Counter Punch | 3 January 2020
Neoliberalism and the end of politics
by Rob Urie
Much of what passes for left commentary in the U.S. emerged from the post-WWII synthesis of radical right economics with a fey liberal notion of democracy. In recent years this synthesis has been given the name neoliberalism. Left largely untouched have been the premises and analytical architecture of neoliberalism, which are as much a part of the neoliberal ethos as the nominal ideas. As such, much of this criticism has had the effect of reinforcing the ideas and actions that are being critiqued.
Presidential candidate Elizabeth Warren articulated this paradox when she stated that she is ‘capitalist to her bones.’ When tied back to her erstwhile policy prescriptions, she restated the neoliberal synthesis— capitalist economics tied to a fey conception of democracy as ‘inclusion’ in capitalist political economy. The question then: what happens when capitalist outcomes are anti-democratic? Is this not the central political question of the age?
Moreover, how and when was capitalism decided upon as the mode of social organization through anything resembling a democratic process? The answer is that it wasn’t. Capitalism is an imposed political order that is put forward as both not-political and freely chosen. What lies behind it is a neoliberal conception of history as before and after, the ‘before’ which occurred before we had a say in the matter, and the ‘after’ which is the world that was decided on ‘before.’
This ‘tyranny of history,’ of being born into already distributed political and economic power, calls the theoretical acuity of both capitalism and democracy into question. Both depend on an absence of coercion (power) to work. If a few people own everything, they can make capitalism the least efficient economic system ever conceived. And if a few people control political outcomes, democracy can hardly be claimed to exist. If people are born into a world where a few people own everything and a few people determine political outcomes, then neither capitalism nor democracy can be claimed to exist.
In less abstract terms, U.S. President Donald Trump’s rewrite of the NAFTA trade agreement, first passed by Democrat Bill Clinton in 1994, tweaks the original and reframes the role of class struggle regarding trade pacts. While the trade pacts that preceded NAFTA carried with them a sense of being ‘Republican,’ the national Democrats countered by inserting labor-friendly language, not through substantive opposition. Getting NAFTA passed required a coalition between business-friendly Republicans and ‘New Democrats’ led by Bill Clinton.
It was Mr. Clinton’s understanding of the neoliberal ethos that gave him the ability to frame the economic policies of the radical right through the language of democratic ‘inclusion,’ To get a sense, Mr. Clinton promoted the idea of a ‘level playing field’ as he was working with the titans of industry to deliver working class jobs to low-wage locales overseas. The ‘level playing field’ was a promise of popular inclusion while his economic policies were being written by corporations and the rich to lower wages and crush the power of labor.
The idea that trade is always and everywhere beneficial has been the ‘American’ position, left, right and center, since the reemergence of neoliberalism in the mid-1970s. This is why having labor representatives ‘at the table’ during trade negotiations slowed the evisceration of labor’s power not one whit. To follow the logic, trade is so beneficial that labor benefits from it even though labor’s power has been eviscerated through trade agreements. As even Clintonite supporters of ‘free trade’ like Paul Krugman argued early on, trade creates winners and losers— there is no universal benefit.
Through neoliberal ideology, the prior distribution of political and economic power should have had no impact on the distribution of the benefits of trade agreements. Otherwise, the argument over ‘free trade’ turns into rococo apologetics to benefit the already rich and powerful. As it turned out, oligarchs and corporations got cheap labor in subsidized factories and freedom from environmental regulations and effective taxation. The laboring classes got gradually debased paychecks and benefits followed by exciting new career opportunities as Uber entrepreneurs and greeters at Walmart.
What this means is that understanding power is more important to predicting the winners and losers of neoliberal economic policies than knowing the economics. This is more likely than not the reason why power is assumed out of capitalist economic theory. But what else are establishment politicians referring to when they claim that wildly popular policies in the public interest can’t be gotten through congress? If the people elect representatives to do the people’s bidding, but the representatives do the bidding of business interests, then where does the power lie? It lies with the oligarchs, and that isn’t democracy.
The concept of power at work is as part of an iterative social-political-economic process that neoliberal ideology can’t accommodate. The theorized point of capitalism is to tie economic distribution to economic production. The equal distribution of political power implied by democracy comes from membership in a democratic society, not from a system for meritoriously allocating it. Without perpetual redistribution to place people in equal starting positions, neither capitalism nor democracy operate as the theories that support them claim.
But what trade agreements do accomplish is to reorganize political and economic relations that 1) benefit the already rich and powerful but that 2) disproportionately harm those whose lives have been reorganized when the reorganizing force is threatened. Amazon uses economic and political power to limit and / or eliminate competition for the benefit of Jeff Bezos and a few other connected executives. Much of this has nothing to do with ‘market’ competition, witness the self-dealing of ‘political’ competition to attract Amazon facilities. But shutting Amazon down would immediately put thousands of people on the unemployment line.
In similar fashion, ‘left’ critiques of Donald Trump’s trade war— an apparent negotiating tactic for winning trade concessions, have centered on the distribution of economic pain, not the widely destructive consequences of neoliberal trade agreements, or their being structured to cause maximum economic pain to vulnerable citizens when trade relations are threatened. Complaints that so-and-so consumer products are made more expensive come from so far down the neoliberal rabbit hole that their very existence affirms the basic economic and political logic of neoliberalism, as well as the Thatcherite TINA (there is no alternative).
If the prior distribution of political and economic power destines the benefits of trade to accrue to the already rich and powerful, then why would a democratic society either care about, or acquiesce to, what benefits the rich and powerful? And to the extent that the continued aggregation of wealth by the few buys them more political power, how are such policies not antithetical to political democracy? Posed historically, isn’t the increasing concentration of wealth and power amongst the few the actual, historically demonstrated, outcome of neoliberal policies?
The link between capitalism and democracy in neoliberal theory comes through the idea of choice. Democracy provides people with a choice of who they want to lead them, and capitalism provides them with a choice between consumer products. The facile nature of the comparison— between how people chose to organize their societies and their preferred brand of toilet tissue, didn’t occur to those who formulated it because they didn’t consider social organization to be a choice to be left to ‘the people.’ Neither capitalism nor neoliberalism have ever been put to a vote.
Think way, way back to the U.S. backed coup in 1973 that ousted the democratically elected president of Chile, Salvador Allende, to install both neoliberal ‘reforms’ and a murderous military dictatorship that quelled resistance to neoliberalism through political repression. Capitalism wasn’t a choice made by the Chilean people through democratic means. It was forced on them by capitalist ideologues— American liberals as it turned out, who were writing books about the unbreakable link between capitalism and democracy as they were having Chilean protestors tossed out of airplanes in flight.
To refresh a bit of history here, the U.S. was ‘founded’ by slave-owning oligarchs who rebelled against the British monarchy in part because Britain had outlawed slavery. If one considers slaves as citizens in a democratic sense, the power of capital to render democratic consent meaningless is made excruciatingly obvious. Much of the rest of American history has been to make the rest of us answerable to the whims of the oligarchs. Gross generalization that this is, I get around, and I’ve never met anyone who voted for NAFTA.
U.S. machinations in Chile represented a convergence of imperialism, Cold War methods and neoliberal ideology. Of current interest is that four-plus decades later the people of Chile have once again taken to the streets to protest the imposition of neoliberalism. They are part of global uprising that to date remains largely unfocused— a mix of social angst, generalized political grievances and declining economic circumstances. What appears to tie them together is a sense of imposed social order— whether by the U.S., the Chinese government or repressive governments put in place to maintain imperial order.
What the U.S. coup in Chile illustrates is the imposed nature of capitalism. Economists claim that it is the result of an evolutionary process by which trade between peoples and nations evolved into trade-centered political economy. This, even though 1) the pre-eminent capitalist nations are current and former empires, 2) variations on slavery and indentured servitude defined their early incarnations, 3) governments have kept a heavy hand in fostering, promoting and supporting dominant industries and 4) trade has been more often imposed at the end of a gun than chosen through democratic means.
The Marshall Plan that rebuilt the industrial economies of Germany and Japan after WWII was in part premised in the neoliberal idea that capitalist democracy promotes peace and stability. This, despite the U.S. being the most militaristic nation in human history. Germany and Japan have indeed remained peaceful in a Pax Americana kind of way. Since WWII, the U.S. has fought major land and air wars in Korea, Vietnam, Laos, Cambodia, Afghanistan and Iraq. And through proxies it has fought wars in Nicaragua, El Salvador, Honduras, Yemen, Somalia, Libya, Ukraine and so forth.
The irony of a militaristic nation putting forth experts who claim they know the formula for peace and stability doesn’t seem to have been much explored. Neoliberal founder Karl Popper, famous defender of ‘open societies’ from ‘their enemies,’ joined Milton Friedman in explaining why capitalist democracy has no need for a militarized police force, the largest carceral population in both absolute and relative terms in human history, a dedicated political police force (FBI) and the most intrusive surveillance technologies ever conceived?
There was nothing democratic about the crafting or passage of NAFTA. Mr. Clinton straight-up lied when he said that it would create thousands of good-paying jobs. Every economist who had looked at the deal concluded that jobs would be lost from it. George H.W. Bush had been unable to get it passed because people didn’t trust Republicans to do the right thing. It was Bill Clinton’s liberal bona-fides that sold Democrats on neoliberalism. That it is the economic ideology of the radical right was hidden behind the façade of kinder, gentler, liberalism.
If one follows the global links of multinational corporations to ‘markets,’ they can largely be explained through— or at least follow, imperial history. Were the neoliberal trade theorists (Krugman) correct in their theories— not just their ‘subject,’ but the premises and architecture of their arguments, there is no necessary reason why this would be the case, because pre-existing power is nowhere to be found in their models. Again, if pre-existing power determines outcomes, and history has fairly well demonstrated that it does, then little is left of the theories.
The benefits of trade have accrued to the rich and powerful who favor trade agreements. Economic aggregates have been used to hide these distributional disparities. In political terms, liberals continue to disparage those who they have dispossessed at their own peril. America is still at a point where the deeper issues of political economy are excluded from acceptable discussion— the Overton window. With environmental, and increasingly social, issues only resolvable through the radical reorganization of political economy, defense of the range of acceptable discussion is moral cowardice. Unless all of the premises of modernity are laid bare to be acted on, the future is bleak.
The claim that large swaths of people have been lifted out of poverty conflates broadly integrated state policies, like those of China, with the benefits of trade. Additionally, there is conflation of monetization with value creation. The nominally communist government of China decided to industrialize China, built the institutions necessary to do so and chose an export-driven strategy. The next logical step is to use state resources to create a consumer culture. In other words, consumers don’t create capitalism, the state, in league with corporations, create consumers. If you see natural evolution or the ‘will of the people’ in any of this, please let me know.
Regarding monetization, with money, an apple has monetary value. Without money, it doesn’t. The apple exists regardless of whether or not it has monetary value. To claim that something has been produced— that people are somehow richer, by giving the apple monetary value is a category error. In similar fashion, capitalism has relegated millions of people to lives of poverty by ‘lifting them out of poverty.’ NAFTA flooded Mexico with cheap industrial corn from America. This destroyed subsistence farming for millions of Mexican peasants. As in Chile and the U.S., no popular vote was taken before NAFTA was imposed.
Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.