Neoliberalism: dangerous myths and/or frightening realities? Part 1

A blog in four parts by Paul Kennedy: MMU Visiting Research Fellow and formally Reader in Sociology – with Kevin Albertson

Part 1: Neoliberalism – How’s it doing anyway?

Neoliberalism[1] draws us into a discourse which promises, even guarantees, enhanced individual freedom from state oppression (apparently, we don’t need to worry about oppression from private corporations). But nearly four decades of policy from the invisible iron hand in the velvet political glove has left many citizens, and even some serious thinkers on the Centre and Left, bewildered, hollowed out and looking for alternatives.

On one hand, it has been propounded with menaces (‘there is no alternative’) and the scapegoating of groups found guilty of creating economic woes – those who inexplicably refuse to buy in to free markets (trade unions, arrogant professionals, public sector employees, welfare scroungers and those apparently too idle to acquire the skills that would enable them to escape from underemployment: tick your favourite box(es)!).

On the other, the rewards of self-interest have been expounded by a popularist press, bevies of business leaders and a majority of politicians across Europe, North America and the world. These have worked hard to persuade citizens of the inalienable rights and superiority of the free-market, the miracles of competition and the necessity of promoting an elite of largely unregulated financial, managerial and technological geniuses from whose actions all good things will ultimately trickle down.

Surely the trickle down should have worked by now, after nearly half a century of Neoliberal policy. Certainly, we have more of everything: the coffee has improved a lot in the last forty years for example. However, we also have more inequality, private, domestic and public indebtedness, widespread economic insecurity and social distress, massive youth unemployment, the continuous risk of further financial crises, seemingly endless regimes of austerity and virtually non-existent or imbalanced economic growth. Neoliberalism has been, in the USA and the UK the only economic game in town for decades: We do not have a choice as to where to assign blame.

Is it a conspiracy or is it the market?

Neoliberalism has seen an unsustainable transfer of national wealth into the hands of the already powerful and the increasing disenfranchising of the vulnerable. This was entirely foreseeable – in fact it happens every time classical economic policies are adopted. Was there a hidden agenda in the Hayek/Friedman doctrines, still pedalled by classical economists and related disciplines and by assenting politicians since the late 1970s? Or were they and their followers simply well-meaning but misguided people with an a-historical view of capitalism, a rather too narrow view of the ideal state, and minimum social perception?

A number of critical and extremely useful analyses can be found in the writings of scholars and commentators such as Gray (1998 and 2009)[2], Harvey (2005)[3], Plant (2009)[4], Mirowski (2013)[5] and Streek (2014)[6], among many others. However, there remains room for further criticism and commentary. Sociology, in particular, has a role to play in this regard and leaning on some of its ideas, I try to flesh out some of the counter arguments below and in subsequent posts.

The logic of markets

Irrespective of what form they take or the locality where they reside (cyber space, downtown Manchester, retail parks, a stock exchange floor &c.) , markets fundamentally bring people together in order to exchange goods and services and in a minority of instances they enable some to make a living from acting as full time traders. Notwithstanding the power of advertising, the possibility of monopoly agreements and other market fixing arrangements on the part of traders and the overall play of supply and demand – the latter partly shaped by cultural and social factors – market prices mostly follow from the unplanned and unintended actions of innumerable micro-decisions made by millions of separate consumers or businesses.

When individuals decide to buy brand X toothpaste instead of Y, purchase equities rather than government bonds for their pension or prefer buying shoes this month rather than garden gnomes, they are not thinking about how to shape the national economy, contribute to overcoming world poverty, bolster an industry or business in order to protect individual freedom or help resolve complex economic dilemmas concerning such issues as securing long-term energy supplies. Rather, for the most part, they are solving entirely personal micro dilemmas concerning their domestic or business situation. And even though the cumulative market choices of the many culminate in aggregate consequences for prices, supplies, employment, earnings, the success or failure of many businesses and their employees, and so on, none of these macro consequences were intended or planned by the uncoordinated millions who made their own miniscule contributions.

Aren’t markets enough?

Neoliberals have tended to reify the ‘market’ and market activity without ever explaining exactly what they are or how and why markets differ and whether this matters. In fact, there were/are many different kinds of market both historically – prior to modernity across very different kinds of social formations, hunting and gathering, tribal, stateless, peasant, feudal and so on – and today. Moreover, and like capitalism itself, no market could or can function outside the framework, protection and guarantees of trust and law provided by a dense network of ongoing social relations and institutions that we have become accustomed to referring to as a ‘society’ – supported by some system of government.

As Durkheim (1964)[7] reminded the Utilitarian thinkers more than a hundred years ago, contracts between individuals or agents are unenforceable and therefore impossible without a prior system of rules and sanctions grounded in strong social relations. Nor can markets become substitutes or replacements for dense networks of social relationships and the solidarities, loyalties, commitments and the emotional support they engender – as Neoliberals seem to imagine. If markets require social frameworks to support them, it is clear markets cannot create those supports.

Even in today’s world, it is not markets that make possible the overlapping institutions of social reproduction – through family life, school, community associations, friendships and neighbourhood life (with a little help from the redistributive and welfare activities of governments) – but the other way round. And the maintenance of social institutions depends only slightly, if at all, on the incentive of money and economic gain per se. We do not mean that societies require no money – only that financial gain cannot be the overriding goal of society. Consider, for example, friendship might be strengthened by sufficient money to spend on shared interests – however, a relationship motivated solely by the desire for monetary gain is not a friendship.

To be continued …

We pick up the topic of motivations in next week’s blog.

_____________________________________

1 Following the WHO, we use the definition Neoliberalism meaning “the philosophy that underpins and drives economic globalization. At its core is a belief in the free market and minimum barriers to the flow of goods, services and capital. It is an extension of the traditional liberal philosophy, which argues for a separation of politics and economics and that markets should be “free” from interference of government.”

2 Gray, J. (1998 and re-published in 2009) False Dawn: the Delusions of Global Capitalism, Granta

3 Harvey, D. (2006) A Brief History of Neoliberalism, Oxford University Press

4 Plant, R. (2009) The Neoliberal State, Oxford University Press

5 Mirowski, P. (2013) Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown, Verso

6 Streek, W. (2014) How will capitalism end?, New Left Review, 87: 35-66

7 Durkheim, E. (1964) The Division of Labour in Society, Free Press of Glencoe

Please note that blog posts do not necessarily represent the views of other authors on the blog or of the Manchester Metropolitan University

This entry was posted in Uncategorized. Bookmark the permalink.