Neoliberalism

• Term is used in different contexts for different purposes:
  1. A period of global capitalism; beginning in 1970s with oil crisis and break down of Bretton Woods system
     • Move from manufacturing to services, and
     • especially the rise of finance as a dominant force in the “global North”
     • the introduction of deregulation, privatization, and liberalization in policy in both the “North” and global “South” after the debt crisis in 1982
     • Finally, a general move to a post-Fordist, or immaterial rather than material economy
  2. Policy package: (e.g. deregulation, privatization)
     • replace preexisting principles of the welfare state and redistribution with principles of constant risk
     • Emphasize importance of competition and innovation
  3. Political philosophers: (e.g. Wendy Brown)
     • Order of Normative Reason
     • New form of subjectivity or form of being whereby people perceive themselves as vessels of human capital that need to be maximized at all times in a competitive market struggle with other humans
     • Foucault’s notion of “being an entrepreneur of oneself”
• Term “neoliberalism” is coined in 1938 by mostly European economists and policymakers and journalists gathered in Paris considering, in the wake of the Great Depression, how one would be forced to renovate liberalism to prevent it from breaking down as it had
  • They concluded: market would not take care of itself; capitalism required an extra set of economic conditions/safeguards to avoid market dissolution
  • “Neo” is break with 19th century Laissez-fare idea that market would self-regulate; rethink role of state to defend economy against corrosive forces like labor unions, empowered populations, anti-colonial struggle, etc.
• From Hayek to Charles Murphy (today) such folks will call themselves classical Liberals, calling on traditional thought of Adam Smith in 18th century
  • But neoliberal is an appropriate label due to the changed conditions of the 20th century vs 19th century
  • Changed conditions:
    1. Emergence of universal suffrage
    2. The end of Empire and rise of self-determined nation-states post-WWI that progressed into ’60s and ’70s
  • These changes present new challenges to Liberalism
    • E.g. 19th century, you could rely, from perspective of Liberal, on the English empire to regulate capital flow
    • These unilateral forces are dissolved in the era of decolonization and mass democracy
• Question now becomes: How does one refashion the State to practice that sort of imperial oversight over capitalism but in a new form?
  • Carl Schmitt’s distinction:
    1. Imperium: the power you’d associate with the nation-state, or political power
    2. Dominium: the realm of capital or market; property
• Schmitt makes this distinction deploring the dualist realms of power; neoliberals prioritize this “double-world” and want to make sure one doesn’t infringe on the other
  • Neoliberals liked very few empires (e.g. English, who was not protectionist and didn’t create tariff walls in its own colonies), which it saw as a positive template
    • Hapsburg empire, however, was very protectionist, and it secured the “double-world”
  • The double-world, for Schmitt, was the nightmare of Liberalism that started in the 19th century and drained politics such that the State couldn’t exercise control over things in its own territory
• Robert Harrison’s (host of Entitled Opinion) hot take:
  • The “Geneva School” neoliberals find no value in a people, a polity, a nation-state; rather, it’s the complete promiscuity of global capital
  • You need dominium so that anyone would be able to own property, factories, interest in any country
  • For Schmitt, this was a nightmare because it infringed on self-determination of nation-states and peoples
• Bretton Woods system breaking down in 1970s
  • One manifestation: the capital controls that had been in existence from 1945-early ’70s by which you couldn’t simply up and take your money out of a country on a whim was the norm at the IMF (ie. that capital controls were necessary because of the desire at that time to produce a Fordist, welfare State in miniature-modulated existence in all the new states of decolonized territories)
  • Bretton Woods breakdown was the freeing of capital from these constraints and the ability of evermore globally footloose capital to discipline any attempts of creating domestic welfare states
  • Bretton Woods breakdown was intentional project sought out by neoliberals
• End of Bretton Woods system meant end of fixed exchange rate system and rise of floating exchange rate system
  • Before the 1970s, the rate at which currency was exchanged was not determined freely by speculative capital, but regulated by IMF, who you needed to confront/consult if you wanted to change your exchange rate
  • After the 1970s, in the system of a floating exchange rate, speculative capital undermined the value of currency
• Why/how did the floating exchange rate win out?
  • It was getting harder for states to control people getting around capital controls
    • E.g. Euro-dollar market: people getting around capital controls simply by keeping their investments offshore
    • Similar to Trump’s tax package: acknowledge that getting around capital controls will happen anyway, so instead of combatting offshore investment tax havens, lower taxes at home to repatriate capital investments
  • Thatcherism/Reaganism: a peak of neoliberalism
    • Now in new era of disenchantment of globalism
• Neoliberals look at WTO and its effect of diminishing U.S. sovereignty as a good thing
  • They see the project as establishing a supranational level of governance that disempowers nation-states; this is hard to pitch to domestic audiences
• Is the democratic party in U.S. still a bastion of neoliberalism insofar as its a globalist project? I.e. if its good for the world, it’s good for everyone?
  • If there is a problem of legitimacy (as exemplified in the WTO riots in 1999 in Seattle) for a globalized institution-building project, the problem is solved in the moments when national interests correspond with global interests
  • Example from mid-’90s: for the U.S. to sign on with the WTO was not something costing them anything because they were able to retain access to markets and commercial dominance they already had without being subject to a downside
    • But, that’s changed in the last 25 years since the WTO was created as the rise of China and India have been able to use the WTO in ways unforeseen by U.S.
    • So, here is a departure of the national interests from the globalist interests
• What should we think of the WTO? I.e. the logic of capital overthrowing any sense of autonomy and democracy of the average citizen?
  • It’s complicated: it depoliticizes the State but repoliticizes control in a different apparatus
  • Bernie Sanders was against it, but so was Pat Buchanan
• Hayek and anxiety over democracy and its needed limitation
  • Democratic paradox: we naturally conjoin idea of liberal democracy, but those two concepts are in tension with one another in the sense that liberalism is invested in protecting a set of institutions regardless of what the people think, while democracy can have highly illiberal outcomes
  • Constant struggle over where to place emphasis: liberalism or democracy?
• Authoritarian liberalism: AFD (Alternative for Germany): believe to protect competition, must prevent flow of immigrants and censor “anti-West” speech
• Neoliberals (via Liberals) seek to dis-embed the market from society because they believe the market can be self-regulating and, therefore, institutions can fall away, community bonds can fall away, and we can encounter each other as exchanging units in marketplace
  • This leads to neoliberalism as ideology that’s inaccurate, since they’re equally interested in embeddedness, but for different outcomes
• Argument against democracy is a way of seeing people as naturally inclined towards solidarity and naturally inclined towards self-interest
  • Both of these pose a problem to Hayek in a democracy because either 1) people are going to use their vote to blackmail politicians to give them favors, 2) people are still hardwired from their time as members of the tribe on the Savannah to want to be communally sharing resources with the small group of the village (which Hayek really believed)