The Rise of the Neoliberals

Isaac Newton (1642-1727) discovered the natural laws of motion, which provided the final piece to the puzzle, establishing the Copernican theory of the Earth revolving around the sun, introducing  the spirit of individualism and the idea the study of human progress was at the centre of all things. During the following decades, his achievement was celebrated as the triumph of the modern mind over ancient and medieval ignorance. The 18th century Age of Enlightenment saw the intellectual maturation of the humanist belief – a system of thought that focuses on humans and their values, capacities and worth. With the introduction of new patterns of thought, honest doubt began to replace unreasoning faith. The ‘truth’ discovered through reason, would free people from the shackles of corrupt institutions, such as the church and monarchy, whose misguided traditional thinking and old ideas had kept people subjected in ignorance and superstition. The concept of freedom became central to the vision of a new society. Through truth and freedom the world would be made a better place.

Neoliberalism is an ideology and policy model that emphasizes the value of free market competition. As national economies became more interdependent in the new era of economic globalization, neoliberals promote free-trade policies and the free movement of international capital. While this political theory has been around since the late 1900s, the rise of the neoliberals occurred over the last 40 years to become the dominant ideology shaping our world today. Joseph Stiglitz observes, “Neoliberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud hanging over the global economy.”

Over centuries of development humanism emphasis shifted from the religious realm to the human realm. The neoliberals brought in their own vocabulary to control the debate: human beings became human capital, essentially reduced to an investment. The individual is no longer at the centre of discussion, having been displaced by the corporation. Government has no economic responsibility; only people have responsibility. Neoliberals maintain the pretense of freedom defined as non-coercion – less government means less coercion or control. The solution is to treat politics as a market and promote an economic theory of democracy. The citizen is replaced with consumer of state services. Following from the human-capital concept education is a consumer good, not a life-transforming experience.

To neoliberals the market is a natural state of mankind. The market can be made manifest in many guises. Natural science narratives are woven into the neoliberal narrative. For example, it can be considered an evolutionary phenomenon. The selective pressure seen in nature is also seen in market forces. Herbert Spencer (1820-1903), an English philosopher and economist, believed that society was evolving towards increasing freedom of individuals and held that government intervention ought to be minimal in political and social life. Spencer’s survival of the fittest concept was believed to be natural, hence morally correct. Neoliberalism that underpins the Bush Administration’s No Child Left Behind Act introduced education reforms promoting high-stakes testing, accountability, and competitive markets. The education system is largely seen as the ultimate arbiter of innate intelligence and ability, as well as the benefactor of hard-work and merit. If public schools fail it clears the road for voucher and charter schools (experimental publicly funded private schools with minimal regulation). Charter schools are neoliberalism’s logical conclusion for education, where schools should become for-profit institutions.1

Their vision of a good society is such that conditions for its existence must be constructed. On the other hand classical liberals reconciled freedom with authority and replaced authority with society. Neoliberals reject society and revive a version of authority under a new guise. The state becomes a core agency that actively fabricates the subjectivities, social relations and collective representation suited to making the fiction of the markets real and consequential. Neoliberals vigorously reject that there are ‘failures’ or glitches in the markets, rather, evolution or ‘spontaneous order’ brings the market to ever more complex states of self-realization that the human mind cannot understand. They reject any suggestion of ‘market failure’ with relation of the 2008 debacle.

Neoliberals extol freedom as trumping all other virtues. Their freedom is divorced from democracy, buttressed by the concept that all coercion is evil. This particular brand of freedom is not the realization of any political, human, or the ultimate aim of cultural success, but rather relying on a system to harness the selfishness of people and direct it to public good, thus freeing itself from the need to depend unrealistically upon the uncertain moral virtues of its participants. For neoliberals inequality is unfortunately a by-product of capitalism, but a necessary functional characteristic of their ideal market system. It is part of a strong motor to progress, hence the rich are not parasites, but a boon to mankind. In fact, the concentration of wealth since 1990s is part of the neoliberal script to produce more efficient and vibrant capitalism.

Neoliberals need the state, (it cannot be destroyed), it is necessary to redefine the function and nature of the state. While democracy is ambivalently endorsed as the appropriate state framework for an ideal market, it is necessary to keep the relationship impotent so that citizen interests are rarely able to change anything. It is necessary to restrict the state with numerous audit devices under the sign of accountability such as, convert state services to private and provision of government services on contractor basis. The privatization of the process of securitization of mortgages , which had started out in the 1960s as a government function has become a flash point in in explanations of how the financial sector lost its way. They mask their role in power by marketization of government functions – and in the process, shrinking state bureaucracies that become unwieldy under such neoliberal activities.

A corporation can do no wrong (as it was created for legal purposes only). Neoliberals were for introducing market forces into corporations. The reengineering of the corporation by separating ownership from control by such features as reduced vertical integration, outsourcing supply chains, outrageous compensation for top officers, incentives such as massive stock options, golden handshakes, and latitude beyond any oversight. Capital has a natural right to flow freely across national borders (labour enjoys so similar right). Offshore outsourcing of manufacturing in advanced economies is clearly a function of neoliberal doctrines concerning the unbounded benefits of freedom of international trade, combined with neoliberal projects to reengineer the corporation as an arbitrary nexus of contractual obligations, rather than as a repository of production expertise.2

Concurrent with the neoliberalization of America, the prison population in the United States exploded. Crime is defined as an inefficient attempt to circumvent the market. Neoliberal ideology helps justify increasingly punitive government intervention into crime and punishment – incarceration becomes a solution to structural economic inequality and political instability. Faced with increasing populations situated outside the reaches of the disciplinary structure of the wage labor system, the neoliberal state reforms welfare into prison-fare to exert social control and regulation of poor and deviant populations and, therefore, limit social instability. The precariousness bred by a welfare-averse politics maintains a steady flow of inmates. The main drivers of penal policy reform at the elite level are cost-benefit analyses and concerns about recidivism, not concerns of justice or human rights.3

Neoliberals have made efforts to have economic theories do dual service as a moral code. The best that they can achieve is intellectual accommodation with the religious right. They share the same freedom – the desire to follow one’s own moral conviction as a modern safeguard to individual freedom. Neoliberals notoriously use “wedge issues,” commonly known as “culture war” issues, such as abortion and gay rights, to divide Christians who might otherwise stand together against the neoliberal economic agenda. Republican neoliberals continue to have one thing in common with their evangelical protégés; they are unlikely to waver in their faith.

The market (suitably engineered and promoted), claim neoliberals, can always provide solutions to problems seemingly caused by the market in the first place. Basically any problem has a market solution. Suitably engineered boutique markets are promoted as superior method to solve all sorts of problems previously thought to better organized by governments: everything from scheduling space shots to regulating the flow through airports and national parks. The marketplace is deemed to be a superior information processor, therefore all human knowledge can be used its fullest only if it is comprehensively owned and priced. This is extrapolated to explain that the solution to perceived problems in derivatives and securitization is redoubled ‘innovation’ in derivatives and securitization, and not their curtailment. Essentially the best people to clean up the crisis were the same bankers and financiers who created it in the first place, since they clearly embodied the best understanding of the shape of the crisis. The revolving door between the US Treasury and Goldman Sacks was evidence that the market system worked, and not of ingrained corruption and conflicts of interest.2

The 18th century Enlightenment was a movement to displace the dogged adherence to established opinions and customs, and to enlighten a population that the system had kept in the dark. The Enlightenment introduced critical thinking to replace the dead weight of tradition and challenge the blind faith in institutions. In the 18th century the church was the dominant institution, while in the 21st century the corporation is the dominant institution. In the 21st century there is a need to challenge the blind faith and convictions in less government and regulations to understand the truth – increasing economic inequality between the rich and the rest of society over the past four decades is no longer acceptable. It is necessary to introduce interventions to reduce the influence of the dominant institution, the corporation, in government affairs. New social relationships need to be constructed, creating a system with increased transparency and accountability that allows individuals expanded opportunities for self-determination and freedom, making the existing model obsolete.

1 Leyva, Rodolfo (2009) No child left behind: a neoliberal repackaging of social darwinism. Journal for Critical Education Policy Studies, 7 (1). pp. 365-381. ISSN 2051-0969 http://eprints.mdx.ac.uk/14551/

2 Mirowski, Philip. Never Let A Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown. (2013) Verso London: New York p. 50-67.

3 Gottschalk Marie. The Folly of Neoliberal Prison Reform (08 June 2015) https://bostonreview.net/books-ideas/marie-gottschalk-neoliberal-prison-reform-caught

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