Neoliberalism - The 'Zombie Doctrine' at the Root of All Our Problems
Published on
Friday, April 15, 2016
by
Monbiot.com
Neoliberalism - 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.
by
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. 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.
'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, 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 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, "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
Hayek remarked 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, 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
dispute settlement": 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 theatre.
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
deregulation.
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, 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
politics.
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 that "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, 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; the companies registered through a
network of offshore secrecy regimes so complex that even the police cannot
discover the beneficial owners; 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. 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 Freedom.
+ + +
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
destruction.
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.
C 2016 George Monbiot
George Monbiot
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Neoliberalism - The 'Zombie Doctrine' at the Root of All Our Problems
Published on
Friday, April 15, 2016
by Monbiot.com
Neoliberalism - 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.
by
George Monbiot
. 10 Comments
.
. 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.
.
https://salsa.wiredforchange.com/o/1493/donate_page/spring2016-articlehttps:
//salsa.wiredforchange.com/o/1493/donate_page/spring2016-article
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. 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.
http://www.versobooks.com/books/2092-how-did-we-get-into-this-mess'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, 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 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, "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
Hayek remarked 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, 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
dispute settlement": 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 theatre.
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
deregulation.
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, 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
politics.
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 that "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, 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; the companies registered through a
network of offshore secrecy regimes so complex that even the police cannot
discover the beneficial owners; 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. 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 Freedom.
+ + +
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
destruction.
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.
C 2016 George Monbiot
