Neoliberalism — system first, ideology changeable

Paul Mason
Aug 7, 2015 · 8 min read

One of the most persistent themes in right wing criticisms of Postcapitalism: A Guide to Our Future is the assertion that neoliberalism does not exist. Or that it was the ideology of the Thatcher era, not the era of Cameron and Obama.

There was already a meme in the right wing internet saying the term should be banned — because it was becoming a term of catch-all abuse like “fascist”, so I should not be surprised. Nor should anybody who has read Philip Mirowski’s Never Let A Serious Crisis Go To Waste.

In an earlier draft of the book I quoted Mirowski at some length over the emergence of a dual consciousness within the neoliberal elite — so that what is said in the private meeting is not the same as what is uttered in public. [I cut most of it out because I thought it reiterated points I made in an earlier book, see below].

Both Tim Mongomerie in the Times, and John Rentoul in the Indy — respectively former supporters of Iain Duncan Smith and Tony Blair — homed in on the idea that, whatever Margaret Thatcher and Reagan did, the modern representatives of the 1% in power cannot be “neoliberals”.

In turn some on the left, including @kindofwater have argued back that neoliberalism is a definable political project, and that the term should be used to describe a specific strand of thought and policy going back to the Hayek and von Mises via the Mont Pelerin Society.

That is true — but this is not how I use the term primarily in the book.

By neoliberalism I mean the global capitalist system shaped around a core of neoliberal practices and institutions, themselves guided by a widespread and spontaneously reproduced ideology, and ruled by an elite which acts in a neoliberal way, whatever conflciting and moderating ideas it holds in its head.

Neoliberalism, for me, is first and foremost a model of capitalism. It is the model that triumphed in, and prolonged, the downswing of the fourth long-cycle of capitalism. As I say in the book, we can use neoliberalism to describe the whole global economy even though it consists of a neoliberal core and a set of countries who absorb the imbalances thus created by refusing to practise neoliberalism (I mean the so-called neo-mercantilists: China, Germany and Japan).

It is in this sense that I believe “neoliberalism is broken” as the first chapter of my book says. Of course neoliberalism as a coherent ideology fell apart in September-October 2008, as Alan Greenspan was good enough to state overtly: “I found a flaw”. Since then it’s relationship to elite economic policy has been something like the relationship of the Ten Commandments to life in an Italian peasant village: a good idea but nobody obeys.

Here I want to briefly explore the relationship between the phenomenon of a broken economic model and the phenomenon of the elite trying to deny the existence of its own ideology. As readers of my previous book, Meltdown: The End of The Age of Greed will know, I think the two are linked.

Here’s what I said in Meltdown, in 2009. To understand why neoliberalism’s internal logic has collapsed:

“we need to use the word ideology in the sociological sense: a set of ideas that justifies the economic dom- inance of a ruling group; which describes experience accurately enough for the mass of people to accept it; which is propagated through the ruling group’s control of the media and education; but which is, on examination, a collection of secrets, superstitions and non-sequiturs. Neoliberalism, like all ideologies, needs to be under- stood exactly as it wishes to avoid being understood: as the product of history.”

That history breaks down into the following phases: the preparation stage, when the US elite assembles an ideology and programme around what was to become the “Washington Consensus” — free markets, small state, privatisation, regressive taxation, deregulated labour markets and, though not mentioned in John Williamson’s famous summary of the project, the re-arming of the police, security services and jail system to suppress dissent.

Next, the implementation phase. In Meltdown, as in Postcapitalism, I’ve emphasised the centrality in this phase of smashing organised labour. In fact economic policies pursued by the Thatcher and Reagan governments, and their imitators in New Zealand, Canada etc, were subordinate to the objective of defeating the unions and destroying working class solidarity. In Postcapitalism I’ve expanded on this, using the Kondratieff wave model, showing how the ability to destroy all forms of worker resistance was unique. All previous bourgeoisies tried to co-opt social democracy or radical republicanism; and tried to replace radical unionism with paternal unionism. The neoliberal elite is the first in the history of capitalism to believe capitalism cannot survive alongside an organised workforce. That conviction was born out of the collapse of Keynesianism — which incidentally I use in the same way: to describe an objective system backed by a pervasive ideology.

This implementation phase is substantially complete by 1992, which in Meltdown I mark as the first turning point of the liberal era. Here’s the skeleton of the argument (for the full thing buy the book!):

“Neoliberalism would now evolve. It had been a doctrine of class struggle, social conservatism and anti-communism. Now, even as the Washington Consensus was being imposed on the developing world and former communist states, it would be challenged in the centres of power. In response it would morph into a kind of secret religion for the super-rich….

“To fulfil its promise and maintain its ideological grip in a world full of Bart Simpsons, neoliberalism would now have to deliver one thing above all: relentless growth. As we have seen, it was in pursuit of such growth that the bubble economy was created. But even as it delivered growth and easy money, the doctrine was under pressure and had begun to split apart.” (p131)

The split produced the Third Way: Clinton and Blair, and their imitators, wanted the results of the freemarket revolution — and would pursue the further privatisation of the state and suppression of wage bargaining power — but they also wanted social cohesion and wellbeing. This was supplied by deregulating the finance system and stimulating monetary led booms.

So that while the first generation neoliberal elite was aligned with real businesses — automakers who needed to smash their unions — in the 2000s it had morphed into an elite assembled around banking, oil, the military-industrial class and a newly enriched class of politicians. In a big switch from the Thatcher/Reagan years — when tight money had been the doctrine — they became apostles of loose money.

Because the unions were already smashed, they did not have to focus so relentlessly on destructive tasks: the ideology in their heads could be more varied, ranging from paternalistic liberalism to — in the Blair/Brown administration — mild redistribution and increased state spending .

The fourth phase of neoliberalism begins in 2008, when they have to abandon the pretence that the market self-corrects, use the state to prop up the banking system, socialising the risks but privatising the gains, and then they design the only stimulus policy available — QE — in a way that enriches the elite first and revives growth much later. As a system — for the reasons I describe in Chapter 1 of Postcapitalism — it is strategically bust.

Fiat money has become a machine for creating booms and busts. Every bust wipes out a bit of the welfare state. Financialisation is a tool enabling the continued suppression of the wage share. The global imbalances fuel the boom bust cycle and can only be suppressed by suppressing growth. And info-tech, the only big positive, cannot produce its promised hike in global productivity because the entire system is geared to extensive growth: more factory jobs in China, more shit service jobs in the developed world.

Each of these four distinct phases of neoliberalism as an economic model demanded different versions of the core ideology. That’s the first reason pro-neoliberal journalists can’t accept there is a coherent or even persistent project called neoliberalism.

But the deeper reason was alluded to by Mirowski in a passage I’ll quote in full (via screen grab):

In 20+ years as a business journalist I’ve seen the proof of this so many times that I have lost count. In private the elite will come out with all the most destructive, vindictive and selfish aspects of the ideology. In public it’s a different discourse. The entire public relations industry at high level is dedicated to reinforcing both activities: the public propagation of the acceptable version, and the creation of private spaces where the esoteric truth can be spoken, and crucial differences of emphasis or strategy debated.

In addition, as Mirowski implies, neoliberal ideology has to be self-replicating and accepted by large masses of people. The welfare recipient has to shrug her shoulders and say: I’m poor because I’m stupid. The worker has to positively welcome the little private letter announcing their individual pay rise, and think “thank Christ there are no more unions to make us all get the same”. The bailiff has to evict the tenant with glee, thinking “thank God it’s not me”. The border policeman has to truncheon the migrant for the same reasons.

All versions of capitalist ideology do this: because they rely on the deeper assumption that private property, wages, and consumption according to market worth, not need, are “natural”, timeless and unchallengeable features of human life.

Even now, educated people will try to tell me things like “markets just exist naturally and will emerge even under postcapitalism”. Well no, markets have to be created every day by the state. If the state did not shape them, create them, permit them to expand and create the money to make them liquid, markets would look very much more constrained and different.

One final thought about this “objectivist” use of neoliberalism, which I prefer. Because the ideology itself has morphed, and is morphing again after 2008, it might be better for those who share my base/superstructure/ideology method to come up with a more specific taxonomy as with feminism (first wave, second wave) to describe the ideology and its relationship to the economic system. Feel free to have a go.

In particular, amid the flurry of change and upheaval since 2008, an interesting question is whether the neoliberal elite itself has changed to become more reliant on (a) offshore, corrupt and dictator-protected wealth — ie for shorthand “more Russian” and/or (b) “more Facebook” — that is, do the elite clustered around the protection of IP monopolies actually have more share of voice in Neoliberalism v1.4 than bankers, or the carbon lobby?

Please discuss, and bear in mind I’m writing this on a beach, with only 3g as comms, and unlike the book I’ve just hit “publish” as I finished writing.

Mosquito Ridge

Resist the right!

Paul Mason

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Journalist, writer and film-maker. Former economics editor at BBC Newsnight. Author of Clear Bright Future: A radical defence of the human being

Mosquito Ridge

Resist the right!

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