Defining Neoliberalism

Neoliberalism is the creed of 21st century capitalism. The capitalist ideologies that have come before it, be they fascist, conservative, liberal, or social democratic have worked to obscure the reality of class rule behind the state, the nation, democracy, and class collaboration. Neoliberalism does none of this. It is the most naked, most open expression of capital the world has ever seen. It speaks only to business elites and bourgeois politicians, and as such is enthusiastically embraced by them. It informs the ruling class on nearly every social policy question and frames their attitude toward the forces arrayed against them. Neoliberalism is the mindset of our rulers and for this reason it has to be examined and understood by everyone opposed to the vandalism it has unleashed upon our planet.

A very modest step in this direction was taken at a day school hosted by Keele last Thursday. We heard contributions on Thatcher's criminological legacy, managerial power, and workers' rights under New Labour. But the most important was the stunning opening by Phil Mirowski. His paper, 'What neoliberalism means today' presented a wide ranging genealogy of neoliberal thought and its proponents, beginning with Von Hayek's biblical screed, The Road to Serfdom, and ending with Wikipedia. He told a story of how the popularisation of the book enabled Von Hayek to found the Mont Pelerin Society and slowly build up an interlocking network of intellectual and activist/PR cadres distributed across think tanks, campuses, and voluntary organisations. And it was slow, Von Hayek and his acolytes played a long game and their patience paid off. When the post-war consensus hit the buffers in the 70s neoliberalism had accumulated the human capital and connections to step out of the seminar rooms and fancy restaurants and onto the stage of history.

So what is new about neoliberalism? Isn't it all about dusting off Adam Smith's 18th century thinking and using it as a guide for managing contemporary capitalism? For Smith and his disciples in the neo-classical school of economics, buying and selling is rooted in human nature. This is the foundation for the market: it arises from our essence and spontaneously organises production and the distribution of goods. The hidden hand of millions of simultaneous transactions regulates the whole social metabolism, leaving nothing for the state to do except guarantee property rights by upholding the law. The state is passive and reactive. Here lies the first break between Smith and neoliberalism. Neo-classicism met its Waterloo in the great depression. The crisis was triggered and then prolonged by the state's hands-off economic policy: the market would eventually reach a new equilibrium. For neoliberalism this is what the state shouldn't do. Not only should states intervene to make sure markets function correctly (tacitly acknowledging markets are social and not natural phenomena) but they need to create the conditions for new markets to emerge.

This leads to the second break. For the state to perform such a role it needs to tool up. The neoliberals' "small state" is a police and military apparatus armed to the teeth and prepared to spill blood to carry out the programme, a programme not confined to economics: it attacks and remoulds the social fabric, bending it to the needs of capital and the logic of the market.

Third, for Smith the market was only the means of allocating goods. For neoliberalism it is an information processor and "knows" more about the economy than anyone else. This is why they can be interventionist and anti-statist: the state can only secure present markets and create new ones. It cannot act as an actor with the economy itself because it can only be privy to a small fraction of the information that are transmitted through and acted upon in market relationships. Democracy therefore is always a danger as popular pressure can force states to blunder into markets for non-economic ends. And as for socialism, you might as well forget it. But corporations? No problem. They're disciplined by the market.

What about problems? Neoliberals in their more honest moments do not deny that they exist, but the solution to market malfunctions are more markets. For example, capitalism's threatening to burn the planet to a cinder? No problem, just set up a market for carbon trading permits.

We have been living with neoliberalism for 30 years in Britain. It has given us a society where manufacturing has been decimated and sub-contracted overseas. The state is trying to extricate itself from being the primary health, education, and welfare provider. Everywhere property rights have been entrenched and what remains of the commons - state property and the genes in our bodies are sold off and patented. In short, neoliberalism strengthens the power of the ruling class by making the rest of society more and more dependent on the market. Their project is a permanent and irreversible distribution of wealth and power to the capitalist class. But its nemesis, the labour movement, remains. And as long as it does neoliberalism can never fully succeed.