Ahistorical pomposity and gnostic sneering: why academics write deep crap about “neoliberalism”

By Lorenzo

Humanities and social science academics write a remarkable amount of nonsense about “neoliberalism”, typically understanding neither the reasons for the general shift in public policy nor the motivations and ideas behind it.

A nice example of such nonsense is provided in a post by philosopher Robin James:

neoliberals think everything in the universe works like a deregulated, competitive, financialized capitalist market.

No one believes this. For a start, no “neoliberal” believes the state works like that. Nor do they advocate abolition of the state–anarcho-capitalism is not a widely held position, particularly not among policy wonks, policy advisors or policy-setting politicians (what we might call policy makers). It is one thing to be struck by how remarkable it is that there is any economic order at all, it is quite another to think such is the template for all that there is.

I am aware of the ideas, constraints, and reasonings involved in the “neoliberal” policy shift because I was involved in “neoliberal” policy advocacy. I moved in such circles, read the literature, even wrote minor bits of it. So, I am familiar. Including with the policy context that policy makers have been wrestling with.

I do not much like the term neoliberal. It is usually used as a “boo” word, and boo words are always analytically suspect. Moreover, the term is often used in a very unclear way, in meaning and scope. Is it a period of history? Is it an ideology? Is it a policy program? If so, what specific policies?

To the extent the term has a useful meaning, neoliberalism is economic liberalisation in the context of an expansive state: either the welfare state (in the developed world) or the development state (in the developing world). Key underpinning ideas in the original “neoliberal turn” include Milton Friedman’s rehabilitation of monetary economics (pdf) and his critique of (pdf) policy reliance on a presumed trade-off between inflation and unemployment, Friedrich Hayek’s analysis of the uses of knowledge in society, the development of public choice theoryfeeding into (pdf) the analysis of rent-seeking (pdf), Ronald Coase’s development of (pdf) the concept of transaction costs and its application to property rights (pdf), and the development of supply-side ideas (pdf).  The Lucas critique (plus rational expectations) and Fama’s efficient-market hypothesis came along a bit too late to have much influence on the original “neoliberal turn”.

What these key ideas have in common is that they cast strong doubt on belief in the omni-competent state, either directly or by comparison with market-based alternatives. Hence the “neoliberal trifecta” of corporatisation (restructuring of state institutions), privatisation (transfer or creation of property rights) and de-regulation (reduction of transaction costs). Plus the adoption of inflation-targeting by central banks, as a way of operationalising their responsibility for inflation as a monetary phenomenon. The critique of the widely assumed omni-competence of the state also encouraged taking gains from trade more seriously, while the policy premium for economic efficiency (see below) put the issue of opportunity costs in sharper policy focus.

The policy debates in which “neoliberals” have been engaged in have been very much about boundaries between state and non-state action, but that is a very different matter than the sort of absolutist claim James claims as defining “neoliberal” belief. You only have debates about the proper boundaries between realms of social action if no particular realm is universal–whether as underlying reality, as created order or as ideal order. A nice example of such thinking, with included critique of overweening confidence in state action, is provided in a a recent blog post by economist Scott Sumner:

Intellectuals on the left go through the following thought process. First they observe a “problem.” Then they declare a “market failure.” Then they consider what sort of government policy could remedy the problem. What they often overlook is that the problem is usually the side effect of other government policies. That doesn’t mean the free market solution is always best; there may be cases where those other government policies are needed, and hence further regulation is required to overcome the side effects. The real problem is that it’s much easier to dream up straightforward government policies to remedy a situation, than to envision how a problem is the side effect of other regulations. Or what further side effects will result from your proposed solution. That biases pundits toward supporting far too much government involvement in the economy.

“Neoliberals” do typically believe that spontaneous orders do and can exist. But markets are only a form of spontaneous order, and only in a rather specific sense. Nature, red in tooth and claw, is a spontaneous order, but it is not a market. (Though it is a realm of budget constraints and trade-offs, as can be seen in the distribution of ecological niches: but, then, the state is also such a realm, but is not a spontaneous order.)

So, in the above purported definition of “neoliberal belief”, we have a complete misunderstanding, both of notions of spontaneous order and of the ideas and motivations of “neoliberals”. And this from someone who has been teaching a graduate seminar on that very subject. (I wonder if someone with experience and knowledge from within the reform movement has ever been invited to address said seminar? Indeed, how often such folk are ever invited to talk to any such seminars or courses?)

There is no great mystery as to why academics write such nonsense about so-called “neoliberalism”: it is due to ignorance and irritation.

Irritation
The irritation is straightforward: there was a comfortable sense in “progressive” circles that they knew where history was going. And then it wasn’t.

At the grand history level, there was an expectation that socialism was the direction of history. The dawning realisation from the 1950s onward that actually existing socialism was not the transformative manifestation of the logic of history that it had been assumed to be led to the rise of postmodernism. As philosopher Stephen Hicks explains in his lucid and revelatory Explaining Postmodernism: Skepticism and Socialism from Rousseau to Foucault (2004).

At a more mundane level, there was (and is) an expectation that (moral and social) “progress” means an ever larger role for the state. This notion that state=civilisation (and the more expansive the role and power of the state, the more civilised) is one of the oldest tropes in human history. It is often a highly misleading and self-serving one, as James C Scott explains in his lucid and revelatory The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia (2010).

The state=civilisation trope does have the advantage of simplicity. Bigger state, good; smaller state, bad is an easy principle to rally one’s sense of moral and cognitive worthiness around. (It would also make North Korea the most civilised society on the planet–since the state has entirely taken over its society: but perhaps the bigger=better is only operating as an indicator at the margin.)

Then along came the “neoliberal” policy shift of corporatisation, privatisation and de-regulation. Suddenly, history got de-railed. This was not how things were supposed to be going. So, there is an underlying hostility to “neoliberalism” in much academic writing: more, there is a presumption that such hostility is the morally and cognitively correct posture to assume towards this “neoliberal” wrong turn.

Hence David Harvey can write (pdf) (via):

The corporatization, commodification, and privatization of hitherto public assets has been a signal feature of the neoliberal project. Its primary aim has been to open up new fields of capital accumulation in domains hitherto regarded off-limits to the calculus of profitability.

This is a wildly ahistorical reading, since much of what was done in privatisation was to put back into the commercial order things which the state had previously removed from that order. But the very ahistorical reading displays the underlying belief in history as having a “proper” direction and the expansion of the state as progress,

The resulting presumptive hostility towards the “neoliberal” de-railing of history’s proper course is nicely expressed in the aforementioned post by philosopher Robin James:

Generally, people use the term “neoliberal” to denote things they don’t like about our historical situation. It’s a kind of shorthand for “contemporary society” with a “which sucks” inflection. This shorthand sense is where all the looseness and imprecision comes in. As Hegel said, “now” can be narrowly particular because it can mean any particular point in time. So, “neoliberal” gets used to mean “now,” which means something specific because it can refer to any specific thing.

But things suck for a reason. This reason lies in the deeper sense of “neoliberalism,” …

A clear message of much academic writing on “neoliberalism” is that if you don’t understand that neoliberalism is bad, you are clearly morally and cognitively deficient: not exactly conducive to engaging with, and so understanding, the phenomenon being studied. Especially if signalling one’s distance therefrom is a key part of the exercise.

If the state=civilisation, that implies that the only social interactions truly worth having are state mediated or framed. There is a fairly clear underlying notion within this literature that commerce is not civilising (or, at least, is not morally uplifting), which connects this line of thinking into a trope that goes back at least 2,500 years–that commerce is morally and intellectually vulgar.

Leslie Kurke’s delightful Coins, Bodies, Games and Gold: The Politics of Meaning in Archaic Greece examines the tension in Archaic and Classical Greece between the gift-exchange essentialist order of aristocracy and the functionalist, coins-and-commercial political order of the demotic polis. There is considerable affinity between modern progressivism and the aristocratic disdain for vulgar, demotic commerce expressed in Plato’s Republic and in some of Aristotle‘s writings. But, then, progressivist academics in particular feel themselves to be a moral aristocracy, even though such a self-identity is typically cast as simply moral concern. Nevertheless, the moral elite pretensions are clearly displayed in the reflexive contempt for those with views outside the “progressive” magic circle.

This reflexive contempt performs a moral-status-and-opinion-conformity signalling function–it expresses one’s cultural placement. Hence it applies to non-“progressive” Westerners (against whom the status games are played), but rarely to non-Westerners, no matter how wildly their views diverge from progressivist norms, as the non-Westerners are much more likely to function as moral mascots–people for whom moral concern is signalled. Thus, contrast how the views of US evangelicals are treated as distinct from the views of more emphatic Muslims. The former are people against whom status is signalled, the latter people for whom moral concern is signalled, even though the actual views of the latter are likely to diverge far more from progressive norms on matters such as gender and sexuality than do the former. (To put it another way, the US evangelicals are to be culturally defeated, the Muslims culturally “respected”: though such “respect” often glosses over winners and losers from various conceptions of what precisely is to be “respected”.)

Westerners involved seriously in commerce are also a status-signalling target. There is little doubt that the irritation with, and antipathy to, “neoliberalism” is deeply connected to longstanding antipathy to commerce and to those who make their living by it. Hence, that “neoliberalism” expands the ambit of commerce is one of its defining sins.

An emphatic statement of such irritation being when folk burble on about “the ruling class”. Few terms are so flattening of social and historical complexity as ruling class. To use an evocative example, that NSDAP funding was disproportionately from those traumatised by revolutionary socialism tells us much. Describing the Nazi Party as a “tool of the ruling class” tells us nothing: indeed, less than nothing, for it flattens and obscures reality rather than illuminating it.

In its manichean over-reaching, ruling class washes away the complexities of history and politics, and the rise of the bargaining state (known in its current dominant manifestation as liberal democracy)–where lines between private and public, between market and command, are part of said social bargaining. But, of course, using the phrase ruling class casts the user in a heroic role as fighter against oppression: it performs a status-signalling role. Such a pose by tenured members of the safest scholar class in history is beyond pathetic, but it fits in nicely with the moral aristocracy self-conceit.

Ignorance
The irritation is easy to understand, even if it is much more grounded in a sense of superior status than its participants are likely to openly admit. Especially as it is a reworking in modern guise of very old patterns of thought, so rather less worthy of pretensions of being “cutting edge” than is generally felt to be the case. (This a recurring pattern: e.g. the post-modernist plaything indeterminacy of meaning was a hot topic for Socrates and the symposium boys, as well as medieval theologians.)

What is less forgivable than said irritation, though it is also thoroughly understandable, is the deep ignorance the aforementioned nonsense is based on. Such academic commentary remarkably often does not understand the role of economic models or of the rationality postulate in economics. (Hint, it’s a postulate.) Vernon Smith’s 2002 Nobel memorial lecture (written version here [pdf]) is an accessible presentation of the role of rationality postulate(s) in mainstream economics. It is also very worth noting that said postulate(s) are typically applied to where such work best–to aggregate behaviour.

The role and nature of economic models is similarly misunderstood. Models are, indeed, “caricatures of nature” when applied to the biological realm, and caricatures of society (and people) when applied to the social realm. But, as this discussion of the use of game theory in biology demonstrates, they can be highly useful caricatures for aiding our understanding. Yes, they can be misused or overdone; yes, there are issues with formalism in mainstream economics. But the modelling map is not the cognitive territory and the endless variants in models used within economics, the arguments and permutations over which “stylised facts” are most appropriate where, are parts of ongoing search for useful models, not for purported direct descriptions of reality in all its complexity. One cannot take a model, or even modelling, and say “neoliberals believe that …”.

So when Robin James writes:

if each individual is modeled as an algorithm (which is not too far-fetched a claim: big data and government model individual users’ behaviour in this way)

there is a very unfortunate cognitive shift. An individual in a model is not an actual individual and their entire behaviour is not being modelled. After all, Amazon.com uses algorithms to connect past purchases from them to what you are likely to be interested in purchasing from among their products. They use algorithms because they work, but only in a fairly narrow, statistical tendency sort of way. That James ends up in a wave form metaphor for social harmony (so quite fundamentally misconstruing what “neoliberalism” is about, as we will see) just illustrates how not useful for understanding said cognitive shift is. (Lord help us, she is apparently writing a book on the “neoliberal” idea of social harmony.)

Underpinning this are more than a few hints of CP Snow’s “two cultures” (pdf). If your idea of social enquiry is based on the gnostic sneering of Marxism, then the utilitarian model play of economics will be mysterious. So mysterious that it will be recast in sense that make sense to you, while missing the phenomenon one is allegedly describing. (Marxism is gnostic in that it presumes knowledge of where history is going, and the “real” “underlying” forces driving said history; sneering in that it is full of terms — bourgeois, petty-bourgeois, lumpenproletariat — which are ways of sneering at entire categories of people under the pretense of analysis.)

This confusion about modes of social enquiry is made all the more problematic as, far too often, academics do not engage directly with “neoliberal” writings, but rely on hostile summaries of the same. Summaries which are often highly unreliable. Robin James cites Foucault on Gary Becker and “Chicago School” economics, for example: citing Foucault on history, or the history of ideas, is never a good sign. (Rictor Norton’s The Myth of the Modern Homosexual provides a witty take-down of Foucault on queer history.)

A particular difficulty is that the ideas behind “neoliberalism” flow from the Sceptical Enlightenment. French intellectuals generally do not “get” the Sceptical Enlightenment. The longstanding worship of French and German intellectualism among many Anglosphere academics has meant that many of them don’t “get it” either. One of the fundamental ways in which they don’t get it is, steeped in Radical Enlightenment notions of a perfectible society, they presume grand system when there is something much more like a conjunction of values, principles and ideas held to be true, or at least useful. If you like, a working acceptance of ambivalence. “Neoliberals” very much embrace Kant’s dictum that, from the crooked timber of humanity, nothing straight can be built. The classical liberal tradition, which is a key source for “neoliberalism”, famously views the state as a necessary evil: in what universe is that the basis for any strong expectation of social harmony?

It is true that some more “Austrian” folk can wax lyrical about the harmonising nature of unfettered markets. Nevertheless, as a matter of practical policy making, a rather more utilitarian presumption in favour of maximising gains from trade (and the employment gains and revenue flows therefrom) is a much more powerful underlying principle in the “neoliberal” policy turn.

Seeking dynamism
What “neoliberals” are typically about is recovering or achieving economic dynamism. This is very much not a social harmony goal, except in the sense of muting social conflict as sharing out a growing pie is much easier than struggles over a static (or worse) shrinking pie. A nice statement of the desire for (and conflict over) dynamism is provided by Virginia Postrel in her The Future And Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress. (Note that all this leaves plenty of room for self-interested political manouevring among interest groups, whatever the policy framework.)

The larger policy context for the “neoliberal turn” is relatively straightforward. There was a major expansion of the welfare state across the Western world in the postwar period, particularly the 1960s. The postwar welfare state represented the imperial Western state colonising its own societies, instead of other people’s. Of course, unlike the territorially-expansive imperial state, the policy subjects of the domestically-expansive welfare state get to vote for the politicians in charge, which makes the operation somewhat different. Though not entirely different, as this would-be small businesswoman’s interaction with the domestically-colonising Greek state illustrates:

But as happens so often in Greece, the bureaucrats had other plans. In a country where you are viewed favorably when you spend money but are considered a criminal when you make it, starting a business is a nightmare. The demands are outrageous, and include a requirement that the business pay taxes in advance equal to 50 percent of estimated profit in the first two years. And the taxes are collected even if the business suffers a loss.

I needed only 20 square meters for my baking business, but inspectors told me they could not give me permission for less than 150 square meters. I was obliged to have a separate toilet for customers even though I would not have any customers visit. The fire department wanted a security exit in the same place where the municipality demanded a wall be built.

I, like thousands of others trying to start businesses, learned that I would be at the mercy of public employees who interpreted the laws so they could profit themselves.

And so in the winter of 2013, my business was finished before it had a chance to take off.

If the Greek state spent less effort in frustrating potential gains from trade amongst it citizens (i.e. “capitalist acts between consenting adults”), it would be less fiscally stressed. But then said state would be far less useful for those who benefit from its colonising of its own society. (One of the signs of how vulgar commerce is viewed to be, is that folk who are very strong on freedom to engage in sexual acts between consenting adults so often take a very different view of commercial acts between consenting adults.)

Outside the Western world, the development state followed decolonisation. Except that said development states often replicated and expanded imperial colonisations of such societies, but this time by local elites of their own societies. With democratic constraints being less common. Again, a longstanding pattern. Thus, the revolt of the Spanish colonies in the 1820s seems to have been largely about constitutional shifts in Spain threatening to undermine local elite income extraction. (Not that income-extraction via the maintenance of slavery and wish to expropriate Amerindian land were entirely absent from the American Revolution, but the rebellious British colonies’s political institutions were already much broader-based than that of their metropole, as they were mass-settler colonies rather than narrow extraction ones.)

The celebration of the expanding welfare state (and the development state) generated new forms of the aforementioned state=civilisation trope. Where, as ever, resistance to the imperial state’s pretensions show a lack of moral understanding, show one to be lower on the ladder of civilisation, an enemy of progress and moral enlightenment.

There is more than a little sense that the small, pervasive decencies and comforts of bourgeois society lack the moral grandeur for such great minds. (Which, by the way, is by no means to cast any blemish on the wish to do better, including in a wider moral-order sense: much of the dynamism of Western society comes from precisely its openness to that.)

This frustrated moral grandeur is particularly clear when the deeper antipathy over conceptions of individuals choices and preferences comes to the surface. If you don’t like the choices people actually make, it is a congenial move to attack the entire notion of such choices as legitimate, to claim that any ideology which celebrates them somehow misses out deeper truths. Particularly if some profound social harmony is one’s goal, as the sheer messiness of individual choices and preferences do not sit well with such an aim. (De-legitimising the actual choices and revealed nature of actual people in favour of some conception of what they ought to choose, and what they ought to be like, is where the Radical Enlightenment takes its turn to tyranny.)

This sort of discounting-choices move underlies philosopher Leigh Johnson’s comment, in a post praising and responding to Robin James’ piece, that:

Of course, the great irony evident in neoliberals’ ubiquitous efforts at data-collection– their constant, relentless and mostly covert encroachment into our “private” lives– is that such efforts are justified on the basis of safeguarding our individual freedom to engage in the market according to our own interests, as those interests are freely determined by us.

Never mind that what an uncritical surrender to algorithmic analyses actually does– little by little, Google search by Google search, Facebook like by Facebook like, Amazon purchase by Amazon purchase– is eventually come to determine not only our interests, but also our “freely, intentionally rational” selections among them.

Never mind the conflation of lots of different things into one great “neoliberal” wickedness (hence her recurring use of the drone metaphor). The obvious truth that if one changes the context people choose differently is being used to discount choices folk actually make. This in societies of unprecedented freedom and prosperity.

Back in policy reality, starting in 1973, productivity growth, which had helped pay for the postwar expansion of the welfare state, stagnated (for reasons we still do not entirely understand). This put the expanding welfare (and development) states under rising fiscal, and broader economic, pressure. This gave economic efficiency a persistent policy premium. The “neoliberal turn” in policy is a response to this pressure and policy premium. (Which, of course, leaves plenty of room for debate about specific measures.)

Been here, done
We (the Western world) have been here before. Responses to fiscal stress by states that involved restructuring of state institutions (corporatisation), sale, creation or re-allocation of property rights (privatisation) and reduction of transaction costs (deregulation) extend back into history, into the medieval period.  For instance, an appropriate modern term for the medieval borough or chartered town would be enterprise zone just as the modern corporation has medieval origins. Henry II’s “creation” of common law was a classic transaction-cost-reducing regulatory simplification (while also extending the reach of royal authority).

A more recent historical precedent would be postwar Germany, where Ludwig Erhard‘s “bonfire of controls” was the original “big bang” deregulation. This was in the context of Ordo-liberalism developing a concept of a social market economy: in many ways a direct forerunner of what later became known as “neoliberalism”. Hardly surprising, as postwar Germany confronted the legacy of Nazism, massive wartime destruction, and Western occupation. So how to rebuild an economy to sustain a welfare state was a central policy question, leading to the postwar West German “economic miracle“.

In the 1970s and 1980s, there developed, in Andrew Norton‘s nice description, a policy coalition to tackle these economic stagnation and fiscal stress problems in the wider Western world. The overlapping aim within the policy coalition was to create a sustainable welfare state. While Thatcher and Reagan get a lot of attention, in fact centre-left governments were prominent in the reform process–such as the Hawke-Keating Government in Australia and the Lange-Douglas Government in New Zealand. (I touch on this in my essay on postmodern conservatism.)

Deregulation actually started under the Carter Administration with Senator Edward Kennedy’s airline deregulation. The first “economic rationalist” (aka “neoliberal”) reforms in Australia were tariff reductions under the Whitlam Government (1972-5). If the policy goal with the broadest support was a sustainable welfare state, then it was natural for centre-left government to be prominent in the “neoliberal turn”. It is the same principle that Scandinavian states are ranked high for economic freedom, because a large welfare state requires a high level of economic efficiency and an expanding welfare state requires a high level of revenue, and thus economic, growth.

At the core of the policy turn are boundary issues for state activity arising from knowledge limits and incentive problems. More gains from trade means more tax revenue and employment prospects. A better targeted welfare state is a more sustainable welfare state. “Neoliberalism” (or “economic rationalism”) was mostly the application of fairly mainstream economic analysis to public policy problems, shorn of the presumption that government action was inherently virtuous or otherwise superior.

For the expanded welfare (and development) state was done as the state does most things–clumsily. (A point that also applies to the reform processes.) The clumsiness of state action is discussed by Peter Shuck’s recent book Why Government Fails So Often: And How It Can Do Better, nicely reviewed by economist David Henderson (link here). The wider issues of the limits to state action are brilliantly analysed by James C Scott in his splendid Seeing Like A State: How Certain Schemes to Improve the Human Condition Have Failed (1999). (A September 2010 discussion between Scott and various liberal or libertarian economists and political scientists is here.)

That the anti-“neoliberalism” literature presents us with Western intellectuals and academics more hostile to expansion of private commerce, markets and private property than the Central Committee of the Chinese Communist Party is somewhat striking, but said Central Committee has to struggle with genuine policy problems. (Just as dependency theorist Fernando Cardoso engaged in economic liberalisation and privatisation as President Cardoso.) All the academics hostilely pontificating on “neoliberalism” have to worry about is their own glowing moral soundness. Where the failure of command economies also goes down the memory hole, creating no problem they have to wrestle with. These are people who are so tied up in a proper conception of History that they cannot see history right in front of them. (And folk who habitually analyse the motives of others in the most hostile and dismissive terms will, of course, be outraged at their own obvious moral nobility being treated somewhat sceptically.)

The loss of harmony
Which is where we come to the central sin of “neoliberalism”. A basic principle of the direction of policy analysis labelled “neoliberalism” is that there are things that the state does relatively poorly and so should not do. This means abandoning belief in an omni-competent state. Which means–in the absence of any rival implementing mechanism to the state–the end of belief in the perfectible society; the end of belief in a society of perfect social harmony; of a society which completely embodies particular virtues; a society without alienation. What, to its practitioners, in the aims that the policy coalition could coalesce around, was simply a way of making the economy work better, of having better targeted and affordable welfare policy, of better allowing people to go about their lives, was a massive assault on every Radical Enlightenment ambition.

(As an aside, radical Left politics and radical Islam both embody the appeal of this notion of virtuous harmony. Hence the various cross-overs between the two.)

The term “contradictions” being regularly applied to clashing social interests nicely expresses the underlying assumption that the proper society has harmony, rather than seeing conflicting interests as both normal and inevitable.

We are dealing with very different responses to the paradox of politics (or the paradox of rulership): that the state is the most dangerous social predator but need we it to protect us against other predators (in order to permit a certain level of social amenity). A paradox sharpened by the constant temptation to use the state for one’s own predatory schemes–from rent-seeking corporations blocking competition or seeking other special benefits to projects of social outcasting and exclusion. The Sceptical Enlightenment accepts that the paradox can never be resolved, just managed more or less well. The Radical Enlightenment lives in the false hope of final solution. The tension between the two has created much tragedy, but has also helped fuel the Emancipation Sequence. (Though, even there, the practical Sceptical Enlightenment goal of inclusion and normalisation has constantly triumphed over the grander Radical Enlightenment goal of subversion and transformation).

Trying to put the Radical Enlightenment project into effect via Leninism created tyranny, (state) slaveryindustrial serfdomhereditary elites and even hereditary God-Kings. (Kim III succeeds his father, an Eternal Secretary-General who succeeded his father, an Eternal President; what else would you call Kim II and Kim III other than God-Kings?) There is also plenty of what James C. Scott calls “cosmological bluster” and Xavier Marquez’s hyperbolic loyalty signalling. This strikingly atavistic array extends to fetishising the mummified corpses of leaders. Said atavism is a result of Utopia in Power‘s vanguardism, which generates both an enormous cognitive and power gulf between those to be harmonised-and-equalised and elite which does the harmonising and “equalising”–those who will prune and straighten the crooked timber of humanity–magnifying dramatically the project’s inherent reliance on, and celebration of, (state) command-and-control. Hence the project’s reversions to past patterns of command-and-control and grand cognitive posturing.

Those who are most under the delusion that they represent some escape from the constraints of history are those who most end up in thrall to its recurring patterns. (Something else the radical Left and Islam have in common.)  For they fail to interrogate the patterns of history with appropriate humility, confident in the notion that they have the key to break out of the same, so remain caught in its patterns. Such as recycling the millennia-old state=civilisation and commerce is the morally polluting action of lesser minds tropes. Or the “end of history” Soviet regime going through the entire ibn Khaldun cycle of rise, decay and fall in a single life-time. Or the aforementioned consequences of the Leninist dismissal of the “bourgeois” Sceptical Enlightenment wrestlings with how to restrain power; wrestlings which presume that ultimate social harmony is not ours to achieve, being made, as we are, of the crooked timber of humanity and that a free (and mass prosperity) society can only be based on accepting people as their nature is, not as you would like them to be.

Which itself can lead into the “eternal now” of conservatism–taking current circumstances as simply “reflecting” human nature rather than contingent historical processes, not all of whose constructing victories are morally worthy. Hence productive tension between Sceptical and Radical Enlightenment visions–which can run within as well as between people–being important in, for example, the Emancipation Sequence.

Ahistorical pomposity
One sign of being so wrapped up in the proper conception of History that the “progressive” academic critics of “neoliberalism” cannot see the history in front of them is the ahistorical pomposity, the redolent rhetorical overdrive, of much of the language used.

Consider, for example, this statement from Stuart Hall and others (pdf):

With the banking crisis and the credit crunch of 2007-8, and their economic repercussions around the globe, the system of neoliberalism, or global free-market capitalism, that has come to dominate the world in the three decades since 1980, has imploded.

No, there has been an economic downturn and financial crisis. These happen. The latter happen recurrently; indeed, for centuries now. Hence the recent examination of the same, This Time Is Different: Eight Centuries of Financial Folly.

They go on to describe them as events:

whose catastrophic consequences are still unfolding.

Catastrophic compared to what, the Great Depression?  The market order survived the Great Depression, it will survive this. (Though hopefully not without some monetary and financial policy changes.) That your humble author lives in a country (Australia) which has been a strong adopter of “neoliberal” policies but avoided both the Global Financial Crisis and the Great Recession (indeed, is the country where the Great Moderation has not ended) makes the not-remotely-apocalyptic reality a little more obvious, but only a little more.

They also talk of:

the redistribution from poor to rich.

Actually, the poor have not got poorer, what has happened is that top income shares have expanded faster–not the same thing. It is useful to keep the perspective that mass impoverishment is the historical norm; it is mass prosperity, and the hope of mass prosperity, which is historically extraordinary.

A theme in the anti-“neoliberalism” literature is to be highly critical of the expansion of the financial sector. Yes, if you subsidise financial activity through IMF “welfare for Wall St” and “too big to fail” (what economists call injections of moral hazard), that will inflate your financial sector and the returns thereto while making subsequent financial crises more intense.  Yet many a “neoliberal” have been critics of such policies–Milton Friedman was a noted critic of the IMF on precisely those grounds.

In Australia, financial liberalisation has incorporated balancing prudential regulation: in the US, it did not, for political reasons which reflect recurring patterns in US politics that go back over a century (see Fragile by Design: the Political Origins of Banking Crises and Scarce Credit). A political failure completely not inherent in “neoliberalism”.

It could be objected that, in quoting from Hall et al, I am citing a manifesto as scholarship. I am merely following Robin James’s original citation as such; and its rhetoric is intended to be persuasive to its audience, so a reasonable indicator of a world view or mentality.

Let us consider a more directly scholarly piece by David Harvey, also cited by Robin James, which refers to (pdf):

State interventions in markets (once created)

One way to elevate the political and the state is to treat markets as inherently “created” by states–as if stateless peoples never had markets and black markets never existed. And yes, of course markets usually rely on law, mediation and other state-supplied services (and black markets have all sorts of quality and violence problems precisely because they blocked from using the same)–but then we are back to the issue being the proper boundaries between state and non-state action.

Harvey at least understands the tension between falling revenues and rising social expenditure, even if he has no serious grasp of why the former. He tells us:

The restoration of fiscal discipline was essential. This empowered those financial institutions that controlled the lines of credit to the state. In 1975 they refused to roll-over the debt of New York City and forced the city close to the edge of bankruptcy. A powerful cabal of bankers joined together with state power to discipline the city.

Yes, the people the money was borrowed from stuck to the novel idea that things have to be paid for. (Especially if you ever want to borrow again at non-punitive terms.) But we are dealing with “neoliberalism”, so something evil and malign:

This amounted to a coup by the financial institutions against the democratically elected government of New York City

Which, of course, has to be paralleled to Pinochet’s coup against the Allende Government. Because we are dealing with a manichean world view, and it is all one vast evil really.  And a failed one, as Harvey cites (quite inaccurate) global economic growth figures:

Aggregate growth rates stood at 3.5% or so in the 1960s and even during the troubled 1970s fell to only 2.4%. But the subsequent global growth rates of 1.4% and 1.1% for the 1980s and 1990s (and a rate that barely touches 1% since 2000) indicate that neoliberalism has broadly failed to stimulate worldwide growth (World Commision, 2004).

They are so evil, they persist in failure. How wicked and stupid policy makers must be! Actually, the answer we are given is that they have not failed, because it all about making the rich, richer. (As if all consequences are intended.) Which make voters pretty stupid then. The answer is rather simpler–while global economic growth has not recovered to 1960s levels, global per capita economic growth has been trending up again.  It is also fairly normal in the anti-“neoliberalism” literature that the massive global exits from poverty are either ignored or glossed over.

On the matter of intention, the anti-“neoliberalism” literature is full of the post hoc ergo propter hoc fallacy, as if consequences were always intended. But such knowing intention is, of course, another sign of “neoliberalism’s” manichean power. This is history without happenstance: thus surges in corporate profits cannot be an unintended consequence of the interaction between inflation-targeting and positive productivity shocks. There is no policy discovery process, no trial and error, because how things work is, of course, already known.

Harvey sees the “neoliberal” turn as being:

to restore or, as in China and Russia, to construct, an overwhelming class power.

What class power is relevant to the Chinese policy shift? Really, you are the elite in charge of a police state command economy which utterly dominates society and its resources in a way no market economy can come close to replicating and somehow economic liberalisation is going to increase your class power? In which planet is someone living when swapping the immense class power of a totalitarian state for the dynamic instabilities of free commerce is seen as “creating class power”? But to say that the policy turn might be about escaping from mass impoverishment would imply the “neoliberal” turn had a positive point, and we can’t have that, can we?

The comparative (and later absolute) failure of command economies in various “natural experiments” has no serious resonance in the anti “neoliberal” literature. Yet it was deeply influential in encouraging “neoliberal” policy advocacy.

Harvey does at least notice that “neoliberalism” accepts the state has having a role. One can only understand the “neoliberal” turn in policy if one grasps that it is really about what the state should, and should not, do because it is about what the state can, and cannot do, effectively. If you cannot enter seriously into the intentions, motivations, ideas and contexts of historical actors, you cannot produce anything beyond congenial rhetoric parading (falsely) as substantive analysis.

Rampant conflation
A common feature of this literature is that neoliberalism is conflated with globalisation. More openness to trade obviously fosters globalisation, but contemporary globalisation itself is mainly driven by falling communication costs (although falling transport costs also matter), just as C19th globalisation was mainly driven by falling transport costs (although falling communication costs also mattered). And there was no globalisation worth the name before the dramatic drop in said costs.

There is also often somewhat sneering references to “capital accumulation”–also known as mass prosperity. Since that is only possible with capital accumulation: indeed, the level of capital per person in a society is a basic indicator of its level of prosperity.

Watching the “neoliberal” Hawke-Keating Government (1983-96) labour mightily to create a sustainable welfare state makes the “threatened ruling class” spouting seem like the self-indulgent crap it is. And exactly how “threatened” was the Chinese “ruling class”? Once again, we are back in the realm of manichean analysis–never explain by the reality that things have to be paid for and economic stagnation is politically problematic when malign conspiracy can be invoked.

So much rests on how things are framed. So Harvey frames it thus:

In whose particular interests is it that the state takes a neoliberal stance and in what ways have these particular interests used neoliberalism to benefit themselves rather than, as is claimed, everyone, everywhere?

Serious, broad-based policy making, struggling with genuine issues, is excluded so that things can be framed in (malign) self interest.

Spontaneous, at the margin, revolt by developing world peasants, workers and students for property rights and commercial freedom also does not suit such narratives, where ordinary folk figure only as victims or dupes. That there might be good reasons by “neoliberal” governments were elected (and, worse, re-elected) passes them by, such good reasons being excluded by their framing. By excluding even the possibility of the “neoliberal” turn being a reasonable policy response, one is left with malign self-interest (even malign conspiracy) to “explain” it.

Just as so much of said “analysis” conflates disparate phenomena together according to what reflects their own hopes, fears and frustrations, not that which is actually in any analytically useful sense a common phenomenon.

This conflating operates at various levels. For harmonising is also homogenising; abandon the notion of final social harmony and the play of diverse identities becomes enchanting and natural rather than inconvenient and threatening.

Again and again, this literature presents us with ahistorical grandiosity. The term “capitalism” helps promote such overweening systematisation. The term becomes so easily an ahistorical abstraction. One that is rhetorically powerful, yet analytically fraught. Retreat to terms such as “state capitalism” shows how analytically empty. Leading to treating the state as some epiphenomenon (typically of class), which it is not. One cannot understand the Euro project, for example, without understanding that it is a deeply political, even (super)state building, project.

So much of the anti “neoliberal” literature is deep crap, because intellectual sophistication is well in evidence even while rhetoric overwhelms and blocks understanding. It is something I find distressing, because I enjoy reading scholarly articles, made so delightfully accessible by the internet. To have such persistent nonsense written about something I am personally familiar with generates worries about the scholarship I appreciate.

Though there is scholarship that can help us make sense of it. A paper by Dan Kahan and Donald Braman, Cultural Cognition and Public Policy, examines how people interpret evidence on the basis of their “cultural placement”. The paper alludes to the intensifying effects of cognitive conformity–Cass Sunstein’s Why Societies Need Dissent is an excellent presentation of the social science evidence on the powerful, and deleterious, effects of cognitive conformity. So much of the academic literature on “neoliberalism” is a case study of precisely that.

In the post praising Robin James’s original post, philosopher Leigh Johnson writes:

And, not to put too fine a point on it, but the “Invisible Hand” drone is a deadly effective weapon that basically works like this: defund or deregulate, make sure things don’t work, wait for people to get angry, then privatize.

Back to the manichean conception. (Manichean both in the sense of evil but also in the sense that it is a grand conjoined corporate-finance-Middle Eastern policy-managerialist evil.) The notion that politics is about contending interests just disappears behind some notion of evil, coherent manipulation of the commercial and political realm because history is not going the way it is supposed to. What is Johnson’s comment that:

the neoliberal imperative, shouted into the panopticon of our modern world and echoed off every wall by banks, political parties, corporations, families, nation-states, social groups and social media

but a wail of cognitive pain about history going wrong? Absent in this manichean wail is the sense that there might have been any legitimate difficulty to be wrestled with, that the welfare and development states suffering fiscal and economic stress might have produced serious policy responses.

The “neoliberal” phenomenon–being about a broad trend in public policy–sits at the intersection of the classical liberal tradition (including those elements that reach into the social democratic tradition), developments in economics and practical politics. People who do not understand these three realms of action and thought are not going to usefully write about the intersection between them.

What is so often portrayed as merely a fight over who controls the lever of the state, and which way it is pulled, is something much more fundamental than that. It is and was about wrestling with what is practicable to do with that lever, and at what cost to whom. The much more fundamental nature of what has been going on in the “neoliberal turn” is not faced because it is too confronting. Remaining within their dogmatic slumbers is much more comforting.

Hegemonic comfort
Hence we get the products of humanities and social science academics who rarely, if ever, meet, still less directly engage with, those involved in the above wrestling. SF author Orson Scott Card observed in a podcast interview with Glenn Reynolds (aka Instapundit) and Dr. Helen Smith (DrHelen) in November 2006 that military officers are generally more intellectually open and flexible than academics, as they have to deal with people with wide range of views; academics just vote against tenure of those they disagree with. It is much more congenial that way: particularly if you wrap your sense of personal identity up in a common notion of being morally and cognitively “sound”. So narrowness of range of views and perspectives becomes a feature, not a bug. It is much more congenial to be part of the progressivist hegemony of academe, rather than a trouble-making outlier. Particularly if you can parade as a morally heroic “exposer” of a malign, society-dominating, “neoliberal” hegemony.

(Pausing here, obviously I have lots of disagreements with Mr Card; that does not mean he doesn’t have a point. And that I have to engage in such hand-waving just illustrates how entrenched the judging-people-by-their-opinions-is. Note also that nothing I have written in this post implies that the actual policies chosen were optimal, could not be reasonably disagreed with, etc.)

I would say that said academics need to go and do the reading for themselves, but the barrier of their assumptions may well be invincible. The barrier of being seen to be “sound”, part of the comfortable progressivist hegemony, even more so.

It is not about reality, it is about feeling intellectually and morally comfortable. Or trying to recover some sense of such comfort by creating a set of intellectual fictions which both deny there is any serious point to the “neoliberal” policy turn and allow them to believe their ideological comforts can be unproblematically resurrected.

Just don’t mistake that search for cognitive comfort, and what it produces, for anything resembling serious scholarship. It utterly lacks the genuine engagement with its subject matter that such scholarship requires.

 

[Cross-posted from Thinking Out Aloud.]

16 Comments

  1. Stuart Chignell
    Posted August 28, 2014 at 6:49 am | Permalink

    I’m about halfway through your essay but I wanted to make a comment now while it is fresh in my mind.

    Your paragraphs on choices and their acceptability and apparent suitability to the powers that be really struck a chord. As someone who is personally involved in the disability sector as a recipient of welfare we face constant supervision and over sight in how welfare funds are spent. It seems that they are more than happy (not ) to provide funds but they must be spent on “acceptable” purchases of goods or services.

    A meeting I went to last night of some friends of ours who are missionaries just back from Nepal had some great tales to tell of how government programs and foreign NGOs were creating problems while trying to help. Although there were some success stories as well.

    The most notable was were one of their colleagues took the novel step of asking the village they were trying to help what they would like done, what would help them most. Their answer was a new foot ball field because the one they had was located on very boggy albeit very flat waste land.

    This was in a village with shockingly bad dirty water sources, awful housing, no school, church or any other communal buildings or indeed really any infrastructure at all.

    As it turned out all they (the westerner) had to do was coordinate the efforts of the villagers themselves in fact all they really did was get the project started. The funds that they had to spend on “helping” this village were not needed and while this didn’t sit well the NGO’s notions of helping they remained unspent. The villagers selected a portion of forest to clear, they cleared it and with basic hand tools they leveled it themselves. Native grasses were sown and the field is maintained by the village.

    One year later as part of another missionary visit they found the village had fenced off the villages water source a spring fed pool from live stock, individual houses had their own home made sand filters and a bunch of other developments and improvements.

    How did all this happen? Well the villagers said that once they had built and finished their football field themselves they started looking around at what they could do next and they went on from their.

  2. Posted August 28, 2014 at 1:38 pm | Permalink

    [email protected] Lovely example. What is really powerful in social development are not things, it is the connections between people, it is usefully congruent habits of action.

  3. Herding cats
    Posted August 28, 2014 at 1:44 pm | Permalink

    neoliberals think everything in the universe works like a deregulated, competitive, financialized capitalist market.

    Um, very complex and complicated article, well done.

    Self tends to trend toward the ideas of an ancient Greek philosopher by the name of Democritus (the laughing) who, from very few written accounts, came up with the notion that the entire universe consists of randomly attracted particles which he called ‘atoma’.

  4. Herding cats
    Posted August 28, 2014 at 1:51 pm | Permalink

    referring to the above, on second thoughts – yep, the universe works like a deregulated …. but will dispute the “competitive, financialized (sic) capitalist market”.

    Like the notion of “God” or “Allah” – purely and simple a human invention and fantasy.

  5. Herding cats
    Posted August 28, 2014 at 7:32 pm | Permalink

    another comment , if allowed – there is no amount of guns and/or explosive ordnance that can defeat an ‘idea’ – a notion – a ‘belief’.

    While yes, perhaps the “military/industrial” complex in any Nation may well “make profits” –

    ..the best result is, perhaps, to simply allow the manufacture – and let them expend excess testosterone and “blow holes in the clouds in the sky” (um, please do not hit ‘commercial airliners’. They really DO have a purpose).

  6. Posted August 30, 2014 at 9:35 pm | Permalink

    @StuartChignell

    That is such an odd story from your missionaries back from Nepal.

    (1) Since when is lack of a church a measure of a Nepalese village’s neediness?
    (2) Isn’t it possible some other organisations (including possibly the missionary-derided NGOs) gave a hand in the year between visits?

    What is oddest of all is the idea of a village which wasn’t able to sort out its drinking water problems because it wanted a football field which it also couldn’t manage to do for itself. If true, that surely would be a classic argument for paternalist intervention.

  7. Joseph Clark
    Posted August 31, 2014 at 5:47 am | Permalink

    Great essay. Enjoyed reading it :)

  8. Posted September 1, 2014 at 6:12 pm | Permalink

    [email protected] Ta :)

    [email protected],4,5 Glad to provoke thought and appreciation.

  9. Stuart Chignell
    Posted September 2, 2014 at 1:18 am | Permalink

    [email protected] 1. The village in question didn’t have much of anything, a generation ago they where still living in caves. I mention a Church because a Nepalese Christian over the last few decades had been teaching them some basic skills (like how to plant crops) and through him I believe the majority of the village had become Christians. The construction of a communal meeting place to worship had become important to a number of the villagers but as I said a place to play football was higher on the community as a whole list of priorities. The Western Christian Aid workers who had been invited to the village had other priorities as well but before going to the village felt that God wanted them to do as the villagers asked rather than what they thought was best. Needless to say they were not happy with the villagers priorities or choice but they went ahead with their original plan and helped them build the football field rather than fix their water or build a school like they had planned in their own minds.
    2. While possible it didn’t. I wouldn’t say that I or my friends would deride the efforts of NGOs but there are many examples of aid disasters where well meaning people tried to help developing communities and just created more problems. In previous generations most of this work was done by missionaries. Now adays it seems the same mistakes are still being made by missionary and secular groups alike. What I related is as much about what the missionaries learnt as anything else.

    I though it was also clear that the point was that they could do it themselves they just needed a nudge.

    As for paternalist intervention that would depend on your definition and on your parenting style. We have similar problems here in Australia where people are simultaneously being dis-empowered by welfare policies that are paternalistic and then beaten with regulatory sticks for not being capable.

    Whether you look at remote Aboriginal villages in the NT or small towns in Tasmania rife with unemployment there is a case for intervention. The problem is the choice of method. So far the majority of Australian Government methods seem to switch between the extremes of let us look after you (eg welfare quarantining) and applying more and harsher discipline (eg changes to new start eligibility, get a job).

  10. Posted September 5, 2014 at 6:51 am | Permalink

    Fantastic piece. Always enjoy your contributions on WCI.

  11. dan
    Posted September 5, 2014 at 10:07 pm | Permalink

    Look,
    I only read the first few paragraphs. And I can’t read any more.

    Everyone’s thought process is more nuanced than these simplistic summary’s either yours or the ones you rebut.

    The bottom line is its not an either or debate, nature v nurture? both.
    Government v markets? both.

    people share the world and interact with each other. Some of this requires a coordinating function. This is what the government offers. Call it something else, and still some things require a coordinating agent – intersections and traffic lights for example.
    What is the free market solution to traffic flow at an intersection?
    There isn’t one unless you play semantics.
    Governments themselves can be viewed as outcomes of a market system; just as markets are government outcomes (there’s no market without armies, judges blah blah blah.

    silly is as silly does.

  12. Posted September 7, 2014 at 8:07 am | Permalink

    [email protected], [email protected] Thanks! :)

    [email protected] You should have kept reading, you might have learnt something. Given that the post precisely discusses the issue being about what the state is, or is not, competent to do.

  13. Mel
    Posted September 8, 2014 at 5:35 am | Permalink

    Exhibit A. I’d like to see you pull this crap apart.

  14. Major.Freedom
    Posted September 11, 2014 at 5:30 am | Permalink

    We don’t typically see eye to eye over at MoneyIlusion, but this article is very, very, VERY good.

    Well done Lorenzo.

  15. tesc
    Posted September 14, 2014 at 1:57 pm | Permalink

    Lorenzo,

    Are you going to officially publish this stuff? This is so good it can be a PHD dissertation.

    I actually feel inspired like when I read Hayek.

  16. Posted September 29, 2014 at 2:23 pm | Permalink

    [email protected] More of the same really, if slightly less febrile in its tone. Once again, contesting the omnicompetence of the state is so confronting that Mark B, like those he cites and those I discuss above, can’t help but mischaracterise the phenomenon he is analysing.

    [email protected] Ta :)

    [email protected] Thanks very much. No, no plans to publish at this stage.

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