Why I’m not a neoliberal

Jun 26, 2017 · 5 min read

It’s almost a year later, but why not. Let’s start by ruling out nos. 5 and 6; with all due respect to Sam Bowman, it’s a little too convenient to claim your ideology as more pragmatic or empirical than anybody else’s. If I’m going to explain why I’m not a neoliberal, it won’t be because I reject evidence in favour of dogma.

There’s consensus on some substantive points. I can run with nos. 1 and 3: I like markets a lot too, and ceteris paribus I care about the poor. And then nos. 8 and 9 are pretty much fine too, as utilitarian belief in property rights and redistribution.

That leaves us with nos. 2 (liberal consequentialism), 4 (cosmopolitan welfarism) and 7 (optimism for neoliberalism) which are at issue here.

The welfare of ‘everyone in the world’ is not a big concern

Bowman says:

It’s natural to feel more in common with people who live near you and live like you, just as it’s natural to care much more about your family than about strangers. But when it comes to policy, we care about improving everyone’s lives, wherever they are.

On the latter point: why? For such an empirical, pragmatic doctrine, here neoliberalism offers an assertion; it follows like George H W Bush reading off the autocue.

It is natural to care more for those we know best, and that goes from friends and family, up to our nation. That’s pretty rational too — by looking after those we have more in common with, we get the greatest return for our investments in social capital.

You can assert that foreigners matter just as much; but most people would not be persuaded. No less a neoliberal authority than Martin Wolf, speaking on the same kind of pro-immigration welfare calculus Bowman proposes, concludes:

the weight on the welfare of potential immigrants should be (close to) zero, I would note that if one adds foreign aid, net contributions to the European Union and that part of the defence budget which might be of benefit to foreigners, the sum is certainly considerably less than 5 per cent of total public spending (with aid at about 1.5 per cent of spending). Thus, 95 per cent of spending goes on 60m British residents, while 5 per cent goes on the rest of the world’s roughly 7bn people. So, revealed preference suggests that the weight placed by the British on the welfare of foreigners is not much greater than zero per head.

Trust the people, but only when people are responsible

Bowman’s liberal consequentialism says:

People’s wellbeing is all that matters, and generally individuals are best at defining what is best for themselves.

Bowman’s “generally” here is doing a lot of work. “[G]enerally individuals are best at defining what is best for themselves” only holds under assumptions that institutions create the right incentives and inclinations.

A good example of the problem — only implicit in Bowman’s essay, but mentioned elsewhere — is the commitment to a universal basic income. The neoliberal belief is that by liberating people from material worries, they will be “free” to live the lives that they want.

Yet we know that many people can overweight short-term pleasures compared to long-term interests. It seems likely that a significant number would use a UBI to finance a life without productive work, with all of the consequences that has for depriving them of life satisfaction (and dignity, if we can use such an old-fashioned word).

The US opioid crisis tells its own story of people left to their own devices finding (often quasi-legal) entertainments which ruin lives. In the end, responsible individuals are generally best at defining what is best for themselves; but we have to cultivate that responsibility.

The world gets better because of the march of pro-market ideas

To be clear, my difference is not with the claimed benefit of the march of pro-market ideas, or the fact they have made so much progress. Instead, my problem is with the notion that the march of pro-market ideas is a sufficient indicator of future global progress.

This seems an odd time to make that claim. Bowman’s essay was prompted by the drift away from pro-market ideas. That drift has been driven by two factors which pro-market neoliberals have struggled to vanquish: firstly, that neoliberalism has nothing to say on the problems facing western societies; secondly, that other societies have shown that a market economy can be mixed with all kinds of political institutions and policy choices which can address those problems.

The trouble with neoliberalism is one that affects most forms of liberalism: the idea that politics is reducible to policy choice. For neoliberals like Bowman, the right policies are obvious — free markets, free trade, open borders, UBI to minimise poverty — and all the rest is unproductive noise caused by low-information voters.

The result is a confusion whenever voters seem to want trade-offs which don’t fit the neoliberal template; if only they read the right studies, they would see the benefit of neoliberal governance. “Demoting democratic adjudication of values in favour of technocratic adjudication of facts” seems a good way of explaining this strategy, and the Brexit referendum result and the Corbyn surge show the potential for backlash when neoliberalism fails to deliver.

The wake of neoliberalism

Bowman’s case is for neoliberalism, and it is fair to give the best case. But in practice, every ideology brings unintended side effects, and neoliberalism is no different.

The first is the increasing intermingling of corporations with the state. The neoliberal tendency to promote business freedom, alongside the reduction of government to administration means the creation of ever-more complex regulatory bureaucracy. That regulation is designed to enable and support, and often ends up being costly compliance rather than anything that gets in the way (see: the financial crisis), although it does keep competition down. Today’s interdependency between large companies and regulators is well-known, with inevitable consequences for taxpayers, consumers and would-be competitors.

The second major effect, well presented by Bowman’s colleague Ben Southwood, is that neoliberalism and liberal-left ideas of ‘social justice’ have found common ground. The shallow world of identity politics is a far more business-friendly atmosphere than high-trust communities with strong institutions. In the name of social justice, there’s no need for limits on markets, as long as everyone gets a share of the action; even better, once you can find a human-rights frame, any restriction on business freedom (e.g. immigration control) can become a left-wing cause.

Commercial capitalism depends upon a strong civil society, and neoliberalism weakens civil society. The mixing up of corporations and the state lowers trust by creating a sense of a ‘rigged market’ economy (sometimes fair, sometimes not). The stoking of social justice encourages political activism in the place of personal responsibility, and wears away at the intermediary institutions that allow people to solve social problems without politics.

In closing, Bowman says “a very weak version of [neoliberalism] might be the basic ideology that underpins the modern world”, and I think there is a grain of truth in that — but the weakness is important. The strong version which Bowman presents is something which has in recent years begun to damage Britain, and now (thankfully) seems to be in decline.