines citizens as consumers, whose democratic choices are
best exercised by buying and selling, a process that rewards merit and
punishes inefficiency. It maintains that “the market” delivers benefits
that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and
regulation should be minimised, public services should be privatised. The
organisation of labour and collective bargaining by trade unions are
portrayed as market distortions, that impede the formation of a natural
hierarchy of winners and losers. Inequality is recast as virtuous: a reward
for utility and a generator of wealth, which trickles down to enrich
everyone. Efforts to create a more equal society are both
counter-productive and morally corrosive. The market ensures that everyone
gets what they deserve.
We internalise and reproduce its creeds. The rich persuade themselves
that they acquired their wealth through merit, ignoring the advantages –
such as education, inheritance and class – that may have helped to secure
it. The poor begin to blame themselves for their failures, even when they
can do little to change their circumstances.
Never mind structural unemployment: if you don’t have a job it’s because
you are unenterprising. Never mind the impossible costs of housing: if your
credit card is maxed out, you’re feckless and improvident. Never mind that
your children no longer have a school playing field: if they get fat, it’s
your fault. In a world governed by competition, those who fall behind
become defined and self-defined as losers.
Among the results, as Paul Verhaeghe documents in his book *What About Me?*
are epidemics of self-harm, eating disorders, depression, loneliness,
performance anxiety and social phobia. Perhaps it’s unsurprising that
Britain, in which neoliberal ideology has been most rigorously applied, is the
loneliness capital of Europe
We are all neoliberals now.
+ + +
The term neoliberalism was coined at a meeting in Paris in 1938
<http://www.wikiberal.org/wiki/Colloque_Walter_Lippmann>. Among the
delegates were two men who came to define the ideology, Ludwig von Mises
and Friedrich Hayek. Both exiles from Austria, they saw social democracy,
exemplified by Franklin Roosevelt’s New Deal and the gradual development of
Britain’s welfare state, as manifestations of a collectivism that occupied
the same spectrum as nazism and communism.
[image: how_did_we_get_into_this_mess-cover-600-]'How Did We Get into This
Mess?' by George Monbiot
In *The Road to Serfdom*
published in 1944, Hayek argued that government planning, by crushing
individualism, would lead inexorably to totalitarian control. Like Mises’s
book *Bureaucracy* <https://mises.org/library/bureaucracy>, *The Road to
Serfdom* was widely read. It came to the attention of some very wealthy
people, who saw in the philosophy an opportunity to free themselves from
regulation and tax. When, in 1947, Hayek founded the first organisation
that would spread the doctrine of neoliberalism – the Mont Pelerin Society
– it was supported financially by millionaires and their foundations.
With their help, he began to create what Daniel Stedman Jones
describes in *Masters
of the Universe* <http://press.princeton.edu/titles/9827.html> as “a kind
of neoliberal International”: a transatlantic network of academics,
businessmen, journalists and activists. The movement’s rich backers funded
a series of think tanks which would refine and promote the ideology. Among
them were the American Enterprise Institute, the Heritage Foundation, the
Cato Institute, the Institute of Economic Affairs, the Centre for Policy
Studies and the Adam Smith Institute. They also financed academic positions
and departments, particularly at the universities of Chicago and Virginia.
As it evolved, neoliberalism became more strident. Hayek’s view that
governments should regulate competition to prevent monopolies from forming
gave way, among American apostles such as Milton Friedman, to the belief
that monopoly power could be seen as a reward for efficiency.
Something else happened during this transition: the movement lost its name.
In 1951, Milton Friedman was happy to describe himself as a neoliberal
But soon after that, the term began to disappear. Stranger still, even as
the ideology became crisper and the movement more coherent, the lost name
was not replaced by any common alternative.
At first, despite its lavish funding, neoliberalism remained at the
margins. The post-war consensus was almost universal: John Maynard Keynes’s
economic prescriptions were widely applied, full employment and the relief
of poverty were common goals in the US and much of western Europe, top
rates of tax were high and governments sought social outcomes without
embarassment, developing new public services and safety nets.
But in the 1970s, when Keynesian policies began to fall apart and economic
crises struck on both sides of the Atlantic, neoliberal ideas began to
enter the mainstream. As Milton Friedman remarked
<http://press.princeton.edu/titles/9827.html>, “when the time came that you
had to change … there was an alternative ready there to be picked up.” With
the help of sympathetic journalists and political advisers, elements of
neoliberalism, especially its prescriptions for monetary policy, were
adopted by Jimmy Carter’s administration in the United States and Jim
Callaghan’s government in Britain.
After Margaret Thatcher and Ronald Reagan took power, the rest of the
package soon followed: massive tax cuts for the rich, the crushing of trade
unions, deregulation, privatisation, outsourcing and competition in public
services. Through the IMF, the World Bank, the Maastricht treaty and the
World Trade Organisation, neoliberal policies were imposed – often without
democratic consent – on much of the world. Most remarkable was its adoption
among parties that once belonged to the left: Labour and the Democrats, for
example. As Daniel Stedman Jones notes, “it is hard to think of another
utopia to have been as fully realised.”
+ + +
It may seem strange that a doctrine promising choice and freedom should
have been promoted with the slogan “there is no alternative”. But, as Friedrich
<http://www.counterpunch.org/2006/11/17/the-road-from-serfdom/> on a visit
to Pinochet’s Chile – one of the first nations in which the programme was
comprehensively applied – “my personal preference leans toward a liberal
dictatorship rather than toward a democratic government devoid of
liberalism.” The freedom neoliberalism offers, which sounds so beguiling
when expressed in general terms, turns out to mean freedom for the pike,
not for the minnows.
Freedom from trade unions and collective bargaining means the freedom to
suppress wages. Freedom from regulation means the freedom to poison rivers
endanger workers, charge iniquitous rates of interest and design exotic
financial instruments. Freedom from tax means freedom from the distribution
of wealth that lifts people out of poverty.
As Naomi Klein documents in *The Shock Doctrine*
<http://www.naomiklein.org/shock-doctrine>, neoliberal theorists advocated
the use of crises to impose unpopular policies while people were
distracted: for example, in the aftermath of Pinochet’s coup, the Iraq war
and Hurricane Katrina, which Milton Friedman described as “an opportunity
to radically reform the educational system” in New Orleans.
Where neoliberal policies cannot be imposed domestically, they are imposed
internationally, through trade treaties incorporating “investor-state
offshore tribunals in which corporations can press for the removal of
social and environmental protections. When parliaments have voted to
restrict sales of cigarettes, protect water supplies from mining companies,
freeze energy bills or prevent pharmaceutical firms from ripping off the
state, corporations have sued, often successfully. Democracy is reduced to
Another paradox of neoliberalism is that universal competition relies upon
universal quantification and comparison. The result is that workers,
job-seekers and public services of every kind are subject to a
pettifogging, stifling regime of assessment and monitoring, designed to
identify the winners and punish the losers. The doctrine that, Ludwig von
Mises proposed, would free us from the bureaucratic nightmare of central
planning has instead created one.
Neoliberalism was not conceived as a self-serving racket, but it rapidly
became one. Economic growth has been markedly slower in the neoliberal era
(since 1980 in Britain and the US) than it was in the preceding decades;
but not for the very rich. Inequality in the distribution of both income
and wealth, after 60 years of decline, rose rapidly in this era, due to the
smashing of trade unions, tax reductions, rising rents, privatisation and
The privatisation or marketisation of public services – such as energy,
water, trains, health, education, roads and prisons – has enabled
corporations to set up tollbooths in front of essential assets and charge
rent, either to citizens or to government, for their use. Rent is another
term for unearned income. When you pay an inflated price for a train
ticket, only part of the fare compensates the operators for the money they
spend on fuel, wages, rolling stock and other outlays. The rest reflects
the fact that they have you over a barrel
Those who own and run the UK’s privatised or semi-privatised services make
stupendous fortunes by investing little and charging much. In Russia and
India, oligarchs acquired state assets through firesales. In Mexico, Carlos
Slim was granted control of almost all landline and mobile phone services
and soon became the world’s richest man.
Financialisation, as Andrew Sayer points out in *Why We Can’t Afford the
Rich* <http://www.policypress.co.uk/display.asp?K=9781447320791>, has had
similar impacts. “Like rent,” he argues, “interest is … unearned income
that accrues without any effort.” As the poor become poorer and the rich
become richer, the rich acquire increasing control over another crucial
asset: money. Interest payments, overwhelmingly, are a transfer of money
from the poor to the rich. As property prices and the withdrawal of state
funding load people with debt (think of the switch from student grants to
student loans), the banks and their executives clean up.
Sayer argues that the past four decades have been characterised by a
transfer of wealth not only from the poor to the rich, but within the ranks
of the wealthy: from those who make their money by producing new goods or
services to those who make their money by controlling existing assets and
harvesting rent, interest or capital gains. Earned income has been
supplanted by unearned income.
Neoliberal policies are everywhere beset by market failures. 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*
Friedrich 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.
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.
Perhaps the most dangerous impact of neoliberalism is not the economic
crises it has caused, but the political crisis. As the domain of the state
is reduced, our ability to change the course of our lives through voting
also contracts. Instead, neoliberal theory asserts, people can exercise
choice through spending. But some have more to spend than others: in the
great consumer or shareholder democracy, votes are not equally distributed.
The result is a disempowerment of the poor and middle. As parties of the
right and former left adopt similar neoliberal policies, disempowerment
turns to disenfranchisement. Large numbers of people have been shed from
Chris Hedges remarks
that “fascist movements build their base not from the politically active
but the politically inactive, the “losers” who feel, often correctly, they
have no voice or role to play in the political establishment.” When
political debate no longer speaks to us, people become responsive instead
to slogans, symbols and sensation. To the admirers of Donald Trump, for
example, facts and arguments appear irrelevant.
Tony Judt pointed out
that when the thick mesh of interactions between people and the state has
been reduced to nothing but authority and obedience, the only remaining
force that binds us is state power. The totalitarianism Hayek feared is
more likely to emerge when governments, having lost the moral authority
that arises from the delivery of public services, are reduced to “cajoling,
threatening and ultimately coercing people to obey them”.
+ + +
Like communism, neoliberalism is the God that failed. But the zombie
doctrine staggers on, and one of the reasons is its anonymity. Or rather, a
cluster of anonymities.
The invisible doctrine of the invisible hand is promoted by invisible
backers. Slowly, very slowly, we have begun to discover the names of a few
of them. We find that the Institute of Economic Affairs, which has argued
forcefully in the media against the further regulation of the tobacco
industry, has been secretly funded
by British American Tobacco since 1963. We discover that Charles and David
Koch, two of the richest men in the world, founded the institute that set
up the Tea Party movement
We find that Charles Koch, in establishing one of his think tanks, noted
“in order to avoid undesirable criticism, how the organization is
controlled and directed should not be widely advertised.”
The words used by neoliberalism often conceal more than they elucidate.
“The market” sounds like a natural system that might bear upon us equally,
like gravity or atmospheric pressure. But it is fraught with power
relations. What “the market wants” tends to mean what corporations and
their bosses want. “Investment”, as Andrew Sayer notes
<http://www.policypress.co.uk/display.asp?K=9781447320791>, means two quite
different things. One is the funding of productive and socially useful
activities, the other is the purchase of existing assets to milk them for
rent, interest, dividends and capital gains. Using the same word for
different activities “camouflages the sources of wealth”, leading us to
confuse wealth extraction with wealth creation.
A century ago, the nouveau riche were disparaged by those who had inherited
their money. Entrepreneurs sought social acceptance by passing themselves
off as rentiers. Today, the relationship has been reversed: the rentiers
and inheritors style themselves entrepreneurs. They claim to have earned
their unearned income.
These anonymities and confusions mesh with the namelessness and
placelessness of modern capitalism: the franchise model which ensures that
workers do not know for whom they toil
companies registered through a network of offshore secrecy regimes so
complex that even the police cannot discover the beneficial owners
<http://www.andywightman.com/archives/4377>; the tax arrangements that
bamboozle governments; the financial products no one understands.
The anonymity of neoliberalism is fiercely guarded. Those who are
influenced by Hayek, Mises and Friedman tend to reject the term,
maintaining – with some justice – that it is used today only pejoratively
<https://twitter.com/georgemonbiot/status/530351056530980864>. But they
offer us no substitute. Some describe themselves as classical liberals or
libertarians, but these descriptions are both misleading and curiously
self-effacing, as they suggest that there is nothing novel about *The Road
to Serfdom*, *Bureaucracy* or Friedman’s classic work, *Capitalism and
+ + +
For all that, there is something admirable about the neoliberal project, at
least in its early stages. It was a distinctive, innovative philosophy
promoted by a coherent network of thinkers and activists with a clear plan
of action. It was patient and persistent. *The Road to Serfdom* became the
path to power.
Neoliberalism’s triumph also reflects the failure of the left. When
laissez-faire economics led to catastrophe in 1929, Keynes devised a
comprehensive economic theory
to replace it. When Keynesian demand management hit the buffers in the
1970s, there was “an alternative ready there to be picked up.” But when
neoliberalism fell apart in 2008 there was … nothing. This is why the
zombie walks. The left and centre have produced no new general framework of
economic thought for 80 years.
Every invocation of Lord Keynes is an admission of failure. To propose
Keynesian solutions to the crises of the 21st-century is to ignore three
obvious problems. It is hard to mobilise people around old ideas; the flaws
exposed in the 1970s have not gone away; and, most importantly, they have
nothing to say about our gravest predicament: the environmental crisis.
Keynesianism works by stimulating consumer demand to promote economic
growth. Consumer demand and economic growth are the motors of environmental
What the history of both Keynesianism and neoliberalism show is that it’s
not enough to oppose a broken system. A coherent alternative has to be
proposed. For Labour, the Democrats and the wider left, the central task
should be to develop an economic Apollo programme, a conscious attempt to
design a new system, tailored to the demands of the 21st Century.
*George Monbiot’s new book, How Did We Get into This Mess?, Is published
this month by Verso.*
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