Yves here. This post provides a useful short history of neoliberalism, as well as how it undermines mental health by weakening social bonds and increasing insecurity.
By Lynn Parramore, senior research analyst at the Institute of New Economic Thinking. Originally published at the Institute for New Economic Thinking website
If you’re unlucky enough to reside in a town where data centers house computer servers storing everything from financial data for giant corporations to military secrets, you’re likely to find that a loud, whining noise becomes life’s agonizing background. The sound peaks and subsides, but it’s always there, never allowing you to fully relax. Eventually, the stress of this kind of ambient noise can wear you down, doubling your risk of mental illness, as well as increasing your risk of diseases like heart attack and stroke.
Living in an economy dominated by neoliberal principles can feel kind of like that: a background hum of constant psychological stress.
The sense of precariousness never really goes away. Instead collectively of sharing the risks of life, we’re increasingly saddled with the heavy burdens of existing in an overwhelmingly complex, modern world. We’re lonely individuals, fighting to stay afloat no matter what our situation. There are a few lucky winners, sure (and even many of them are psychically damaged), but most of us are forced to battle in an unrelenting struggle and competition for rewards. Hunger games, status games, power games, the list goes on and on.
In the big picture, the cumulative impact of shoddy safety nets, rapacious business practices, money-driven politics, and severe economic inequality is crushing our hope for the future, which we need to survive. Our trust in one another and in our institutions is dissolving. Our mental and physical health can’t stand up to this.
Harrowing conditions like major depression, bipolar disorder, schizophrenia, and obsessive-compulsive disorder are among the leading causes of disability in established market economies, according to Johns Hopkins Medicine. Even before the pandemic, more than a quarter of American adults were afflicted by a diagnosable mental disorder. Then, in 2020, global rates of depression and anxiety soared by more than 25%, a jaw-dropping one-year rise, linked to the pandemic, that has especially devastated women and young people. American doctors have declared the mental health crises among children a state of emergency. And all this mental distress fuels physical disease, like stroke, heart disease, diabetes, and arthritis.
The twentieth-century movement of neoliberalism, the dominant economic philosophy of the last half-century in the United States and much of the world, has foisted upon us a false view of the world with myriad negative outcomes for human wellbeing. The question is, how can we recover from its maladies? We had better figure it out soon because a half-century of the unrelenting strain of this toxic philosophy is breaking us down.
A Plan to Shift the Human Soul
The roots of the neoliberal perspective sprung from a world shattered by the collapse of empires and the chaos produced by the first World War. Austrian economists and business advocates in the 1920s and ‘30s, like Ludwig von Mises and Friedrich Hayek, working at the time in the Vienna Chamber of Commerce, worried about how a rump nation like Austria could get along in the new global landscape. The specter of socialism and communism in Hungary, part of the old Habsburg Empire, which briefly went red in 1919, added to their anxiety. They were also afraid of rising nation-states calling the shots on economic matters by doing things like raising tariffs – especially nations governed by democracies that recognized the interests of regular people. The spread of universal male voting rights set off alarm bells that power was shifting.
How could capitalists survive without a vast network of colonies to rely on for resources? How could they protect themselves from continuing interference in business and seizures of private property? How might they resist increasing democratic demands for more broadly shared economic resources?
These were big questions, and neoliberal answers reflected their fears. From their viewpoint, the political world looked frightening and uncertain – a place where the masses were constantly agitating to disrupt the realm of private enterprise by forming labor unions, conducting protests, and making demands to reallocate resources.
What neoliberals wanted was a sacred space free from such turmoil – a transcendent world economy where capital and goods could flow without restraint. They imagined a place where capitalists were secure from democratic processes and protected by carefully constructed institutions and laws — and by force, if necessary. Neoliberals weren’t fully opposed to democracies as long as they could be constrained to provide a safe haven for capitalists, but if they didn’t, many thought that authoritarianism would do just fine, too.
These early stirrings of neoliberalism were thus a kind of theology, a utopian longing for an abstract, invisible world of numbers that humans could not spoil. In this promised land, talk of social justice and economic plans to enhance the public good was heresy. “Society” was a realm which, at best, should be kept strictly separate from the economy. At worst, it was the enemy of the global economy — the troublesome domain of nonmarket values and popular concerns that got in the way of capitalist transcendence.
After World War II, the neoliberals organized formally as the Mount Pelerin Society, in which key figures like Hayek pushed the vision of a “competitive order” where competition among producers, employers, and consumers would keep the global economy humming along smoothly and protect everybody from abuse (quite an idea, that). Protections like social insurance and regulatory frameworks were unnecessary.
Basically, the market was God, and people were here to serve it – not the other way around.
For neoliberals, the twentieth century wasn’t about the Cold War, which didn’t much interest them. It was about fighting against things like Franklin Roosevelt’s New Deal and what they considered dangerous totalitarian schemes of economic equality. As historian Quinn Slobodian put it in his book Globalists: The End of Empire and the Birth of Neoliberalism, they set their sights on the “development of a planet linked by money, information, and goods where the signature achievement of the century was not an international community, a global civil society, or the deepening of democracy, but an ever-integrating object called the world economy and the institutions designated to encase it.”
Neoliberals dedicated themselves to protecting unrestricted global trade, crushing labor unions, deregulating business, and usurping government’s role in providing for the common good with privatization and austerity. While it’s true that most Western governments, as well as powerful global institutions like the World Bank and International Monetary Fund, are deeply influenced by neoliberalism today, it really wasn’t until the 2007-8 Global Financial Crisis that most people had even heard of the movement.
That’s because, for a long time, neoliberalism invaded our lives like a stealth virus.
During the first half of the twentieth century, it was mostly rich right-wingers who cottoned to the neoliberal prescription for world order. Economist John Maynard Keynes, who called for government intervention in markets to protect people from the kind of flaws and abuses so clearly demonstrated in the Great Depression, was much more influential.
But neoliberals kept their economic utopian dream alive by patiently building institutions, focusing on creating legal restraints for democracies, and seeding their ideas in supranational institutions and in academic outposts like the University of Chicago. They funded symposia, scholars, books, and reports, gaining well-known cheerleaders like economist Milton Friedman, and lesser-known but influential ones like James Buchanan, the only Southerner to win the Nobel Prize in economics.
The turn to neoliberalism really didn’t go mainstream until the 1970s, when conservatives blamed economic upheaval on too much government spending and labor power. By the 1980s, neoliberal champion Margaret Thatcher felt comfortable letting the agenda fully out of the bag: “Economics are the method: the object is to change the soul,” she announced.
It seems strange to mention the dismal science in connection with the human soul, but Thatcher had a point. Neoliberalism seeks to shift how human beings exist in the world, to change how we relate to each other and what we expect from life. Over time, we move from considering ourselves mutually responsible beings with a shared fate to isolated atoms liable solely for our own lives. Gradually, we shift from empowered citizens to people destined for servitude to arbitrary economic powers that lay well beyond our reach or understanding. Our humanity fades into an abstract realm of incomprehensible numbers and data, and we become little more than commodities, or even embodied externalities, in an invisible global economy ruled somehow by an invisible fist.
Unsurprisingly, this mode of existence produces maladies of mind, body, and spirit, elevating some of our most troublesome instincts as it denigrates many of the best.
Three Maladies: Distrust, Disconnection, and Disempowerment
A key tenant of neoliberal philosophy is that to live is to compete. As Slobodian has described, the architects of neoliberalism focused on “pushing policies to deepen the power of competition to shape and direct human life.” For them, the best world is brought about by everyone constantly striving to get more or better than their neighbor.
In a society dominated by this kind of thinking, you find yourself inculcated with a competitive mindset the minute you enter school. The simplest expression of your vitality, like singing, running, or jumping, is quickly nudged into a competitive framework. You can’t just jump for joy; you have to be the number one jumper. The point is not the intrinsic reward of the activity but the thrill of beating someone else, or perhaps the negative relief of not being a loser. You are trained to categorize your fellows according to whether they win or lose, sensing that you should just give up on activities in where you don’t “excel.”
Gradually, you grow distrustful of both your own natural instincts and of the motivations of other people. After all, helping others succeed means they may win the prize instead of you in a zero-sum game. Thinking selfishly becomes second nature. As researchers on the impacts of neoliberalism have shown, we become restless perfectionists, endlessly trying to perfect ourselves.
As political economist Gordon Lafer has noted, (increasingly defunded) schools become the place where ordinary kids are groomed for servitude and prepared for a life in which they are likely to find themselves either stuck or sliding downward on the economic ladder.
You learn to accept a world of diminishing, not expanding, possibilities.
A sense of disconnection increases as life progresses. In a place like the U.S., you grow up with low expectations of anyone really caring about you, resigned to spending most of your energy trying to fund life’s necessities, like healthcare and education, all the while dealing with shape-shifting predators in the form of the insurance firm, the bank, the utility company, the hospital, the police, the fill-in-the-blank – those entities which neoliberals made sure were free from the pressures of regulation and legal remedies. If you have a problem, the night watchman state isn’t interested; ask anyone who’s tried to deal with bank charges or utility bills.
You begin to understand that you don’t have much agency in the world. Life feels precarious, and that is exactly what neoliberals intended because they believed that living in such a state was necessary to “discipline” people to accept their place in a world ruled by capitalists.
As a citizen, your influence feels negligible. Neoliberalism tends to dimmish the political agency of ordinary people, offering us a wide array of (often subpar) consumer goods as compensation. As concentrated wealth takes over the political system, we see that what most people want – universal health care, a tax system in which the wealthy pay their share, affordable education, decent jobs, reproductive rights – are increasingly ignored in the policies and laws that govern our lives. Neoliberals sought only to expand the freedom and agency of property owners, as James Buchanan explained in his 1993 book, “Property as a Guarantor of Liberty.” In his view, everybody else was little more than a parasite trying to bleed the capitalist dry.
In 2007, Alan Greenspan declared that “it hardly makes any difference who will be the next president. The world is governed by market forces.” What he didn’t mention is that market forces are governed by capitalists, even though neoliberals pretend that their vision of markets doesn’t lead to asymmetries of power that result in monopoly practices, the undermining of citizens’ legal rights, and the dumping of the risks of business activities onto society. By the time Greenspan was making his declaration, people had begun to get used to the idea that predatory financialized markets designed by and for capitalists had crept into every aspect of our lives, from education to medicine to policing. (Of course, few had done as much as Greenspan to make that happen, with his preposterous confidence in reputation as a substitute for serious regulation.)
Today, the sick neoliberal vision has taken hold to such an extent that if you find yourself in a hospital emergency room, a hedge fund manager may well decide your fate. Perpetually anxious in our atomized existence, we shoulder our debts and burdens alone, inured to sacrificing our wellbeing, our natural habitats, and even, as the pandemic has shown us, our very lives, to “the economy.”
At the end of this weary road, when you’re too old to work anymore, you’re likely to be faced with an uncertain and underfunded retirement, all the while scolded by neoliberals for not being more careful as you struggled for bare survival. And even if with the most carefully laid plans, you are likely to be rewarded by being sicker and dying younger than those who came before you.
Neoliberalism says: suck it up, because this is as good as it gets. Is it any wonder that we are starting to break down?
The Covid-19 pandemic has shined a glaring light on the ugliness of the failures and insufficiencies of the neoliberal approach – and yet governments are still pushing out policies that prioritize business security above the lives of the vast majority of people.
Stressed-out workers simply can’t cope anymore. At a time when most Americans are worried about the economy, low-wage workers are walking off the job. Data released by the Bureau of Labor Statistics in January 2022 illustrates a trend of hanging up your hat so widespread that 2021 has been called the “Year of the Quit.”
Contrary to popular narratives, the quitting wasn’t mostly driven by better-off employees doing something more fulfilling. Instead, industries with low-wage workers saw the highest number leaving the job. While it may not seem rational for a worker worried about the economy to quit even an undesirable, inflexible, low-wage position, a worker beaten down by depression and anxiety might logically do just that, unable to tolerate the punishing demands while worrying about getting sick, caring for children or other family members, and being forced to take on extra duties as employers struggle to fill positions. It’s simply too much.
The transition from the welfare state to neoliberalism has meant that you are responsible for everything, even what is clearly out of your control. You have to reinvent the wheel every time you try to solve a problem, like how to pay for a house, how to get an education, how to have surgery, how to retire. There are unpleasant surprises at every turn.
Neoliberalism is not a happy philosophy, carrying a belief that human discontent is not only a natural but actually a desirable, state of affairs. It has had a huge impact on the culture of the U.S. and other countries where it holds sway and acts as a largely unrecognized drag on health and well-being. It’s no coincidence that the prevalence of mental health problems both nationally and globally is rising. Broken marriages, addictions, loneliness, and deadly despair are taking their toll.
So what’s the alternative? Let’s begin by stating the obvious. A sane society is not run for the economic benefit of a few wealthy capitalists. That is a sick society, and we are living proof of it.
Since the 1980s, we’ve been trained to think of this psychologically crippling state of affairs as normal, when it’s actually anything but.
Part of our recovery is remembering what truly makes us human. Researchers have found that a baby at six months already displays the instinct for empathy, illustrating that caring about what happens to our fellows is part of our DNA. On a collective level, anthropologists like David Graeber have shown that human societies have not always been organized along the lines of domination and inflexible hierarchies. We have choices, and we can make those that better align with our positive instincts. We can give parents the ability to nurture children, like bringing fathers into nurturing from the moment of birth, providing gender-blind parental leave, and making childcare affordable. By extension, our nurturing of the young enhances our ability to care for each other, our communities, and nature writ large.
Our common good is enhanced by political arrangements in which cooperative forms of participation and the needs of ordinary people are prioritized. This means pretty much doing the opposite of what neoliberals have championed. We acknowledge that governments can and must intervene in markets so that people are protected from abuse. We focus relentlessly on getting money out of politics and making voting something that everybody can do easily. We regulate business, enhance the power of working people, and ensure that the global economy is not just one big race to the bottom but a system in which the needs and rights of all inhabitants are considered.
Recovery demands that we create, as economist Peter Temin has stressed, a unified economy instead of the bifurcated one neoliberals and their libertarian offspring have brought us. We focus on restoring and expanding education and shifting resources from policies like mass incarceration. We focus on establishing and enhancing safety nets so that life is not just one arduous, Hobbesian slog, but a journey in which creativity and joyful pursuits are available to everyone. Instead of hyper-focusing on competition, we emphasize mutual succor, and we remember, as the denizens of Silicon Valley seek to drag us into an ever-more abstract metaverse, that we are embodied creatures who need real-life communion more than digital connectivity. We demand to be trained for jobs that are dignified, decently paid, and free from abuse.
The remedies to the maladies stoked by neoliberalism involve doing what it takes to enhance our sense of trust and shared fate. We move from privatization to the public interest, from solo flying to sharing risks, from financialization to a fair economy, from the common denominator to the common good.
Such a shift requires enormous resources of endurance, commitment, patience, and boldness. Neoliberals manifested these things. They played a long, tough game to get their ultimately antisocial, anti-life ideas accepted as mainstream. Our recovery and the widespread acceptance of a better, healthier narrative will not happen overnight. At first, demands for economic equality, political rights, and social justice will sound radical and futile, and those who promote them will be called dreamers and lunatics. That’s just what happened to the neoliberals when they first demanded a transcendent promised land for capitalists free from democratic constraints. They took the hits and kept going.
If we learn to play a long game, the future can be our world, not theirs. That awful, whining hum in the background of our lives might be changed to a tune we can actually dance to.