Neoliberalism is more than economics: It’s an approach to social organisation.

On my politics page on facebook I’ve touched on my broader “theory” of what exactly neoliberalism is.  In one post on the page is a brief summary of my views on the ideology.  But I thought it might be time to do a slightly expanded piece on the subject.  Why is this necessary?  Well, neoliberalism seems to have a variety of definitions and some of them aren’t particularly enlightening or useful.

A common definition of neoliberalism is that it essentially equals ‘free market economics’.  Apart from being, in my opinion, wrong, even if it was right it adds absolutely no explanatory power to the well known ideology of laissez faire (i.e. free market economics).  My view is that neoliberalism is an ideology that more correctly encompasses a particular approach to social organisation (which of course includes economics).

What’s interesting is that, to the best of my knowledge, you don’t get popular treatises defending neoliberalism as an approach to social organisation like you did with Marxism.  You get plenty of free market adherents writing plenty, and indeed you have free marketing ‘heroes’ like Hayek, von Mises and Friedman etc from which whole schools of economic (and therefore in effect ‘social’) thought are built around.  But where are the heroes of neoliberalism as a tool for social organisation the way that I (and others) believe it truly functions?  Maybe they are out there, and you might be able to suggest some after you hear what my “theory” of neoliberalism is.  But part of my view of what neoliberalism is accounts for the idea that it’s not something that is popularly espoused.  That is because it is essentially a highly insidious ideology that relies on a false popular view of what it is.

So, what is my “theory” of what neoliberalism is?  And why doesn’t anyone else espouse a similar view?  Well, some do – Noam Chomksy in his book “Profit over People”, and George Monbiot and David Graeber in many of their writings view neoliberalism as more of a social ideology than simply an economic ideology.  So, what is it simply? It’s a system of social organisation and behaviour management based in deeply conservative ideas and moralities with an allegedly liberal economic system which “enforces” this view.  It’s a strange creature crafted from the seemingly incompatible ideologies of conservatism and liberalism.  Why are these incompatible?  Well, liberalism broadly promotes freedom, while conservatism broadly promotes safety in familiarity and tradition which often involves protection of networks and ideas from open access (i.e. the opposite of liberalism).  How do these two seemingly incompatible ideas work together in neoliberalism?  Well, the “missing link” is that neoliberalism doesn’t actually strictly adhere to the principles of liberalism and freedom.  In a sense, it’s selective liberalism.  Let me expand on that below.

In a macro-economic sense, neoliberalism broadly espouses the view that less government regulation on business is generally better than more regulation.  Same with labour markets, money markets and the banking sector.  And governments should get out of providing services, if not entirely, at least significantly, that the private sector can provide. This is good ol’ liberalism.  Free up businesses and money markets and you allow natural competition of ideas and products to flourish, which in turn will lead to better products and more choices for consumers.  I.e. economic freedom!  Traditional liberalism doesn’t disavow the idea of market regulation (even by governments), and in a sense makes the socialist argument that truly unfettered capitalism wouldn’t function very well (if at all).

What’s interesting about this macro-economic view of liberalism is that it encompasses the views of the great evolutionary biologist, Charles Darwin, with the concepts of competition and ‘survival of the fittest’.  That is, competition between units in the market place will weed out the weak and the strong will survive, leading to a better adapted business economy.  Competition between species (and between businesses) leads to innovations that allow a species/business to better dominate its niche in its environment.  Whether Darwin’s theories of natural selection are properly transferable to an economic (or otherwise) marketplace is probably a discussion for another essay.  But it’s trivial to note that not all innovations are good innovations.  Dishonest innovations probably work better than honest ones, at least up to the point that the dishonesty is exposed.  The calculus is about the cost-benefit of such choices.  Examples of terrible innovation recently are the Credit Default Swaps and other labyrinthine financial instruments that brought down the world’s financial systems in the GFC starting in 2008; and more recently VW’s software hack that allowed their cars to cheat strict emissions testings.  That software hack was a brilliant innovation!  Until it wasn’t.

Getting back to the point that neoliberalism is in fact a selective version of economic liberalism.  Proponents of neoliberalism (basically the vast majority of capitalists and western ‘centrist’ governments) loosely support the broader freedom of liberalism as described above, but importantly make exceptions where it is in their interest.  So it’s free markets in the financial sector and labour markets, so that capital is freed up to react quickly to changed environments, but it’s protectionism for certain industries and groups in society for various reasons that I will address further on.  And the reason that liberalism is applied selectively across the economy ties in with the other half of the neoliberal genesis – that is, conservatism.  The real interesting thing about economic liberalism’s adoption of Darwinistic principles is that this is broadly the shared linkage between liberalism and conservatism.  So while conservatism shares almost none of the principles of freedom that liberalism espouses, it does adopt it’s own form of Darwinism, although, one that is arguably far more dangerous, and certainly historically loaded.  So, how does the conservative side of neoliberalism work?

The underlying ‘pathology‘ of conservatism, if you can call it that, is a fear of change, a fear of difference, and ultimately a fear of self.  This is why conservatives strive for the safety of well known traditions and established hierarchies.  The latter gels nicely with the contention that conservatives ultimately fear (and therefore distrust) themselves.  From Encyclopaedia Britannica:

Far from believing that human nature is essentially good or that human beings are fundamentally rational, conservatives tend to assume that human beings are driven by their passions and desires—and are therefore naturally prone to selfishness, anarchy, irrationality, and violence. Accordingly, conservatives look to traditional political and cultural institutions to curb humans’ base and destructive instincts. In Burke’s [one of the ‘fathers’ of political conservatism] words, people need “a sufficient restraint upon their passions,” which it is the office of government “to bridle and subdue.” Families, churches, and schools must teach the value of self-discipline, and those who fail to learn this lesson must have discipline imposed upon them by government and law. Without the restraining power of such institutions, conservatives believe, there can be no ethical behaviour and no responsible use of liberty.

Conservatism is based around the belief that human nature is inherently bad, and without codification and control, society will descend into anarchy.  This is essentially a moral system, and one that is the opposite of the liberal tradition that humans individually acting as rational actors will lead to a free, just and prosperous society.  Both of these ‘systems’ are frankly extreme and idiotic, as I will expand on more later.  The ‘truth’ of the most beneficial system lies somewhere between these two extremes, the exact place moving around depending on what types of philosophies and values one adopts to determine ‘success’.  Needless to say, ‘success’ is going to be subjective.  But that doesn’t mean that it can’t be more or less objectively stated that an extreme view of human nature (at either of the ends of the conservatism-liberal divide), is simply wrong and likely to lead to disaster if it is adopted as a rigid prescriptive system (like most ideologies).

So, conservatives have inherent affinities for traditional hierarchies and moral systems.  What does this have to do with neoliberalism?  Well, it’s these affinities that guide the selective application of economic liberal principles.  Who do conservatives trust?  Those entrenched by age old systems and those that they themselves know and trust through direct experience.  ‘New’ systems and unknown inherently (allegedly) evil people can’t be trusted.  This is where stable systems of morality play such an important part in conservatism.  And there’s one exceedingly obvious “moral” system that gels well with the inherent belief of conservatives that most people are born evil (i.e. in sin), and that system is religion.  In the West, predominantly Christianity.  Now I think we can all agree that there are some broad morals in the various Christian texts that make eminent sense – don’t murder, love thy neighbour, do unto others as they would do unto you.  But unfortunately a lot of the morals of the old-testament (and the equivalent documents in Judaism and Islam), “morals” which are frankly barbaric, are still manifested to varying degrees in our laws but more importantly for this essay – in our unofficial social organisation and mores.  Revenge and punishment are some broad examples.  Apart from social studies which show the fallacy of these types of approaches to “justice”, they don’t make much sense in the context of humans who are considered born flawed – i.e. something totally outside their control.  Christianity gets around this by blaming Adam and Eve (or was it just Eve?), and stating that we’ve inherited their debt to God, so it’s all good to punish us for things that are apparently not our fault.  Non religious conservatives (I’d be interested to see how many there really are; I’d assume it’s a fairly small percentage), well, they need some other explanatory system to justify their old-testament-esque inherent feelings about human nature.  So what is it?

This is where Darwinism rears its head again, in the insidious ideology of Social Darwinism.  Essentially, Darwin’s ideas of natural selection and survival of the fittest are to be applied to individuals and groups in society.  It goes further than liberalism’s adoption of Darwinism for economic advancement, in that it broadens it to a societal context where not only ideas or bad investments are punished and eliminated, but people and groups of people are “naturally” selected against for the overall betterment of society.  (Apart from the overall dubiousness of this belief, it’s also a bastardisation of evolution.  Evolution is amoral.  Applying the principles of evolution towards the “betterment” of society is a value-judgement and therefore a moral dictate).  From Encyclopaedia Britannica:

the theory that persons, groups, and races are subject to the same laws of natural selection as Charles Darwin had perceived in plants and animals in nature. According to the theory, which was popular in the late 19th and early 20th centuries, the weak were diminished and their cultures delimited, while the strong grew in power and in cultural influence over the weak. Social Darwinists held that the life of humans in society was a struggle for existence as ruled by “survival of the fittest,”

And:

The theory was used to support laissez-faire capitalism and political conservatism. Class stratification was justified on the basis of “natural” inequalities among individuals, for the control of property was said to be a correlate of superior and inherent moral attributes such as industriousness, temperance, and frugality. Attempts to reform society through state intervention or other means would, therefore, interfere with natural processes; unrestricted competition and defence of the status quo were in accord with biological selection. The poor were the “unfit” and should not be aided; in the struggle for existence, wealth was a sign of success. At the societal level, social Darwinism was used as a philosophical rationalisation for imperialist, colonialist, and racist policies, sustaining belief in Anglo-Saxon or Aryan cultural and biological superiority.

Well, you can clearly see where that final rationalisation led.  Nazi eugenics and the Aryan master race concept.  Thankfully, that’s where the serious acceptance of social Darwinism ceased.  Unfortunately, like old-testament “morals”, some of these ideas have remained in society, and most certainly appear to remain to varying degrees with conservatives.  Gerry Harvey provides a great example:

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How can conservatives still seriously entertain the ideas of social Darwinism?  I suspect it’s because of the evolutionary predisposition in all of us to favour our own kin groups, although liberals and progressives have managed to rationalise and subdue that base motivator.  I suspect it is also maintained by conservatives due to their mental predisposition to seek out authoritative structures and indeed be subservient to them.  It merely reinforces their inherent beliefs that hierarchical structures are natural and to be desired for stability and safety.  And all of the above nicely explains why the rich by far identify as conservatives.  It’s the perfect justification for the hoarding of luxuries and a more selective outlook towards society.  Although this isn’t supposed to be an essay particularly bashing conservatives, I can’t help but reference one of my favourite quotes by John Kenneth Galbraith, the famous economist:

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.

That pretty much sums up the conservative moral framework that underpins neoliberalism.  Essentially, economic liberalism where it suits one’s colleagues and ideological allies; and protectionism, regulation, coercion, and often outright corruption when it is called for.  In short, we get back to a simple summary:

Neoliberalism is an ideology that seeks to organise society along traditional conservative lines, utilising some of the mechanisms of economic liberalism.

The great swindle, and indeed the most insidious part of the ideology, is that it operates under a cover of pure liberalism.  Free up markets and we all benefit.  Sure, they have no choice but to admit that neoliberal policies (as would all pure economic liberal policies) lead to increasing wealth inequality, but a “rising tide lifts all boats”.  That’s the cute way of saying “trickle-down economics”, which was the calling card of Thatcher and Reagan in the 80’s.  While some benefit more than others, allegedly everyone benefits from a growing economy.  Well, that’s debatable, and in the case of the USA, home to the most potent implementation of neoliberalism in the world, the middle-class has gone backwards, and the poor haven’t seen a raise in wealth and real wages for decades.  And this sort of undermining of the bulk spenders in a society leads to the predictable outcome of a slowing of economic growth.  During the post-war period up to the late 70’s when neoliberalism kicked off, the western world experienced the highest growth rates ever in modern times.  This was a time of Keynesian and post-Keynesian economics which favoured demand-side economics – that is, the spenders in a society are the primary drivers of an economy.  With a shift to neoliberalism we saw a shift to more “supply-side” economics which essentially holds that producers and associated investors are the primary drivers of an economy.  This shift in economic ideology to supply-side fits in nicely with the neoliberal idea of subsidising favoured producers and investors (and specifically reducing their regulations).

And while this all sounds potentially theoretical and subjective, you can see real studies that highlight the fact that neoliberalism isn’t about smaller government (e.g. lower government spending and lower overall taxation; i.e. a strong liberal tenet) or overall greater economic growth.  It’s really a conservative ideology to further entrench an already entrenched elite.

Neoliberalism at a national scale is problematic enough, but we live in a global economy now.  Neoliberalism is effectively forced on developing economies through US controlled major institutions of the IMF and the World Bank.  It also, like on a national scale, utilises economic might to distort “free markets” in a way that even the fathers of economic liberalism, like Adam Smith, expressly warned against.  But that is for another essay.  Hopefully through this essay you’ve got a better understanding of my “theory” of the ideology of neoliberalism, and can help others move past the false rhetoric that neoliberalism is a synonym for liberalised free markets.

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