Hayek’s view is human cooperation, social order, and economic prosperity are only possible where human freedom is maximized, subject to the constraints of a legal and moral code that demarcate the realms of mine and thine. Freedom of action within the law gives rise to market phenomena such as prices and profits, both of which make the private knowledge of actors socially accessible to others, which in turn generates economic coordination. Julius Evola (1898-1974) claims freedom and equality are tools of manipulation, and after the movement leaders get what they want, they’ll toss you aside. Evola explains, “Practically speaking, it is only a revolutionary weapon: freedom and equality are the catchwords certain social strata or groups employed in order to undermine other classes and to gain preeminence; having achieved this task, they were quickly set aside.” Today the economic elite claim, there is a threat to other freedoms with any reduction to economic freedom (i.e. regulations).
Simmel wisely observes that the concerns and rules around secrets often provide groups with their particular rules and forms, with an etiquette about language and behavior that marks them off from the unknowing. One effect of these secrets is an intensification of individual identity setting off those who know from those who do not know what is hidden. Philip Mirowski’s argument that under neoliberalism markets are understood to be an information processor superior to any human being “meta-information processors” which, partly based on randomness, produce correct “knowledge” about the social good in the form of prices. The paradox is the spread of neoliberalism required substantial state intervention to establish a global ‘free market’. Governments in the West implement a series of tax and financial policies to stimulate a consumer society, while undermining and weakening social safety nets. We have reached a stage in the development of capitalism underpinned by financialization.
William Blake wrote that secrecy is the human dress, and while he clearly meant no compliment, there is no question that secrecy is central to human affairs, at least if one takes the term to include all kinds of concealment. Taking this broad view of secrecy, one finds few sides of social life where things are not hidden. Georg Simmel begins what remains the most searching analysis of secrecy by observing that all social life is founded on exchanging information about what people are, about what we may expect from one another, and about how to manage things. Yet Simmel’s exegesis, first published in 1908, quickly moves from considering candor to considering artifice, from considering information to considering misinformation, and to the related issues of truthfulness and lying, simplicity and adornment, distortion or concealment, in order to gain communicative advantages over others.
Friedrich Hayek (1899-1992) explains to his enthusiastic supporter Antony Fisher: “Society’s course will be changed only by a change of ideas. First you must reach the intellectuals, the teachers and the writers, with reasoned arguments. It will be their influence on society that will prevail and the politicians will follow.” To empower these ideas corporate money supported think-tanks along with scholarship and intensive use of media. This think-tank network wasn’t for creating new ideas, but for being a gate keeper and disseminating the existing set of ideas around “the philosophy of freedom.” The conscious strategy of this global think-tank network was to take the idea of individual freedom and minimal government mainstream. Neoliberalism is an economic system that needs a strong state, even at the expense of constraining democracy – rebuffing challenges to austerity and minimal government – to maintain a system of thought and applied political strategy. The state is a central instrument for the advancement of the neoliberal agenda.
Neoliberals insist that they are agents of change. They aim to reform society by subordinating it to the market. Their goal is essentially to erase any distinctions among the state, society and the market. Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that the market delivers benefits that could never be achieved by planning. Inequality is recast as virtuous: a reward for utility and a generator of wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances. In a world governed by competition, those who fall behind become defined and self-defined as losers.
A major challenge of the neoliberals is how to maintain their pretense of freedom as non-coercion when, in practice, it seems unlikely that most people would freely choose the neoliberal version of the state. Their answer is to treat politics as if it were a market, and promote an economic theory of democracy while redefining the shape and functions of the state. One of the paradoxes of our age is that we are simultaneously living through a time of positive economic innovation and also a time of the painful erosion of the way of life of many middle-class families. More and more find themselves in an era of insecurity as the safe routines of their life have become undone. Excessive psychosocial stress is associated with the adoption of health threatening coping behaviors. Increased insecurity for low skilled workers is associated with rising mortality rates.
The neoliberal strategy achieves successful upward redistribution. The 1980s marked the start of the declining wage shares in developed countries. There occurred a paradox: real-wage productivity gap resulting in a previously unseen phenomena, the stagnating of the incomes of the middle class. At the same time, as a result of tax decreases inspired by the neoliberal project, the income of the top 10% started to increase dramatically in the UK and the US – the homeland of the neoliberal counter-revolution. The basic paradox is that capitalism creates enormous wealth, but it concentrates into oligopolies and monopolies, to the extent that it undermines that very wealth production it relied on. Another paradox is in how neoliberal capitalism creates and normalizes a culture of lying to itself leading to its inherent instability. Free market fundamentalists and neoliberals are in total denial of the paradox.
Supported by the proliferation of opaque financial products market, “shadow” institutions have emerged with heightened speculative behavior, and corporate and even household governance increasingly focuses on quick returns from speculation on financial assets, exchange rates, real estate, and mergers and acquisitions, often fueling asset price bubble. With its grip over both corporate governance and policy making, economic “success” has now become disconnected from the making, product investment, raising production, and creating jobs. Household debt boosts consumption and GDP growth in the short run, mostly within one year. In a series of recent papers, Schularick and Taylor (2012) and Jordà et al. demonstrate that high debt levels are not only a good predictor of financial crisis but also a key determinant of the intensity of the ensuing recession.1 The collapse of Lehman Brothers in 2008, the greatest bust (at that time) since the Great Depression, is an example of a crisis from debt driven consumption.
Being born in rich countries like Canada and the US with increasing GDP growth and prosperity doesn’t bring happiness if it comes with more risk and uncertainty. Financialization creates profit through financial channels rather than through trade and commodity production, enriches a select few at the majorities’ expense. Because of the way financial services are measured, GDP data does not measure changes in inequality. The consequence of such dogma: inequality continues to skyrocket ever since the pandemic. In the US, consumer spending comprises 70% of GDP. Real household disposable income, net cash transfers to households, real household consumption expenditure, consumer confidence, households’ savings rate, households’ indebtedness, financial net worth, and labor under-utilization rate are just a few of the indicators that can help provide a better picture of societal progress. Aggregate figures like GDP fails to sum up reality which overlooks the well-being and day-to-day lives of its citizens.
Freedom has nothing to do with democracy or speech or individual rights: for the neoliberal it is about the freedom of the market and the elites who control those markets. The lack of freedom to make choices creates a group working below their capabilities precisely because they have no other option, thus they become susceptible to rhetoric from populist politicians with simplistic solutions. An essential attribute of the good life is that people enjoy not just a range of personal freedoms, but an access to knowledge and a voice in public affairs. When asking searching questions of yourself, realize that freedom resides not in the brain, but in the traditions of critical thought and skeptical reason. Freedom is best exercised as a means to an end, but the end must be one that gives people the choice to make the best possible decisions to reach their full potential.
1 Marco Lombardi, Madhusudan Mohanty and Ilhyock Shim. (Jan 2017) The real effects of household debt in the short and long run https://www.bis.org/publ/work607.pdf