Neoliberalism: A Political Curseword
Neoliberalism. It is all around us but we seem to struggle to grapple with it. It is both hegemonic, and teetering on the edge of collapse. For some time now I've been wanting to write on this idea of "neoliberalism" which seems to define our modern era so much. Starting out it became immediately evident that "Neoliberalism" is a notoriously ambiguous word. With this in mind, I thought it worth worth taking a moment to properly define what I at least for the purpose of this space mean by it.
I put forward that, fundamentally, "neoliberalism" is about a belief in markets facilitated by the state. Though there are precedents before him, I do find Milton Friedman's definition one of the most useful:
Neo-liberalism would accept the nineteenth century liberal emphasis on the fundamental importance of the individual, but it would substitute for the nineteenth century goal of laissez-faire as a means to this end, the goal of the competitive order. It would seek to use competition among producers to protect consumers from exploitation, competition among employers to protect workers and owners of property, and competition among consumers to protect the enterprises themselves. The state would police the system, establish conditions favorable to competition and prevent monopoly, provide a stable monetary framework, and relieve acute misery and distress. The citizens would be protected against the state by the existence of a free private market; and against one another by the preservation of competition.
To summarise this into three key points:
- Neoliberalism centres individual rights,
- Neoliberalism secures this through the 'competitive order' of a free market
- The free market is secured in turn, by the state
Alternate Definitions
To validate this definition, we can turn to the opposite end of the political spectrum and see how neoliberalism is defined there. Adam Kotsko describes the term as:
…the most clear-eyed advocates of neoliberalism realised that there could be no simple question of a "return" to the laissez-faire model. Rather than simply getting the state "out of the way", they both deployed and transformed state power, including the the institutions of the welfare state, to reshape society in accordance with market models. In some cases this meant creating markets where none had previously existed, as in the privatisation of education and other public services. In others it took the form of a more general spread of a competitive market ethos into ever more areas of life
Here we see the same idea. Neoliberalism is not a libertarian ideology of free market fundamentalism, but an ideology that deploys and transforms state power to uphold and create markets.
To provide a few more definitions, David Harvey's A Brief History of Neoliberalism uses:
Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to [provide]… quality and integrity of money… military, defence, police, and legal structures and functions… [for] the proper functioning of markets.
Daniel Stedman Jones, in his Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics provides:
The term has become divorced from its complicated and varied origins. It is too often used as a catch-all shorthand for the horrors associated with globalisation and recurring financial crises. But transatlantic neoliberalism, as used in this book, is the free market ideology based on individual liberty and limited government that connected human freedom to the actions of the rational, self-interested actor in the competitive marketplace…. …the term [neoliberalism] was chosen because it suggested more than a simple return to laissez-faire economics.
Simon Springer, editor of the Routledge Handbook of Neoliberalism says:
At a very base level we can say that when we make reference to 'neoliberalism', we are generally referring to the new political, economic, and social arrangements within society that emphasize market relations, re-tasking the role of the state, and individual responsibility… neoliberalism is broadly defined as the extension of competitive markets into all areas of life, including the economy, politics, and society.
With all of the above, we see the same elements of Friedman's definition:
- Neoliberalism centres individual rights (though often recast as individual responsibility)
- Neoliberalism secures this through the 'competitive order' of a free market
- The free market is secured in turn, by the State.
Though one additional point can be added that is not explicit in Friedman's definition, though I do believe it is implicit:
- The extension of the 'competitive order' ethos into all aspects of social life and the recasting of the individual into the terms of a rational economic actor.
This fourth point is made most fervently in Wendy Brown's Undoing the Demos in which she describes neoliberalism as as "a peculiar form of reason that configures all aspects of existence in economic terms."
Why Friedman's?
I favour circling back to Friedman's definition for a number of reasons:
It is positively defined by an actual proponent. This means we can understand what it is rather than isn't; can better understand what its proponents actually want to achieve; and avoids using the term as a "political swearword." Looking at detractors is very important, but if you take that as a starting point, you can find yourself debating positions that no one actually holds.
As an example, shortly after the above listed definition David Harvey (an explicitly anti-neoliberal Marxist) writes that neoliberalism believes:
state intervention in markets (once created) must be kept to a bare minimum because, according to the theory… powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit.
It is true that neoliberals believe powerful interest groups will distort and bias state interventions. It is also true that neoliberals have been sceptical of democracy, and Friedrich Hayek infamously wrote in support of Pinochet that "I prefer a liberal dictator to democratic government lacking in liberalism." However, I find little in Hayek's writing nor David Harvey's history to support the assertion that powerful interest groups are particularly problematic in specifically democracies. Why are "powerful interest groups" in, say, Ba'athist Iraq or kleptocratic Russia or war-ravaged Chad, prone to less distortion than "powerful interest groups" in Canada or Ireland? There is plenty within Hayek's writings to suggest the exact opposite:
In order to achieve their ends the planners must create power - power over men wielded by other men - of a magnitude never before known. Their success will depend on the extent to which they achieve such power. Democracy is an obstacle to this suppression of freedom which the centralized direction of economic activity requires. Hence arises the clash between planning and democracy.
The poster child of neoliberalism, Friedman, was explicitly in favour of democratic governance over dictatorship, saying:
…free-market policy will not last unless the military government is replaced by a civilian government dedicated to political liberty - as the junta has announced is its intention. Otherwise, sooner or later - and probably sooner rather than later - economic freedom will succumb to the authoritarian character of the military… political freedom in turn is a necessary condition for the long-term maintenance of economic freedom.
Similarly, it is worth engaging with Simon Springer and his co-authors, but one has to keep in mind that Simon wrote the [in]famous essay (and later book) "Fuck Neoliberalism" with the very succinct abstract: "Yep, fuck it. Neoliberalism sucks. We don't need it." You don't have to fall for a faux-neutrality to believe that maybe Simon wouldn't be the best person to speak about neoliberalism supposed positives when he openly denounces it as an "enemy" and that "there is nothing about neoliberalism that is deserving of our respect."
Secondly, why I like Friedman's definition is that it is flexible - meaning we can apply our understanding to a number of different situations without needing to deal with "true" neoliberalism. What counts as "acute" misery and distress can be debated within the bounds of what entails "neoliberalism". What counts as monopolostic, or what "conditions favourable to competition" actually looks like can all be debated.
I am entirely okay with Reagan and Thatcher being cast as "neoliberal' alongside the Clintons, Obama, Tony Blair and Paul Keating. Despite their significant differences, all of these politicians believe in liberal individual rights, they believe these rights are secured through liberal market capitalism and democracy, and these conditions are secured through the legitimate use of the state.
Thirdly, Friedman's definition contains within it the tensions and contradictions of the ideology - it pits the state against the free private market, but also intrinsically links one to the other. Unlike laissez-faire, neoliberalism sees the state as necessary to ensure the functioning of a competitive market, even if it also sees state power as a threat. It is within these tensions that I think some of the most insightful and thought-provoking debates take place. Those are some of the debates I want to be able to cover in this blog.