Saturday 30 May 2015

Re/Defining Neoliberalism

The March Of Neoliberalism: Not a coherent economic philosophy, but a fearsomely coherent political project. Its purpose: to use the coercive power of the state to thwart and/or reverse any and all attempts to empower the many at the expense of the few. Those who try to pass neoliberalism off as the crackpot economic "religion" of a handful of Act supporters, are simply attempting (like Tony Blair) to carve out a political space for themselves within the Neoliberal Settlement.
THE DEBATE which Matthew Hooton kicked off in earnest on Radio New Zealand this week is hotting-up. In dispute is that much-used, but imperfectly understood, political term: “Neoliberalism”.
Some, including economist, Brian Easton; former Finance Minister, Sir Michael Cullen; and Wellington blogger, Danyl McLauchlan; have claimed that John Key, and the government he leads, no longer fits the neoliberal description. They have not, however, moved as far down the revisionist road as Mr Hooton. His claim is that the Key Government has not only moved on from neoliberalism, but that it has also crossed the line into the full-blown leftism of that arch-socialist, Rob Muldoon.
Wellington-based academic, Jack Vowles, joined the fray a couple of days ago - posing the question: “Neoliberalism: Half-Full or Half-Empty?”
As Professor of Comparative Politics at Victoria, Jack’s purpose in entering this debate appears to be the rather dubious one of muddying the waters about what neoliberalism is – and is not. In its turn, this obfuscation seemed to be aimed at keeping open the political space currently occupied by what he calls “market pragmatists” – those particularly pusillanimous neoliberals known as Blairites.
Vowles’s case: that neoliberalism is a kind of economic religion, adhered to by a tiny number of extreme Hayekian economists, and only ever imperfectly applied in New Zealand, is, like most erroneous conclusions, based upon an erroneous premise.
Neoliberalism as never been, and is not, a coherent set of economic principles, the presence or absence of which in any given policy prescription determines the strength or weakness of its ideological credentials. Indeed, neoliberalism, far from being some sort of neo-classical economic crusade, is what it has always been: the fearsomely coherent political project of global capitalism’s ruling elites.
Its anti-state/free market propaganda notwithstanding, neoliberalism’s purpose has always been to use the coercive power of the state to thwart and/or reverse any and all attempts to empower the many at the expense of the few.
As Professor David Harvey notes in his A Brief History of Neoliberalism:
“Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalisation as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévy, after careful reconstruction of the data, have concluded that neoliberalisation was from the very beginning a project to achieve the restoration of class power.”
It is no accident that neoliberalism’s origins, as a politically effective force, may be traced to the economic, social and political upheavals of the 1970s. This was, after all, the decade in which the power of the capitalist ruling classes came under maximum pressure: the decade in which both individual capitalists and the principal organs of capitalist power (especially in the USA and the UK) commenced their still-advancing counter-offensive against the unnerving encroachments of social-democratic redistribution and reform.
It also explains why, in practical terms, neoliberalism has always been a more-or-less constant set of political and economic objectives rather than a coherent philosophy. The whole point of neoliberalism is to have the coercive powers of the state deployed to the exclusive advantage of the elites. This may be seen not only in the largely successful campaigns to reduce the influence of organised labour, but also in the ongoing efforts of neoliberal regimes to decouple the regulatory and administrative powers of the state from those sectors of the economy that the forces of social-democracy had once been powerful enough to wrench from private hands.
Vowles’s plaintive cry, that not all of the defining features of a neoliberal regime are in and of themselves bad, misses the point entirely. Of course trade liberalisation can be seen “a good thing” – but not when it’s used to gut the domestic manufacturing sector and eliminate the social milieu out of which strong social-democratic values grow. Relieving the pressure on income tax to meet all of the state’s fiscal needs may, similarly, be a good thing, but not when a deeply regressive goods and services tax is imposed on the working-class to fill the fiscal hole created by easing the “burden” of progressive taxation on the wealthy.
Why is Vowles unable to see this? Primarily, because he is desperate to avoid acknowledging both the Neoliberal Revolution, and the Neoliberal Settlement which it enabled, as the central political (and, increasingly, cultural) realities of our time. Were he ever to accept that neoliberalism will manoeuvre swiftly and decisively (principally through its enablers in the news media) to thwart “the alternatives that do exist to promote [a] more inclusive and egalitarian society”, then all his talk of “responsible economic management” and of not taxing and spending “without any apparent constraints” would stand revealed for what it is: mealy-mouthed Blairite blather.
It is, however, in the midst of all his Third Way apologetics that Vowles let’s slip the very insight he’s trying so hard to pretend he has not had. It’s when he declares: “The implicit alternative to neoliberalism implied by many on the left is simply not feasible in the 21st century.”
This is the crucial admission, and the crucial explanation for why Vowles and his Blairite comrades are so keen to reduce neoliberalism to something only a handful of Act supporters take seriously. What Vowles is really saying is that the Left’s alternatives are not feasible while the Neoliberal Settlement endures. And if that is true, then the only possible programme for a genuine left-wing party is the one committed to challenging that settlement head-on and reclaiming the coercive powers of the state for the many, from the few. (The sort of coercive powers that John Key’s indisputably neoliberal National Party refuses to deploy even in the name of ensuring that working people are not seriously injured or killed on the job!)
I have followed Jack Volwes’s highly successful career in political science for more than quarter of a century. His scholarship in dissecting the crucial general elections of the 1990s – not to mention the arrival of MMP – always possessed the reassuring feel of work undertaken by a man comfortable in his own radical skin.
What happened, I wonder, to the Jack Vowles who seemed to see, in the epic struggle between Labour and the Alliance, the acting out of the urgent mission to make left-wing policies “feasible in the 21st century”? When did it become okay for the Professor to put down the opponents of neoliberalism as inhabitants of a political ghetto, communicators of despair, weakeners of their own cause?
Was it about the same time, Jack, that you decided that if neoliberalism could not be beaten, then it could, God forgive you, be joined?
This essay was posted simultaneously on The Daily Blog and Bowalley Road of Saturday, 30 May 2015.


Sanctuary said...

"...Was it about the same time, Jack, that you decided that if neoliberalism could not be beaten, then it could, God forgive you, be joined..?"

I've said it before - the advance of neo-liberalism was much enabled by the craven cowardice of the baby-boomer generation who, instead of having the guts to fight to protect their parent's achievements, sold out for a comfy job and a property bubble.

Andrew Riddell said...

Interesting read there Chris.

Re: " This may be seen not only in the largely successful campaigns to reduce the influence of organised labour, but also in the ongoing efforts of neoliberal regimes to decouple the regulatory and administrative powers of the state from those sectors of the economy that the forces of social-democracy had once been powerful enough to wrench from private hands."

This week's email from the NZ Initiative (nee Business Roundtable) includes advocating that an "independent" fiscal responsibility board be set up to stop the democratic process from changing the economic settings. Just one example. Surrendering monetary policy to the reserve bank is another.

While I said it was an interesting read,nwas it necessary to write it in a way that strayed into attacking the person though.

Anonymous said...

And if that is true, then the only possible programme for a genuine left-wing party is the one committed to challenging that settlement head-on and reclaiming the coercive powers of the state for the many, from the few

I think you are missing one additional dimension here: in a world of enforced neoliberalism via the EU and other international organisations, in a world with unfettered movement of capital, where international forces are always on hand to punish anyone straying from the Settlement - the problem of developing an alternative is that much more severe.

After all, if the last hurrah of western democratic socialism - Mitterand's France in the early 1980s - fell foul of the constraints imposed by the ERM, and even Helen Clark's centrist regime was similarly punished by "markets" in 2000, how do you break out of the Settlement? You're left looking at a one-term kamikaze mission, a sort of Rogernomics in reverse, in a desperate attempt to reset the settings as far as you can while you have the chance. Not the cheeriest proposition.

Grant said...

"Vowles’s plaintiff cry" *plaintive..

Interesting essay Chris. Explains and brings things into focus things which I had only felt at gut, rather than cerebral level previously. Thanks.

adam said...

I just thought when I saw Jack's piece. "I'm all right, quick pull the ladder up." Bad pun fully intended. It seems the more those people who were willing to embrace the tired old left, now seem willing to embrace a odd sort of post-fascist space. By post-fascism I mean, dishonest about ideology and their collective ideological position,anti-democratic, and highly opportunistic in a political sense.

Chris Trotter said...

To: Andrew Liddell.

Gentle chiding rather than a full-scale attack, I think, Andrew. No better or worse than Jack's not-so-subtle digs at me. When you open fire at someone, it's foolish to think that they won't fire back!

To: Anonymous@12:27

It's a real dilemma, isn't it? And I certainly believe there needs to be as broad an international component to the fightback as can be organised. That, and a massive education campaign about the rights of the citizen.

Hugo Chavez printed the key articles of the Venezuelan constitution on milk cartons - as well as distributing millions of printed copies to the slum dwellers and landless peasants.

A citizenry who know their rights must surely be Democracy's best defence.

Anonymous said...

Chris I think I might have an answer re Jack. Years back Neville Gibson now wriring on the NBR used to sell a Marxist rag. Neville is a good guy but he does "ideology". The cogent theory of Marx and that of Hayek seem when dissected as mirror images of the same argument. They use the same rational materialist constructs. For an ideologue to swap one for the other would be quite easy. Its a case of same tools different job. Sounds like your man is a knife out of the same drwer.

pat said...

nice analysis though I do question whether a) it is as organised and concerted as painted and b) whether many of its proponents are aware of the end game (or goals if you believe in the structure) somebody once said "this too will pass"....the more successful the neo libs are the greater the incentive for "the many" and the further the pendulum will swing.....and when this occurs it may well be new and unrecognisable as what we (have) consider(ed) the traditional "Left".

aberfoyle said...

Neo liberalism,just a fancy word used by the capitalist class to askew its profit exploitation as like some zealot blinded christian believing that being a hopeful christian things will get better for all believers, all involved in the trickle down sharing of the former believers are certainly having their belief structure tested.

The hidden left,revolutions youth fervour love the Neo LIBERAL CAPITALSIT label,it gives them a target to grasp without the understanding of the solution aside from rampant destruction of the SYSTEM,to be replaced by a State Capitalist Structure,or mindless Anarchist idiocy.

Chris Trotter said...

Yikes! Thanks, Grant. Duly corrected.

(Although, my misspelling had a curiously appropriate feel ;-)

Brendon Harre said...

RE: “neoliberalism’s purpose has always been to use the coercive power of the state to thwart and/or reverse any and all attempts to empower the many at the expense of the few.”

Chris I am not sure about your definition of neo-liberalism. I suspect if we reviewed all your previous utterances on neo-liberalism we would find some variation.

I will give you though Chris that you have captured the mood of opposition to ours and many other current governments.

What with the demise of ‘speaking truth to power’ John Campbell. Picketty showing that capitalism is concentrating wealth in fewer and fewer hands. That others haven shown this is mainly a house price effect. That this sort of concentration of wealth and power is definitely happening in NZ as can be seen daily in our auction houses and real estate markets.

In politics the powerful few do not always win. The few in the last 30-40 years have put a lot of runs on the board but our time will come. In the long run New Zealand’s history has been about empowering the many.

He Tangata, he tangata, he tangata.

Wayne Mapp said...


Having read both articles, you seem a bit hard on Professor Vowles, though I suspect that is because in your view he has deserted the Left. In any event at least I am no doubt now where you stand. You still want to overthrow the neo-liberal settlement. That is pretty clear from "The whole point of neo-liberalism is to have the coercive powers of the state deployed to the exclusive advantage of the elites."Of course I would fundamentally disagree with this analysis. The beneficiaries of the settlement are vastly broader than an elite few. I think John Key's electoral success is a pointer in this respect, unless you are one of those who think that most National voters are unwitting dupes.

What I do not discern in your writings is any sense of how you would reverse the neo-liberal settlement. Perhaps such ideas generally elude the Left. Maybe they simply don't exist, any more than one could revive Marxist-Leninism. Obviously the Venezuelan or Greek precedents will not be happening in New Zealand.

In practical New Zealand politics, the closest one gets is the approach of the Green Party, though with their new co-leader one wonders how long their railing against the evils of capital will last.

So in a roundabout way, I agree with you that the intent of the architect of the neo-liberal settlement was to alter the balance between Left and Right in an enduring way. This was the very clear intent of Margaret Thatcher et al, though she was hardly an upper class toff. She genuinely believed that people ought to get ahead through their endeavors, without the state taking more than half, and without the State and Unions controlling peoples economic and personal destiny.

I appreciate that in your view that is a form of class warfare since the balance between organized Labour and Capital was indubitably changed. But for many people the change was and is seen as essentially an expression of personal freedom. That after all is the predominant discourse of the Right, and was also how Roger Douglas framed it. For him and many others who came from the Left, the narrative of personal freedom was a powerful drug, in many ways the outcome of the youth rebellions of the 1960's. When young, personal and sexual freedom, when older with family responsibilities, the ability to forge one own path in business and private enterprise.

Margaret Thatcher was fundamentally successful in her endeavor of changing society. Apart from maybe 10 to to 20% of society, most people think that changes of the last 30 years wrought across western societies have been basically a good thing, and in large part that is because people have more choice.

Of course people want to see the harsh edges ameliorated, and John Key has been very sensitive to this, but that is quite different to an expectation that the last 30 years should be rolled back.

Jack Vowles said...

Having got involved on debates on this site, first I was flamed, now I’ve been moderately roasted, and by the man himself! I don’t think the personal tone of the response and further comments is helpful or constructive, but that’s a matter of taste. But first, a correction. I was not in Dunedin in 1979, nor ever went to any 'clandestine'Marxist meetings there, but I do remember Chris from at least one meeting of the Castle Street Branch of the Labour Party in 1980. I also remember reading his political commentaries criticizing social democracy from a position considerably further to the left of it, and wondering how he put those two things together. But I hardly knew him when we were both in Dunedin in 1980, and he knew me even less. Chris and other commentators ascribe to me all kinds of opinions and motives that I don’t hold, on the basis of very little knowledge. Second, a concept like neo-liberalism can be defined in various ways. For some ideological purposes, defining it as a ‘project’ bordering on a capitalist conspiracy may be useful. For purposes of analysis and understanding, I personally prefer to use a more precise conceptualization that has more empirical footing and makes possible a sharper analysis but, by all means, take it or leave it. Third, in a world in which former apparent bastions of neo-liberalism like the OECD and the IMF are now advising governments that inequality is bad not only for social cohesion but also for economic growth, there is a need for more than a little rethinking, across the entire spectrum of political belief. There’s evidence quite a lot of people are doing this, and the ‘Left’ – which I define as being those considerably left of ‘Centre-Left’ – also needs to be do the same. I’ve always liked Keynes’ retort to some criticism he received at some point – somewhat over-cited, I acknowledge. ‘When the facts change, I change my mind. What do you do, sir?’ But this is it – I won't be commenting further here.

Guerilla Surgeon said...

"unless you are one of those who think that most National voters are unwitting dupes."

The right often talk about social engineering as if they oppose it. But the biggest and most successful social engineering project in New Zealand was begun by Roger Douglas to make it appear that there is no alternative to neoliberalism however you define it :-).

Chris Trotter said...

Seriously, Jack? You weren't in Dunedin in 1979? In that case, somebody may have been taking your name in vain. Presumably, whoever it was had already left town by the time you arrived in 1980. Oh, and since we're swapping stories about meetings never attended, I did not join the Castle Street Branch of the Labour Party until 1983.

Even so, and because your memory of where you were in 1979 is likely to be more reliable than mine, I have decided to delete all reference to Hyde Street and its doings from the posting.

Also, a little surprised to discover that you are now prepared to call the likes of Prof. David Harvey "conspiracy theorists", rather than adopt the extremely useful concept of neoliberalism as a ruling-class "project".

The shifting positions of international bodies like the IMF and the OECD, in relation to the political pressures building up from below, are, of course, very easily accommodated within the definition of neoliberalism as a self-defensive strategy of the elites - but that's a debate you're clearly unwilling to engage in, so let's just agree to disagree.

It is baffling about 1979, though. I wonder who that guy with the English accent really was?

Chris Trotter said...

I am glad, Wayne, that you (unlike Jack) are willing to concede that neoliberalism is a project, undertaken to shift the balance of class power, decisively and permanently, in favour of capitalist elites.

What leaves me baffled, however, is your incapacity to see the use of the state's coercive powers to strip citizens of rights they had enjoyed for close to a century (viz. The Employment Contracts Act 1991) as anything other than a jolly exercise in advancing personal freedom.

Your commentary here would be immensely improved if you would remove the beam that is in your own eye - at least insofar as the changes of the past 30 years are concerned.

pat said...

now that we have agreed the western economic/political model is neoliberalism (even if we havnt agreed the definition of said term)...what then is the workable alternative?.....i suggest for discussion that ISIS,ISI or ISIL (take your pick) is one segment of society's considered viable that a model we would advocate over neoliberalism?
Frankly, on the basis of the accumulated evidence of the past century I would suggest that this left/right debate is rearranging the deck chairs on the Titanic and the sooner everyone understands and acts on that the better.

Robert M said...

Possibly structual adjustment more accurately reflects the aim of most of the practical applications of neo con and neo liberal projects. In New Zealand the aim in large part seems to be to reduce the size of the state, public transport and old protected industries to the scale, the productive economy farming, fishing and tourism could support. In Britain and the USA it was about downsizing and eliminating the smoke stack industries, steel and car building, now done more economically in
Asia. In Chile and Argentina the aim was to eliminate the feather bedded economy of a massive low efficiency and bureaucracy and state and industry sector. Similar factors existed in Greece and Spain.
As Colin James once lamented in New Zealand the job was only half done by Douglas, Caygill, Richardson and Shipley. Education in New Zealand has remained public tax payer funded to an extraordinary degree at secondary and tertiary level and the full service welfare state has not been entirely eroded. Ironically Clark and Maharey largely held benefits, targeted and favoured full time workers much more than Abbott and Howard.
Inequality in New Zealand reflects a failing economy with a fragile economic base of dairying, fishing and tourism and the transfer of much of the base to China and the tribes.

Loz said...

Defining Neoliberalism as a "set of economic principles" overlooks that the "economic principles" of the era were already defined as being Neo-classical. After all, Liberalism was a philosophical ideology, not an economic doctrine.

If neoliberalism as a philosophy is distinctly different from neoclassical economics, changes to economic policies (such as a government role in "quantative easing") aren't evidence that a political ideology has changed.

Jack Vowels' suggests that neo-liberalism was a set of ideological concepts that developed (or were extrapolated) from a fundamentalist faith in classical economic principles. With this definition, the evidenced failure in friedmanite, supply-side economics that was espoused as economic truth in the 1980's is certainly different to the economics currently being practiced in response to the Global Financial Crisis. I’m not convinced that such a definition can be defended.

Defining neoliberalism as an ideology “extrapolated” from neoclassical economics is as fraught as suggesting that 19th century Liberalism was itself an extrapolation of classical economics. Liberalism may have been ideologically defined by an economic commitment to low taxes and free-market economics. However, the ideology was much broader with a solid committed to the state provision of public welfare, industrial relations protections, the extension of democratic franchise and the recognition of the role of unions. Any suggestion that liberalism was simply an extrapolation of classical or even free-market economic principles would appear absurd.

The neoliberal ideological path that was begun in the 1980's shares some economic principles with the liberal ideology of the century before. Neoliberalism was universally committed to low taxes and free market economics... a commitment still demonstrated by both Labour and National today. 1980's Neoliberalism contrasted liberalism by an unrelenting commitment to erode the public provision of social services, industrial protection, eliminate the power of unions while freeing the most affluent to pursue self-interest regardless of the impact to society. None of these principles appear moderated in any form today.

Politics is the study of power. If Neoliberalism was (or is) a political ideology, it’s most accurate definition should be derived from assessing which sectors were empowered by its adoption. It must be beyond question that neoliberalism sought to empower business interests, corporations and foreign investors above the collective interests of New Zealanders as expressed either by either unions, protective regulations or democratic participation. With the thrust of contemporary political parties unwavering in their commitment to the same interests it becomes extremely difficult to suggest that neoliberalism has somehow been replaced with something else.

aberfoyle said...

OUTSIDE MY NOWIN,sitting at the front table of the Carpenters and Related Trades Union table at the end confrance of the Federation of Labours representation of the workers rights.History here you front,speeling this is the new new direction of the dinasaur that was our our labour sluaghtered past.The memory of that table seat,was Ken Douglas,saying,this is the man that says we are dinasuars in this business magasine.What i remember was the shake your stand shook,under our tables glare,rememeber that profit contro,l for your self me.Go and do it put it out on my proud social care line doubt it sir,will never forget your hand shaking as Ken DOUGLAS cut your arrogance down,and how well it was done,as our eyes seen and new to say.No whay will you run this but my socialts care to understand the knowing.