Time to be honest about neoliberalism

The peasants are revolting, as Brexit and Trump’s election suggest. But it’s not immigration and terrorism that’s the cause. It’s neoliberalism.

neoliberalism
Ronald Reagan and Margaret Thatcher initiated the neoliberal revolution in the early 1980s.

The peasants are revolting! This year, votes for Brexit and Donald Trump. Next year, Marine le Pen could become French president. And who knows what will happen in Italy on Sunday.

The messages are unclear, except that ordinary people across much of the Western world are dissatisfied with their lot. Their ‘democracies’ have replaced one-person-one-vote with one-pound-or-dollar-one-vote, leaving the vast majority in an increasingly precarious state.

And this is gradually gnawing away at the middle classes, who like their working class compatriots, face creeping dispossession and marginalisation.

We have all been told that, unless we did our duty and worked hard, then we would be disposable. Now, as technology destroys jobs at an accelerating rate, it’s dawning on us that we’re all disposable anyway. And that’s not a good place to be.

 

When success is failure

Of course, many commentators have been keen to lay the blame on the failure neoliberalism. Cornel West, for instance, was among the latest when he wrote in Friday’s Guardian:

“This lethal fusion of economic insecurity and cultural scapegoating brought neoliberalism to its knees… The age of Obama was [its] last gasp.”

The problem with this analysis is that while the neoliberal enterprise has played a major role in getting us into this mess, we are not here because it failed. Quite the opposite, in fact. We’re here because it succeeded.

It achieved what it set out to do. What we now have is the logical conclusion of 40 years of financialisation, circumventing democracy and the welfare state, and privatising ‘the commons’.

This point is central to understanding why we should replace neoliberalism with a model that widely distributes prosperity. The neoliberal enterprise was always about two things. Firstly, concentrating wealth and power among a tiny elite. And, secondly, using its austere economic rationale to convince ordinary people that this is natural and unstoppable; that there is no alternative.

 

Making people disposable

Getting mass society to accept its own disposability is probably neoliberalism’s single most impressive achievement. From that flowed the idea that resistance is futile. Margaret Thatcher’s ‘demonstration effect’ showed that anyone who resists the corporate agenda is dropped like a stone. Accept the inevitable or your jobs move offshore.

Neoliberalism fashioned the state into today’s advocate and enabler for large corporations. Lobbyists invisibly get the real deals done. The state delivers cruelty to anyone who rejects their role as worker-consumer drone.

However, it’s not merely the neoliberal destination that’s at issue here. It’s how we escape it. And this is where understanding whether it has failed or succeeded is critical.

If it had failed, the momentum towards a new economic and social model would have become unstoppable years ago. And it would have spanned across national boundaries. Instead, the system ploughs on, and it’s easy to see why.

The other side of the coin to concentrating power within a small elite is bourgeoning inequality. Inequality has strongly risen worldwide since Thatcher and Ronald Reagan led financial deregulation 30 years ago.

These two leaders effectively subcontracted our monetary systems to a small collection of global banks, corporations and investors. In doing so, they established the primacy of finance over human and natural capital. And, of course, they consolidated an economic class as rulers over the ruled.

 

Market fundamentalism

Central to the neoliberal agenda is its assertion that The Market works best when left completely to its own devices. The State should butt out and leave the economic players to get on with the serious business of creating wealth. If the State sticks its oar in, it will only impoverish us all.

However, what the economists don’t say is that power distorts how The Market works. The Market is not a neutral medium of exchange and equilibrium. Instead, it is loaded in favour of the winners right from the start. A level playing field it ain’t.

Ignoring this fact has merely fostered a culture in which the already-rich and powerful use The Market as merely the means by which they can screw everyone else for every penny they can – sorry, maximise their returns.

And, if left to continue, this has consequences not just for The Market, the wealthy and everyone else, but for the wider functioning of the economy.

 

I wanna be a rent-seeker

As wealth and power becomes more concentrated, so the elites feel more able to rest on their laurels. Rent-seeking and hoarding is lower risk and more attractive than production and innovation. Their profits become dead wealth, which is then used to extract more rents from the rest of us.

Price signals become distorted, and innovation becomes less urgent as the competitive edge drains away. This doesn’t describe the whole picture, but the dynamic is there.

Meanwhile, captured by the elite, The State has largely administered the creeping withdrawal of effective legal protections. If these are not progressively watered down or poorly enforced, it’s a safe bet that the regulators will turn native.

 

Representative turned security guard

Today, The State is more a security guard that dishes out pain and cruelty to the less fortunate than a body seeking to represent its people. And this is a process cheered on by the Fourth Estate as if punishing the poor was the very essence of good journalism and natural justice.

Neoliberalism has achieved exactly what its father, Milton Friedman, had argued for before it was piloted on Chile under its dictator Augusto Pinochet. Though harsher than Western neoliberalism, many of the telltale trends of concentrated wealth and power, inequality and falling productivity in Chile were there for all to see.

And still we are encouraged to work harder, smarter, more flexibly etc etc, even though economic growth is unsustainable socially, economically and environmentally and increasingly benefits only the elite.

Neoliberalism has turned morality into an unaffordable luxury; The Market into a mechanism for enforcing theft; and The State into an occupying power. Is it any wonder the peasants are revolting?

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peterbatt

Peter a journalist with 30 years experience of freelance writing, UK national newspaper and magazine production roles, and business development. In 2007, he developed and launched a mainstream-style green consumer magazine in the UK, called GreenerLiving, as a means of promoting sustainable change ‘within the system’. GreenerLiving closed during the post-crash recession, but Peter went on to become managing editor of the international ethical business title, Ethical Performance. However, Peter felt that the CSR sector has not succeeded in changing corporate priorities anywhere near fast enough, and so I decided to leave the treadmill of corporate employment and debt accumulation to focus on my own projects. Now poorer but a billion million times happier, he writes on political, economic and social issues – usually seriously, but sometimes as satire. He's currently writing Psychopath Economics, a book about the logic of social and economic power, belief systems, and the rise and fall of societies. Peter is convinced that ordinary people must educate themselves and exercise their economic leverage if we are to avoid social and environmental destruction.

peterbatt has 163 posts and counting.See all posts by peterbatt

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