Over-estimating neoliberialism

George Monbiot says that the left hasn’t come to terms with “neoliberalism.” His piece shows why. It might be that “neoliberalism” is not so much a coherent intellectual project as a series of opportunistic ad hoc uses of capitalist power.

To see this, consider two paradoxes. Paradox one is that although the left sees neoliberalism as the dominant ideology of our times, very few people actually claim to be neoliberals – aside, arguably, from a few Blairites and Economist writers. As an intellectual presence, neoliberalism is little more than well-connected trolling.

Paradox two is that whilst the left associates neoliberalism with free markets – as George says “it maintains that “the market” delivers benefits that could never be achieved by planning” – one feature of the neoliberal era has been the soaring wages of those claim to deny the power of markets. 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.

These two paradoxes have a simple solution. It lies in the fact that neoliberalism is NOT free market ideology. Here’s Ben Southwood:

Neoliberalism is comfortable with the state spending 40-50% of GDP, it is comfortable with minimum wages, redistribution, social insurance, state pensions and extensively-regulated finance.

And here – from a very different perspective – is Will Davies:

the state must be an active force, and cannot simply rely on ‘market forces’. This is where the distinction from Victorian liberalism is greatest…Arguably it is the managerial freedom of corporate and quasi-corporate actors which is maximized under applied neoliberalism, and not markets as such.

Most leftists, I reckon, would describe all the following as distinctively neoliberal policies: the smashing of trades unions; privatization; state subsidies and bail-outs of banks; crony capitalism and corporate welfare (what George calls “business takes the profits, the state keeps the risk”; the introduction of managerialism and academization into universities and schools; and the harsh policing of the unemployed.

What do they have in common? It’s certainly not free market ideology. Instead, it’s that all these policies enrich the already rich. Attacks on unions raise profit margins and bosses’ pay. Privatization expands the number of activities in which profits can be made; managerialism and academization enrich spivs and gobshites; and benefit sanctions help ensure that bosses get a steady supply of cheap labour if only by creating a culture of fear. Ben’s claim that neoliberalism is happy with a big state fits this pattern; big government spending helps to mitigate cyclical risk.

All this makes me suspect that those leftists who try to intellectualize neoliberalism and who talk of a “neoliberal project” are giving it too much credit - sometimes verging dangerously towards conspiracy theories.  Maybe there’s less here than meets the eye. Perhaps neoliberalism is simply what we get when the boss class exercises power over the state.

* In fact, most fund managers don’t beat the market; they make their money by asset-gathering (and perhaps darker practices) rather than asset management.

Comments

[Paddy Carter]

so this word is used to describe both extreme free-market ideologues and erm .. Brad De Long.

[sam]

i agree with Herbert Gintis:

http://www.amazon.com/review/R39XEVF9I4FLJV

[Jubey]

@sam - Umm..its very suprising that Herbet Gintis would consider Mirowski taking this so-called postmodernist view of science. Any brief history or beginner's reading of neoclassical economics will show you that the whole discipline is unredeemable. It has time and time again been proven wrong on various fronts, very recently by Anwar Shaikh from new york's New School of Social Research who defines it as a religion. Yet, neoclassical economists do not accept this and use dirty and seedy tactics to not only keep their discipline alive but to make sure it has political influence and a say in shaping society and keep out other economic disciplines that can benefit society and have done proper research. A brief look at Paul Krugman's extremely childish or might I say bullying behaviour during the early 90s when NAFTA was being ratified and his stance now on it explains it. And this is a 'nobel' laureate we are talking about here. Not to forget the rather shady history of the nobel prize in economics.
Rational actors, equilibrium modelling, loanable funds, Black Scholes,everybody with half a mind uncorrupted by neoclassical woo-woo knows its smelly stuff of the highest order. The fact that it still has such powerful influence on the discpline, in universities and in policy circles will anger anyone with a sense of justice. And hence I think Mirowski's tone is right. Disproving their theories wont work because it never has.

As for what is Herbert Gintis is doing in this review, I think, is akin to scavenging out tiny unburnt pieces from a burnt dish and consoling himself that atleast these parts are well cooked.

[Jubey]

Might I suggest that you try this lecture to give you an idea of how terrible of a discpline atleast neoclassical economics is - https://www.youtube.com/watch?v=xfbVPDNl7V4

[sam]

I'm good, thanks. All Shaikh, Mirowski and all these other old cranks who rail against 'neoclassical economics' accomplish is creating smug complacency in ignorance of economics. Some economics is great and some not-so-great. I trust myself to tell the difference. And I've read enough empty take-downs for one lifetime.

[Deviation From The Mean]

Stalin was keen to ferment competition between regions when it came to steel and grain production. He also encouraged competition within Gosplan. The view was that abundance would eventually eradicate competition, as we know it.

So I think we can very easily compare central planners with CEO's. I would say CEO's are central planners but instead of having a national interest they have a personal interest. So CEO's are probably worse.

Bob - you could never be an ally could you? You equate wealthy people setting up a shell offshore company, using financial experts and accounting trickery to achieve direct tax evasion with someone on the average wage who turns up to work and uses a computer.

Seriously, this is so off the scale and in the la la land, how else can we react? If reason is the impossibility of reason, you are the Devil!

[Jubey]

@sam - Ok. But then I'm confused as to how you reconcile absurd concepts such as homo economicus or rationality with what happens in the real world. I'm also interested in knowing what you'd think is a substantial critique(apart from Gintis') in economics.