Neoliberalism intensifies and extends itself by displacing competing socioeconomic forms that restrict it. This means that a through, nuanced, comprehension of capitalism is more important than ever for understanding neoliberal social life and psychology. Marx and Engel’s analysis of capitalism remains a touchstone for any discussion of neoliberalism and its transformation: “The history of all hitherto existing society is the history of class struggles.” For many today you can only get a decent income if you put a huge amount of hours in. Prior to COVID-19 around 80% of Americans were living paycheck to paycheck, meaning they have no significant savings. Now half of US homes have lost wages during the pandemic. The pandemic highlights the problems with the existing economic system. Our current economic system values corporate interests more than the needs of humanity and the planet. The economic system as a whole is rigged in favor of big business.
The French Revolution was certainly not the first class conflict, because class struggle also characterized the history of Antiquity and the Middle Ages. In July 1791, Leopold of Austria (brother of Marie Antionette) instigated the Padua Circular, an open letter to the leaders of Prussia, England, Spain, Russia, Sweden and other nations. This circular called for a European military coalition to invade France, halt the revolution and reinstall the monarchy. The consensus now is that the Girondins wanted to militarize the revolution, to provide it with direction and impetus, to distract from domestic economic problems and to consolidate their own power. Some Girondins also believed that a revolutionary war would become a “crusade for universal liberty”, and challenge absolutist monarchies elsewhere in Europe. Notwithstanding, the French Revolution was the first important conflict of the modern class struggle, which continues today.
In making his case, Jacques Pauwels sets the Great War in the context of what historians call the long 19th century, beginning with the French Revolution of 1789 which, with its watchwords of liberty, equality and fraternity, helped inspire reformers and revolutionaries alike. The 1848 February Revolution – one of a wave of revolutions in 1848 in Europe – established the principle of the “right to work” (droit au travail), and its newly established government created “National Workshops” (ateliers nationaux) for the unemployed. The Paris Commune occurred in the wake of France’s defeat in the Franco-German War and the collapse of Napoleon III’s Second Empire (1852–70). The program that the Commune adopted, despite its internal divisions, called for measures reminiscent of 1793 (end of support for religion, use of the Revolutionary calendar) and a limited number of social measures (10-hour workday, end of work at night for bakers).
Jacques Pauwels makes the case that World War I was not simply a war between states, but also a war between social classes. Pauwels claims it was wanted by European elite of aristocrats and capitalists who saw in war the means to reverse the growing democratization of society that threatened their position and power. The power elites feared the working class eating into profits by forming unions and demanding higher wages along with better work conditions. The elite believed that a war would crush revolutionary zeal, aspirations for democracy, and replace socialism with nationalism. They expected the demands of war would instill in the working class the discipline, sense of tradition and respect for authority they saw as so obviously lacking, as the pre-1914 wave of strikes and of socialist and feminist agitation demonstrated. In fact, union leaders travelled around the country to encourage the rank and file not to strike, but to volunteer for the army.1
In the ten years from 1935 to 1945 the working classes across the world were pushed harder in greater numbers to produce much more. As well as working more people harder for longer, business and government worked together to hold down their wages – so boosting industry’s operating profits. Holding down wages was not easy because putting so many more people to work ought to have pushed wages up. In fact, in cash terms, weekly wages did go up. But on closer inspection we find that hourly wages tended to go down. People were working for much longer hours, sometimes giving up their time for free, often losing out on overtime payments. What increases there were in wages did not keep pace with the increase in output. In 1941, Roosevelt helped war profiteers by banning strikes and taking away labor legislation protections in the armaments industry. In 1935 he had made a dispute procedure, the National Labor Relations Board, which barred wildcat strikes.2
The phrase the end of history was first used by French philosopher and mathematician Antoine Augustin Cournot in 1861 “to refer to the end of the historical dynamic with the perfection of civil society”. Francis Fukuyama brought the term back to the forefront with his essay The End of History? that was published months before the fall of the Berlin Wall. The essay centers around the idea that now that its two most important competitors, fascism and communism, have been defeated, there should no longer be any serious competition for liberal democracy and the market economy. It’s not surprising that Fukuyama, who was also a member of the RAND Corporation (the Cold War think-tank that was part of governmental efforts in the US after World War II to prove the validity and superiority of liberal democracy), made the political statement in 1989 that the liberal democracy with its neoliberal economic system is the best and final one in our history.
To account for movements not able to be explained by his formula, Newton proposed the hand of God to guide the planets in various circumstances – providing long-term stability to the universe. Adam Smith’s claim about the ‘invisible hand’ in Wealth of Nations, first published in 1776, pertains to a scheme consisting of all the voluntary actions of people who engage in buying, hiring, producing, consuming, and selling, typically mediating these actions by exchanges involving money. Smith’s point is that, if certain conditions are met, these actions will collectively produce a result that a benevolent God would wish for us. Ludwig von Mises, in Human Action, uses the expression “the invisible hand of Providence”, referring to Marx’s period, to mean evolutionary meliorism. He did not mean this as a criticism, since he held that secular reasoning leads to similar conclusions. Milton Friedman, a Nobel Prize winner in economics, called Smith’s Invisible Hand “the possibility of cooperation without coercion.”
Neoliberalism was never really simply an economic doctrine. Neoliberalism was a political project carried out by the corporate elite as they felt intensely threatened both politically and economically towards the end of the 1960s into the 1970s to curb the power of labor. It is the fear of the nation state as a democratic force that underpins the neoliberal project. It was necessary to separate the economy from the nation state – cultural issues could still be managed at the national level. The goal of this “double government” was to separate politics from economics. Hayek argued for global institutions to protect what he called the ‘negative right’ for foreign investments to have freedom from expropriation, and the right to move capital freely across borders. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organization, neoliberal policies were imposed – often without democratic consent – on much of the world.3
Basically, money controls labor. If you can’t get the finances to start a business, you’re forced to work for someone else. Instead of financing small and medium sized businesses, who are the main job creators, to create goods and services for the future, banks in the U.S. mainly grant loans to people or businesses with collateral that’s already existing and can be foreclosed on; such as real estate, land that holds valuable minerals and oil, and profits from monopolies. Stock markets were supposed to supply capital to businesses in exchange for equity, however they’ve been turned into casinos in pursuit of short-term profit betting which way prices will go instead of assisting industry with producing more goods and services. The drastic inequality of the control of resources – as the big get bigger – creates the majority of the problems we have today. This breeds cut-throat competition which leads to crime, corruption, non-cooperative behavior, and many other negative side effects.
According to Adam Smith, everyone in the marketplace is operating out of their own self-interest. However, by each individual being so motivated by self-interest, they inevitably lose sight of how their role plays in the economic system as a whole. COVID-19 exposes the ugly underbelly of neoliberal fundamental economics. Small and medium sized businesses, who are the main job creators, to create goods and services for the future, are the least likely to secure bridging funds, will take the brunt of the economic downturn. While the global financial crash in the summer of 2008 sensitized workers to the issues, the class struggle is resurging around the world because of COVID-19. The goals of the French Revolution are still relevant. It is necessary to completely change the relationship between the power elite and the working class – small business owners, and redefine the nature of political power to bring about economic stability.
1 Dutta, Manas (2019) “Review of “The Great Class War 1914-1918″ by Jacques R. Pauwels,” Canadian Military History: Vol. 28 : Iss. 2, Article 9.
2 James Heartfield. (20 Jan 2010) World War As Class War https://www.metamute.org/editorial/articles/world-war-class-war
3 Phil Mullan. (22 March 2019) The truth about neoliberalism. https://www.spiked-online.com/2019/03/22/the-truth-about-neoliberalism/