Capitalism

Was the Rise of Neoliberalism the Root Cause of Extreme Inequality?

Financial meltdown, environmental disaster and even the rise of Donald Trump – neoliberalism has played its part in them all.

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By George Monbiot 

Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you’ll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is?

Its anonymity is both a symptom and cause of its power. It has played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring of wealth and power, of which the Panama Papers offer us merely a glimpse, the slow collapse of public health and education, resurgent child poverty, the epidemic of loneliness, the collapse of ecosystems, the rise of Donald Trump. But we respond to these crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has – or had – a name. What greater power can there be than to operate namelessly?

So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. But the philosophy arose as a conscious attempt to reshape human life and shift the locus of power.

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Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.

Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve.

We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances.

Never mind structural unemployment: if you don’t have a job it’s because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you’re feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it’s your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.

Among the results, as Paul Verhaeghe documents in his book What About Me? are epidemics of self-harm, eating disorders, depression, loneliness, performance anxiety and social phobia. Perhaps it’s unsurprising that Britain, in which neoliberal ideology has been most rigorously applied, is the loneliness capital of Europe. We are all neoliberals now.

The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.

With their help, he began to create what Daniel Stedman Jones describes inMasters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of think tanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way – among American apostles such as Milton Friedman– to the belief that monopoly power could be seen as a reward for efficiency.

Something else happened during this transition: the movement lost its name. In 1951, Friedman was happy to describe himself as a neoliberal. But soon after that, the term began to disappear. Stranger still, even as the ideology became crisper and the movement more coherent, the lost name was not replaced by any common alternative.

At first, despite its lavish funding, neoliberalism remained at the margins. The postwar consensus was almost universal: John Maynard Keynes’s economic prescriptions were widely applied, full employment and the relief of poverty were common goals in the US and much of western Europe, top rates of tax were high and governments sought social outcomes without embarrassment, developing new public services and safety nets.

But in the 1970s, when Keynesian policies began to fall apart and economic crises struck on both sides of the Atlantic, neoliberal ideas began to enter the mainstream. As Friedman remarked, “when the time came that you had to change … there was an alternative ready there to be picked up”. With the help of sympathetic journalists and political advisers, elements of neoliberalism, especially its prescriptions for monetary policy, were adopted by Jimmy Carter’s administration in the US and Jim Callaghan’s government in Britain.

After Margaret Thatcher and Ronald Reagan took power, the rest of the package soon followed: massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies were imposed – often without democratic consent – on much of the world. Most remarkable was its adoption among parties that once belonged to the left: Labour and the Democrats, for example. As Stedman Jones notes, “it is hard to think of another utopia to have been as fully realised.”

***

It may seem strange that a doctrine promising choice and freedom should have been promoted with the slogan “there is no alternative”. But, as Hayek remarked on a visit to Pinochet’s Chile – one of the first nations in which the programme was comprehensively applied – “my personal preference leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism”. The freedom that neoliberalism offers, which sounds so beguiling when expressed in general terms, turns out to mean freedom for the pike, not for the minnows.

Freedom from trade unions and collective bargaining means the freedom to suppress wages. Freedom from regulation means the freedom to poison rivers, endanger workers, charge iniquitous rates of interest and design exotic financial instruments. Freedom from tax means freedom from the distribution of wealth that lifts people out of poverty.

As Naomi Klein documents in The Shock Doctrine, neoliberal theorists advocated the use of crises to impose unpopular policies while people were distracted: for example, in the aftermath of Pinochet’s coup, the Iraq war and Hurricane Katrina, which Friedman described as “an opportunity to radically reform the educational system” in New Orleans.

Where neoliberal policies cannot be imposed domestically, they are imposed internationally, through trade treaties incorporating “investor-state dispute settlement”: offshore tribunals in which corporations can press for the removal of social and environmental protections. When parliaments have voted to restrict sales of cigarettes, protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical firms from ripping off the state, corporations have sued, often successfully. Democracy is reduced to theatre.

Another paradox of neoliberalism is that universal competition relies upon universal quantification and comparison. The result is that workers, job-seekers and public services of every kind are subject to a pettifogging, stifling regime of assessment and monitoring, designed to identify the winners and punish the losers. The doctrine that Von Mises proposed would free us from the bureaucratic nightmare of central planning has instead created one.

Neoliberalism was not conceived as a self-serving racket, but it rapidly became one. Economic growth has been markedly slower in the neoliberal era (since 1980 in Britain and the US) than it was in the preceding decades; but not for the very rich. Inequality in the distribution of both income and wealth, after 60 years of decline, rose rapidly in this era, due to the smashing of trade unions, tax reductions, rising rents, privatisation and deregulation.

The privatisation or marketisation of public services such as energy, water, trains, health, education, roads and prisons has enabled corporations to set up tollbooths in front of essential assets and charge rent, either to citizens or to government, for their use. Rent is another term for unearned income. When you pay an inflated price for a train ticket, only part of the fare compensates the operators for the money they spend on fuel, wages, rolling stock and other outlays. The rest reflects the fact that they have you over a barrel.

Those who own and run the UK’s privatised or semi-privatised services make stupendous fortunes by investing little and charging much. In Russia and India, oligarchs acquired state assets through firesales. In Mexico, Carlos Slim was granted control of almost all landline and mobile phone services and soon became the world’s richest man.

Financialisation, as Andrew Sayer notes in Why We Can’t Afford the Rich, has had a similar impact. “Like rent,” he argues, “interest is … unearned income that accrues without any effort”. As the poor become poorer and the rich become richer, the rich acquire increasing control over another crucial asset: money. Interest payments, overwhelmingly, are a transfer of money from the poor to the rich. As property prices and the withdrawal of state funding load people with debt (think of the switch from student grants to student loans), the banks and their executives clean up.

Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income.

Neoliberal policies are everywhere beset by market failures. Not only are the banks too big to fail, but so are the corporations now charged with delivering public services. As Tony Judt pointed out in Ill Fares the Land, Hayek forgot that vital national services cannot be allowed to collapse, which means that competition cannot run its course. Business takes the profits, the state keeps the risk.

The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public sector.

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Perhaps the most dangerous impact of neoliberalism is not the economic crises it has caused, but the political crisis. As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending. But some have more to spend than others: in the great consumer or shareholder democracy, votes are not equally distributed. The result is a disempowerment of the poor and middle. As parties of the right and former left adopt similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of people have been shed from politics.

Chris Hedges remarks that “fascist movements build their base not from the politically active but the politically inactive, the ‘losers’ who feel, often correctly, they have no voice or role to play in the political establishment”. When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation. To the admirers of Trump, for example, facts and arguments appear irrelevant.

Judt explained that when the thick mesh of interactions between people and the state has been reduced to nothing but authority and obedience, the only remaining force that binds us is state power. The totalitarianism Hayek feared is more likely to emerge when governments, having lost the moral authority that arises from the delivery of public services, are reduced to “cajoling, threatening and ultimately coercing people to obey them”.

***

Like communism, neoliberalism is the God that failed. But the zombie doctrine staggers on, and one of the reasons is its anonymity. Or rather, a cluster of anonymities.

The invisible doctrine of the invisible hand is promoted by invisible backers. Slowly, very slowly, we have begun to discover the names of a few of them. We find that the Institute of Economic Affairs, which has argued forcefully in the media against the further regulation of the tobacco industry, has been secretly funded by British American Tobacco since 1963. We discover that Charles and David Koch, two of the richest men in the world, founded the institute that set up the Tea Party movement. We find that Charles Koch, in establishing one of his think-tanks, noted that “in order to avoid undesirable criticism, how the organisation is controlled and directed should not be widely advertised”.

The words used by neoliberalism often conceal more than they elucidate. “The market” sounds like a natural system that might bear upon us equally, like gravity or atmospheric pressure. But it is fraught with power relations. What “the market wants” tends to mean what corporations and their bosses want. “Investment”, as Sayer notes, means two quite different things. One is the funding of productive and socially useful activities, the other is the purchase of existing assets to milk them for rent, interest, dividends and capital gains. Using the same word for different activities “camouflages the sources of wealth”, leading us to confuse wealth extraction with wealth creation.

A century ago, the nouveau riche were disparaged by those who had inherited their money. Entrepreneurs sought social acceptance by passing themselves off as rentiers. Today, the relationship has been reversed: the rentiers and inheritors style themselves entrepreneurs. They claim to have earned their unearned income.

These anonymities and confusions mesh with the namelessness and placelessness of modern capitalism: the franchise model which ensures that workers do not know for whom they toil; the companies registered through a network of offshore secrecy regimes so complex that even the police cannot discover the beneficial owners; the tax arrangements that bamboozle governments; the financial products no one understands.

The anonymity of neoliberalism is fiercely guarded. Those who are influenced by Hayek, Mises and Friedman tend to reject the term, maintaining – with some justice – that it is used today only pejoratively. But they offer us no substitute. Some describe themselves as classical liberals or libertarians, but these descriptions are both misleading and curiously self-effacing, as they suggest that there is nothing novel about The Road to Serfdom, Bureaucracy or Friedman’s classic work, Capitalism and Freedom.

***

For all that, there is something admirable about the neoliberal project, at least in its early stages. It was a distinctive, innovative philosophy promoted by a coherent network of thinkers and activists with a clear plan of action. It was patient and persistent. The Road to Serfdom became the path to power.

Neoliberalism’s triumph also reflects the failure of the left. When laissez-faire economics led to catastrophe in 1929, Keynes devised a comprehensive economic theory to replace it. When Keynesian demand management hit the buffers in the 70s, there was an alternative ready. But when neoliberalism fell apart in 2008 there was … nothing. This is why the zombie walks. The left and centre have produced no new general framework of economic thought for 80 years.

Every invocation of Lord Keynes is an admission of failure. To propose Keynesian solutions to the crises of the 21st century is to ignore three obvious problems. It is hard to mobilise people around old ideas; the flaws exposed in the 70s have not gone away; and, most importantly, they have nothing to say about our gravest predicament: the environmental crisis. Keynesianism works by stimulating consumer demand to promote economic growth. Consumer demand and economic growth are the motors of environmental destruction.

What the history of both Keynesianism and neoliberalism show is that it’s not enough to oppose a broken system. A coherent alternative has to be proposed. For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.

Originally published here.

George Monbiot’s How Did We Get into This Mess? is published this month by Verso. To order a copy for £12.99 (RRP £16.99) ) go to bookshop.theguardian.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min p&p of £1.99.


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  • kenny

    It is very refreshing to see a commentator who doesn’t just hype up one of these two ideas. It may well be the case that in the context of their times – the 1930s/40s and 1980s – that these two models brought benefits. But, like antibiotics, the animal is evolving so as to become immune.

    Blaming the neocons for loneliness is perhaps a little disingenuous: The so-called liberals have embarked on fantastically destructive social course, successfully doing to social institutions and organisations what the neocons have done to the economic.

    The population is left divided like never before, with no political representation, an irrelevant and alien national media, and an increasingly oppressive and threatening social and economic order.

    These seem to be causing a long term growing epidemic of cognitive dissonance, with people living beliefs that they know to be untrue.

    My view of BREXIT In the UK was simply the first time in 25 years that half the population had anyone other than a Blairite government to vote for: They turned out and voted against the current social and economic order: against the neoliberals, against the politicians, and against the media. The EU simply part of that problem.

    • someone

      Very good point on how the left destroyed social institutions… you’re exactly right. I don’t think the “I’m with her” crowd understand how much I hate them and how I blame them equally for my predicament just as much as cons (I take no responsibility! Wow talk about entitled… and fucking proud!).
      Amen on Brexit as well… If this radical leftist were American, he’d be voting for Trump. Also, so long as I am poor, let the earth burn, its always rich liberals that talk about the environment. I’m too poor to have kids.

  • Mike T

    Free markets are an outgrowth of the physical constructal law. This recent discovery has the potential to open new doors within the political and social sciences.
    http://www.westernfreepress.com/2016/03/13/scientific-proof-of-the-existence-of-natural-rights-found-in-the-constructal-law/

  • Sara Parmar

    An interesting and thorough overview of our recent history and our human and planetary predicament. No solutions proffered, however. I would like to offer three. First, as a transitional solution, Universal Basic Income – to begin to reverse wage slavery and rampant inequality, to begin to free the human spirit after centuries of serfdom. Second, adoption of the principles and processes outlined in The Third Industrial Revolution and The Zero Marginal Cost Society, both by Jeremy Rifkin (and both taken very seriously at present by Germany and China). Finally, begin to implement a Resourced Based Economy – researched, planned and illustrated extensively by Jacque Fresco of The Venus Project (Venus, Florida, USA) and disseminated comprehensively by Peter Joseph and The Zeitgeist Movement (Global). Therein lie the solutions. When do we begin mass education?

  • Harry Alffa

    As I keep telling everyone – it’s very easy to both remove bankers’ political power and “instantly” grow the economy; link banker/bank taxes to unemployment level/cost.
    Set bankers’ income tax at 10 times the percentage rate of unemployment.
    Set the total for the bank-levy to the cost to the State of paying Jobseekers allowance.
    This “forces” banks and bankers to put the growth of businesses (SMEs initially) at the forefront of their minds.
    See bailoutswindle.com

    • kenny

      Brilliant, the banking lobby would:
      – have the unemployment rate at 0.1% within a couple of years, without changing employment rate. Cut retirement age to 55 and increase the federal pension? Cut all benefits to under 30s, forcing zero hour ‘internships’ at supermarkets …..
      – Job seekers allowance would disappear as everyone would be in internships.

    • planckbrandt

      The debt money system naturally generates unemployment. There can be no full employment when money is issued as debt by private banks. There has to be a surplus of workers to keep wages down. This is a natural outcome of the system. There will never be full purchasing power when the majority have to pay interest to a minority.

    • If you don’t like what banks are doing, blame the government. Banks have been effectively nationalized some years ago. Bankers are now effectively government employees, doing what they are ordered to do.

      • Jack Din

        You’ve got that exactly backwards.

        • ger320

          Right, Jack.

  • X-7

    K Mr. George, props, part of the problem.
    Re a solution, I think we’re already cooked. Recently decided to try to relax into the apocalypse.
    But drunkenness, or invoking the brutal, selected collapse-apps alphabet coded as: suicide, rape, genocide, war, eating one’s children — I’ll pass, for now. And should a “pick-one-mofo” choice become inevitable, I’ll take suicide, or so I think.
    This eve I’m banging the keys thusly per my still withering solution reflex.
    Here’s a partial distillation of my thought-structure variation re the cultural organism’s interface with reality.

    * * *
    The idea that human beings using monetary code could possibly generate selectable relationship hierarchies in-and-across geo, eco, bio cultural & tech networks, and importantly, across time, has been rendered ludicrous by this accruing reality: exponentially accelerating complexity.

    If your economy converts the sky and ocean into terrorists, arms them with myriad weapons of mass destruction that will kill your descendants, then the assigning of complex relationship-value by a species with limited computation abilities using a thousands-of-years old cultural coding structure is likely an erroneous manner of reality interface.

    Survival / Passing Natural Selection Tests: Largely a function of processing relationship information with sufficient reach, speed, accuracy and power.

    Humans using monetary code increasingly FAIL on ALL those information-processing criteria. Hence we summon The Horror of “premature and perverted death” for our children. (Verily, that seems a tad inefficient.)
    I do have an econ app variation in mind, but even if I didn’t:
    “To kill an error is as good a service as, and sometimes even better than, the establishing of a new truth or fact.” Chuck Darwin

    Btw Mr. George, I recently submitted a piece to Evonomics and the Guardian US Opinion titled: “The Price Is Wrong.” Happy to send it on to those interested. You can contact me here: http://postgenetic.com

    Best,
    Bryan Atkins

  • John M Legge

    It wasn’t Keynesianism that failed in the 1970s, but “bastard Keynesianism” (Joan Robinson’s term) http://www.johnmlegge.com/blog/monbiot-right-wrong/

  • Carlo de Leon

    Reading this article makes me think of “Rent-Seeking” that Gordon Tullock originally defined and Anne Krueger introduced the term in 1974.

    In a political economy, rent-seekers bribe government for protection, exclusivity and monopoly of public services. The citizens are forced to use their service because nobody else is allowed to offer them, and because the law makes sure that you cannot. Just like owning a toll gateway, where everyone who passes through has to pay a fee and there is no other way to get through. The utility businesses are the favorite choices of these rent-seekers.

    • planckbrandt

      yes and money itself is perhaps the biggest thing we pay rent for to monopolists. The US constitution privatized money issuance to private banks when it banned local state issuance of state script and enforced that the Federal govt must borrow from private lenders and be in constant debt. This is just like the Bank of England and those devious founders wanted their own privatized money here, too.

  • planckbrandt

    The root cause is the money form created ex nihilo as debt accruing interest from most of us during our working lifetimes to few owners of banking licenses. The volatility embedded in this money system ensures that collateral concentrates with every debt cycle. That concentration of property and privatization of the commons ensures monopoly rents accrue to these families. Monopoly rents on money and land that have to come off the top of everything we own are the root causes.

    • Rory Short

      Abslutely!

  • planckbrandt

    The biggest reason there is no alternative proffered is because there is no money in it. Keynes got funded and promoted because he advocated for permanent public debts. This is a gift to the rich. Keynes also offered a solition to the volatility in the unregulated system that wiped out much shareholder capital in 1929. Keynes offered protections and bribes for the rich. That is why they promoted him. By the 70s, the middle classes had too much and the plug needed pulling. Hence, the money fot behind Mont Pelerin, etc. The so called left was really the right’s creation. As it should be according to the Arthashastra.

  • Rory Short

    The first step in healing the economy is to reform the money system at its foundation so that money becomes a reflection of completed economic acts, i.e. a natural representation of the value involved in voluntarily completed exchanges of goods and services. This can be done through the use of the internet and IT. Smart phones would become the individual’s electronic wallet able to dispense money both old and new, new money, as individual debt, when the the individual was short of cash to make a purchase. There would be a limit on the amount of new money debt that any individual could carry at any point in time. New money debt would be interest free and would be settled as and when the the new money debtor earned money. New money would only be issued in this way and thus all financial institutions would perforce only handle old money. Money system induced inflation would cease.

  • cehc84

    What is the relationship between this ideological diatribe and evolution economics?

  • entiendo

    “It is hard to mobilise people around old ideas; the flaws exposed in the 70s have not gone away; and, most importantly, they have nothing to say about our gravest predicament: the environmental crisis”.

    It doesn’t seem to be *that* hard: Jeremy Corbyn has done it very successfully with the unreformed 1970s ‘Militant Tendency’ Socialialism he believes in; Bernie Sanders has done it with the 1970s Scandinavian-style Social Democracy he believes in; Donald Trump is doing it with the nineteenth century American protectionism he believes it. Indeed politics and economics seem to have become just a car-boot sale of old ideologies, some less battered than others, which we’re seeing mixed and matched with quiet desperation to find an answer. But just as the Apollo programme was never going to get off the ground by bolting together bits of old machines, so ‘a conscious attempt to design a new system’ requires genuinely new and original thinking.

    When I mention what I think is genuinely new political thinking – for instance, Jonathan Haidt’s research into how conservatives and liberals simply build on different moral foundations, which are common to all of us – nobody really wants to consider its implications. “Left and right are just different, and we will always have both? No, the left is morally superior and the right has to be entirely eliminated…” We want the new new, it seems, as long it reinforces the old old – and we don’t have to renounce ancient partisanships. Well, good luck! I just don’t see it happening until we’re ready to let go of all the patterns of political thinking that keep us revolving in our ever-narrowing orbit.

  • Trần Hoàng Calvin

    It’s stunning how badly Monbiot mischaracterizes everything here. Even though he never clearly defined neo-liberalism himself, he paints this vivid picture of all these back-room deals and insidious plans, and then tries to tie it to neo-liberalism. In this way, it’s very much like the term ‘trickle-down economics,’ a term that is almost entirely used by free-market critics as a sort of ‘boogeyman.’ We can certainly be critical of the free-market, but there’s no academic integrity in boogeyman tactics and conspiracy theories.

    • ger320

      Paid troller maybe?

  • If millions of people are not wise enough to make their own economic decisions, who is wise enough to do it for them? Hayek was right. There is no alternative. Government officials? Laughable. The rich? Even more laughable. The only way an enormous and varied number of goods and services can be produced and distributed with a modicum of intelligence and efficiency is through markets. This is even more true today as technology accelerates as it was during Hayek’s time. The dream of the kindly, wise central planners bringing us all love and goodness died a long, agonizing, sickly death for good reason.

  • Walter Teague

    Excellent article describing the social political Dynamics of neoliberalism and our current problems, that there is one important component of this process that is left out.

    That is the psychological, the human component. How is it that this ultimately suicidal economic pandemic is able to effectively takeover the minds and beliefs and function in so many?

    In the past the ruling ideology gathered loyal supporters under the patriotic protection and cause of supporting the king, the nation, and the race etcetera. And outsiders were labeled enemy and resisters within the castle walls were losers as an evil and a disease to be wiped out.

    This article lays out well how this process rewards, at least in appearance, the winners and demonizes and punishes the losers. But it leaves out an important aspect of how this can possibly work.

    I would argue that the psychological and social characteristics of human beings that make them vulnerable and controllable through prior subjugation and victimization is worsened by childhood traumas which they survived physically, but left them with psychological damage which is then utilized by Excellent article describing the social political Dynamics of neoliberalism and our current problems, that there is one important component of this process that is left out.

    That is the psychological, the human component. How is it that this ultimately suicidal economic pandemic is able to effectively takeover the minds and beliefs and function in so many?

    In the past the ruling ideology gathered loyal supporters under the patriotic protection and cause of supporting the king, the nation, and the race etcetera. And outsiders were labeled enemy and resisters within the castle walls were losers as an evil and a disease to be wiped out.

    This article lays out well how this process rewards, at least in appearance, the winners and demonizes and punishes the losers. But it leaves out an important aspect of how this can possibly work.

    I would argue that the psychological and social characteristics of human beings that make them vulnerable and controllable through prior subjugation and victimization is worsened by childhood traumas which they survived physically, but left them with psychological damage which is then utilized by neoliberalism to win control and allegiance.

    Like the invisibility of “neoliberalism” to its victims, as children we experience instinctual challenges which if we met them successfully form our sense of worth and confidence. The primary instinct that guides us to healthy functioning as an individual and a member of our species is the built-in instinctual drive for survival, experienced in small children as the wish to be loved in order to avoid the extreme pain of Shame.

    Childhood traumas are inevitable and the child feels worthy and relieved when they are overcome. When the child can’t resolve the threat alone, they seek relief through the support and approval of their care givers. We call this instinct love. But small children shunned or blamed by their family experience a desperate sense of shame, as if their failure is their fault. A small child can not yet reason themselves out of this self loathing. Only a healthy loving caring community can give them the reassurance it takes for them to quell their shame. But many traumatic situations are too severe and prolonged and many families and cultures are too unhealthy to provide the love and attention the child needs. The result is often a toxic form of shame that the individual child survives by hiding and suppressing as best they can a deep and irrational sense of self-loathing. Many strive to compensate by proving their worth to others. Some act out their inner hate through acts of self-harm or violence.

    Such damaged individuals with their diminished capacity to love themselves or others in a fully healthy manner, provide a reservoir of recruits glad to be drawn into the ranks of groups promising guaranteed approval, making them excellent subjects for neoliberalism to win control and allegiance.

    Like the invisibility of “neoliberalism” to its victims, as children we experience instinctual challenges which if we met them successfully form our sense of worth and confidence. The primary instinct that guides us to healthy functioning as an individual and a member of our species is the built-in instinctual drive for survival, experienced in small children as the wish to be loved in order to avoid the extreme pain of Shame.

    Childhood traumas are inevitable and the child feels worthy and relieved when they are overcome. When the child can’t resolve the threat alone, they seek relief through the support and approval of their care givers. We call this instinct love. But small children shunned or blamed by their family experience a desperate sense of shame, as if their failure is their fault. A small child can not yet reason themselves out of this self loathing. Only a healthy loving caring community can give them the reassurance it takes for them to quell their shame. But many traumatic situations are too severe and prolonged and many families and cultures are too unhealthy to provide the love and attention the child needs.

    The result is often a toxic form of shame that the individual child survives by hiding and suppressing as best they can a deep and irrational sense of self-loathing. Many strive to compensate by proving their worth to others. Some act out their inner hate through acts of self-harm or violence. I call this condition Childhood Post Traumatic Shame, differentiated from general PTSD.

    Such damaged individuals with their diminished capacity to love themselves or others in a fully healthy manner, provide a reservoir of recruits glad to be drawn into the ranks of groups promising guaranteed approval, making them excellent subjects for neoliberalism.

  • Walter Teague

    Excellent article describing the social political Dynamics of neoliberalism and our current problems, but there is one important component of this process that is left out.

    That is the psychological, the human component. How is it that this ultimately suicidal economic pandemic is able to effectively takeover the minds and beliefs and function in so many?

    In the past the ruling ideology gathered loyal supporters under the patriotic protection and cause of supporting the king, the nation, and the race etcetera. And outsiders were labeled enemy and resisters within the castle walls were losers as an evil and a disease to be wiped out.

    This article lays out well how this process rewards, at least in appearance, the winners and demonizes and punishes the losers. But it leaves out an important aspect of how this can possibly work.

    I would argue that the psychological and social characteristics of human beings that make them vulnerable and controllable through prior subjugation and victimization is worsened by childhood traumas which they survived physically, but left them with psychological damage which is then utilized by neoliberalism to win control and allegiance.

    Like the invisibility of “neoliberalism” to its victims, as children we experience instinctual challenges which if we met them successfully form our sense of worth and confidence. The primary instinct that guides us to healthy functioning as an individual and a member of our species is the built-in instinctual drive for survival, experienced in small children as the wish to be loved in order to avoid the extreme pain of Shame.

    Childhood traumas are inevitable and the child feels worthy and relieved when they are overcome. When the child can’t resolve the threat alone, they seek relief through the support and approval of their care givers. We call this instinct love. But small children shunned or blamed by their family experience a desperate sense of shame, as if their failure is their fault. A small child can not yet reason themselves out of this self loathing. Only a healthy loving caring community can give them the reassurance it takes for them to quell their shame. But many traumatic situations are too severe and prolonged and many families and cultures are too unhealthy to provide the love and attention the child needs.

    The result is often a toxic form of shame that the individual child survives by hiding and suppressing as best they can a deep and irrational sense of self-loathing. Many strive to compensate by proving their worth to others. Some act out their inner hate through acts of self-harm or violence. I call this condition Childhood Post Traumatic Shame, differentiated from general PTSD.

    Such damaged individuals with their diminished capacity to love themselves or others in a fully healthy manner, provide a reservoir of recruits glad to be drawn into the ranks of groups promising guaranteed approval, making them excellent subjects for neoliberalism.

  • someone

    Okay but it’s a bit much to ask for a ready made system… I don’t think it ever works that way. Our failure is simply not feeling entitled enough to demand what we deserve.
    I don’t have a perfect solution but it starts with taxing the hell out of the rich, providing for a universal minimum income, and regulations that protect the environment. Does that solve EVERY problem? No… but it shouldn’t have to! If we need to, we will just hang the rich and take ALL of their money
    As for the neoliberalism with no name, it’s because they convinced us that its the end of history, that this is the way things are supposed to be. Ideologies have names, truth is just truth… and neoliberalism is truth to our finest little eichmanns

    • If you get your way, no one will ever invent anything again, work hard again, or ever attempt to better themselves again. You’ll get what you deserve, the Soviet economy.

      • someone

        honey, at this point “the soviet economy” isn’t worse than what we have today. SORRY! You’re trickle down failed MISERABLY.
        All I’m asking for is the economic policy of FDR, not Stalin. If you think those 2 are the same…. well I don’t think I will be able to change your mind.
        As for your theory, I’m not saying that we should do away with all economic incentive, I am simply asking for a proper safety net and to do away with the corruption of the elite. Also, read up on Dauphin, Manitoba and what happened there when everyone received the same income, no matter what they did… not as stark as you claim it will be at all.
        I’m not going to dismiss that economic incentive can push us; we can all use a good swift kick in the behind sometimes but I think its pretty clear that people living with the constant anxiety of living below the poverty line ALSO curbs economic growth. At worse, I’d say it will be a push and we’ll live in a more humane society. Look at this way… I used to volunteer, I used to tutor kids, I used to really care about being a good person… now (that I’ve trampled on by the system in so many way and am dirt poor) its all I can do not to harm ignorant idiots like you… so what kind of world would you prefer? I thought so!

        • Haris Iasonas Haralabides

          Living below the poverty line is a below 10% issue worldwide nowadays (in a world with 10 times the population of 2 centuries ago – a sign of prosperity in itself). It wasn’t the case 200 years ago when OVER 90% was living below the poverty line (in todays standards). So the world IS getting better. It’s sad that most people are oblivious to the fact (and history in general).

    • ger320

      If we must have capitalism…and not have communism OR neoliberalism…then we must maintain a balance between the proletariat and the bourgeoisie—as in, all of life needs to be in balance—like the planets>>>to close–burn, to far–freeze.

  • Ray Lapan-Love

    We on Left have so very far to go. It seems that too many well intended Leftys just keep spreading inaccurate material and thereby the resulting confusion causes a lack of unity. The following statement, for example, is essentially the opposite of true: “When parliaments have voted to restrict sales of cigarettes, protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical firms from ripping off the state, corporations have sued, often successfully” In fact, as in Uruguay just recently, governments have not yet lost a single case in these investor stake protection cases so far as I know, and I am fairly certain there have been only five so far.

    • ger320

      Uruguay is maybe the welcome exception.

  • Sly

    Given that neoliberalism is responsible for all the reprehensible things the author here lists it is no wonder that the world fares worse on any possible metric compared to the time period before these neoliberalist ideas took hold. Furthermore it is refreshing to see that countries that represent the alternative view to neoliberalism fare to much better than market-oriented economies…

    oh wait…

  • ger320

    By far, the most informative and explanative article I have ever read on the destructive system–neoliberalism.

  • Ned

    This is merely the default state of capitalism. Reforms never last more than a single generation. A new system needs to be developed without capital concentration or this won’t be fixed and humans may face extinction. A little Keynesian tinkering won’t last more than 30 years.

  • OllieJones

    It may be time to re-read Max Weber’s 1930 book The Protestant Ethic and the Spirit of Capitalism. Weber reached back into religious history. He dug into the ethical framework by which the accumulation of private wealth came to be understood as a sign of personal virtue, especially in territories dominated by heirs of John Calvin’s Geneva.

    Like neoliberalism, this ethic Weber describes is the water in which we swim. It has a certain austere beauty: personal striving avoids the need for favoritism. Success relies not on cronyism but on what the Geneva people called “divine providence.”

    Recently one Larry Summers, former president of the pre-eminent Calvin-heritage institution in the New World (Harvard) slagged the president-elect for jawboning to keep some jobs in Indiana: for using cronyism to keep the United Technologies air conditioner factory from moving to a Mexican maquiladora. His reasoning was pure Protestant Ethic:

    ““A principle is being established: it is good for the President to try to figure out what people want and lean on companies to give it to them,” Summers wrote in a blog post Friday. “Presidents have enormous latent power and it is the custom of restraint in its use that is one of the important differences between us and banana republics.”” (Bloomberg, Dec 2, 2016).

    Now, maybe it’s wrong for politicians to offer companies big rewards to keep jobs in their districts. But it’s certainly not wrong for them to try to keep jobs local. Doing that serves constituents. That’s what politicians are elected to do. And the protestant ethic combined with neoliberalism offers abstract reasons why that is wrong. They don’t hold up.

    Where politicians may go wrong on these deals is putting too much trust in the businesses they’re trying to pressure. The history of “tax breaks for jobs” deals is full of companies who took the money and run.

    “Tax breaks for jobs” deals should be, to serve the people, be as crass as possible: A company should send, after every payroll run, an accounting of FICA tax paid. The government offering a tax break should, upon verifying the accounting, send a check to the employer at the agreed-upon subsidy level. If the FICA accounting stops coming, so does the subsidy. Politicians are elected to spend the public’s money. If we want them to spend it to keep jobs in town, or in state, let’s get them to do just that rather than make abstract deals that fulfill what we imagine to be righteousness.

    But this is way too crass for the Protestant Ethic. It’s also the reason the staunchly neoliberal US Democratic Party can’t win elections.

  • michael

    Like most others, Monbiot uses “neoliberalism” to name the enemy, which is in fact a heterogeneous suite of ideas and policies, as well as policy failures, that cannot be squared with any cogent definition of neoliberalism. At the same time, the Mont Pelerin collective devised an economic philosophy that directly opposes key features of every known liberalism. It is neither liberal nor, for that matter, neo–. Hayek’s view amounts to little more than oligarchy dressed up as catallaxy—that is, market competition for workers and socialism for corporations and the rich. The only novel twist he added was the myth of spontaneous order as the sales pitch. (The notion of the market as a calculation device is an elaboration of Adam Smith and others.) But he never even pretended to believe it, arguing openly that inequality is a virtue of which workers are inevitably skeptical. So to sum up: Hayek and his heirs have undoubtedly been influential, but 1) they are not neoliberals and 2) the transformations of the past 40 years cannot be explained as their doing.

  • Ian Crowther

    This is difficult to swallow, but for me needs saying – the clear facts are these: opposition to neoliberalism will not come through criticising economy through the Marxist paradigm of production, value, labour, profit or equity etc. – whilst valuable research continues on these lines to illustrate what the impact of neoliberalism enables through these variables, it is obvious by now that the nature of neoliberalaism dissolves this attempt to oppose with ease.

    To get underneath the political economy of neoliberalism and provide opposition, one must understand the philosophy and epistemic prescription of what neoliberalism has become since 1979: it’s key drivers are thus…

    1. That most humans are not rational (even though economics tells us otherwise) consensus achieving beings, but are stupid, so keep feeding the economic fog with confusion that doesn’t need to make sense and they’ll keep going and believing in what we are doing as long as profits and cashflow keep going.

    2. To maintain human belief that the concept of markets as the all seeing super computer that is capable of running an economy better than any human or group of humans for society is the right way to go – markets will provide and set us free.

    3. To have humans, even in the face of severe financial crisis, to be subservient to markets and to have this remain, to rentrench previous ideology and continue to plough the same furrow without revealing the closely regarded philosophy to the wider public that continue being hoodwinked.

    4. Finally, politics needs to provide a double precept to the above as neoliberalism is unlikely to hold without the Mont Pelerin base of think tanks and financial support, and without politics maintaining the platform through which neoliberalism operates, ‘markets’ – so heaven and earth is moved to ensure this stays in place.

    What is also clear, is this continued attack on laissez-faire economic doctrine is not the same as attacking neoliberalism and its central tenets above.

    Often the terms under which the left operates criticism is achieved through complex argument to realise those conclusions. The majority of global population has switched from socialism (post the failures of the post Soviet bloc), and listens to cheap and erroneous social media meme based analysis, easy to understand, and which steers the conversation away from a wrecking ball through the above neoliberal epistemic underpinning of its philosophy and which provides more fog (fake news), as markets re-generate and move onto something else that provides profit, recasting itself in new wolf’s clothing and becomes the next parasite on a new host from which it can derive a cashflow that continues widening inequality gaps whilst not addressing the deteriorating fundamentals.

    The left must find a way to breach the shapeshifting nature of neoliberalisms market power and that means attacking its philosophy and episteme, all guns blazing rather than a continuing criticism of its affects through long standing concepts in political economy. Attack the heart of neoliberalism rather than expecting people to switch ideas on economic organisation and political structure through illustrating complex empirical effects. This is also not withstanding what to replace neoliberalism with that people can have confidence in?

    2008 came and the left was not ready. The same left wing tropes are not going to work now. George is right about the left offering little as to the way forward on the issues that matter right now, growth, climate, in particular – technology seems to be the driver to change and neoliberalism grabs it for itself and creates markets such as carbon exchange and alike which it uses to create cashflow and legitimises through powerful political and legal process – creating a new platform to continue realising neoliberalisms philosophical ambitions.

    Time to rethink how to attack this beast, as current efforts have failed despite the ramifications of its effects being clear but too complex to grasp for the majority of folks. How best to convey this message is key to the way forward.