Neoliberalism

Three decades ago, a contagion by the name of “neoliberalism” broke out of the centres of capital accumulation and spread from there to engulf the rest of the world.

In its growth phase, the doctrine of the supremacy of the free market moved rapidly from marginal economic thinkers and ruling class warriors such as Margaret Thatcher, Ronald Reagan and Augusto Pinochet to the mainstream of politics, journalism and academia.

By the 1990s even the strongest social democratic parties had written neoliberalism into their platforms or were implementing neoliberal policies when in power. Nothing did more to sustain the claim that there was no alternative to neoliberalism than this capitulation of the left.

But we have now entered a period of gathering, if uneven, revolts against neoliberalism and those who have surrendered to it.

In Western Europe and much of Latin America, a new politics of resistance is confronting renewed attacks on workers and the welfare state, producing deep crises in these societies.

This is raising a number of pressing political questions and drawing new layers of activists into longstanding debates in Marxist political economy.

What is neoliberalism? Where did it come from? Most importantly, how do we get rid of it?

David Harvey, a US-based Marxist best known as the author of The Condition of Postmodernity (1989) and The New Imperialism (2003), squarely addresses each of these questions in his not-to-be-missed new book, A Brief History of Neoliberalism (2005).

Neoliberalism is most commonly understood as a set of ideas and policies which seek to expand the sphere of the market by rolling back the powers of the state. Social democratic critiques of neoliberalism engage with it on this basis: neoliberalism is a series of mistaken policies, a utopian vision bound to fail, or a specifically Anglo-American cultural or institutional phenomenon. Alternatives to neoliberalism within capitalism are viable if you elect a party with the right ideas.

Harvey rejects these views.

He makes a clear argument that neoliberalism is above all a political project to restore class power in the context of a sustained global crisis of capital accumulation.

Neoliberalism is too pervasive and long lasting to be a mistake. It has not failed to solve economic problems because it was not designed for this purpose. It has not, Harvey maintains, resolved the crisis of accumulation – world growth rates remain at historic lows.

But from the perspective of capital, it has been effective in restoring their social power. Workers everywhere are now working harder, with less security, for longer hours and less pay.

Neither should neoliberalism be dismissed as a blight of Anglo-American civilization or as a project of the American state, as some on the left are arguing. The pattern of its diffusion, its present universality and national variations do not fit these hypotheses well.

Harvey’s defense of a Marxist understanding of neoliberalism is the strongest and most useful aspect of the book. If neoliberalism “looks like class struggle and acts like class war then we have to name it unashamedly for what it is.”

During the postwar economic boom, workers throughout advanced capitalist countries had been able to win significant concessions. Harvey shows how inequality was declining in theses societies – to the detriment of ruling class power – as labour movements and social democratic parties grew bolder. If capitalists felt squeezed in the booming postwar economy, they became absolutely desperate to reverse this trend with the onset of economic crisis in the 1970s.

It was not immediately obvious that states would respond to the crisis with the neoliberal policies that are now routinely applied. At first, ruling elites reached for the ideas at hand and implemented a recharged Keynesianism. Left parties in Europe, riding a wave of working class militancy, went further in pushing social democratic and corporatist solutions, even proposing to buy out the ruling class as in Sweden.

This was very alarming to capitalists on both sides of the Atlantic. To protect themselves from “economic and political annihilation”, as Harvey puts it, the power of the working class had to be broken.

The failure of reformist attempts at restarting economic growth opened the way for a more noxious prescription. The capitalist class reorganized politically. It dusted off old reactionary ideas and spent lavishly to promote them; it sought out the divisions within the working class and forced the issue of who had the power.

Harvey dwells on this moment of crisis, and some of the more interesting sections of the book deal with how neoliberalism was imposed in concrete situations.

There are, he suggests, two models of transition: the violent path typified by Pinochet’s US-backed coup in Chile, and the handling of New York City’s 1975-77 fiscal crisis. The latter demonstrated that even in the US’s most unionized, social democratic city, all power could be handed to the bankers, and workers’ standards of living could be drastically reduced without having to call in federal troops (as the Mayor at the time feared would be necessary).

The chapter on the emergence of neoliberalism in China – “Neoliberalism with Chinese Characteristics” – is the best available explanation of the complexities of China’s insertion into neoliberal globalization and the emerging tensions between Chinese and American capitalism.

Harvey is concerned with how neoliberalism as a form of class rule is able to sustain itself in liberal democracies. Provocatively – and problematically – he suggests that neoliberalism was able to build a broad societal consensus by appealing to the desire of individual liberty raised by the revolts of 1968.

The movement of 1968 demanded both liberty and social justice. Neoliberalism offered the former at the expense of the latter by dismantling a heavily interventionist state and confronting the powers of union bureaucracies.

This does not sit well with his observation, also in the book, that neoliberalism rode the backlash politics of racism, anti-feminism and anti-gay bigotry – all reactions to the emancipatory spirit of ‘68.

Here Harvey makes a bad misstep by explaining the reproduction of neoliberalism in the 1990s under Clinton and Blair in terms of cultural and ideological transformations, rather than returning to the competitive pressures of the world market and defeat of the left as in his earlier analysis.

“Perhaps the greatest testimony to [Thatcher and Reagan’s] success”, he writes, “lies in the fact that both Clinton and Blair found themselves in a situation where their room for manoeuvre was so limited that they could not help but sustain the process of restoration of class power even against their own better instincts.”

Harvey writes feelingly of the devastation wrought by neoliberalism and celebrates the variety of resistances that have challenged it.

His belief, however, that Thatcher’s project of changing our souls has succeeded – “we are all neoliberals now” – leads him to lower his expectations of this resistance.

In trying to find a footing for radical politics in the American collective memory, he reaches for Roosevelt.

Better to recall the heroic struggles – the strikes in Toledo, Minneapolis and San Francisco – that managed to wring out the concessions from his government.

Perhaps Harvey has become overly pessimistic as a result of writing the little black book of neoliberalism. Perhaps too he is extending a hand to a liberal readership, easing their transition to socialist politics.

Harvey is, after all, a revolutionary. When asked what he wanted for his birthday (the launching of A Brief History coincided with the celebration of his 70th) he replied, “Revolution, of course!”

Neoliberalism is the way that capitalism is now, and it affects everything that we do as socialists. A Brief History of Neoliberalism should be read and engaged with. Buy the hardcover and share it with a friend.

David Harvey • A Brief History of Neoliberalism • Oxford, 2005 • 247 pages • $45 hardcover

Socialist Worker 460 19 November 2005 www.socialist.ca