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April 16, 2016

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Matt Moore

'Perhaps neoliberalism is simply what we get when the boss class exercises power over the state.'

It can hardly exercise power *over* the state. Say rather, this is the use of state power by the boss class. The user of state power by the worker class has never done better. Maybe it is state power that is the problem, rather than the inherent flaw of any particular class

Metatone

1) "Neoliberalism" is a much contested word and I don't want to get dragged into defending it as a descriptor.

2) There is an ideology, which has become deeply rooted in our culture, which many people would name "Neoliberalism" - and the point of that ideology is to create the belief that "what we get when the boss class exercises power over the state" is actually what is best for everyone, what is the only way to economic growth, etc. etc.

3) Understanding how that ideology was created and got rooted into our culture is well worth doing, because it wasn't just a natural growth, it was a conscious project.

Doc at the Radar Station

"Perhaps neoliberalism is simply what we get when the boss class exercises power over the state."

Yep. There are a lot of thumbs on that scale.

chris

@ Metatone-I'm not sure it was a conscious project from the start. Granted, Thatcherism was about shifting power from workers to bosses, but I'm not sure the bank bailouts and crony capitalism were intended by her. More likely, the post-Thatcher advances of neoliberalism were just one damned thing after another.
I suspect the ideology, if we can call it that, came afterwards; there are always people who want to defend the status quo, however, intellectually confused and lacking empirical evidence it is.
@ Doc - my point is actually a crudeish Marxian one - power comes first; ideology follows.

From Arse To Elbow

Another way of looking at it is that neoliberalism has faded from view as an articulated position precisely because of its ideological triumph. It has become hegemonic in a way that classical liberalism failed to do in the 19th century, not least because the latter was contested by the counter-movement described by Polanyi and was seen at the time as very much a class interest.

One way in which this dominance has come about is through the growth of the state over the 20th century, which led to a profound intrusion into the lives of working people (Foucault's biopolitics) and served to undermine many of the earlier pro-social responses to classical liberalism - e.g. the welfare state obviated the need for workers' benevolent societies.

While it's true that "neoliberalism is ... what we get when the boss class exercises power over the state", it is also true that neoliberalism is a coherent intellectual response, with its roots in Habsburg Vienna, to the growth of the modern state, whose aim is to ensure that the state is not democratised. In this light, "the market decides" is simply a synonym for "the people don't".

Chemical Andy

Surely a better description of the current ruling ideology is Neo-Feudalism?

Blissex

«very few people actually claim to be neoliberals – aside, arguably, from a few Blairites and Economist writers.»

And sadly by B deLong:

http://equitablegrowth.org/?p=11847
«I am what Paul Krugman calls "Davos Man" to a substantial degree--a card-carrying neoliberal, a believer in globalization and free trade»

«As an intellectual presence, neoliberalism is little more than well-connected trolling.»

As to this, while B deLong claims to be a neoliberal, is well connected indeed, and trolls a fair bit, he often rises above all that, and often delivers excellent information and insight, but usually not on current affairs, but on economic history (or just history).

Kevin Carson

I agree, Matt. The state, by its very nature, is not amenable to control by a popular majority. It will always be controlled by the class that directly staffs it or has close personal or organizational ties to those staffing it. The only way to circumvent elite control of the state is either to devolve and decentralize its function to structures amenable to genuine democratic control, or to render it irrelevant and bypass it (e.g. what Negri and Hardt call "Exodus").

Jonathan da Silva

It does seem more a triumph of rhetoric over reason and nuance rather than a rounded philosophy as enacted in the Political sphere (hasn't economics as policy always been so?). Some jottings:-

1) Somewhere it has developed a legal/illegal rhetoric as though a legal line determines right and wrong and is a canyon divide not a line in a spectrum. I think as we see in the terrorism rhetoric this is to sanction the State power - telling us what to do.

2) Osborne seems intent on state control even if he plays the small state to Conservative Kool Aid drinkers - each week he finds someone else to subsidise/tax break. Indeed but for more extreme cuts he's hard to distinguish from the majority of Labour's PLP who supported him so enthusiastically last year after lampooning Lib Dems for far less. Common idiocy includes:PFI: Academies:Creating monolithic private suppliers of public goods/services:surveillance:wars. It's power without accountability? Who do you complain to when some outsourced asset stripper messes up?

3) All major political parties Lib Lab Con Kip SNP clearly have no actual belief in market economics (or just think they do) and throw subsidy at anyone except the poor - pensioners farmers bankers oil large corps Virgin Trains etc. Cons spongers strivers rhetoric would appear to miss the point of their support, the election win was down mostly to pensioners & rural types or welfare receivers as my HMRC explainer calls them.

4) Topped off by an absurd subservience to wealth whether it's Hammond grovelling before the Sauds or Osborne debasing himself before the Chinese or Mandelson sniveling around oligarchs.

Worst part is the demonising of working age poor and the effects this will have long term. That is probably more anthropology and ego than any theory.

Seth Edenbaum

"few people actually claim to be neoliberals"
Few Zionists outside of the Israeli right claim to be conservatives. And yet ethnic nationalism is conservative by definition. Self-reporting is next to meaningless.
"I'm a liberal" "I'm a nice guy!" Ask someone else what you are.

The best description of neoliberalism is as an ideology, ethos or sensibility that places economic relations as the foundation to all other relations. Libertarianism is its purest form but all forms of neoliberalism prescribe what Marxism describes only to predict eventual escape.

Neoliberalism is the logical result of liberal individualism: that the American model of life is the ideal. It's stupid. You don't have to be a revolutionary to admit that most jobs are pointless banality and that the rat race is for shit. Neoliberalism defines the rat race as an end in itself, the telos, the moral good. It's a fucking joke.

Ram

The reason most neoliberals don't describe themselves as such is because they don't take neoliberalism to be an "ism". A neoliberal is someone who thinks that the insights of mainstream economics should guide public policymaking. Non-neoliberals are either ignorant of mainstream economics, or subscribe to some alternative to mainstream economics ("heterodox economics"). With notable exceptions, the latter routinely fail to engage with mainstream economics, instead reveling in caricature, misrepresentation, straw-manning, and selective consideration of empirical evidence.

Interestingly, mainstream economists tend to hold views very much at odds with the general public, and these differences are not really explicable in terms of demographic differences, ideological differences, or partisan differences. Instead, it seems that mainstream economists hold views at odds with the public in large part because economists have studied economics and the general public has, for the most part, not. (See http://faculty.chicagobooth.edu/luigi.zingales/papers/research/economic-experts-vs-average-americans.pdf for one study of these differences).

It doesn't help your case to make claims such as this:

"CEOs – who are in effect central planners – and financiers who aspire to beat the market have seen their pay increase massively since the 80s*. That’s not something that would have happened if market ideology has triumphed."

As someone who has studied economics, I'm not sure how one could arrive at this conclusion. In the simplest model of econ 101, wages equal marginal product. It is perfectly consistent with a free market configuration, in such a model, that some individuals have vastly greater marginal products than others. Indeed, a number of studies have shown dramatic changes in equity valuations when a CEO unexpectedly dies, suggesting the creation or destruction of a tremendous amount of wealth often hinges on who the CEO of a company happens to be. (See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1695366 for example). This is not a settled issue, of course, as very little in economics is ever fully settled. But if you want to argue against "market ideology", it would help to identify who these market ideologues are, and my guess is they would largely be students of mainstream economics. If so, then your characterization of their views is rather mistaken.

Darrell Kavanagh

Neoliberalism, or whatever you want to call it, has nothing to do with free markets - it is clever enough to accept the tendency of capitalism to greater and greater monopoly power, and to make its peace with a relatively large state.

But it makes a virtue (from the point of view of the ruling class) out of necessity, by ensuring that the power of monopoly gives rise to a completely unperforming, but grossly overpaid, executive class; and that the economic resources allocated to the state (social security, health, defence, etc) are largely transferred straight back to the private sector through privatisation, outsourcing and wage subsidies.

Their ideological trick is that they have convinced many that this is due to some sort of law of nature, rather than a political choice. But the cracks are beginning to show.

James

Adam Curtis wrote a very good blog in 2011 about how neoliberalism had become the dominant ideology, worth reading if you have the time.

http://www.bbc.co.uk/blogs/adamcurtis/2011/09/the_curse_of_tina.html

Ryan

I don't think the left would disagree with the last line about the boss class overpowering the state.

Metatone

Just because the final destination of neoliberalism isn't the Hayekian nirvana the Mont Pelerin society expected doesn't mean that we aren't living the cultural values/ideology they worked so hard to foist on us.

The final destination is exactly where I would expect "deregulated free-markets" to end up - power to the rich and powerful.

RalphMus

Lefties just love long important multi-syllabic words, even if it’s totally unclear what they mean. Neoliberal is one. Multiculturalism is another.

David

@ RalphMus.... no.. The "neoliberal" rulers would have us put in prison for using the words that we really love..... and almost all of them are mono-syl-lab-ic!

So we are to be held to be "stupid" if we use monosyllabic words, and as striving to communicate "above our station" if we try to convey more meaning?

The "left" have lost this war, and our children will suffer the consequences.
Intergenerational memories are stunted and the wheel will always be re-invented.
This "peace" cannot last.

Deviation From The Mean

This article would have hit the nail on the head, I think, had the subtext not been a belief in the free market. The free market is a myth, bordering on a dangerous conspiracy theory. Get rid of the word free and just leave the word market and you will stumble to a correct analysis.


"The state, by its very nature, is not amenable to control by a popular majority. It will always be controlled by the class that directly staffs it or has close personal or organizational ties to those staffing it"

I think this is dogma.

There is no doubt that the boss class control state power and that democracy is a sham. For example, no democracy would ever allow the wealthiest to serially dodge tax while the majority have to pay as you earn.

Blissex

«no democracy would ever allow the wealthiest to serially dodge tax while the majority have to pay as you earn.»

Only if you conveniently forget that house price increases are most often effectively tax-free, or pay a very low rate of tax, or percetually none if they get cashed in with remortgages.

Anyhow "the majority" don't envy the rich for arranging laws so they don't pay taxes, they would do the same if they could.

What they care about is whether they themselves are getting ahead.

Plus one of the biases that our blogger often (not often enough) mentions is that people relate most strongly to those who live similarly to them. So southern voters get angry about northern "scroungers" who have an unused bedroom in an area where houses are cheap, but not about billionaries not paying taxes, because the latter are outside their imagination.

I recently found that this bias was mentioned by Mises in typical gobshite fashion:

www.econlib.org/library/Mises/msS9.html
«The fact is, that the doctrine of increasing relative social poverty is nothing more than an attempt to give an economic justification to policies based on the resentment of the masses. Growing social poverty means merely growing envy.
Mandeville and Hume, two of the greatest observers of human nature, have remarked that the intensity of envy depends on the distance between the envier and the envied.
If the distance is great one does not compare oneself with the envied, and, in fact, no envy is felt. The smaller the distance, however, the greater the envy.
Thus one can deduce from the growth of resentment in the masses that inequalities of income are diminishing.
The increasing "covetousness" is not, as Kautsky thinks, a proof of the relative growth of poverty; on the contrary, it shows that the economic distance between the classes is becoming less and less.»

Bob

"Only if you conveniently forget that house price increases are most often effectively tax-free, or pay a very low rate of tax, or percetually none if they get cashed in with remortgages."

It's more than that. Not only is tax avoidance legal it is required, because otherwise none of those 'tax engineering' nudges so beloved of certain political classes would work.

If you pay into a pension you're avoiding tax. If you pay into an ISA you're avoiding tax. If you use a work computer then you are avoiding tax. If you claim travel expenses you are avoiding tax. And so on.

Bob

"wages equal marginal product."

Marginal product theory is complete bunkum. No firm operates like that and they don't in aggregate.

Employers tend to behave capriciously all the time in an environment where there are fewer jobs than there are workers. Employers increasingly use psychological techniques (fear essentially, coupled with cheap comfort blankets like sexy job titles) to lock people into positions.

In a depressed environment quits are lower – therefore it makes business sense to make sure that the environment remains at a level of depression that suppresses quits. Perhaps that is the real reason why the economy is run persistently under capacity.

john

Notice also the policies listed generally reduce demand, growth, ROI--in other words they restrict aggregate wealth. While wealth is shifted from the poor to the already rich, the creation of new wealth slows down.

Counterintuitively, neoliberalism is bad for business, if business is to be understood to be in a wealth creation activity.

john

Blissex

«house price increases are most often effectively tax-free,»

«those 'tax engineering' nudges so beloved of certain political classes would work.x

The nudges exist mostly because the beneficiaries are targeted specific categories, in general the better off, because in order to enjoy a nudge one usually has to have a significant income; for example tories love to exempt from tax income from capital, like capital gains or interest.

Zero or low tax on capital gains on property, or other capital income tax exemptions, have some special characteristics:

* It exempt income at the source, as to how it arises, regardless of how it is spent; most "nudges" are about how income is spent.
* It makes it quite easy to shift otherwise taxable income into untaxed income: just buy a more expensive house, if your income can afford it.
* It exempts the more income the richer the beneficiary is.

The logic behind them is that productive owners of real or financial property need to be rewarded for their productivity, while the parasites who generate income from their work need to be punished for their laziness. Music to the ears of tory pensioners and rentiers in general.

«If you pay into a pension you're avoiding tax.»

That's not quite the same thing, as eventually the pension income gets taxed too. Also it is about spending money. But it still overbenefits the larger incomes.

«If you pay into an ISA you're avoiding tax.»

Not quite the same as pensions, more like property price increases, as the payments into the ISA are taxed, it is the capital gains and income that are not. But it still rewards those with larger incomes.

«If you use a work computer then you are avoiding tax. If you claim travel expenses you are avoiding tax. And so on.»

That's bit confused, those are not (net) incomes, so no tax is due.

In general the media these days are trying to sell to gullible voters the idea that anything that does not require paying tax is "tax avoidance", for example 0-rated or exempt VAT items would qualify.
Then having an income below the taxable threshold would also qualify.

Tax avoidance is more properly defined as arranging affairs in an artificial way, with little or no business purpose, mostly to change the tax rate paid.

Deviation From The Mean

"If you pay into a pension you're avoiding tax. If you pay into an ISA you're avoiding tax"

This is not true but anyway it nicely shows Bob's utter grovelling apologia for the criminal actions of the wealthy.

Whether everyone would, if they had the money, create a shell company, register it in some exotic location in order to avoid paying tax is beside the point. The point is no real democracy would allow a small minority of its wealthiest citizens to avoid contributing to the coffers on such a scale. The nature of these tax evasion schemes are so intricate and involve so many webs that it can only happen in societies bought off by the wealthiest and most powerful.

In theory everyone can be Pope but only one person can be Pope!

The idea that everyone would do it so that makes it ok is the language of the apologist. But the fact is that such tax laws will only ever favour a small number of people, and always the wealthiest.

The majority of people are outraged by these actions because most people know that even if they would do the same, the fact is the majority can never do this. For the majority there is little left after all the bills are added up.

Which brings us to the other dimension, the staggering levels of inequality. The tax scandals only reflect a growing disgust at utterly obscene, and in the long run unsustainable, levels of inequality.

The arse lickers of the elite, like the Bobs of this world, are dwindling and in this age of austerity, where we "don't have enough money", the mountain of hypocrisies are now obscuring the prattle from the defenders of the elite.

Bob can make as much noise as he likes, no amount of hot air from the likes of him will obscure the truth any longer.

theOnlySanePesonOnPlanetEarth

"If you use a work computer then you are avoiding tax"

No, you are using a work computer. You certainly do not have to employ an army of accountants and finance advisors when using the work computer. If my work computer was the the Cayman Islands, well that might be another story.

If you work there is no real way to avoid being taxed until the pips squeak, other than leading a very lonely life and pleasure free life, building up some modest savings and maybe saying a few hundred quid on moving your ISA before the tax year changes, though I think they clamped down on that! Tax avoidance comes at a high price if you are an average worker.

For the elite no such problems, you get all the tax breaks you want, 101 ways to avoid contributing to the national pit and you get all the pleasure and pursuit your heart can take.

Subtle differences that Bob's muddled mind cannot quote grasp.

sam

Very hard to talk about neoliberalism when everyone pulls their own ad hoc definition out of their arse every time. There's certainly no point to letting us leftists define it: we tend to define neoliberalism as libertarianism modulo the parts of libertarianism that we have come to terms with. The neoliberal is always the person one narcissistic small difference to the right of us. I like big-government liberalism, and define neoliberalism as small-government liberalism. My friends to the left of me consider me a neoliberal. And so on.

One way I like to think about neoliberalism is the set of policies that would be optimal in an economy well-described by neoclassical economics. By that definition only 'privatization' and 'smashing unions', among those you list, are neoliberal. I don't know any economist who advocates for crony capitalism, corporate welfare, state subsidies and bail-outs of banks, and if mainstream economists are not predominately neoliberals, then who is?

Blissex

«If you work there is no real way to avoid being taxed until the pips squeak,»

Interestingly, the expression «until the pips squeak» was originally used by D Healey about taxing property rentiers, not the rich in general:

The Times, Tuesday, Feb 19, 1974)
"squeeze property speculators until the pips squeak" (and also "wring the neck of the Housing Finance Act")

The story he remembers is:

http://www.theguardian.com/business/2006/dec/03/past.interviews

Soon after he said that, the era of mass southern property speculation began, and it is southern property speculators that elect and fire governments.
End of that story :-)

Blissex

«One way I like to think about neoliberalism is the set of policies that would be optimal in an economy well-described by neoclassical economics.»

That would be *classical* liberalism, or Ayn Rand's objectivism, depending on point of view.

Neo-liberalism, whatever that is, does not seem to me to be an identical resurrection of classical liberalism.

BTW "neoliberalism" is most reliably considered the political side of the "Washington consensus" economic policies, which are not quite those of classical liberalism.

Blissex

«the expression «until the pips squeak» was originally used by D Healey about taxing property rentiers»

More precisely still as D Healey recollects and further web searching shows the first original quote was by E Geddes in 1918 at the end of WW1:

"The Times", 1933-12-15
«Fifteen years ago, on December 11, 1918, to be exact, I made a speech in the Beaconsfield Club Hall, Cambridge, during the course of a campaign [ ... ] The phrase was this: "squeezing Germany like a lemon until the pips squeak."»

Jubey

Any brief reading of scholars who have covered neoliberalism such as Philip Mirowski or Will Davies(mentioned above) should make it clear what neoliberalism is about. Using state power to bring market-like reforms/changes into every sphere of life including how an individual views his/herself.

Its odd how much clearer(and more complete) Will Davies' description of neoliberalism is than what is being described in the blog post above. Please be clearer when discussing an issue about clarity of terms.

Ed

Bob two comments ago hits on something I've noticed in my various work environments.

The idea that most of an advanced capitalist economy is made up of private businesses, whose goal is to make money by selling goods and services for more than they cost to produce, is fantasy.

First, in any advanced economy, a large minority (if not a majority) of GDP is made up either of direct government spending or spending by organizations that are private on paper but actually are fronts for government activity or rely on government contracts and grants. The main distinction with a fully centrally planned economy is whether private enterprise can exist legally. A majority of economic activity is essentially government controlled or heavily government influenced.

Second, most of the remaining private part of the economy is made up of large corporations which are run by salaried corporate bureaucracies, and the bureaucrats running things don't own the companies and don't directly profit if they make money.

Many small businesses are vanity projects or glorified hobbies, and primarily means by which someone who has gained some capital can spread it around to family and friends.

The profit motive plays such a small role, as opposed to tribalism, that its amazing things run as well as they do. I don't think they run that well myself and I think advanced capitalist economies are still living off of the industrial revolution windfall, which is winding down.

Ed

The right wing American blog "the Z Blog" approvingly posted Whittaker Chambers' review (or take down) of Ayn Rand and Atlas Shrugged recently. Chambers noted that Rand was not in favor of freedom at all, though she used the rhetoric. She was advocating society being run by a small technocratic elite, just as the Leninists wanted, and was equally ruthless in opposing cultural values that got in the way. Neo-Liberalism is the capitalists' version of Leninism.

Skippy

Neoliberalism is just the matrix created by the dominate social narrative peddled by MPS philosophers... where atomtistic individuals seek to maximize their utility... because it was said to be "natural".

Skippy.... Flexians are the apogee of the system.

Bob

"This is not true but anyway it nicely shows Bob's utter grovelling apologia for the criminal actions of the wealthy."

My huh?

If you don't like it get the law changed.

We can't have tax lynch-mobs and self-appointed 'tax experts' going around trying to dictate what is and isn't 'moral' or 'acceptable' on their own grounds. You can't have sons held accountable for the alleged crimes of their father. I have no more time for vigilantes in tax than I have for vigilantes in crime. There is a presumption of innocence and due process to follow for a reason. Make your arguments through the legislature.

You people are good at pissing off people who could potentially be allies.

Blissex

«The profit motive plays such a small role, as opposed to tribalism,»

That is more or less the message of "Debt: the first 5000 years" of D Graeber, and anthropologist. Or in another version "Some people live to work, but most people work to live".

«advanced capitalist economies are still living off of the industrial revolution windfall, which is winding down.x

As in my previous "revelations", it was not the industrial revolution windfall, it was the adoption of much cheaper mined coal and then oil to replace much more expensive farmed hay/oats/corn and wood as fuel.

Bob

"That is more or less the message of "Debt: the first 5000 years" of D Graeber, and anthropologist. Or in another version "Some people live to work, but most people work to live"."

BTW "blissex" this debate has started up again over Graeber and the nature of money. Not directly related to your point:

http://socialdemocracy21stcentury.blogspot.co.uk/2016/03/george-selgin-versus-david-graeber-on.html

sam

"Using state power to bring market-like reforms/changes into every sphere of life including how an individual views his/herself."

This seems to me like a bad definition. Can you identify anyone who advocates for this, aside from extreme libertarians? I've always found Mirowski to be a terrible windbag.

"BTW "neoliberalism" is most reliably considered the political side of the "Washington consensus" economic policies, which are not quite those of classical liberalism."

This seems like a good definition. I'm sure there is a difference between classical liberalism and neoliberalism, but I don't see any looking at John Williamson's ten policy recommendations:

1- Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;
2- Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
3- Tax reform, broadening the tax base and adopting moderate marginal tax rates;
4- Interest rates that are market determined and positive (but moderate) in real terms;
5- Competitive exchange rates;
6- Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
7- Liberalization of inward foreign direct investment;
8- Privatization of state enterprises;
9- Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;
10- Legal security for property rights.

I don't think it's healthy or productive for the left to argue against bogeymen; it gives us too many degrees of freedom. Why not argue against the policy proposals of those who identify as neoliberals? Brad DeLong, Scott Sumner, or Adam Ozimek are a few econ bloggers who claim the title. And if, as Chris suggests, neoliberalism isn't an intellectual project but an opportunistic ad hoc use of power, you'll have many allies across the political spectrum.

Guido Fawkes

Point of order, CEOs are not central planners if they have competitors.

Almost all do.

Nanikore

There are two separate issues here.

The first is that lower income groups have lost relative income and power.

The second is that while this has happened, the size of government has increased.

I think this has something to do with the relationship between government, the governing classes - an international elite that Monbiot articulately refers to, and capital. It is as if government has become captured by capital.

The theory that comes closest to predicting this phenomenon I would say would be Marxian. Adorno, for example, refers to 'bureaucratic capitalism' - which would almost be an oxymoron in neo-classical theory.

Jubey

@sam - Why do you think Mirowski is a terrible windbag?

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