© 2019 by Mutiny. Proudly created with Wix.comTerms of Use  |   Privacy Policy

What do we mean by neoliberalism?

Updated: Feb 12

Phil Hearse takes issue with Blairite commentators who claim that neoliberalism is nothing but an ‘unthinking leftist insult’.

18 January 2020.


In the wake of Labour’s election defeat, the Blairite Right, and its intellectual outriders, have launched a sustained campaign against the Left and socialism. ‘The leadership’, ‘sectarianism’, ‘ideological purity’, and of course ‘anti-semitism’ are standard explanations of Labour’s defeat.


Part of this is a bad-tempered Observer article[1] by economist Will Hutton, in which he claims the word ‘neoliberal’ – applied to people or ideas – is just an ‘unthinking leftist insult’.


Will Hutton, it will be remembered, was the author of a sharp attack on Thatcherism, The State We’re In, published in 1996, and subsequently a strong advocate of Blairism.[2] He now claims the Left lost its battles against the Right in the last decade:


… because at bottom it has a fatal, divisive weakness. Lack of any agreement about what being liberal Left can and should mean creates a sectarianism that unless confronted consumes it, the Left defining itself as the custodian of the ‘socialist’ flame and everyone else, in varying degrees, as a traitorous ‘neoliberal’.


Further:


The very term ‘neoliberal’ has become a catch-all to indicate contempt for any policy position or political figure the Left considers to be departing from true ‘socialism’, which in turn must be based on the subordination of capitalism to the state rather than its reform… the passions aroused created a never-ending sectarian war. Making the compromises necessary to create a governing coalition that could exercise power is not on its agenda: the Left’s struggle is all about fighting for and delivering a particular definition of socialism – or nothing.[3]


Accusing the Left of being sectarian is pretty standard stuff, but Hutton’s article begs the question of whether neoliberalism actually exists, either as an ideology or as the dominant form of actually existing capitalism.[4] Because if it does so exist, then it is reasonable to suppose that certain ideas and individuals actually embody that ideology and propose policies to implement neoliberal nostrums. Obviously.


Just in passing, we might note that there’s a whole body of writing in the Observer’s stable-mate, the Guardian, which utilises the concept of neoliberalism and calls out its consequences.[5] Indeed, Guardian columnist George Monbiot argues that it is impossible to understand the world without the concept of neoliberalism.


He points out that among wide sectors of the population the idea is unknown. He says,

Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives [neoliberalism] has, for most of us, no name. Mention it in conversation and you’ll be rewarded with a shrug.[6]


Tony Blair (right) and Will Hutton (left) - both attack the Left for telling the truth about neoliberalism's devastating impact on working people.


David Harvey


‘Most of us’, in this case, means people not on the Left. And far from being, as Will Hutton maintains, an ‘unthinking leftist insult’, there is a huge literature that explains it. In his well-known A Brief History of Neolibealism,[7] David Harvey explains it as follows:


Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices…


Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution), then they must be created, by state action if necessary. But beyond these tasks the state should not venture … There has everywhere been an emphatic turn towards neoliberalism in political-economic practices and thinking since the 1970s. Deregulation, privatisation, and withdrawal of the state from many areas of social provision have been all too common…


Neoliberalism has, in short, become hegemonic as a mode of discourse. It has pervasive effects on ways of thought to the point where it has become incorporated into the common-sense way many of us interpret, live in, and understand the world.


A couple of points of detail need to be added. The neoliberal state has everywhere attempted to attack workers’ rights and diminish trade-union power. It has reduced job security, and indeed created a society where economic insecurity is the permanent lot of a significant section of the population.


It has increased economic inequality massively, carrying through a gigantic transfer of wealth and power away from working people in favour of the mega-rich. It has meant working longer and harder as most jobs become subject to minute oversight and measurement. And it has created a debt-laden society in which millions keep their heads above water by building up unsustainable debts just to keep going. It has created huge ‘left behind’ areas in which poverty will be lifelong. And it has created a situation where the future for millions of young people is grim.


Add to that the fact that obsession with short-term profit inevitably prevents any resolution of the climate crisis, and a world of massive corruption as banks collaborate with the rich to hide their money from observation and tax collectors, and you have a pretty good overview of what neoliberalism means.


Hutton’s fatal error


Hutton was very much pro-New Labour before the 1997 election but not uncritical of New Labour in power. But his basic viewpoint has remained unchanged since the mid-1990s. He believes that the problem is that we have the wrong type of capitalism, one which prioritises financial profits over productive investment, and what we need is investment in robust productive companies like they have over there in Germany.


In a recent article, Hutton praised Elizabeth Warren, a contender to become the Democratic candidate in the November presidential election, over her more left-wing rival Bernie Sanders – because Warren praises markets and wants to ‘remake capitalism’.


But significant sections of the capitalist class in Europe and America cannot be won to his or Warren’s project, because the present configuration of capitalism delivers such vast profits to its dominant sectors. Hutton fails to see that financialisation – the dominance of finance capital – is built into the modern capitalist system (aka neoliberalism).


Hutton says:


I continue to think that Rhineland capitalism with its emphasis on protecting companies’ long-run purpose and values – interestingly now echoed by the mighty West Coast US tech companies – permits more great companies to prosper in Germany than in Britain. GEC and ICI are now dead, surrendering to the financial preoccupations of the stock market: their German counterparts, Siemens and BASF, are world leaders.


Companies like Bosch and BMW, or Carlsberg and IKEA in Scandinavia, are well-owned and driven by a great sense of purpose: rather as Apple and Google are. It is Britain that treats companies like casino chips, with results that cascade into poor productivity, low innovation, and rising inequality.[8]


The reason that Hutton’s vision – a desire to go back to the dominance of manufacturing capital in the 1950s and 1960s – won’t work is that financialisation is built into the DNA of neoliberalism. Here’s why.


Neoliberalism, by pushing down the share of GDP allocated to wages and social spending, has an inherent deflationary tendency, as well as boosting the super-profits of finance capital. This is linked to privatisation.


Privatised utilities, privatised transport, and the destruction of the social-housing sector lead to a hoovering up of the spending-power of the working class and lower sections of the middle class in utility bills, local taxes, transport costs, and above all rents and mortgages.


Financial capital has an answer to all this, a way of ensuring continued capitalist growth – vast oceans of debt. Now the rentier, the capitalist money-lender, reigns supreme.


The current model of capitalism in the advanced countries prioritises hyper-consumerism, all financed through debt, over-lorded by the ideology of the consumer spectacle.[9] In the process, vast profits are piled up by key corporations like the California hi-tech companies praised by Hutton, making it difficult to distinguish clearly industrial and financial capital.[10] Much of this profit is used for financial and not manufacturing operations.


Hundreds of millions of workers depend on debt, not just for housing or consumer durables, but for part of their daily expenditure as well. The cash-rich upper sections of society are matched by the debt-ridden masses. The corollary of a debt laden economy is financial crash, as we saw in 2007/8.


In 2006 Hutton wrote a retrospective of his 1996 Thatcher critique in which he wondered whether, in the light of the onward and upward progress of globalisation, he had got his critique of Thatcherism at least partially wrong.


Then came the 2007 world banking crisis, followed by endless neoliberal austerity. The crash and the austerity were not something separate from neoliberalism and financialisation: they were caused by it.

Yellow Vest protest against neoliberalism.

Lying about the Left


Will Hutton is hostile to the Trump-Johnson style Right, but his notion that left sectarianism and division is responsible for it being in power is very superficial. Hard-right victories are at least in part a verdict on what came before – in Britain, Blairism, in the US, Obama.[11] The results of the Blair and Obama governments, exactly the type of centrist government you get if the Right is defeated and the radical Left marginalised, were – to say the least – disappointing, because neither challenged the dominant neoliberal discourse

.

As I wrote in a recent article:


Blair’s government maintained harsh anti-union laws that made effective trade-union action difficult. It deepened Thatcher’s adherence to labour ‘flexibility’; it kept her policy of starving local government finances; it continued the policy of rock-bottom welfare payments and harsh penalties for claimants, including disabled people.


Most of all, despite several initiatives to help the poorest in society, it failed to take the kind of measures needed to make any significant dent in Britain’s status as one of the most unequal advanced capitalist economies. Which is why the few significant measures to help the most disadvantaged were so quickly overthrown by the post-2010 Tory-Liberal coalition government…


Blair’s government fully signed up to a low-wage economy which forced many working-class people to depend on consumer debt to finance their daily lives – which of course contributed to the dreadful outcome of the 2007/8 financial crash. The cost of daily life was massively inflated by the increasing reliance on the private rental sector for housing and the huge amounts of disposable income pumped out of working people by privatised utilities and transport networks.[12]


Will Hutton is wildly wrong about why the radical Left and revolt against what Tariq Ali calls ‘the extreme centre’ have won significant support since 2007. It is not just that some mendacious and maliciously sectarian people went into a corner to cause trouble for the ‘liberal Left’.


It reflects something real in the experience of millions, the failure of the extreme centre to ameliorate their condition. Since the 2007/8 financial crash there has been endless austerity, but also endless revolt against it, from the Indignados in Spain, to the Yellow Vests in France. It is also why we got Corbynism in Britain.


To get out of the grim mess that neoliberalism has created you have to change a lot of things at once. You have to scrap the anti-union laws to empower workers. You have to ban zero-hours contracts. There has to be a minimum wage that reflects the real costs of living. You have to control rents and start a huge public house-building campaign. There has to be a revolution in social care. Utilities and rail transport have to be brought into social ownership. And we need a green new deal to convert to a carbon-neutral economy and society.


It is impossible to do these things without massively taxing wealth, not just income. A structural change in wealth and power relations is not just socialist ‘purity’: it is a burning necessity.


Will Hutton does not intervene directly in the Labour leadership battle, but what he says is identical to what people like Alan Johnson and Tony Blair say. It is part of an offensive whose ultimate aim is the decisive defeat of the Left in the Labour Party.


Coda: It’s all around you


On the day I wrote this article, I heard an item on the BBC World Service about the looming battle in California over labour ‘flexibility’. Last September the state legislature passed a measure that would extend many rights enjoyed by full-time workers to part-time workers or labour-only contractors.


This is now being challenged by a group of companies, led by Uber, Lyft, and DoorDash, who are launching a $90m campaign to overturn this measure in a proposition to be voted on with November’s elections.


Imagine that. A huge $90m campaign so they don’t have to pay out basic benefits to workers. Would it be possible to call the opposition of Uber et al ‘neoliberal’? Of course: this kind of thing is at the core of neoliberalism. It’s precisely what it’s all about.


When I retired from teaching in 2016, I was put on the panel interviewing for my successor. I had to explain to the four candidates who arrived at the college by 8.30am that first they would have to do a sample mini-lesson, then a 15-minute presentation, then in the afternoon a panel interview. No-hopers would be sent home at lunchtime, for the rest it would take all day.


I apologised for this drawn-out procedure, typical of the approach imported from corporate ‘human resource’ departments in the United States. One of the candidates shot back, ‘It’s called neoliberalism.’


Yes it is. It is the counter-revolution that is ingrained into modern capitalism, which everyone experiences. To understand it we have to name it and fight its advocates.


Phil Hearse is active in Mutiny and Socialist Resistance.

[1] https://www.theguardian.com/commentisfree/2019/dec/29/neoliberal-is-unthinking-leftist-insult-all-it-does-it-stifle-debate


[2] https://www.theguardian.com/commentisfree/2006/sep/10/comment.politics1


[3] Observer 29 December 2019


[4] Accusing people who use the term ‘neoliberal’ of being unthinking is pretty rich, especially inb the light of the huge number of books and documents which document and establish this concept. See https://www.goodreads.com/shelf/show/neoliberalism


[5] Particulary in the writing of Aditya Chakrabortty https://www.theguardian.com/profile/adityachakrabortty and Goerge Monbiot https://www.theguardian.com/profile/georgemonbiot. Se also https://www.theguardian.com/news/2017/aug/18/neoliberalism-the-idea-that-changed-the-world


[6] https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot


[7] Oxford University Press, 2007.


[8] https://www.prospectmagazine.co.uk/magazine/will-hutton-how-to-fix-britain


[9] https://www.marxists.org/reference/archive/debord/society.htm


[10] Petra Dünhaupt explains how this has been theorised by the Monthly Review school: “Foster (2006, 2007, 2008, 2010a, 2010b) argues that by the late 1970s, capitalism entered a new phase, which he calls ‘monopoly-finance capital’. The defining features of this phase are, amongst others, the accelerating increase in financial bubbles and financial speculation. Though profits of financial corporations have risen as a share of total corporations’ profits, Foster argues that the divide between financial and non-financial corporations became less clear, given the increasing reliance of non-financial corporations on financial activities. Moreover, he mentions the rise in income inequality as another defining feature, which generated a rise in households’ indebtedness to compensate for stagnating or falling real wages. According to Foster, a more unequal distribution of income is a prerequisite for the functioning of monopoly-finance capital, given the “demand for new cash infusions to keep 8 Economic surplus is defined as the difference between “what a society produces and the costs of producing it” (Baran & Sweezy 1966: 9). 12 speculative bubbles expanding” (Foster 2007). Foster (2007) regards neoliberalism as “the ideological counterpart of monopoly-finance capital”… reflecting “to some extent the new imperatives of capital brought on by financial globalization.” https://www.econstor.eu/bitstream/10419/140624/1/85892790X.pdf


[11] https://www.truthdig.com/articles/american-history-for-truthdiggers-the-obama-disappointment/


[12] https://prruk.org/shipwreck-of-the-third-way-tony-blair-new-labour-and-inequality/