The strange victory of neoliberalism

    Friday, 06 December 2019
    Milton Friedman, one of the twentieth century's biggest advocates of free markets, and one of the most prominent figures associated with neo-liberalism. Credit: Wikimedia Commons.

    The most striking feature of the existing literature on neoliberalism is the level of contradiction and extremism the different statements about and analyses of this doctrine can reach.

    On the one hand, a newspaper such as The Guardian goes as far as to label neoliberalism as the “root of all our problems,” including causing the rise of populism. Along the same lines, other commentators went so far as to describe populism as a “neo-fascist moment of the neoliberal doctrine.” On the other hand, populists, such as the French writer Eric Zemmour, describe the left as the “useful idiots” that eventually caused the triumph of neoliberalism.

    Such contradictory claims indicate that the word “neoliberalism” — especially when used in public debates — is slowly but surely taking the same road that previous concepts such as socialism and fascism once took. The word “neoliberalism” itself is increasingly becoming an empty shell void of any concrete meaning. In fact, the word starts to sound like an insult that can be thrown at the opponent’s face to kill the discussion and win the debate — regardless of the subject.

    This does not mean that neoliberalism in itself is a useless concept that should be abandoned. However, before starting to use it, one should start considering more carefully what the actual neoliberal thinkers said and thought.

    Indeed, the current debate on this ideology shows the opposite tendency, with commentators quoting and referencing other analyses that defined and criticised neoliberalism without a clear view of the original doctrine in itself.

    When looking at things from this angle, it seems obvious that one of the main problems that the examples provided is that analysts tend to identify neoliberalism with any trend or societal evolution they dislike. As a consequence, I would like to clarify things through an investigation of the different social phenomena that are traditionally associated with this doctrine.

    To do this, I will consider neoliberalism from both an economic and an ideological perspective.

    The thinkers 

    The identification of neoliberalism with the existing economic order is a classic idea that clearly holds some truth. The influence that a neoliberal thinker such as Friedrich von Hayek had on Margaret Thatcher is enough to illustrate this.

    This is further illustrated with the presence of the infamous Milton Friedman — probably the most prominent figure of the neoliberal movement — in China during the country’s liberalisation period undertaken under Deng Xio Ping. Also, let’s not forget the role that Friedman, along with his “Chicago Boys”, (the academics from the University of Chicago that went to Chile to implement neoliberal solutions) played in Pinochet’s Chile. All of these are clear and definitive proofs that neoliberal thinkers had a direct influence on the way the national and international economic models were shaped or reshaped from the 70s to the 90s.

    However, even though the influence of neoliberalism on international events is obvious, caricaturing the existing world as a side effect of the neoliberal doctrine is so oversimplified that it sounds almost childish. The most blatant example of this is the way the Euro currency can be labelled as a “neoliberal trap”.

    Beyond the economic debate, there is a rather large consensus that the Euro was a State-led project that was prompted by political concerns. Furthermore, Milton Friedman himself at its inception labelled the common European currency as an overly political idea that was doomed to fail within 20 years. In fact, the idea of a common currency is so contrary to neoliberalism that Friedrich von Hayek was in favour of a full privatisation of currency. The Austrian economist’s preference was for a system where private banks would operate their own currencies.

    More profoundly, and as the current and worrisome crisis on the REPO market in the US (where banks lend money to each other at the end of the day) illustrates, the entire world economy relies on manipulated interest rates and state/central banks’ intervention in the markets. The control and influence exerted by central banks on the economy went so far that Patrick Artus, chief economist of the Natixis bank, describes it as the “Madness of the central banks”. The French anthropologist Emmanuel Todd made an even bolder claim as he went as far as to question whether the way the economy currently works can still be described as capitalist.

    Looking at modern economies from a neoliberal perspective clearly gives a different view as to what economic solutions this doctrine would have prescribed. The French economist Charles Gave, who is probably the closest thing to a living neoliberal one could currently find, describes some part of the CAC40 (the French equivalent to the S&P 500) as belonging to the “communist sector”. According to Charles Gaves, the core of the problem is not the overextension of the free-market. Rather, the main issue stems from the entanglement between private and public interests, a phenomenon he calls “Capitalisme de copinage” (“Tit for Tat Capitalism”) —something that neoliberals have never been shy to complain about.

    But as already mentioned, neoliberalism is not only seen as an economic doctrine or system. It is also frequently described and analysed as an ideology and a social system. I will describe this vision by quickly summarising the theories of two of the most famous critics of neoliberalism: the French sociologist Pierre Bourdieu and the French philosopher Michel Foucault.

    For Bourdieu, the essence of neoliberalism can be defined as the conscious project of destroying all the collective bodies and institutions that could have resisted the market. At the core of this neoliberal system of belief is the faith in the free-market, which is seen as superior to any regulation. Foucault, on his side, analyses neoliberalism from the perspective of “gouvernementalité” (the strategies used to rule a population) and the individual. The philosopher defines the neoliberal individual as a person who fully defines himself as merchandise. Both authors share the idea that neoliberalism is an institution that is closely related to power: a way of dominating and ruling society.

    Again, these definitions are interesting and useful to understand neoliberalism and contemporary societies. These theories consider the triumph of neoliberalism as so obvious that they do not really demonstrate it. However, it is not that clear that neoliberalism so thoroughly brainwashed our elites and completely shaped our reality. Taken as an ideology, neoliberalism equates to libertarianism.

    Friedrich von Hayek coined the term libertarianism when he founded the “Mont-Pélerin” society, an organisation based in Switzerland that gathered and organised the neoliberal movement from its birth in 1947 when it was still a very marginal and even mocked movement. However, libertarians represent at best between 7 and 20% of the US population and this ideology is not really influential outside of the US.

    Moreover, the popularity of a figure like Bernie Sanders and the trend in youth voters have been showing rather clearly the important influence that social-democratic ideals still have on the population, including the elites.

    In reality, when reviewing the facts, it appears that the claim that neoliberalism brainwashed all the elites and shaped the world is as tedious as the claim making Obama a radical-socialist and France or the Scandinavian countries a series of “socialist nightmares.”

    So why, after all this investigation, do I think that we can still speak of a neoliberal victory? And why is it a “strange” one?

    Victory? 

    We can start understanding this better thanks to the seminal ideas of the French philosopher Jean-Claude Michéa. A former communist, the French thinker is very critical of both neoliberalism and its opponents. In Michéa’s view, both Bourdieu and Foucault, for example, greatly contributed to the destruction of the collective identities and institutions in Western countries. This is precisely what Bourdieu describes as the core of neoliberalism.

    According to Michéa, the modern left actually contributed to the deployment of radical individualism in the West. This is an ongoing process that could only end up with the triumph of capitalism and the free market. The core idea of Michéa is that the left, through its methodical dismantlement of the traditional institutions, in the name of individual liberty, became an unconscious agent of the capitalist transformation of the world. In fact, this vision probably explains why Michéa does not seem to give much credit to the concept of neoliberalism. In his view, liberalism, the left and neoliberalism are so close they look nearly identical. Even if he does not clearly say it, we can safely assume that the French thinker would consider neoliberalism a bogeyman used by the left to hide its conversion to capitalism and liberalism.

    So why do I speak about a “strange victory”? Neoliberalism cannot be credited with a complete and final victory over other ideologies and economic doctrines. Neither can it be so carelessly said that all the elites have been brainwashed and the world fully reshaped based on neoliberal ideas. In reality, the neoliberal victory is an intellectual one.

    Neoliberals were simply the first to understand that the free market is the only institution that could organise a society based on the principle of individual autonomy and freedom.

    Extending the free market

    Neoliberal thinkers —like the vast majority of us— see individual freedom as an intrinsic good. The particularity of neoliberalism is simply that it postulates that only the market can institutionalise and organise societies based on the principle of individual liberty. Very logically, the free-market should, therefore, be extended and applied to all the dimensions of life in our society. The different streams of the neoliberal doctrine can then be classified based on how far they are ready and willing to go in this path.

    This can be illustrated with the perhaps unlikely but telling example of online dating. Dating apps’ main effect is to remove the traditional matchmaking roles of informal institutions, such as the family and the circle of friends. Dating apps created a digital marketplace, where an offer meets a demand, that is progressively replacing these groups. To meet a partner through a dating app means that the member has to maximise its value and market it through a personal profile that is strangely close to a product description on eBay. This is probably the most uncomfortable thing with dating apps but also the most illustrative example of what Foucault called the “neoliberal individual.” And yet, who would be extravagant enough to say that the development of online dating is the consequence of neoliberalism?

    This is exactly what makes neoliberalism such an easy and tempting target.  Neoliberal thinkers theorised and advocated for the extension of the free-market logic to all parts of societies. A neoliberal academic like Murray Rothbard, for example, defended a system where the free-market logic could help redefine human relations. In other words, neoliberalism gets the blame for the worst consequence of the existing system: the extreme importance given to the market in our modern world.

    This conveniently allows us to blind ourselves to the fact that neoliberals were not the cause. We are.

    This is, by far, the most powerful and yet underestimated characteristic of neoliberalism.

    Anybody willing to oppose neoliberalism would, therefore, have a choice to make: either give up on some personal liberties and agree to more collective constraints or demonstrate that other institutions than the market can maximise individual freedom. Anybody wanting to reverse the direction in which society is heading has to take up the gauntlet and directly address the neoliberal challenge, demonstrating that other types of institutions can maximise liberty in modern societies.

    So far, this is something that has only been done in very intellectually stimulating but yet rather obscure and vague theoretical essays.

    If the left wants a political future, this is probably where it should bring the fight.

    Audren Layeux