Yves here. This article is better than its title. It recounts the origins and the evolution of neoliberalism, arguing (and I agree) that it became established not under Reagan and Thatcher, but Clinton and Blair. It also does offer support for its contention that neoliberalism is losing its hold, ideologically and in practical terms.
Of course, that view presupposes sincerity among the proponents of neoliberalism, as opposed to simply seeing it as the best available tool for gutting social safety nets and reducing worker bargaining power. Now that that aim has been accomplished, with corporate profit share of GDP holding firm at levels nearly double one that Warren Buffett deemed to be unsustainably high, and income and wealth inequality still rising, there’s no need to bother with principles.
By James Meadway, an economist and writer. Originally published at openDemocracy
Could it be that the free-market policies that have dominated policymaking for the past 40 years are finally on their way out? In the past six months, the Conservative government in the UK has nationalised a steelmaker, threatened major football clubs with fan ownership, and moved to block the sale of silicon chip designer ARM to a US manufacturer. Such moves towards more assertive state intervention are not limited to the UK.
In Europe, the EU is in the process of overhauling its State Aid rules to allow greater government support to industry, citing the need to meet competition from China. In the US, Joe Biden’s administration is not only committing $3.6trn to spend on health and education – it is expanding trade union rights, raising taxes for the rich and corporations, and has successfully led the push for the introduction of a global minimum corporation tax. None of this would fit easily into the ‘neoliberal’ playbook of previous decades, when anti-union, tax-cutting and market-first policies dominated government thinking.
Debate over neoliberalism’s future is not new, and has been reignited since the COVID-19 pandemic disrupted economies across the world. But this isn’t simply an academic matter: whether we think neoliberalism is dead, dying, or in rude health has strategic consequences for political activity. If neoliberalism – meaning the way in which capitalism has been run for the past three decades (and in some parts of the world, for longer) – is really on its way out, we need to be alert to the ways in which the system is changing, and perhaps update and refresh our own slogans and demands and strategies accordingly.
But if neoliberalism remains firmly in place, there might appear to be fewer challenges for the Left and progressives in dealing with the situation. All our slogans, policies and strategies, honed over the last decade, will still basically apply: a case of better the devil you know, and an opportunity to stay in our collective comfort zone.
Whether we are seeing a real break in global capitalism’s mode of operation, a temporary deviation from the neoliberal norm during a global pandemic, or simply a continuation of business as usual depends crucially on what we think neoliberalism was and is. Those stressing that we are seeing a break, like French economist Cedric Durand in two recent New Left Review essays, tend to view the shift as pre-dating the pandemic. Durand has described the Biden administration as “1979 in reverse”: instead of driving up interest rates, cutting social expenditure, and attacking trade unions, Biden is overseeing a regime that is suppressing interest rates, driving up social spending, and expanding trade union rights. Crucially, however, he locates the breach with neoliberalism before the COVID-19 pandemic. And, like others stressing a significant shift, he points towards material factors driving the ‘contradictions’ facing capitalists, such as the difficulties in securing profitable investments. In this reading, neoliberalism was related primarily to the restructuring of capitalism from the 1970s onwards.
Those seeing the current period as mainly a continuation of the neoliberal era stress the specificity of the pandemic in forcing temporary actions, much like the temporary ‘Keynesianism’ that followed the 2008 financial crisis. Crucially, they view neoliberalism as primarily an intellectualmovement. Writing in Tribune magazine, historian Quinn Slobodian argued that the intellectual forebears of today’s nativist and government-friendly radical Right – the Steve Bannons or Marine Le Pens of this world – can be found amongst the ranks of neoliberal gurus like Friedrich von Hayek. Far from wanting a pure free market everywhere, Slobodian claims, Hayek and his co-thinkers were only too happy to see authoritarian governments erect barriers to markets. Far from promoting the unfettered free market of libertarian fantasy, neoliberals were very happy to use the ‘strong state’” if doing so meant building support for their vision of society. Economist Grace Blakeley, meanwhile, has also argued that governments across the globe still see themselves as working to a neoliberal playbook.
This way of seeing neoliberalism, as an intellectual movement above all, is most associated with Philip Mirowski and his work on the ‘Neoliberal Thought Collective’. It turns the history of neoliberalism into a story about the role of the Mont Pelerin Society, established in the eponymous Swiss town in 1947 by Friedrich von Hayek, Milton Friedman and other neoliberal thinkers. In this version of events, the Neoliberal Thought Collective then spent decades nurturing their vision of a market-organised world before the crisis of the 1970s gave them their opportunity to mould governments in their image. This version of history has gained some support in the past decade amongst the broader Left in the form of the idea that the 1970s and 1980s were a ‘paradigm shift’ in economic thinking – with neoliberalism replacing the earlier ‘paradigm’ of Keynesian government intervention in the 1970s crisis. What is needed now, in this view, is a similar paradigm shift, but in the opposite direction.
As Will Davies has written, the 1970s “inspired a vision of crisis as a wide-ranging shift in ideology, which has retained its hold over much of the Left ever since”. But this was – as the filmmaker Adam Curtis might say, himself a proponent of the paradigm shift view – an illusion. Neoliberalism didn’t arrive on tablets of stone, brought down from the Swiss mountains. What became neoliberalism in government was the product of actions by different governments, at different times, under different guises. For governments in the West, the process in the formation of neoliberalism was strikingly uneven. Margaret Thatcher’s British government led the charge in western Europe, but it was only through successive victories – both industrially, against a series of trade unions, and electorally – that a decisively neoliberal domestic regime was installed by the end of the 1980s, along with Thatcher’s exit from office.
But the process was not confined to separate national governments. Eric Helleiner’s classic book, ‘States and the Rise of Global Finance’, shows how, across the major developed economies, domestic crises from the end of the 1970s pushed countries towards building a new international order for capitalism. Although many countries were partly influenced by neoliberal think tanks, they were also responding ad hocly to changing global circumstances. It was the 1974-79 Labour government, for example, which first removed exchange controls, not from a commitment to neoliberal ideology but in the belief this would help domestic manufacturing investment. As Slobodian argues elsewhere, it is at the level of international organisation and global rules that neoliberalism can best be understood. Crucially, however, those rules emerged from specific domestic circumstances and the outcome of uncertain struggles in different countries. It was in responding to different domestic circumstances, as the world around them changed, that different national governments – led by the largest economies in the West – pulled together the neoliberal global regime.
To understand the world today, we need to shift the focus away from neoliberalism’s heroic years in the 1980s, when it acted as an injunction to attack and destroy the enemies of capital such as the miners in Britain or the air traffic controllers in the US. This account of neoliberalism’s early combative years offers a clear, simple story, with obvious goodies, baddies, winners and losers. But the severity of the class struggle then can lead us to misunderstand its real triumphs globally. The years of struggle can be found not in the period of neoliberalism’s completion and triumph, but its difficult and contested emergence.
This period, from the end of the 1970s through to the early 1990s in Britain, when strike days and union membership collapsed never to recover, is the period during which the neoliberal style of government was contested and other competing options were still on the table. The National Union of Mineworkers could have won in 1984-85, as we now know the government feared; ‘shock therapy’ in Eastern Europe was not at all what reformers and dissidents wanted or expected; and although now largely presented in the West as a student struggle, the convulsions across China around the Tiananmen Square protests that were brutally suppressed on 4 June 1989 drew in far wider layers of Chinese society – crucially including workers on a mass scale.
Neoliberal governments tore down controls on the movement of capital across borders, ripped up protections on labour and the environment in the interests of multinationals, and instituted a global race to the bottom on tax that saw major corporations often pay less in tax than their workers. International organisations like the IMF and the World Bank were repurposed, new agreements on intellectual property were signed, and the World Trade Organization was established. This triumph meant that even where there were domestic differences in how different countries organised their economies, the general tendency everywhere was for all national economies to come increasingly into alignment with the neoliberal international order. At varying speeds, and from different starting points, almost every country on the planet found itself adapting to the same neoliberal rulebook for its domestic economy. “There is no alternative,” was Thatcher’s striking phrase, but it was only after she left office that this began to ring true.
What’s crucial about all this is that neoliberalism didn’t arrive fully-formed. The ‘shock therapy’ reformers in eastern Europe certainly had some ideas about what they were trying to eventually create, but the drivers of change were the freeloaders from inside the old nomenklatura who took advantage of privatisation and liberalisation to steal billions from their local populations. Thatcher did not enter office anticipating that she would decimate British manufacturing and create a monstrous debt bubble – quite the opposite, her rhetoric was about Britain becoming once more the “workshop of the world” and about the virtues of thrift – but that is where she ended up regardless. It was only after the dust settled from the great class battles of the 1980s that, in the West, we could see the shape of the neoliberal system that had been created. And it was only by the early 2000s that we could see the shape of it everywhere.
At each stage in these early years, the alternative to a neoliberal turn was on the cards, but it was only in the success of the ruling-class offensive that neoliberalism truly took shape. Moreover, it did so on the basis of the new economic circumstances that had been opened up in the course of the offensive: the incredible fall in the price of transporting goods and materials, primarily through containerisation; the huge expansion of the global labour force (via China and, to a lesser extent, eastern Europe); and, in financial markets, the continuing dominance of the US dollar – the lynchpin of the global financial system that allowed the booming of a global credit bubble. This bubble kept consumers supplied with money for purchases even as real wage growth was suppressed. Multinational companies, which had begun to rise to dominance in the post-war years, became the cutting edge of the neoliberal global economy, becoming increasingly adept at exploiting weaknesses in the global tax system through avoidance and the use of havens. These material conditions were collectively the basis for dramatic catch-up growth in China and parts of the less developed world and, by the 2000s, of an unstable, debt-funded version of prosperity across the developed world.
In other words: neoliberalism was formed in the West not at the start of the 1980s, but at its end. The combative years of the 1980s often attract too much attention, which means we end up seeing neoliberalism as a kind of permanent ruling-class offensive against its enemies, rather than it being what happened when the ruling-class offensive had essentially won. This is where neoliberalism comes into its own as a set of automatic rules that, in the ideal society, no longer require intentional government action to function.
The peak neoliberal governments – those that perfected the form – were not Thatcher and Reagan’s, but those of Blair and Clinton. And the peak neoliberal moment in history was not the defeat of the British miners’ strike, but the entry of China into the World Trade Organization in 2001. If we think of neoliberalism as primarily an intellectual struggle, dictating a form of ruling-class combat against its opponents, we will view this history the wrong way round. It wasn’t the most ideological governments who were the most neoliberal: it was those who came afterwards, who proclaimed themselves to be ‘beyond ideology’ or ‘beyond Left and Right’.
This should alert us to a second point: whilst governments have used spending cuts and austerity to drive through neoliberal programmes of change, there is no necessary attachment of neoliberalism to austerity. For all the early rhetoric about ‘rolling back the frontiers of the state’, neoliberalism in practice has accepted a significantly expanded state sector. And however grudging the acceptance may be by neoliberal ideologues, neoliberal governments in practice have accepted many ‘Keynesian’ or social-democratic institutional hangovers, like the institutionalised trade union bargaining that many European countries still maintain.
Although neoliberalism came together in a disparate way, this doesn’t mean it is a system without its own principles, or that there is no logic to what neoliberal governments did beyond responding to circumstances. Quite the opposite: neoliberal thinkers, whatever their tactical manoeuvrings and opportunistic alliances, have been very insistent on two related values: firstly, the supremacy of law and, secondly, the centrality of markets and the price mechanism in organising society. Neoliberals like Hayek and Friedman may have disagreed on much, but both would insist on the need for society to operate automatic mechanisms that regulate it. In other words, that there would be no place for interventions by government or other public bodies if a society was well run. And a well-run society would (of course!) be one where the automatic social stabilisers of law and the market could operate freely, independently of political intervention. This belief is the ‘liberalism’ of neoliberalism. Like the classical liberals of the 19th century, neoliberals viewed a society with the rule of law and free markets as a society in its ideal form. Its clearest expression is perhaps Hayek’s book ‘The Constitution of Liberty’, which is an extended argument for a (limited but fundamental) rule of law and the operation of the price mechanism as the cornerstones of meaningful human freedom.
From these two underlying values, neoliberal governments tended towards three principles. First, that law and the market should work together, with well-designed protections for private property that ensure markets can find the correct price. These private property rights should be extended as far as possible, particularly in the field of information and knowledge to cover software, for example, making it possible for Microsoft to copyright a program or to lay claim to genetic information, and allowing Monsanto to patent genetically modified crops. This is despite the fact that Intellectual property right extension was contested by some leading neoliberal thinkers – a further example of how it is the institutions, not the ideas, that define the period. Even if temporary, the Biden administration’s support for the ending of intellectual property protections on COVID-19 vaccines marks an important blow to this concept.
The second principle is that both law and the market take precedence over democracy, and even government itself. In other words, democratic demands to change how markets operate, or to change the law on property – removing intellectual property protections on HIV medicine, for example – should be pushed aside.
The early legal offensive on trade unions was an important aspect of this primacy of law. In the early 1980s, Hayek recommended to Thatcher that her government should repeal the 1906 Trade Disputes Act, which would allow unions to be sued for actions undertaken by their members during a strike. The effect would be to reset decades of accepted practice in British industrial relations, in which the unions and employers would each bargain from positions of organised strength, and instead turn unions back into something more like any other voluntary association, lacking the capacity to act collectively.
In the end, Thatcher didn’t go this far, but the succession of trade union laws passed by Conservative governments in the 1980s and 1990s very significantly undermined trade unions’ abilities to organise and bargain. It was the legal victory that was the real strategic goal for neoliberalism, building out from the industrial defeats (of car workers, steelworkers, miners, and printworkers), since it was the means to preserve those victories. It is why the proposals by the Biden administration to reverse some of the neoliberal legal restrictions on US trade unions, introduced in the 1980s, are so important, and the biggest single breach he has proposed in the neoliberal system to date.
The third principle is that both law and the market extend beyond the boundaries of the nation-state and encompass (as far as possible) the international economy. The extension of the intellectual property regime via the TRIPS Agreement in the 1990s was a key moment in the development of a neoliberal global economic order. So, too, was the attempted creation of something like an international commercial law through the establishment of Investor-State Dispute Settlement (ISDS) mechanisms, in which trade treaties like the North American Free Trade Agreement would create independent court-like bodies that gave corporations the power to sue governments that had allegedly breached their ‘rights’ – for example by imposing environmental obligations on them.
This international dimension is what we might call ‘peak neoliberalism’. Once the neoliberal rules of the game were bolted in place internationally, it would become harder for individual countries to seriously breach them. It is in the sphere of international economic relations that neoliberalism is most apparent, since it is here that the separation of the activities of government and the activities of those in the market are most obviously separated, and even come into conflict. This is in contrast to Blakeley’s argument that, being capitalists, they are fundamentally the same. Different national governments have different interests that can conflict, but neoliberal institutions aim to smooth out these conflicts in deference to clear sets of rules – like intellectual property, or agreements on trade subsidies.
This international order helped create a certain ideal type of neoliberal business, one that depended on both the smooth global operation of the price mechanism, and on the legal protections of international commercial law and regulations. All multinational enterprises required both to some degree, but the companies that were most dependent on the neoliberal global order were the multinational investment banks like Lehman Brothers, RBS and Deutsche Bank – vast, powerful, global enterprises, at least until the credit bubble burst in 2007-08.
Domestic and International Dimensions to Neoliberalism
If we want to look for an ending to neoliberalism, then we need to look at both the domestic and the international spheres. The turn against neoliberalism from 2008 onwards has been more obvious in the international dimension than the domestic, at least for countries in the historic West. Global trade was already falling as a share of GDP after 2008, but it was Donald Trump’s dramatic assault on neoliberal trading rules, via his trade war with China, which really shifted the international political order.
That breach has been further reinforced by the recent G7 Global Tax Agreement, which paved the way for a global minimum rate of corporation tax. Driven by domestic political considerations, notably around the brazen way in which Big Tech has scarcely managed to wriggle out of its tax obligations, major economies like Britain and France had already begun seeking ways to impose new taxes on companies such as Facebook and Amazon. The US had robustly opposed this, and one way to view the G7 agreement is as a compromise between the desire of the US government to raise more tax revenues domestically, and the desire of other G7 members to prevent mainly US tech multinationals from undermining their own tax systems. The crucial point is that, just as in the 1970s and 1980s when neoliberalism first emerged as a rulebook for the major economies, a combination of domestic politics and shifting international conditions has moved the G7 countries to turn against the existing international rulebook.
Combined with the striking turn across the major economies towards government intervention in the form of industrial strategy, the anti-neoliberal tendency is clear. Governments across the world are pledging to spend more on investment and to act more directly to support their national businesses, and to shape economic outcomes through initiatives like Britain’s alleged ‘green industrial revolution’. The period since 2008 has been one in which states and businesses have drawn closer together, breaking the neoliberal claim that the two should be distinct.
But this is nothing new: states and businesses have always been mixed up with each other. Socially, those running major businesses are closer to senior civil servants, leading politicians or those who run newspapers, than they are to those who work for them. Politically, businesses have always actively sought the support of politicians and political parties, as well as seeking close relationships with those parts of the permanent state that deal with their interests. But stating this truism doesn’t get us any closer to understanding how the system has changed over time. If we turn ‘neoliberalism’ into merely a general description of how any capitalist state operates, the term is redundant. But if we want to understand how capitalism has come to operate, and the specific relationship between major businesses and capitalist states, we need to specify the term more closely. This is particularly the case given that the companies now dominant in the world do not correspond to the historic neoliberal ideal.
Big Tech as an ‘Anti-Neoliberal’ Formation
In 2009, the four largest corporations in the world were Petrochina, ExxonMobil, Industrial and Commercial Bank of China, and Microsoft. By 2019, they were Apple, Microsoft, Amazon and Google’s parent company, Alphabet. These digital platforms don’t correspond to the neoliberal ideal of a corporation. Notoriously, whilst they are happy to exploit elements of the neoliberal system (like intellectual property, and tax havens), the platform companies have spent the past decade or more busily pushing beyond the existing boundaries of law and regulations through their data-gathering operations. Investment banks certainly seek out ‘regulatory arbitrage’ opportunities in existing law and regulation (that is, loopholes to exploit), and try to create new financial products that can be traded beyond the point of regulation. But what they do is of necessity bound by existing property and contract law. You cannot trade a financial product if you don’t have a price for it, and if the property it lays claim to isn’t legally protected.
Financial companies also employ lobbyists to try and shape the law to their advantage. Crucially, however, the existence of a financial system, particularly in a neoliberal policy environment, depends on the existence of a law around which it can profit. At the most elementary level, it is the presence of both a government-backed form of money (including deposit insurance) and a government-backed central bank that allows finance to function. As a system, it is in continual tension with the law but it is ultimately the presence of law and, relatedly, regulation that determines its capacity to profit. It is impossible to understand the modern financial system without understanding it as a by-product of government decisions. It is, in the end, fundamentally subordinate to law – as the post-2008 bailouts graphically demonstrated.
This does not apply to the platform corporations in the same way. The major tech giants grew up in a neoliberal environment, and it is quite hard to see how they could have grown in the way they did if the internet itself was not left very significantly free of government regulation (in line with neoliberal principles pushed particularly hard by the US Democrats of the early 1990s). But as Shoshanna Zuboff’s ‘Surveillance Capitalism’ details, it was the first US crisis of the new millennium – that of the ‘dotcom crash’ of the early 2000s – that pushed Google and others into a distinctive new form of business organisation, based on the mass acquisition and analysis of user data.
Once the secret of monetising mass user data was unlocked, a path out of neoliberalism was opened. This happened in a number of ways. First, the most aggressive of the companies were immediately involving themselves in vast new areas of human activity where law and regulations did not exist, making their own policy and regulations as they went along. The driver of their business model, the acquisition of data, was a permanent – and increasing – extension beyond the reach of law. Blowback from this overreach has led to the creation of a quasi-judicial function by Facebook, establishing a supposedly independent ‘Oversight Board’ to rule on policy decisions, after Mark Zuckerberg had previously speculated about creating a “Supreme Court” for Facebook decisions. Neoliberalism – in practice and in theory – tended to view government sovereignty as something that should be limited in its extent, but that corporations and private individuals should ultimately be subordinate to it. The data giants fundamentally subvert this idea, starting to define what look very much like their own forms of sovereignty over the new domains of human behaviour they oversee and manage.
Second, the principle of price as an organiser of economic activity has become increasingly tenuous. The products of the platform giants, at least on the consumer side, tend to work against market mechanisms. Facebook still boasts that “it is free, and always will be”. There is no consumer market and no price being established, when a product like Facebook is free. Where a product is not obviously free, the platforms have attempted to push their customer base into a subscription model: not organising a market through price, but creating a continual flow of income, at a fixed rate, from the consumer to themselves. For example: Apple wants you to use their hardware to establish subscriptions to its services, and Netflix does not charge you per film viewed, but expects you to remain a subscriber in perpetuity. The ultimate expression of this has been the attempts, led by Facebook, to establish their own currencies, free from government, allowing them to operate their own payments system and so take a slice of every transaction made.
Continually expanding the boundaries of what can be turned into data is fundamental to the data-gobbling business model of the platforms. Like cuckoos in the nest, they grew up under the protection of neoliberal governments, but rapidly outgrew their limitations. ‘Move fast and break things’ is an anti-neoliberal statement. These are anti-neoliberal companies.
This has, in turn, produced an anti-neoliberal reaction from governments. The proposal for special new taxes, as made by Britain and France, to capture only the US digital giants, is a break with the neoliberal programme on tax, which has always sought to create a ‘level playing field’, culminating in the demand for flat taxes on all forms of income.
Or take the emergence of the ‘neo-Brandeis’ school of competition scholars, now firmly entrenched in the Biden administration with the appointments of radical legal experts Lina Khan as Federal Trade Commission chair and Jonathan Kanter as assistant attorney general for antitrust. Whilst for decades, neoliberal thinking has been thoroughly embraced by competition authorities, stressing that market structures matter less than presumed consumer benefits, the neo-Brandeis school stresses the importance of competition not only for consumers but for democracy itself.
I find the paragraphs about monetizing user data and the (predatory) pricing of these giant software companies / platforms hard to parse. Can someone enlighten me?
Did author Meadway, after analysis and synthesis that are promising, fall into the clichés and slogans of the times, that Google and Facebook are somehow liberating us from earlier economic organization?
Google and Facebook are mainly new channels of distribution. Would one say that Federal Express led to a new form of economic organization?
These companies don’t seem to be models for a way to seek an opening beyond neoliberalism. These companies seem to be mainly engaged in predatory pricing and manipulation of existing law. (Amazon, anyone?)
If Peter Thiel, GrubHub, Lyft, and Uber are liberation armies, we are in worse straits than I suspect.
Meadway seems to me to be an “automated luxury communist”. So he would have it that the platform companies provide a model for a new paradigm, presumably nationalized at some point. We are all getting a UBI and working part-time with strong union representation in a more decentralized, local economy, according to his vision. It is pretty utopian and as you suggest, not where we are now by a long shot.
His animus against MMT is seen in the debate between a MMT Job Guarantee vs UBI. A JG implies a more fundamental role for the state in the labour market, where price discovery is supported rather than undermined, as in luxurious communism. A JG can be a solid base for a Green New Deal that tackles climate change through designated work, where Meadway just tacks it on at the end talking about investment in “programmes”. But are UBI communists prepared to put in the hard graft?
Well, a carbon tax is the proper UBI response to the Green New Deal. A job guarantee can be handled ideally theoretically, but could just as easily be digging pipelines with a pick for $10 an hour pumping CO2 for hydrofracking, or CO2fracking or whatever.
Carbon taxes will be part of the effort to stop emissions for sure, but the UBI is a passive labour policy that assumes degrowth with lower production and lower consumption. A JG promotes an active view of cleaning up the mess and changing the structure of the economy.
The silicone valley billionaires are supporters of UBI and in a funny way Meadway is a supporter of silicone valley. Guilt by association is a bit unfair, but it gives something away, no?
DJG, Reality Czar: I find the paragraphs about monetizing user data and the (predatory) pricing of these giant software companies / platforms hard to parse. Can someone enlighten me?
Sure. I’ll give it a try.
I agree that this a confused, Dunning-Kruger-esque piece. Also, with the poster who commented that if Meadway botches the history of neoliberalism — which he absolutely does, in a parochially Brit-centric way if he believes that Thatcher in the 1980s was its fount and origin — there’s no reason to believe him about anything.
Anyway, to the issue of platform capitalism: Some new beast is emerging with the big tech companies, and it’s big enough that everybody is still groping towards the conceptual language to grasp what’s happening.
Neoliberalism’s central tenet has been that the Market is the Supreme Information Processor, capable of wisdom impossible to achieve by mere humans. Though they pretend to, the core neoliberal priesthood generally does NOT believe in the neoclassical precept that individuals are rational in making choices between identifiable and value-associated outcomes thereby maximizing utility. To the contrary: real neoliberals believe human individuals are ignorant and useless at that, and furthermore the more ignorant they are the better, because otherwise they might be tempted to believe they can do better than the Wisdom of the Market, which by definition they cannot. (Don’t ask me how the hell a Market composed of ignorant human components can sum to a Supreme Information Processor — neoliberalism at its purest is a religion).
But if the Market is the Supreme Information Processor, drawing together information from all the distributed inputs out there, what happens when real Super Information Processors operating over instant global electronic networks now emerge and impose themselves on the previously ad hoc, distributed, and far-from-instantaneous Market?
Consider Amazon. Amazon has 40-50 percent of the e-commerce market, more than five times the share of its nearest rival, is the leader in Cloud and web services, has gigantic physical plants, and even its own space program. Amazon IS the Market to a large extent, and unlike the neoliberal idea of the Market as ad hoc Information Processor, Amazon not only has both instant access and control of all its inputs and outputs, but also aims and agency. (Jeff Bezos’s ultimately, I guess.)
Maybe Amazon — and its peers like Microsoft, Google/Alphabet — simply supercede the neoliberals’ Market as Supreme Information Processor.
Someone who’s developed some conceptual language to try and grasp what’s happening is a writer called McKenzie Wark in her book CAPITALISM IS DEAD: IS THIS SOMETHING WORSE? And what Wark calls this new, arguably post-capitalist situation is vectoralism.
Under vectoralism, technological advances have made information extremely cheap and abundant so that a new mode of production has morphed out of capitalism, based on the control of what Wark calls ‘vectors of information’ — the infrastructure whereby information is routed.
Where the ownership and control of the means of production conferred upon old-school capitalists the power to organize labour, ownership and control of the vector gives the vectoralist class the power to organize the means of production themselves, through patents, copyrights, brands, trademarks, proprietary logistical processes and such. Thus, much of the power and property of the world’s largest corporations is now in vectoral form. As Wark notes, many of the vectoralist class ‘don’t actually make the things they sell’, and even when they do, ‘a quite remarkable amount of the valuation of the company comes from portfolios of intellectual property, or proprietary data about their customers.’ (Facebook is an example of the latter, a purely parasitical entity built on the data of its billions of users.)
I found out about Wark in this review from NEW LEFT REVIEW here (Wark’s is the last of three book reviewed) —
Still, we’re all just beginning to try and assemble the conceptual language to describe this new thing. What Wark calls vectoralism, others have described as neofeudalism.
> Consider Amazon . . . Amazon not only has both instant access and control of all its inputs and outputs, but also aims and agency.
I don’t think so. Wringing subsidies from all level of governments while paying almost zero taxes is the operating principle while stealing from it’s customers, the third party sellers, which Amazon either copies or buries in a pay or you aren’t found system.
Then there is the outrageous 150% annual turnover raste in the warehouse / torture chambers. Am I the only one that thinks this is insane? Moar insanity is the 30% return rate for the crapola that they sell and that portion of the gabage barge is subsidized by the arm that stores zeros and ones, which makes a buck “profit” out of every three thay take in, another huge subsidy by governments that use AWS.
They are not able to get a grip on the huge fake review problem, the drone program is a disaster and the attempted takeover of grocery is a failure so far. Eventually they might with all the subsidies they extract from whoever they deal with.
Amazon is a cancerous puss oozing horror show, stomping it’s boot on the face of humanity and Amazon shoppers = whip cracking sadists.
I would also regard the digitech giants as seeking their own self-serving digitech feudalism. And it is not even an “evolution” in response to shifting conditions. It is almost an alien imposition . . . . like the Franco-Viking conquest of Saxon England, which already had a social order before the Franco-Vikings ( “Normans”) invaded, conquered and destroyed Saxon England’s social order so they could impose their own Franco-Viking Pirate Feudal order upon a prostrate Saxon England.
And so the digitech giants seek to impose their own digitech feudal pirate order on America. Is America prostrate enough that the digitech giants can get away with imposing their very own New Feudal Order?
Is America prostrate enough that the digitech giants can get away with imposing their very own New Feudal Order?
If the opposing contender for dominance is only an increasingly played-out neoliberal FIRE sector’s Old Feudal Order, it’s quite possible.
Amazon is a cancerous puss oozing horror show, stomping it’s boot on the face of humanity and Amazon shoppers = whip cracking sadists.
Okay. But it’s not just Amazon, is it? It’s all the vectoralist overclass — Gates, with his takeover of vaccine and biotech IP, and farmland (because there’s a second Green revolution on its way with CRISPR and other things); Apple with its control of cellphones, privacy, and the computers you use if you don’t use MSFT; Google with its control of YouTube, emails, search and news; Facebook with its parasitic control of social data and news and … well, I feel about Facebook like you feel about Amazon.
Facebook is purely parasitic. It’s also the most vulnerable of the digitech giants — there’s nothing there — and the others may choose to sacrifice it to propitiate antitrust sentiments and enhance their own powers.
Well, I had dinner with James Meadway a few years ago in London to discuss Labour Party financial policies. He absolutely hates MMT and was not very communicative, except for supporting de-privatizatioin. I asked a party insider for breakfast next day to give me some background.I was told that he had just come over from the Trotskyists, and was appointed the financial advisor to the new left-wing Labour leader Corbyn and to McMil.(I forget) for shadow finance minister because of personal loyalty, instead of Murray, who had a much better view.
I can’t disagree more with the recentering of neoliberalism’s rise in the late 80s, having long ago concluded that it was already going strong _before_ Reagan in the parade of “fiscally responsible” and pro business leaders who included Reagan’s predecessor. Neoliberalism as a philosophy had been around for a long time by then, and provided the justification for early efforts to dismantle the New Deal way of doing things.
In retrospect, the elimination of postal banking as the Great Society stalled seems a good point to look for evidence that the barbarians were approaching the gates. Nixon era amping up of means-testing, privatization, and “liberating” big business through regulatory “reform” should never be forgotten — not to mention the actual implementation of neoliberal theory by the Chicago Boys in Latin America (under autocratic regimes nurtured by the US) during the same time period.
As for what comes next, having botched the history, I don’t think the author is in a position to make any trustworthy prognostications. I’m more inclined to think Richard Wolff and Michael Hudson have some better ideas, particularly Wolff’s vision of truly democratized workplaces (a deus ex machina that shows up to save the world in Kim Stanley Robinson’s fiction).
A FB friend of mine while I was still using it before the noise & hysteria got too hard to cope with who never impressed me very much – although I would be the first to acknowledge that economics needs to throw a huge amount of mud at me for much of it to stick. His dig at Mirowsky’s version of things strikes me as just more of that thing the Left always does that involves squabbling about technicalities & who knows best etc. He also appeared to be something of an apologist for Starmer but maybe he is looking for a job.
Interesting stuff though & I think he is correct about Blair & Clinton, of whom the latter was apparently able to do things that Reagan could have only dreamed of, maybe Glass-Steagall being just one example & Thatcher did use government money for employment schemes that did help to keep things going while tidying up old industrial wastelands, which Blair replaced with a brand of nothing very much.
thanks for the article Yves.
we must enlighten. just as thomas paine and ben franklin, enlightened.
if we do not expose who did what to whom and why, the clinton/blair types will skate, and the damage will be permanent.
they must be made to pay.
if they skate, they have divided us so much, we might sink into a bloodbath all over the world.
this is what we need so that people do not blame each other. the clinton/blair types need to do the perp walk.
what we need is more of the below, its history repeating itself, and it should be required reading for anyone to understand what was done to the world in the 1990’s, and if we do not do something about polices that never worked in the past, proven to have only enriched a few, to the detriment of man kind, but keep cropping up by those whom are very good at mental gymnastics, then history will repeat itself.
the best education was the percura commision,
and the nuremberg war trials, which matched names and pictures, with their crimes against humanity.
The Truman Committee proved to be one of the most successful investigative efforts ever mounted by the U.S. government
it worked, the ike administration is considered socialist compared to the clinton/obama abominations.
sunlight works. it will turn clinton/blair/obama types radioactive, that is no one will want to touch them.
if you shine a light on them, we get to see who their advisors were inside and outside of government, and their financial backers were.
Thank you, MH.
I have heard similar.
Meadway was advisor to MacDonnell and then supported Starmer before moving on.
His opposition to MMT led to Richard Murphy’s association with Corbyn being short lived.
Lots of criticism of Meadway et al at Bill Mitchell’s blog
In ‘MMT is just plain good economics’, Bill shows that Meadway has no understanding of MMT whatsoever. Hence, it is difficult to say why Meadway ‘hates’ MMT. Even reading the exchange he and Portes had in 2018 rendered me little wiser about why he finds it difficult to extricate himself from the mainstream economic narrative. I can understand why Sunak is a neoliberal. He was a hedge fund manager and, thus, knows something of microeconomics. But microeconomics is quite distinct from macroeconomics. And mainstream thinking contends, among other things, that the latter can be derived from the former. Sunak gives every impression of believing this, but it is completely false.
John McDonnell MP?
I kept wondering what Wolfgang Streeck would say. His point is that capitalism is the thing that is dying and will be saved by various applications of socialism. Which I agree with. This piece seems to substitute “neoliberalism” for “capitalism”. And also brings up the fact that original neoliberalism is more ordoliberalism – which is more socialism to me. And then to add to the confusion, Slobodian thinks that neoliberalism is neoimperialism, so if Slobodan gets tossed into the above equation that neoliberalism is ordoliberalism it really does look like we’ve been on an expedition to save capitalism from capitol controls, that the “liberal” part we are talking about is free-wheeling international profiteering. Which nobody should brag about. And on and on. But one other thing – Paul Craig Roberts might say that neoliberalism did get its start in the Reagan administration because Reagan was faced with entrenched stagflation because of the debt overhang of the Vietnam War and it’s ineffective cure – neoliberal austerity. So PCR’s solution was to switch out Keynesian demand-side economics whereby the government had been a buyer of US manufacturing in order to support labor, etc. and do “supply side economics” by subsidizing production. Or otherwise known as trickledown. That whole plot lost me because in the end it didn’t really help our economy stabilize. So here we are saying “Neoliberalism is dead, long live neoliberalism.” Interesting times. I’m thinking that capitalism, not neoliberalism, is a force of nature and it just needs to be tamed for the benefit of society and the environment. The no-brainer stuff.
I think you mean Jeremy Corbyn’s shadow chancellor John McDonnell.
Unfortunately, McDonnell was still wedded to the conservative ( not Conservative) paradigm of “not frightening the City”, and consequently a possible Corbyn government would have ultimately floundered on the rocks of economic orthodoxy.
I think Neoliberalism is thriving; it’s the United States that is dying, strangled by the rapacious vine. We mustn’t confuse the inadequacies and injustice of our governing system as the death throes, but rather the desired outcomes.
The pandemic response demonstrated this clearly, as the systemic response was to direct more resources to supporting asset prices at the expense of public health. Whether the talking head at the top of the US government said it was a public health crisis; the system diagnosed and treated it as a “market” crisis because it is all the system can do. And in that regard, ask anyone invested in the stock market, it worked marvelously.
In the financial economy fostered by “neoliberalism” production takes a distant place to access. And so the difference in outcomes achieved by the “rich” as opposed to the “poor” are the goal. Gone is the idea of an ever growing pie. Economists who still believe that fantasy can’t pull their nose out of their nether regions long enough to see that “growth” resides in the accounting gimmicks on the central bank balance sheet.
The western left has no challenge to this because it discarded the only weapon that works a generation ago. Instead of fighting they sit around debating where the fight should take place. For instance trotting out a idea like MMT. That’s like deciding you should fight a duel with pistols after you’ve been shot. The central bankers and politicians know MMT is a reality, why do you think they’ve run the tab for the past 50 years. But they’re happy to kayfabe around the idea of deficits while they use the sovereign currency to their portfolios’ content.
Fortunately, despite the inadequacies of the western left, that useful weapon they discarded is being used by others. The Chinese, among many, certainly never set aside Marxist analysis and communism as a goal. Now in the 8th round, it’s kind of fun watching them pull off the greatest “rope-a-dope” in history.
China’s new system, as with Russia’s, won’t be liberal therefore won’t be neo-liberal. The western neoliberals and liberals have slowly accepted this, with the final remaining holdouts finally accepting reality when Kabul fell. These non-liberal systems will rapidly expand worldwide, as countries would rather trust Russian or Chinese non-liberal stability over (comparatively) degenerate western chaos. Brazil will soon follow their path, although they will be supported by a Biden administration tolerant of a new Brazilian military regime in exchange for help against the left. The acceptance of non-liberal countries into the liberal system is rot, and even the most casual of observers can see that the neoliberal regime is slowly rotting bottom to top. Imagine the mess when Saudi Arabia’s fake regime collapses as well, world oil markets won’t function as they have and neither will plastics markets. An end -although not the end- is near.
I don’t necessarily disagree with the “thrive” part though. The reality of Covid has still not yet hit most investors and markets, and the reality is that the goals and growth they had planned for the 2020s and 2030s won’t occur. When this hits, markets will collapse. We are still in the “delusion” stage. Consider the academic crisis alone: the entire student pipeline has collapsed due to school and college lockdowns. The only people working are non-college educated “essential” tradesmen. This situation cannot hold, eventually the essential workers will exercise their power or the worker pipeline will starve and, due to the chip shortage, lead to extended business shutdowns as well. Climate change will probably mess some of this up too.
Such ends the new liberals of the post cold war era, and begins the new nationalists and mercantilists of the 21st century.
I think Neoliberalism is thriving; it’s the United States that is dying, strangled by the rapacious vine. We mustn’t confuse the inadequacies and injustice of our governing system as the death throes, but rather the desired outcomes.
Yes, our way of life isn’t long for the world, the American Empire collapsing before our very eyes in a myriad of machinations, the worst part being that it isn’t going to resemble the collapse of Communism, where the public there looked forward to something better, with hardly any violence. (countries starting with ‘R’ not so much)
We’re all used to violence and another mass murder by guns (our version of 19th century opium in China) has no real meaning compared to the soul searching the country went through after Columbine, its all old hat now. 6 year old kids being wiped out @ Sandy Hook & the Vegas terrorist who killed and wounded nearly a thousand innocents was just meekly accepted as the price of doing business, and the first real shortages of anything, happened to be ammunition & guns, we couldn’t get enough of them as the pandemic took hold.
Its gonna be a bloodbath when things come a cropper.
Conspicuous by its absence (?), little is mentioned about Clinton passing CFMA and GLBA, which, combined with NAFTA, laid the seeds to the 2008 Great Recession.
the american worker, or the deplorable as the clintonites call them, have been radicalized. trump understood this and took advantage of it.
a trump type can still do this, the deplorable hate the nafta democrats that badly, and only a few were turned against trump, trump lost the election in three states by about 43,000 votes.
nafta joe biden has done what the german liberals did, he is cutting off unemployment, and has refused to take the housing moratorium to congress and use the bully pulpit.
the results of this could be staggering to americas economy.
like the U.K. labour party, any attempt at reform will be met with fury, and the nafta democrats will blame the deplorable for the fix the country is in as the party sinks into irrelevance.
I dunno, but the day I see the tiniest town south of Nothingville, USA, unable to procure coffee, 24/7/365, from thirty different countries around the world, is the day I start to take seriously that Neoliberalism is dead, and not simply rebranded like an Erik Prince mercenary company.
Agreed. This –
“…Joe Biden’s administration is not only committing $3.6trn to spend on health and education – it is expanding trade union rights, raising taxes for the rich and corporations, and has successfully led the push for the introduction of a global minimum corporation tax.”
– is just PR and the author seems to have fallen for it hook, line and sinker. “led the push for the introduction of” is considered a success rather than actually implementing it. Come on, man!
The one statement where I actually take Biden at his word is when he said “Nothing will fundamentally change” to his real constituents, the donor class he’s helped to enrich for the last 40 years.
So, in 2009 the four biggies were two Chinese giants and two ‘murican giants (what happened to Aramco?). By 2019 three had been overtaken by tech giants such that the four biggest corporate monsters were then (and now) ‘M’icrosoft, ‘A’pple, ‘G’oogle (alphabet) and ‘A’mazon. Wait, that can’t be right.
I saw what you did there!
This is a good post, as far as it goes….
Imo, the “perfect market” in neolib terms is a market that always profits the wealthiest to the greatest extent possible. Labor arbitrage is one way to increase profits by reducing labor wages to the lowest cost possible. Labor arbitrage is beginning to reverse, not by any govt policy but by China no longer being a “low cost” or “reliable” partner, big increases in shipping costs, increasing shortages, C19 border closings and fewer workers available.
This recent Guardian article (surprised to see it in the Guardian) about employers and profits being “squeezed” by low income work “shortages” is nominally about Brexit, but it applies in the US as well as many other countries with the C19 closed borders. Paying more for low end work? Investing money and time in training? Sounds like a good idea.
At which point it may be worth taking a second or two to ask a simple question: if labour shortages are driving up the wages of low-paid workers then what is wrong with that?
There may well have been worse decades than the 2010s to be a wage earner but you would have to go back to the 19th century to find one comparable. It took 12 years for average earnings to exceed the level reached before the 2008 financial crisis – a dismal trend that led to entirely appropriate criticism not just of the UK’s economic model but of rising inequality.
If that way of doing things – in which the flipside of over-reliance on unskilled, cheap labour has been persistent underinvestment – is now coming apart then that is a welcome development and not a bad thing. …
I learned so much from this remarkably concise, lucid, and politically astute analysis, especially the trajectory of the development and consolidation of the Neo-liberalism as it crested in the first decade of the 21st century; the pullbacks that are occurring at different times and paces across the global economy; and the relationship with to emergent authoritarianism, whether in the developing or the developed world; and recommended political strategies. I’m going to share it with friends who would not normally find it arrive to their inboxes. If I were still in university teaching, I would make it required reading.
At the risk of exposing my NYC provincialism, I’d roughly date the advent of neoliberalism with the 1975 Banker’s Coup (mistakenly called the Bankuptcy or Fiscal Crisis) in New York, which led to many thousands of teacher, police and fire fighter layoffs, imposition of tuition at CUNY, hospital closings, transit cutbacks, etc., the full Austerian menu, along with years-long fiscal governance by the FIRE sector. Predictably, NY’s stock transfer tax was effectively eliminated a few years later, signifying Finance’s rise to total dominance.
NYC, with a free City University and an expansive municipal hospital system, in the previous era was the closest thing the US had to a social democratic state-let. It had to be blown up and discredited before Neoliberalism could proceed.
According to Katherine Graham’s autobiography, in 1954 the government (Eisenhower’s gov.) threw a big party and everybody nicknamed it the “Bankruptcy Ball”. Because we had been financing the MIC since the end of WW2 and otherwise spending tons of money. The Bankruptcy Ball was our way of thumbing our nose at the rest of the financially conservative world – the Europeans mostly. It translates through the fog of years to us ignoring everything except what we had to do at the moment, and for decades to come, to keep the world economy functioning. Print money. Sovereign spend. It is almost an argument for a certain degree of financial sovereignty for the states. They tax, they have the option of using a state currency. Which can be used for public spending and never needs to be “paid back” to the sovereign. Right?
also trade as a component of GDP was under 10%, which means we consumed 90% plus of what we made. it takes a mighty well paid labor force to do that. and i think Xi may have figured that out.
MMT is the cure, but first the political leadership needs to understand how to use MMT. Right now they like the fiscal muscles, but using them is another issue altogether. A national job guarantee is superior to a UBI program.
Assuming that the jobs are properly managed, which is hard even if you aren’t promising to hire literally everyone no matter what.
David Harvey has a more succinct and clear picture of where we are now. Essentially he separates the “free markets” and “competition” rhetoric of neoliberals from its real purpose. Neoliberalism is about the concentration of wealth and power thru monopolization. The reality; under his definition; is that currently neoliberalism is alive and well.
The relevant part of Harvey’s talk starts at 17:12
“More succinct”. That would be nice. Why is it that many writers on the left feel the need to use fifty words, with parenthetical and comma-delimited phrases all over the place, when a dozen or so well-chosen ones that get to the point directly, would do. :-)
My shortening attention span really struggles with, uh, with, er, what was it again…
WALLS OF TEXT has been a serious problem for the left for nearly as long as there has been a left. I chalk it up to so many of us being too much inside academic and intellectual spheres. It doesn’t at all surprise me to learn from Hudson above that Meadway is an Old Trot. The Trotsky crowd has always been especially bad about not understanding that brevity is the soul of wit.
Thanks. That’s very interesting, especially the part about a shortage of what’s called surplus labor and low wage workers.
To me, neoliberalism means privatize everything, make as many billionaires as you can and forget climate change. However, climate change will have the last word and it will bring about the end of neoliberalism.
The following is my view. I think neoliberalism is a reaction to the oil crises of the ’70’s, an attempt to create a global feudalistic society. However peak oil between 2OO0 and 2010, (fracking – which is a ponzi scheme – notwithstanding), meant that our oil based industrial society is finished, and climate change means our industrial society will also be over in short order. There will probably be neofuedal societies in the future, just not a neoliberal global one. The post Brexit UK appears to be heading down this path.
I differ. In the US, at least (and they are far from least in global influence) the Establishment — commerce, business, corporations, wealthy families, you know, money — felt threatened by the organized upheavals of the 60’s. Eg, Hippies, Yippies, peaceniks, unions, etc. in the US and greens, provos, diggers, credible communists, and pirates elsewhere.
In Aug 71, Lewis Powell wrote a memo to the US Chamber of Commerce at their request. You should really read it if you haven’t, the man was a genius. Lessons to learn there. Eg, check out the Mackinac Institute for Public Policy.
We had a chance, they organized and we didn’t. They won years ago. von Hayek, Rand, Friedman were just useful grifters and hangers-on, like Calvin springing off the Protestant Reformation, and with the same beguiling prosperity gospel siren song loop: “… we’re rich because we’re good because we’re good because we’re rich …”
Agree yet would simplify to the degree Lambert does with his first two rules of neoliberalism e.g. a two class society with a small percentage at top.
In part, “they” didn’t have the full force might of government destroying all “their” organizing efforts, whereas “we” did.
The secret Paper-Clip Nazi Deep State did not assassinate the Powells and the Friedmans and etc. It assassinated Kennedy, X, King, Kennedy and countless less-famous others Enough of that creates a leadership vacuum and a thinkership vacuum and scatters and disperses any and every organizing effort which “we” tried to launch.
“If the disintegration of law is a central feature of the world after neoliberalism, especially where this disintegration has taken on an authoritarian guise, it suggests a major part of the strategy for the Left should be supporting precisely the norms of law as they have been established over decades, even centuries, of struggle”
Restorationism of bourgeois norms is “the Left’s” next new frontier?
“Third, the Left should be looking to both extend existing rights, and broaden the ownership of wealth and assets in society”
Buying off more people with the broader (but never level) distribution of new private property is something “the Left” should do?
Progressives and left-libertarians clearly have no common ground and it’s time for them to stop speaking for one another under this rubric of “the Left” as if it were a bourgeois property…
Nicely done. When I left uni in ’71 my Econ. Dept. was made up entirely of two New-leftish young profs and the rest were all firm Keynesians; and all survivors of the Great Depression. I spent the ’70’s bumming around, but couldn’t miss the general disparagement of social market intervention and the increasing diminution of Keynesianism. The triumph of New Labour and the New Democrats was very dispiriting.
The first sign of hope for me was the Battle of Seattle in 1999. I was shocked that so many ordinary people were hip to international corporate pillage and plunder. The author contends that “…the peak neoliberal moment in history was not the defeat of the British miners’ strike, but the entry of China into the World Trade Organization in 2001.” This may indeed be the case, but just like the Seattle cops, the trans-nationalists must have been shaken to the core. For me, Seattle was (hopefully) the beginning of the end for the rootless cosmopolitans ;-) .
The global engine of “free-traders” clearly began sputtering at the end of the failed Doha Round in 2011. After 10 years of bickering, the old neo-colonials refused to be screwed yet again by northern capital. And the death knell? Well we can thank the most reviled man in America…Donald Trump for that. He wasted no time in backing out of the TPP in January of 2017. Revisionist history hard at work doing the right thing.
i went through the same thing in my economic studies at college in the same time frame, i was told to forget about lincoln, keynes etc., no one would hire me, freidman was in vogue now. so i left college and went to work as a deplorable, but still kept at it through reading.
Great Reset anyone? Don’t worry. There is a Plan.
Agreed, and the Plandemic is just one component of The Great Reset.
Go back further than the 70s for the predicament, but not to anitquity (any documentation leaves too much to be left to interpretation, conjecture, and even wishful thinking).
I look at the history of the The Dutch East India Company and the British East India Company for the roots of current global economics.
Big Tech, whichever country they reside, especially remind me of the Dutch East India and British East India Companies and their relationships to governments.
Absolutely! The current (70’s and fwd) pushback from The Wealthy, no matter the source or age of their wealth, is to neutralize communism, socialism, the New Deal, in fine, any and all threats to their wealth.
Aha the end pf Lazy Fare (/s) and the return of Governance (aka Policies and Management) of the Economy.
It on;y too 50 plus years to discover that Chaos is not Governance. Amazing how thick the Art Majors are.
Thinking of Jackson Pollock? And post-modernism?
A fundamental problem with Meadway’s analysis is his unstated assumption that free markets actually did exist in the U.S. in the course of the development of the so-called free market policies of American capitalism.
A quick glance at the writings of historians of the American State such as William J. Novak in his 2008 article in the American Historical Review “The Myth of the Weak American State,” would throw such an assumption into question. Furthermore people like Mirowski himself have argued that the essence of neo-liberal doctrine has always advocated the repositioning of the State to support markets–not a shrinking of the State– as Meadway himself indicates in his above essay.
If looked at historically, it was way earlier than the 1970s or 1980s that the American state was involved in using the private sector to establish so-called public objectives, and there is plenty of evidence to support the contention that markets themselves are usually an outcome of the public power that existed behind market power.
In the area of law, as Katharina Pistor has argued in her book “The Code of Capital,” the actual creation of such capital is linked to assets and the legal code, with the American State backing the private coding of such assets into law. The question of how assets are selected to be legally coded as capital and by whom and for whose benefit are the questions that cut to the core of American capitalism. As she points out asset holders do not need to capture the state directly, much less win class struggles or revolutions, they simply need the right lawyers on their side to code their asset into law.
Furthermore, developmental state institutions have always nested themselves in markets, usually cajoling, nudging and pushing private interests in state desired directions. Most of the literature on the development of state institutions indicates that neither the Hayekian caricature of an all powerful and pervious state planner bureaucrats or that of the Smithian metaphysics of a beehive of autonomous economic actors really capture the intense institutional wrangling and conflict that has existed historically in the economic development of the U.S. Indeed the American state has always appeared to have been intimately intertwined with the economy, as recent books like Jonathan Levy’s “Ages of American Capitalism”, make historically explicit.
Meadway, however is quite right that the U.S. may be in the process of embracing a type of authoritarian capitalism and it is not clear that any political faction has an answer to stopping this.
If we are now in a situation where capitalism is nicely encased within a military-intelligence-central bank monolith in which, for example, the repetitive stabilizing strategies of the Federal Reserve result in an ever accelerating inequality via its credit policies along with offering a never ending liquidity to speculative investments–this authoritarian turn seems likely to only become more powerful.
China has proven that any pure market-driven approach will simply yield to non-liberal countries coopting the liberal system for themselves. This was not an easy thing for western elites to learn; it took the russians (supposedly*, as we all know) hacking Trump into the white house and China selling their own in-house networking, telecom and associated services to the third world. African countries aren’t buying American cars, they’re buying Chinese meanwhile South American governments are (supposedly*) falling to leftists every day because, ultimately, the US does not provide them with products as China does. Russia as well but with VK. We can see this battle play out as Amazon begins to curtail Alibaba resellers and other low rent Chinese products.
Simultaneously, the American right has suddenly realized that capitalism no longer needs them. Their populist, free-market rhetoric actively destroys them. As they evolve back towards an interventionist platform (either populist flavor with Trump or stability flavor with Romney) the Neocon era will come to a close as well.
The real question is – what will Biden do? If he is willing to cut down free trade entirely, he will rebuild the Democratic base in a way that wins them the whole country for the next century. If he refuses, then we get another decade or so of indecision until we elect a Trumpist who does.
What I wish was dead is Trotskyism calling for “making space” and “building alliances” in capitalism with neoliberals so opportunists can get hired, appointed, or elected.
I read this post. It is long, discursive, and after some thought, I believe the effort required to critique the analysis it contains would not be worth the candle. I hope the influence and insights of James Meadway will remain far far away. He seems quite well-suited to help worsen the Brexit debacle. The u.s. is already well-staffed to fashion its own path to ruin and will not require his help.
“Neoliberalism” is way too broad and vague to describe today’s predatory end-stage corporate/state capitalism.
Kabul has fallen. Schools are reopening in the face of a plague. Two teachers died last week in Texas of COVID-19. The Coronavirus pandemic drags on forever in the USA because government is incapable of eradicating it. All the US professional class can do is propagate big lie propaganda, useless mandates, and scapegoat the unvaccinated. They simply try to force people to vaccinate with for-profit mRNA vaccines to increase pharmaceutical profits that may or may not save their lives. Public and health is now a contradiction. US life expectancy is declining sharply.
Texas and Florida are determined to go their own way. Once food and energy shortages become common due to missing workers and drought (along with hyperinflation and unrepaired fire and storm damage); western civilization is done.
There’s an important strand that this writer doesn’t care about at all. I learned about it as part of neoliberals’ strategies for their own perpetuation, but if someone’s semantics are such that it isn’t part of what they mean by the term, it is still a serious mistake to leave it out entirely. It’s the everyday and the relationship between the institutional tier and the smaller tiers. A major point that Mirowski makes about 2008 is that one of the reasons why neoliberals maintained power after 2008 is because the institutions were cemented by uptake in the everyday, ordinary people, and the in-between orders of magnitude.
This undermines Meadway’s big tech. I guess it’s interesting if big tech is big enough to promote its own ideas at the expense of the Washington Consensus or “neoliberalism in government,” but tech as anti-neoliberalism only works if you want to ignore the everyday cement. Platforms are endlessly neoliberal. Platforms are everyday neoliberalism. They make a market. If you were ambivalent about market solutions, they provide an object lesson in a market solution. They constantly exhort participants to adopt entrepreneurial self-conceptions. They make their little worlds in their own image in their founder/VC relationships. They think that way already so it’s natural for them to pump it out in their beloved project too. (LS, that is something Kickstarter has in common with the sharing economy.) How can Meadway omit this? I agree that institutions such as the IMF are important. This is now being miniaturized in fintech startups. Debt at the smaller levels is useful for the neoliberals because it puts us in a vulnerable position where we can be inculcated with how they wish us to conceive of ourselves. Uber had a car-leasing program. If you are in debt to Uber and Santander, you are in a position of disadvantage if they want you to attend a personalized captive-audience meeting. This is material and about ideas at the same time. The Zuboff system facilitates instant loan approvals using ML to gauge your risk level. So you’re exhorted to get on (with all the sophisticated neuro tricks) and then you are quickly subject to structural adjustments if you can’t pay. They loan money with strings attached and the strings could involve additional propaganda, or being presented with the opportunity to sign away your freedom in a contract. (Annie McClanahan talks about people with student debt and the appalling things that they said they would be willing to do to discharge it.) This neoliberalism is not dying.
How did the Keynesian era come about?
The economists learned from what they saw in WW2.
In the paper from 1943 you can see …..
They knew Government debt and deficits weren’t a problem as they had seen the massive Government debt and deficits of WW2.
They knew full employment was feasible as they had seen it in WW2.
Balancing the budget was just something they used to do before WW2, but it wasn’t actually necessary.
Government debt and deficits weren’t a problem.
They could now solve all those problems they had seen in the 1930s, which caused politics to swing to the extremes and populist leaders to rise.
They could eliminate unemployment and create a full employment economy.
They could put welfare states in place to ensure the economic hardship of the 1930s would never be seen again.
They didn’t have to use austerity; they could fight recessions with fiscal stimulus.
They had worked out how to create stable societies after the 1930s, but we forgot what they had leaned before.
Everything that was learned before has gone.
It’s dead, but its effects will be with us for a long time to come.
The debt in the banking system are claims on future spending power, and nearly everywhere is loaded up to the max.
Japan was the first to make this mistake.
Japan could study the Great Depression to avoid this fate in 1991.
How did Japan avoid a Great Depression?
They saved the banks
How did Japan kill growth and inflation for the next thirty years?
They left the debt in place and the repayments on that debt killed growth and inflation (Japanification)
They still haven’t recovered.
Paying down the debt is a long and painful process.
What we have effectively been doing is bringing future spending power into today with unproductive bank lending.
Paying down the debt is a long and painful process. SoS
Not necessarily since debts to banks can be paid with fiat and fiat is inexpensive and easily created.
The challenge then is how to distribute fiat in a just manner without too much price inflation. Steve Keen presents some ideas in his “A modern debt jubilee.”
Ups several typing mistakes in there that I couldn’t edit!
swordfish, not swordfish tuna
Never ending badly structured phrases… 31st should read 21st
This is weird. I posted a long post that seemed accepted and then added the 6:06 comment as a reply to that but in the process the former post was apparently erased. Fudgetaboutit, we can all survive without reading it.
It was supposed to be new, but it isn’t.
I have been looking at the history of neoliberalism and this reveals the Mont Pelerin Society went round in a circle and got back to where they started.
Western liberalism failed miserably in the 1930s and new ideas took hold, but those in favour of Western liberalism looked to bring it back in a different form.
They were initially well aware of past failings and sought to address these problems, but as time went on, they moved further and further to the right and got back to pretty much the old form of Western liberalism, with its old problems.
In the early days of the Mont Pelerin Society, they were acutely aware of the problems of Western liberalism and none more so than the Germans.
They looked for a form of liberalism that would also provide a stable society, and came up with Ordoliberalism, which they implemented in Germany. It was a huge success.
The rest of the Mont Pelerin Society gradually forgot the problems of the old Western liberalism, and unintentionally got back to pretty much where they started.
That’s handy Harry!
Since it’s pretty much the same, we can underpin it with the same economics.
The problems come out of the economics, which is why you can see the same problems in the US in the 1920s and early 1930s.
What could possibly go wrong with free markets?
The same as last time.
Learning form past mistakes always helps, but that didn’t happen.
Henry Simons was a founder member of the Chicago School of Economics and he had worked out what was wrong with his beliefs in free markets in the 1930s.
Banks can inflate asset prices with the money they create from bank loans.
Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.
“Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of “bank-financed inflation of securities and real estate” through the leveraged creation of secondary forms of money.”
Banks lend to fund the transfers of existing assets, which pushes up the price.
The markets and the banking system become closely coupled.
When asset prices fall, the banking system collapses.
Bankers get to create money out of nothing, through bank loans, and get to charge interest on it.
Bankers do need to ensure the money they lend out gets paid back to balance their books.
Banking requires prudent lending.
If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money.
If they use bank loans to inflate asset prices they get into a world of trouble when those asset prices collapse.
As asset prices collapsed in 1929, the banks became insolvent as their assets didn’t cover their liabilities.
They could no longer repossess and sell those assets to cover the outstanding loans and they do need to get the money they lend out back again to balance their books.
The banks become insolvent and collapsed, along with the US economy.
When banks have been lending to inflate asset prices the banking system is in a precarious state and can easily collapse.
What was the ponzi scheme of inflated asset prices that collapsed in Japan in 1991?
Japanese real estate.
They avoided a Great Depression by saving the banks.
They killed growth for the next 30 years by leaving the debt in place.
What was the ponzi scheme of inflated asset prices that collapsed in 2008?
“It’s nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world” All the Presidents Bankers, Nomi Prins.
We avoided a Great Depression by saving the banks.
We left Western economies struggling by leaving the debt in place, just like Japan.
It’s not as bad as Japan as we didn’t let asset prices crash in the West, but it is this problem has made our economies so sluggish since 2008.
The last lamb to the slaughter, India
They had created a ponzi scheme of inflated asset prices in real estate, but it collapsed.
Now they need to recapitalize their banks.
Their financial system is in a bad way, recovery isn’t going to be easy.
don’t forget, a lot of the money that bleeds offshore due to free trade, comes back to america and helps fuel asset inflation.
that offshored money used to mostly stay in the u.s.a., subject to wages, taxes, regulation and re-investment, which all helps the blunting of economic bubbles.
In some ways I wish this wasn’t posted on a holiday weekend as its strikes me as important and I would have thought it would have provided many comments.
I think Neoliberalism is far from on its way out. If one defines a revolution as the change in the way we organize society, but not necessarily violently, then it is hard to tell if a change is happening while it happens. Looking around me, our elites have never had it better. More importantly, they have rewritten many laws to institute this system and in my opinion end the US as a functioning democracy. We are ruled by a minority.
The test will come when the financial system faces distress. Will we bail out assets over the real economy? My bet is yes.