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How to get out of this mess

In his new collection of essays How Did We Get Into This Mess?, George Monbiot outlines the key cause of the major economic, social and environmental issues facing our world: neoliberalism.

Monbiot observes that ‘ideas, not armies or even banks, run the world. Ideas determine whether human creativity works for society or against it.’ The essays focus heavily on Western culture, and the obsession with individuality and consumerism in particular, which underpin social issues, economic inequality and environmental destruction.

So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the neoliberal proposition that this utopian, millenarian faith (which holds that the free market, unimpeded by government intervention, will answer all human needs) is nothing more than a description of a neutral, natural force – a kind of biological law, like Darwin’s theory of evolution.

Monbiot is not alone in blaming the ideology of neoliberalism for our world’s issues. Another major left thinker – Naomi Klein – framed her last book This Changes Everything as a treatise on why it is ‘climate versus capitalism’. In reality, though, her real focus is on ‘neoliberal capitalism’, or what she often calls ‘disaster capitalism’. Klein takes aim at the individualisation and privatisation of the neoliberal order, arguing for a return of the kind of government intervention that existed in Keynesian-era capitalism.

The crux of these arguments is that government has been overtaken by a ‘bad idea’ and what we need to do to fix the world is to defeat that idea. Neoliberalism is a system in which the state has been co-opted by corporate and right-wing interests; this not only removes the ability of the state to engage in true social, environmental and economic reform, but, Monbiot argues, turns us into poor, selfish individuals, who have no care for our environment, society or each other.

The way to get out of this mess, Monbiot and others posit, is to return to the great age of communal cooperation – the period in which the state had the ability to implement vast social reforms; that is, the post-war period.

Of course neoliberalism is deeply problematic – but so is reducing all of the world’s current problems to this one ideology. Neoliberalism hit its heights in the 1980s, but nowadays is nowhere near as prevalent. Focusing all our energy on this one school of thought means we are misdiagnosing the problem, and, in turn, giving power back to the very people who developed the system in the first place.

Initially developed in the 1940s by a group of thinkers called who called themselves the Mont Pèlerin Society, neoliberalism as a political ideology gained traction following the oil crash of the 1970s. It was implemented first by Pinochet in Chile, next by Thatcher in the UK, then Reagan in the US, and Hawke and Keating in Australia. The system sees a dominance of capitalism and markets, and an argument that the state inherently restricts freedom – both economically and socially. As William Davies explains:

At the heart of the neoliberal era were two fundamental assumptions. Firstly, individuals, not experts, were the best judges of their own tastes and welfare. Secondly, the price mechanism of the market could be trusted to adjudicate between the various competing ideas, values and preferences that exist in modern societies. The state, by contrast, could not.

From this basis, neoliberals moved to implement a wide-ranging set of reforms to privatise major state-owned industries, make huge cuts to social spending and the size of government, and place a focus on the market as solutions to social and environmental issues. It is the ideology behind these moves – primarily a focus on the individual – that left critics take aim at.

But it is here where we can see how those criticisms remain shallow.

First, through this history, we can see that the ideology has faltered since the 1980s. Tad Tietze, for example, notes how neoliberalism became extremely unpopular by the 1990s, resulting in the turfing of Governments in the UK (Thatcher) and Australia (Keating). The unpopularity of mass cuts to social welfare led to these governments holding back in many areas, with the agenda eventually stalling by the 1990s.

Potentially more importantly, while neoliberals advocate for a hands-off approach to government intervention, recent governance shows this is no longer a popular idea. Even though modern governments talk about ‘balancing the books’ and the need for austerity, the major programs of privatisation and drastic social-welfare cuts proposed and executed in the 1980s have largely disappeared. Indeed, government intervention seems to actually be increasing, whether through bailouts and nationalisation of major industries (such as occurred in the wake of the GFC and are still occurring today), increasing security legislation and intervention, and through social control programs ranging from ‘evidence-based’ interventions into people’s health and wellbeing practices to lockout laws that control nightlight in the city.

Clearly, neoliberalism is no longer the force it once was. Which brings us to the second reason left focus on this ideology is so flawed: thinkers such as Monbiot and Klein credit neoliberalism as the success of an ‘idea’, but it is more important to read it as a class project. Neoliberalism was not a pure anti-government ideology, but about the targeted use of the state to pursue class-based interests.

Maybe the best example of this is the way in which neoliberalism deals with unions. In his book PostCapitalism, Paul Mason describes how across the capitalist age, economic crises have always resulted in attempts to crush unions in order to suppress wages. These lower wages are seen as a solution for businesses suffering under economic pressures. The crisis of the 1970s and 80s was no different. Across the US, the UK and Australia, neoliberal governments engaged in a massive program to crush unions and the workers they represented – employing the strong arm of the state to do so. Using Thatcher as an example Tad Tietze explains:

Far from being hostile to the state as she sometimes implied, in practice Thatcher’s project was one of massive and brutal state mobilisation on the side of big business, as demonstrated by a series of major confrontations with unions.

Here we can see the contradiction of ‘neoliberal thought’. Whilst anti-unionism is integral to neoliberalism, so is anti-government intervention. And yet in the case of Thatcher (and Reagan in the US and Hawke and Keating in Australia), the desire to crush unions won out. Government intervention was seen not only as acceptable, but essential.

Neoliberalism was, in essence, a smokescreen for a well-practiced form of state intervention in the economy – one that used the state to benefit big businesses against the needs of the working class. As Tad Tietze argues:

neoliberals are clear about the need for strong state action to construct a market society in which ‘freedom’ and ‘liberty’ are maximized for the entrepreneur, even if they must be limited in terms of formal democracy.

By framing neoliberalism as the dominance of a ‘free market ideology’, the left misses these material underpinnings, and give too much credence to an idea and not enough to the class-based motivations of that idea. This in turn means we ignore the realities of the role of the state in today’s various crises, blaming the selfish, consumer-obsessed individual instead.

Consequently, the solutions we present – mass government intervention such as a ‘Green New Deal’, for example – see us asking the very institution that has been implementing this class agenda all along – the state – to fix the crises. In short, we attempt to use capitalism as a way to solve a problem created by capitalism.

The best way to examine this is to see how the state has reacted since the slow demise of neoliberalism in the 1990s, and in particular following the GFC of 2008. While many on the left saw this as an opportunity for mass state intervention that would create benefits for all (what was framed as a potential for a Green New Deal), we actually witnessed the complete opposite. Governments did engage in mass economic intervention, but once again it was to favour the ruling classes. Economically this included providing huge handouts to big businesses and strong-arming smaller states (for example, Greece) to implement radical economic agendas. This was matched with radical social reforms, either under the guise of increased security, or simply of governments using ‘evidence-based policy’ to do ‘what’s best’ for the general population.

But these policies are not neoliberal. In fact they are the opposite: they maintain the class interests that underpinned neoliberalism in the first place – the class interests that underpin our entire system of capitalism.

How did we get into this mess? People like George Monbiot or Naomi Klein will take aim at the ideology of neoliberalism – one that has seen a corporate takeover of the state – but the answer is far more complex. Neoliberalism was a class-based agenda, one implemented by the state and corporate powers in tandem. There’s been a decline in neoliberal policies and approaches, yet these class-based programs, situated within a capitalist economic and democratic system, continue. That is what we need to challenge if we want to get out of this mess.

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Simon Copland is a freelance writer, climate and Greens campaigner and masters student from Brisbane. He has an interest in all things politics, but with a particular focus on the direction of left-wing movements. In his spare time he plays rugby union and is a David Bowie fanatic. He is a regular columnist for the Sydney Star Observer, blogs at The Moonbat and tweets at @SimonCopland.

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  1. Thanks for the article, and let me add that I am glad to see some articles on economics in Overland.
    I disagree on a couple of key points. First, the very thing that’s ‘neo’ about neoliberalism is that it is not laissez-faire. The Germanic and US theorists who cooked up neoliberalism were quite clear about this: laissez-faire leads to a range of decidedly illiberal outcomes (i.e. cartels, monopolies, centralisation). Consequently, the role of the state was to function as an activist tilting the market towards certain outcomes (competition, above all, but also the notion that each individual is an entrepreneur of him or herself, an object of investment, etc). In short, there is no contradiction between neoliberal ideology and state intervention, and in Australia, Workchoices is probably the exemplar of this, namely, a massively interventionist piece of legislation designed to tilt the market toward individualised agreements, casualization and lower costs for the employer. This element is missing from Tietze’s account, which amounts to a fundamental misunderstanding of Hayek et al. The Austrians and the Chicago school saw nothing to contradict their economic philosophies in the Pinochet dictatorship, and the contemporary left shouldn’t either.
    In practice, neoliberalism has not been implemented in a uniform manner, even in Pinochet’s Chile. It’s therefore easy for right-wing libertarians to point to the inconsistencies in neoliberal states and say that what happens there is not their philosophy. They’re either naïve or bullshitting.
    That said, I think that critics of neoliberalism should not fall into the trap of the US Democrats (for instance) after the GFC, and say that the solution is a ‘regulated’, kinder, Keynesian capitalism. And it’s certainly true that the term ‘neoliberal’ is thrown about with imprecision and reckless abandon in plenty of left-wing forums. Neoliberalism alone does not, in my view, account for structural shifts in economies such as Australia’s (i.e. away from industrial production, toward debt-driven financialisation), and so its explanatory power is necessarily limited.

    • I’m not sure what I’ve misunderstood about Hayek and the state. Even in the quotes Simon uses above I am clear on neoliberals being happy with state intervention in the pursuit of their aims.

      What I don’t agree with is the tendency for any and every policy the Left doesn’t like to be considered part of some coherent “neoliberal” project. That’s just a circular argument. Worse, in the hands of someone like Phil Mirowski, it becomes an exercise in proving that even the most non-neoliberal policies are actually neoliberal.

      • I agree with David’s general point. Simon says: “Potentially more importantly, while neoliberals advocate for a hands-off approach to government intervention, recent governance shows this is no longer a popular idea.” But also quotes you Tad noting that neoliberals are actually content with government intervention, as it’s part of their project of structuring the market. So maybe it’s Simon who needs to respond to this.

        More generally though, I think it’s a mistake to presume that neoliberalism has fallen out of favour. The election outcomes Simon points to don’t confirm that thesis. The idea isn’t a total explanation for our current state of affairs, obviously, and I agree the left too easily substitutes ‘neoliberalism’ and ‘capitalism’ – with a variety of consequences that are problematic. But that doesn’t mean the ideology is not still powerful (and it is not necessary that it be unpopular to make this critique).

        I think it is reasonable to say that neoliberalism has a significant hold on much thinking among social-democrats. The bailout of the banks in 2008 is a good example – there was no real opposition or alternative put in the form of debt relief for people in mortgage distress, for example. The long term privatisation of government is another example. So many social services are now delivered by private companies and there is no question or alternative suggested. It’s the new norm.

        But whatever you think of that, I think some better thinking could be done on solutions. Mass government intervention is not necessarily a reactionary demand. Nationalising companies and industries is government intervention, but is not necessarily reactionary. Government investment in new forms of power generation is probably necessary to arrest climate change.

  2. Why split neoliberal hairs when you know to begin with it is all part of the contradictory working through of capital?

    • Heya Matilda,

      I agree that’s bad! But it doesn’t necessarily mean it’s ‘neoliberalism’ — I actually just think that is capitalism at work. That sort of stuff happened before neoliberalism and will happen after its final death — as long as capitalism exists.

  3. No, and knowing the variants of a name is no help either when it comes to saving a thriving community garden – you need bodies /intelligence on the ground and in the airwaves to stop that sort of shit from happening.

  4. The privatisation of essential services seems unlikely to be reversed due to the massive amounts of money required to buy them back, but a change of law, and political will, could have them seized and returned to the ‘community’. Shades of Communism, but public ownership at least in Australia was somewhat more accountable and secure, than the power grid for example owned by individuals whose desire for profit could see it flicked off if the price was right. Thatcher’s literal translation of society as a collection of individuals failed to understand that the whole is always greater than the sum of its parts, and where essential human services are at issue, avoids selfish motivations. Let’s get a sense of real community back, seize these assets, as they have seized property for infrastructure.

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