I recently read a critique of the market-oriented economic theory known as “neoliberalism” and decided to add some of my thoughts about it in a series of short messages on a social media platform dedicated to providing an outlet for short messaging. I have decided to expand upon those messages and provide a slightly more fleshed out appraisal here.
“Neoliberalism” has gone from being a monetarist theory first mentioned in academic circles about the primacy of finance capital in the pyramid of global capitalism to a school of economic thought based on that theory, to a type of economic policy (via the Washington consensus) promoted by international financial institutions to national governments, to a broad public policy framework grounded in privatisation, low taxation and reduction of public services, to a social philosophy based on reified individualism and decontextualised notions of freedom of choice. Instilled in two generations over the last 35-40 years, it has redefined notions of citizenship, collective and individual rights and responsibilities (and the relationship between them) in liberal democracies, either long-standing or those that emerged from authoritarian rule in the period 1980-2000.
That was Milton Friedman’s ultimate goal: to replace societies of rent-seekers under public sector macro-managing welfare states with a society of self-interested maximizers of opportunities in an environment marked by a greatly reduced state presence and unfettered competition in all social (economic, cultural, political) markets. It may not have been full Ayn Rand in ideological genesis but the social philosophy behind neoliberalism owes a considerable debt to it.
What emerged instead was societies increasingly marked by survivalist alienation rooted in feral capitalism tied to authoritarian-minded (or simply authoritarian) neo-populist politics that pay lip service to but do not provide for the common good–and which do not adhere to the original neoliberal concept in theory or in practice. Survivalist alienation is (however inadvertently) encouraged and compounded by a number of pre- and post-modern identifications and beliefs, including racism, xenophobia, homophobia and social media enabled conspiracy theories regarding the nature of governance and the proper (“traditional” versus non-traditional) social order. This produces what might be called social atomisation, a pathology whereby individuals retreat from horizontal solidarity networks and organisations (like unions and volunteer service and community agencies) in order to improve their material, political and/or cultural lot at the expense of the collective interest. As two sides of neoliberal society, survivalist alienation and social atomisation go hand-in-hand because one is the product of the other.
That is the reality that right-wingers refuse to acknowledge and which the Left must address if it wants to serve the public good. The social malaise that infects NZ and many other formally cohesive democratic societies is more ideological than anything else. It therefore must be treated as such (as the root cause) rather than as a product of the symptoms that it displays (such as gun violence and other anti-social behaviours tied to pathologies of income inequality such as child poverty and homelessness).
As is now clear to most, neoliberalism is dead in any of the permutations mentioned above. And yet NZ is one of the few remaining democratic countries where it is still given any credence. Whether it be out of wilful blindness or cynical opportunism, business elites and their political marionettes continue to blather about the efficiencies of the market even after the Covid pandemic has cruelly exposed the deficiencies and inequalities of global capitalism constructed on such things as “just in time production” and “debt leveraged financing” (when it comes to business practices) and “race to the bottom” when it comes wages (from a labour market perspective).
I shall end this brief by starting at the beginning by way of an anecdote. As I was trying to explain “trickle down” economic theory to an undergraduate class in political economy, a student shouted from the back seats of the lecture hall “from where I sit, it sure sounds more like the “piss on us” theory.
I could not argue with that view then and I can’t argue with it now. Except today things are much worse because the purine taint is not limited to an economic theory that has run its course, but is pervasive in the fabric of post-neoliberal societies. Time for a deep clean.
PS: For those with the inclination, here is something I wrote two decades ago on roughly the same theme but with a different angle. Unfortunately it is paywalled but the first page is open and will allow readers a sense of where I was going with it.
How would you see the situation developing from here on?
William,
It depends in no small measure on how the lessons of pandemic mitigation are interpreted. For people like me, the main message was that it is time to bring the state back into policy discussions and implementation. That is, after years of privatising and starving the public sector of resources, the successful health policy measures undertaken by the NZ state as well as other democracies like Uruguay makes clear that there remains a critical core role for the state in public good provision and economic macromanagement and that the private sector is miserably incapable of fulfilling those functions because of their focus on profit, not people.
Private firms are not charities or commonweal organisations. Instead, they exist to make a buck and as the business sector whinging demonstrates, when public health measures designed for the common good interfere with their ability to profit, then they jettison any concern about the larger community (this is a generalisation and there are exceptions to the rule but you get the drift). Phrased differently, material self-interest and myopic concern with generating surplus returns makes the business sector singularly unsuited for public good provision, be it in health, welfare, water and power provision, road building, “public” transportation and many other socially beneficial activities that are not designed to be profitable but which are designed to make society a better place to live in. Non-essential profit-oriented ventures like adventure tourism and the cruise liner industry can be left in private hands but regulated better and subsidised less.
That is where the State comes in (or returns, as it were) when it comes to restoring balance and equity into the economic mix.
States that depended most heavily on private health provision or where the state was incapable of providing universal pandemic mitigation relief, were those that suffered the most from Covid. The only thing worse was when anti-scientific ideological views infected health policy decision-making such as in the US or Brazil, which along with the federal nature of their political systems led to decentralised and disorganised state and local responses and logjams between the central government authorities and state level politicians disinterested in their recommendations. Oh and yes, that imbecile Trump talking about bleach and horse dewormer as effective Covid treatments and the equally stupid Bolsonaro saying that Covid was no more than the flu and God’s will in any event, all while encouraging conspiracy-fuelled “debates” about masks and vaccines. In any case, be they federal or unitary in nature, central States that had a broader role in national pandemic mitigation fared better than those that did not.
That gives me reason for hope. Along with the economic disruption of global capitalism caused by the pandemic that glaringly showed the inherent flaws of contemporary production schemes (commodity concentration, just in time production, oligopolistic control of supply and logistic chains, etc.) it is clear that neo-liberalism and its pro-market sequels and successors have failed to live up to expectations about their supposed benefits.Markets do not clear equitably but instead concentrate wealth in the hands of an oligarchical few (who are not just Russians) while increasing income inequality between individuals, communities, nations and regions. In fact, just as there is institutional and systemic racism that stacks the social opportunity “deck” against cultural, ethnic, racial and religious minorities, there is also institutional and systemic (structural) bias in favour of economic elites that stacks the material opportunity/advancement “deck” against wage labourers and others who do not have ownership stake in themes of production. When combined, these disadvantages lead to the emergence of a host of social pathologies on a global scale.
Put another way: a rising tide does not raise all boats when some have short anchors and others have long ones. The greater the tide the more likely the short anchored boats will be swamped, while those that have more anchor lengths to spare can ride the wave successfully. As with trickle down theory, there is another, less salubrious way to interpret its practical effects.
The answer, in short, is a reappraisal and judicious re-introduction of the state into the centre of macro-economic and public policy-making and the reversal of the privatisation of commonweal organisations and public services. From things such as “welfare” budgets can begin to take real shape.
So are you for a revived, if amended, version of social democratic Keynesism? or are you simply a Listian mercantilist?
Dame Anne Salmond makes a very interesting point in a recent piece on her thoughts on what is wrong with the current Three Waters proposal. She says:
“In the 1987 ‘Lands’ case, provoked by the creation of ‘State Owned Enterprises’ and a debate over the ownership of ‘assets,’ the Court of Appeal effectively rewrote Te Tiriti. Setting aside the original text, the judges ruled that Te Tiriti established a ‘partnership between two races’ based on ‘fiduciary’ principles, not unlike a business partnership.
The logic of Three Waters governance seems to arise from this neo-liberal rewriting of Te Tiriti, rather than the original agreement itself. In Te Tiriti, there is no mention of ‘races,’ or ‘partnership,’ or ‘fiduciary principles.’ It speaks of taonga, not ‘assets.’”
As I really dislike this current iteration of Three Waters it really struck a chord with me. I realised the logic of Te Tiriti being used in legislation such as Three Waters has been compromised by the neoliberal interpretation of the Treaty all those years ago. Dame Anne says this: ” The 1980s rewriting of Te Tiriti is overdue for critical examination; and this time it should involve all parties to the original agreement, including ordinary citizens, both Māori and non-Māori.” Here is the link if anyone is interested in her full opinion piece: https://www.auckland.ac.nz/en/news/2021/12/22/anne-salmond-three-waters-and-te-tiriti.html
William,
Although (as a non-economist) I am sympathetic to List’s views on national versus individual economic preferences and strategies and the oft-conflictual relationship between them, I tend to lean more in the social democratic Keynesian direction. My economic views are by no means pure or grounded in disciplinary rigour, although I tend to think that demand side economic policies are preferable to supply side policies. I combine that general structural perspective with a largely realist bent on international relations and foreign policy, but that too is intertwined with bouts of idealism such as when discussing human rights and the preferability of democracy as a political form. I note that List mostly had a rather realist view of the competition between nations given their different factor endowments, so maybe he was working off of Hobbes’s notions of the state of nature when he wrote his treatises (“Letters”). But I also note the idealism in his notion of the “universal republic” of nations even if I also see the absence of any distinction between democratic and authoritarian forms of governance (which admittedly in his time where more of the latter than the former and which tended to have closed elite-driven policy making in both instances).
Having said all of that, a return to neo-Keynesian economic policy-making would not be a bad idea, IMO.
Hola Pablo
It is frustrating that people refer to ivermectin as horse de wormer.
Sorry..I don’t get the joke.
Because it is disrespectful and belittling of the efforts of the two Nobel Prize
To continue my unfinished post above
….the two Nobel Prize winning scientists which lead to the development of ivermectin.
In relation to Covid19 ivermectin and hydroxychloroquine have now been relegated to the
” what could have been/should have been ” files.
A shame really. They could have been used as pre treatment protocols here in NZ, thus avoiding unnecessary confusion fear and panic amongst the populace
Instead this is a wonderful example of inept decision making by our politicians and unelected bureaucratic officials as well as the silencing os alternative scientific opinions
Hola Pablo
” Time for a deep clean ”
Yes. I heartily agree. However… What with?
The time is certainly ripe for change. From what I read on other websites and blogs the mood of contributors is quietly simmering with discontent
As Ed Miliband put it on rising tides & yachts:
“They used to say a rising tide lifted all boats. Now the rising tide just seems to lift the yachts.”
And NZ’s own David Parker:
“We believe that a rising tide of economic growth should lift all boats, not just the super yachts.”