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74 responses to “Is neoliberalism finished?”

  1. SJ

    Well thought out post, Mark. Good job.

  2. Mark

    Thanks, SJ!

  3. dk.au

    Rather, globalised financial markets, and the consequences of their pathologies, are deeply imbricated with the stategies of the US state

    Timothy Mitchell documented this particularly well in Rule of Experts

    Fwiw, if I were setting a short answer question on neo-liberalism I would be looking for the following in answers:

    1. The imagination of citizens as calculative units of preferences endowed with traditional ‘rationality’ as per Classical Liberalism
    2. The market as:
    – explicit construction of state power, rather than something that springs forth from ‘natural’ conditions or ‘natural tendencies of man.’
    – always a better processor of information than the State
    – best represented by Neoclassical (esp. Chicago School) Economics
    3. The transposition of economic ideas into arenas traditionally thought of as being the domain of the ‘social sphere’.

    Excellent post, btw Mark.

  4. Mark

    Thanks, dk.au.

    On the economic theory question, the point I had in mind to make (but forgot to!) was that “monetarism”, the “efficient markets hypothesis” etc. are relatively independent of neoliberalism and can be invoked when necessary and ignored when no longer necessary. Neoliberalism is basically a regime of government (and a set of techniques for governing) and a hegemonic political force. Because it relies on conflating the social with the economic, it’s too often mistakenly seen as an economic theory or practice itself. It’s nothing of the kind, I’d argue.

  5. dk.au

    Oh yes – I would also be looking for that absolutely crucial break with Classical Liberalism: the success of the neo-liberal programme won’t spring forth from ‘natural conditions’ or any ‘natural tendencies’ in Man but must be constructed. (Of course, the sociological response to Classical Liberalism is that it’s also constructed, but the difference is that this construction is explicit in the modern variant).

    This captures it well:

    Neoliberalism is basically a regime of government (and a set of techniques for governing) and a hegemonic political force

  6. Boy from Flynn

    So where do you think the fallout from this this will actually lead Mark? (I am assuming that we have probably not seen the end of it by a long shot). It was interesting to hear Rudd describing the market as “a public good”.

  7. Katz

    Academics, armchair economists, libertarians and House Republicans are the only ones who take the “principles” of neoliberalism seriously. Governments here and across the Atlantic only stick with it in as far as it entrenches the rule of capital.

    It may well be argued that neoliberalism doesn’t differ in kind from any other organising principle of social control in this regard.

    Who, apart from the above-mentioned useful idiots “believe in” any set of conceptual “principles”?

    Experience and contingency trump doctrine whenever they come into contact.

    Even the Khmer Rouge couldn’t sustain their adherence to doctrine.

  8. Mark

    dk.au, maybe they were all reading Polanyi instead of Hayek on the sly! 😉

    BFF, I’d hesitate to make any predictions, but from what I read today in the financial pages, it seems that a lot of observers think that the cost will end up being a lot more. But there’s not much more to go around – and the ability of the US government to squeeze its taxpayers while relying on the rest of the world (and the Asian banks and SWFs in particular) has to be less than is envisaged.

    Politically, it’ll be interesting to see how it plays out over the medium term. “Middle class” incomes in the US are very hard to come by now. It will be very difficult for Obama to do even the minimal stuff he’s proposing – for instance, in health care (the US health care system is actually crucial to the wage/income problems, but that’s a topic for a separate post). Whether the Democratic Party can survive as another arm of the neoliberal consensus is an interesting question.

  9. Mark

    It may well be argued that neoliberalism doesn’t differ in kind from any other organising principle of social control in this regard.

    Indeed, Katz, and that is my argument.

  10. Adrien

    Interesting post Mark.
    .
    I tend to think ‘neoliberalism’ actually describes not the theory but the application by political agents of that theory. The theory is simply a modified retro-fitted version of classical economics. Neoliberalism is associated with privatization of state assets, reduced tariffs, the marginalization of state power and the rest.
    .
    The theory – economic liberalism – was applied selectively. Friedman might’ve been popular in certain instances with Mrs Thatcher and Mr Reagan but neither of them took his views on drug policy seriously did they? Moreover Mr Bush, who I don;t believe is much of a reader, might want to take a look sometime at Adam Smith’s views on allowing merchants to dictate public policy pursuant to their interests. He said: do not let them do that ever. (D’uh!)
    .
    Whatever the future holds one has to admit that the spectacle of so many market fundamentalists – including Rupert Murdoch of all people – now acknowledging that regulation needs to return, that this (very Keynsian) rescue package is vital and the rest will diminish any claims at least in the near future that market will sort it out.
    .
    Politically also people who’ve been subjected to neoliberal policies are weary of them. I see a pattern of regulation and liberalization emerging. It would be nice if people were to abandon their ideological mantras of economic theology disguised as science and simply deal in common sense. I know jackshit about financial markets but I do know that a bubble will lead to a burst and that heaps of people in debt is a recursos to disaster.
    .
    Which is why I sold off my stocks a couple years back. The dude I was with thought I was nuts. I’d ring him to gloat but I understand the emergency services are busy trying to coax him off the window ledge. 🙂

  11. Katz

    But yet, some concepts and intellectual constructs cease to exercise hegemonic power or even persuasiveness.

    In the sociology of ideas, it seems to me and to you, Mark), the interesting question isn’t whether a conceptual framework is correct, but rather what are the historical conditions that

    a. evoke its elaboration.
    b. mark its moment of political influnce.
    c. explain its rise to hegemony.
    d. mark its moment of decline
    e. consign it to the dustbin of history (as some have) though perhaps neoliberalism never will. Or is it too early to tell?

  12. Adrien

    And if (as appears more likely recently) Barack Obama is elected, his ability to bring about any change will be severely constrained by the steps that have been taken in the last week.
    .
    Yeah. Bummer for his plans innit? He’s got his work cut out for him just sorting this mess out. It’s a wonder he still wants the job. I’d bet green money that he looks 20 years older in four years time.

  13. Mark

    I tend to think ‘neoliberalism’ actually describes not the theory but the application by political agents of that theory. The theory is simply a modified retro-fitted version of classical economics.

    Agree more or less, Adrien – there were certainly propagandists for the theory (ie Hayek, Mount Pelerin Society, and particularly Friedman), and there was certainly an undeground current of liberal economics which never really went away even throughout the Keynesian era. But I also think it’s much more to do with political calculations and the balance of social forces (and attempts to shift that and to create a new “common sense”) than any sudden realisation of the truths of a certain economic paradigm.

    Or is it too early to tell?

    I’ve got a feeling it’s done and dusted in the medium term, Katz, and climate change will be one of the big reasons (the others being the shift in power East and concomitantly the shrinking of the space for low waged production where there is sufficient human capital and infrastructure). However, I’m not a determinist, nor necessarily an optimist. What takes the place of neoliberalism sooner or later may be worse for the common people of the world.

  14. Boy from Flynn

    If only Freidman had lasted a couple more years, I wonder what he would say about the US government’s rescue of the finance sector? Let the weak perish?

    I’m sure that allowing the collapse of: the world’s biggest investment bank, two of America’s biggest mortgage lenders and the world’s largest insurance group would have been a clever thing to do.

    Hmm. If AIG had been allowed to disintigrate, I wonder what the effect on the US health system (such as it is) would have been?

  15. Adrien

    Well the rearguard action to blame it all on government intervention has already begun. An American libertarian at Thoughts on Freedom says:

    This crisis is grounded in government intervention in the financial markets on behalf of a worthy social goal. The government created the original problem in 1977, and then exacerbated it in 1995. When our central bank responded to 9/11 by flooding our economy with cash in late 2001…

    .
    Ay carumba!
    .
    The debate about the Causes is raging. Advocates of the gold standard are no longer relegated to the loony bin. I haven’t got the expertise to say whether this chap’s right or wrong and if so why and how much, however this mantra that it’s always about govt intervention when clearly it involves the nefarious deeds of dodgy pricks on Wall St is breathtaking.
    .
    I believe that I should be able to go about my business with minimum interference from the authorities but I also recognize the salient facts about the rationale for govt regulation. Governments regulate because people behave badly.

  16. onimod

    There is a massive sample of viewpoints on that John Gray article.
    The multitude of opinions is enlightening and yet the consistent tone that the author somehow knows he is, and will be, correct I find very disturbing.

    Some months back there was a bloke spruiking a new book on geopolitical power on newsradio. I can’t remember wether it was an interview lifted from the BBC or not.
    Can anyone remember who it was or the name of the book?

    Cheers for the post Mark – my brain feels like I’ve just cracked a beer at the end of a long shift in an underground mine.

  17. Adrien

    But I also think it’s much more to do with political calculations and the balance of social forces (and attempts to shift that and to create a new “common sense”) than any sudden realisation of the truths of a certain economic paradigm.
    .
    I didn’t exactly mean that Mark.
    .
    Over the last few years I’ve come to realize that politicians and economists are the physicists and mathematicians of practical philosophy. Two groups divided by a common language. I don’t think politicians are ‘waking up’ so much. When Keynes was in vogue they all listed to him: Tory and pinko. When stagflation hit in the ’70 they started paying attention to Friedman because he’d predicted it.
    .
    Now his turn’s probably over for the time being and they’ll be listening to Stigliz or some such. They haven’t woken up so much as recognized that the wind’s changed direction.
    .
    Politicians have an excellent understand of wind and blowing. It’s their area of expertise really. Kim Beazley is the unacknowledged master of it. 🙂

  18. Adrien

    Some months back there was a bloke spruiking a new book on geopolitical power on newsradio.
    .
    Um. More information s’il vouz plait?

  19. onimod

    From me Adrien?
    I can’t remember much more than – “I’d like to read that”.
    I can remember he was talking about the rise of China and measuring that rise against the historical rise of world powers. At a guess I’d say he was on the radio sometime in the first 5 months of this year. I’ll sleep on it and keep digging.

  20. Adrien

    From me Adrien?
    .
    Yeah. If you can remember then I’ll probably be able to tell. There’s a million books on geopolitics. Kissinger’s new one’s interesting. I’m still waiting for his all-time classic: I Am An Evil Prick and Deserve To Be Shot Like A Dog.
    .
    Somehow I think I’ll be waiting a long time on that one.

  21. John Quiggin

    Mark, I’m unconvinced by your dismissal of “theoretical baggage”, elaborated in various ways in your comments. As has been stated above, the shift from Keynesian-social democratic dominance in the period to 1970 to neoliberalism in the 1980s wasn’t (at least not primarily) because of changes in the balance of class forces, it was because Keynesian economic managers failed to deal with the crises of the early 70s, and the combination of monetarism and the EMH seemed to offer both an explanation and a policy response (money growth rules + financial deregulation). Monetarism didn’t last long but financial deregulation went from strength to strength until the late 90s.

    It’s been failing since then, and that’s been reflected in a loss of impetus in the neoliberal policy agenda, at least in the English-speaking countries. Privatisation has slowed to a crawl and been reversed in a number of cases, for example. Similarly, attempts to scale back the size and scope of government have been far less successful, and there have been some notable new programs.

  22. Adrien

    May I suggest an entirely new school of economic thought: It’s called Nothing Lasts and Shit Happens.

  23. onimod

    could be this guy:
    http://en.wikipedia.org/wiki/Michael_Klare
    and this book:
    http://www.amazon.com/Rising-Powers-Shrinking-Planet-Geopolitics/dp/0805080643

    I’m not 100% sure; sorry for the sidetrack

  24. SJ

    With respect, John, I think you and Mark are both correct, but you’re asking and answering different questions.

    You (John) are asking whether neo-liberalism is still viable in credible economic circles. The answer is probably no.

    Mark is asking the same question about political circles. I.e., is neo-liberalism still viable as political bullshit. The answer to that particular question is probably yes.

    The above is just a cursory summary of how I interpret your respective positions, and if either of you feel that I’ve misrepresented, please accept my apologies in advance.

  25. Mark

    Adrien @ 15, it’s also being blamed on Clinton… Partly this is the wingnuts (of the more economically minded stripe) trying to shore up the defences of their view of the world, and partly it’s a reflection of the House GOP mob trying to pin the blame on the Democrats and pose as friends of the people.

    Wrt to your comment @ 17, I want to contest the view that “Keynes” was fully appropriated by the economic management consensus of the 50s and 60s. He simply wasn’t. For a start, there’s his own view of what ought to happen at Bretton Woods and the actuality and aftermath, and secondly much of what he had to say which was more radical was certainly ignored. That’s also partly a response to John because I don’t think that there’s any simple equation to be made with Keynesianism (which is different from Keynes’ theory just as Marxism is/was from Marx’) and social democracy.

    SJ @ 24 is on the right track.

    I don’t disagree with John’s economic narrative @ 21 (well, maybe some of the nuances, but let’s leave them aside). But I go back to my question about “who benefits?” – postwar Keynesianism may have benefited (male) workers in first world countries, but not in any way which would have led to an actual democratisation of the economy or (in the “Anglosphere” anyway) any significant shift in the frontier of control at the workplace. That’s for a whole range of reasons, and it’s significant to note that one of the things that prompted Thatcherism was an attack on “Bustkellism” (a term coined to elide the names of Labour and Tory Chancellors) – let’s not forget that what was seen as “modern” economic “management” was fully accepted by those such as Macmillan who’d earlier been on the left of the Conservative party. It was a governing consensus – with its own institutional and social embodiment – that Thatcher consciouslessly set out to shatter.

    Similarly, wrt John’s argument about Howard (made in a number of places and posts), I just don’t see that authoritarian populism (to borrow a phrase coined by Stuart Hall in the 80s) as an electoral support for big government conservatism has anything to do with social democracy. Howard’s redistributive spending was targeted to construct and reinforce a particular division of the social, and was accompanied by the reintroduction of the “deserving” and “undeserving” poor, which is certainly part of the neoliberal political logic.

    There might be arguments to be made about the relative income growth of those in the lower quintiles, but they don’t always take into account the dismantling (in effect) of much of the “social wage” and maintenance of the position of the working poor and pensioners is hardly the summit of social democratic ambition. Quite the contrary. There shouldn’t be poverty at all.

    Social democracy has to be understood as a transformational project, which as I said in my earlier post, lost (in English speaking countries) much of its radical impetus some time ago. It’s just not equivalent to the size of government or the presence of government programs. In fact I personally would like to see the state driving and being driven by a process of democratisation.

    Lastly, I think things are more complex than a shift in the balance of class forces (though that is important). That still has some resonance with a view that the economy is somehow determining for politics (and perhaps here neoliberals and Marxists have a lot in common). Neoliberalism is a project which seeks to destroy the possibility of there being a working class in any politically meaningful sense of the word, and that’s its force as a hegemonic project. Which unfortunately, because we haven’t worked out how to counter it, at least in the immediate future, we’re stuck with as SJ says.

  26. Mark

    Onimod @ 16, thanks!

    On books about geopolitics and economic power, I’m looking forward to reading this one:

    http://www.versobooks.com/books/ab/a-titles/arrighi_g_adam_smith_beijing.shtml

  27. Down and Out of Sài Gòn

    A probably naive question for everybody. Everyone’s writing off any possibility of universal health care in the US because the cash isn’t there, or won’t be anymore. But didn’t the UK do the same thing when they lost their empire? They were in pretty dire financial straits in 1948, and they just jettisoned India and Pakistan the year before. That didn’t stop them starting the NHS.

    Not that I think Obama is a closet Keynesian.

  28. Mark

    Down and Out, one relevant difference is that the establishment of the NHS came at the end of a (long) process of exanding social rights and the logic of universal provision. The US has been winding back such social rights as existed for a long time and never bought into universal provision.

    But I’ll leave my thoughts on health care for another post, as I said, though I’d be happy for others to comment.

  29. Mark

    And speaking of the Republican talking points blaming “liberals” for the financial crisis, John has usefully refuted those at Crooked Timber:

    http://crookedtimber.org/2008/09/29/republican-talking-point-whack-a-mole-yet-again/

  30. Bingo Bango Boingo

    SJ, in these ‘credible’ economic circles in which you apparently move, how many want our governments to indulge in sustained borrowing for consumption? How many want to plough taxpayers’ money into indiscriminate state subsidies of politically-powerful producers and consumers? How many want to narrow the tax base, up the marginal rates and expand the scope of exemptions, exceptions and deductions? How many want to go back to fixed exchange rates? How many want higher and widely-varying import tariffs and the re-introduction of quotas? How many want to reintroduce FDI-killing foreign capital controls? How many want to re-establish state-owned enterprises or monopolies in the airline, telecommunication, banking, insurance and energy industries? To summarise my queries: how many actually reject the neoliberal programme?

    BBB

  31. John Quiggin

    BBB, you seem to have given quite a bit of ground in the formulation of your questions, so as to ensure a negative answer. So, I can support government borrowing to fund public investment, higher taxes on a broader base, a range of industry policy interventions (provided they are not indiscriminate, widely varying and so forth) and still be a neoliberal. If so, I guess we are all neoliberals now.

    But on your final question, I think it’s pretty clear that, as far as nationalisation of banking and insurance firms goes, we are all socialists now. Economists almost unanimously preferred the final bailout package, with partial or complete nationalisation of firms receiving assistance to the original Paulson version.

  32. SJ

    What a load of horse shit, BBB.

  33. Bingo Bango Boingo

    John, I could’ve predicted that you’d go for the form rather than the substance. Don’t pretend that you haven’t realised that I formulated the questions by reversing the classic neoliberal policy prescriptions. And of course you can be a neoliberal and support borrowing for public investment (including for the accumulation of human capital). That’s just plain vanilla Washington Consensus stuff. Perhaps you need to revisit the Williamson paper?

    “If so, I guess we are all neoliberals now.”

    Yes, that is rather the point.

    SJ, is that a yes or a no?

    BBB

  34. Bingo Bango Boingo

    Sorry SJ, not yes or no. How many?

    BBB

  35. Mark

    What’s this, BBB, your impression of Andrew Bolt asking Robert Manne to name members of the stolen generation?

    The assumption that anyone who is critical of neoliberalism wants to return to the 50s or whatever is an illogical and risible one, and is hardly worth debating. So I’m not going to bother.

  36. Mark

    Just saw this – Nouriel Roubini argues the TARP bailout is more of a selective bailout than a recapitalisation and won’t work.

    http://www.guardian.co.uk/commentisfree/2008/sep/29/wallstreet.useconomy

  37. Paulus

    But John, while it makes a lot of sense for government to demand shares in the institutions they’re bailing out, this doesn’t constitute any coherent, long-term program of nationalisation, does it?

    Soon as the markets have stabilised, the US Treasury will be only too keen to flog the shares and find other things to do with the $.

    Neither the US or UK or Australia, or any developed country, is about to start setting up government banks, are they?

    This bailout is a crisis measure, just as the massive market interventions during WW2 were justified as crisis measures, but got wound back afterwards.

    I can’t see that the major principles of neo-liberalism — as you’ve defined them on your page — are under any threat from some (temporary) government ownership of bank shares, and a bit tighter regulatory controls. Indeed, in so far as new regulation mandates greater transparency of financial companies and markets, they’ll probably be welcomed by neo-liberals and classical liberals alike.

  38. Mark

    My understanding of the equity bit of the TARP, Paulus, is that it’s so that the government can later sell the shares and recoup some of the costs to the taxpayer.

  39. Bingo Bango Boingo

    Mark, if your position is that social democracy has given so much intellectual ground that we cannot even consider undoing some of the key neoliberal reforms of the past three decades, that’s fine with me. All the better. But I do not see how you can be critical of neoliberalism as a whole but also indifferent as to whether its most important reforms remain in place.

    BBB

  40. Bingo Bango Boingo

    That is precisely right on both counts Paulus. The bailout-as-socialism line from Quiggin is nothing short of bizarre in view of the medium-term intent. And regulation that more or less imposes a process of market/consumer disclosure is very rarely the subject of opposition from neoliberals. Neoliberals are not libertarians, no matter how much Teh Left wants them to be.

    BBB

  41. Paulus

    Precisely, Mark.

    And since this ‘nationalisation’ will be limited and temporary, I don’t think neo-liberalism will be at all shaken or routed by the banking crisis.

    If you had a deep, and prolonged, recession/depression in the real economy, then you might start to see people agitate for a revision of the basic economic consensus that Reps/Dems, ALP/Libs, etc., are all living by.

    But we’re a long way from there. (Thank God.)

  42. Mark

    BBB, I’m not going to engage in your debating tricks on this one, so you can infer what you like.

    You might like to have another look, though, at how I’m defining neoliberalism.

  43. Mark

    But we’re a long way from there. (Thank God.)

    There I’m not so sure we’re in agreement, Paulus. I’m quite pessimistic about the immediate economic future, unfortunately.

  44. Mark

    Another interesting take on these themes from Gary Younge:

    http://www.guardian.co.uk/commentisfree/2008/sep/29/uselections2008.useconomy1

  45. Bingo Bango Boingo

    Well Christ Mark. You’re the one accusing me of saying that neoliberalism’s opponents want to go back to the 1950s, when I neither said nor implied any such thing. I can’t be more specific and concrete than laying out for SJ (and now you, since you have condescended to engage with this, apparently against your better judgment) the actual real-life neoliberal policies that were actually implemented in real life over the course of the 70s, 80s and 90s.

    BBB

  46. Mark

    BBB, no need to get hot under the collar! All I’m saying is that I don’t accept your definition of the terms, and therefore don’t feel obliged to respond. What interests me – as should be clear from the post and from what I’ve said in earlier comments – is the political aspects of neoliberalism. I don’t want to get into a line by line discussion of all the economic aspects of neoliberal governance because I’m arguing they’re to some degree separable from its force and objectives as a political constellation. Maybe some other time.

  47. Bingo Bango Boingo

    As for debating tricks, I genuinely have no idea what you are talking about. Can I suggest you assume that others have simply missed your point rather than assume that they can be bothered playing pointless games.

    BBB

  48. Mark

    I apologise if that gave some offence, but I thought the point of your question was to imply that if your interlocutors didn’t disagree with all of those things you talked about, then they were insincere. The “name some” comment is also reminiscent of some other well known debating tricks. Can we leave this alone now, please, and return to the substantive discussion – preferably related to the topic of the post?

  49. Bingo Bango Boingo

    Mark, don’t worry about it for goodness’ sake. The point of the question was merely to rhetorically illustrate that credibility in economic matters does not now reside exclusively in opposition to the neoliberal programme, as SJ claimed. She/he has misread the on-the-ground situation appallingly.

    dk.au,

    “The transposition of economic ideas into arenas traditionally thought of as being the domain of the ’social sphere’.”

    In a domestic context, neoliberalism is absolutely about the expansion of ‘the market’ and the conversion of coercive subject-state relationships (fake society) into citizen-citizen transactions (truly social, but denied that name essentially through the operation of the crude and wrong economy-society dichotomy). That this can be seen as a transposition of the economic onto the social is surely an artifact of corporate economic activity: it is difficult, as a customers, to relate to those of your fellow citizens who have pooled their savings into a corporate entity.

    BBB

  50. Mark

    Author Dean Baker doing a bit of a sales job:

    The point of my book is that the battle between progressives and conservatives is not about a policy of government intervention as opposed to free market policies. Rather, it is a battle between those who want to use the government to benefit the middle and bottom of the income distribution and those who want to use the power of government to redistribute income upward.

    http://www.guardian.co.uk/commentisfree/cifamerica/2008/sep/29/us.economy.wall.street

    That’s a bit simplistic, but it’s headed in the right direction about how this should be characterised.

  51. Andrew Reynolds

    Mark,
    I would strongly disagree with Dean’s terminology. He is clearly using (as many do) the term “progressive” to mean “left-wing”. This is a nonsence. Perhaps the terminology should be regressive, conservative or classical liberal.
    The hi-jacking of the term “progressive” to mean “left-wing” is, IMHO, ridiculous.

  52. Nabakov

    And just to further dispel this pathetic furphy by angry old white male losers watching their Presidential surrogate melt in front of them – a furphy that a few tens of thousands of feckless minority home loan borrowers somehow managed to bring the US’ vast financial system to a squealing and juddering gear change, I suggest people read this.

    http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

    If you can’t be arsed, the key conclusion is CRA loans accounted for less than 10% of all high-cost loans.

    I also note all those shrill cries of “with rights come responsibilities” have seriously dried up in some quarters.

    Hang on a minute, incoming call…***!…***?…***!…nah, not important, just McCain on random call again trying to look busy.

  53. Boy from Flynn

    Congress has rejected the bailout bill.

    US stocks plunge 500 points.

  54. Katz

    Republican Congress people rebelled against Bush’s leadership and voted consistent with neoliberal principles.

    Did these Republicans rebel because of principle or because of fear of a vote backlash? It appears that many did take notice of a huge write-in campaign mobilisd by bloggers and others, many of whom adhere to neoliberal principles.

    Whether motivated by principle or by fear of the electorate, this exercise in representative democracy is an example of the potency of neoliberal ideas as an organising principle for political action.

    The markets have suffered a large decline, but so far significantly less than the “armageddon” that the Bush administration was threatening.

    Chicken Little is squeaking for all he’s worth, but the sky refuses to fall. Can it be that market operators believe that the market can survive without a season on the public teat?

  55. Boy from Flynn

    I think it was a combination of principle and fear of the electorate who – by and large – appear to believe that allowing large financial institutions to collapse is preferable to using taxpayers money to rescue them. While I would agree that many of these barstards deserve to fail and be rubbed out, in a quick glance at a couple of blogs frequented by many Americans I have read very few comments that indicates whether or not the poster has given any thought whatsoever to what might happen to them should financial institutions continue falling like domino’s. It doesn’t seem to have been factored into their thinking that serious recession or even depression could result from refusing to take action they find distastefull and that this might just suck much, much worse for them.

    I would be cautious about saying that the sky has yet to fall even though chicken little is squeaking. I seem remember well-known economic commenters saying early in the year that it was pretty clear that this crisis was not going to be a crisis but just a little bump in the road. It may take well into next year for this to fully unwind.

    Dow Jones now down almost 800 points.

  56. Boy from Flynn

    Just heard (unofficial) word that congress has backflipped and passed the bill following the market’s biggest ever one-day plunge.

    Anyone else hear anything?

  57. Boy from Flynn

    Hmm. Appears to have been a rumour. There has been no backflip, the bill remains rejected. Guess all we can do is see what happens in the coming hours, days, weeks and months.

  58. Adam Bandt

    Interesting post, Mark. Unlike much other commentary on neoliberalism, it has the distinct advantage of recognising what the Ordo neoliberals were saying all along: markets have to be made. And it takes a strong state to do it. There thus never was a ‘weak state’ within neoliberalism as practically/politically applied. There never was a ‘hands-off moment’. In Wendy Brown’s words,

    neo-liberalism carries a social analysis which, when deployed as a form of governmentality, reaches from the soul of the citizen-subject to education policy to practices of empire.

    Also interesting is the intersection of the strong state of neoliberalism with the real emergency of climate change. In public debate, it’s easer to imagine the end of the planet than to imagine a non-market-based solution to climate change. And it is acceptable to debate a $700bn state-funded credit bailout yet not a similar intervention to transition to, say, an economy centred on renewable technologies. My point? Neoliberalism as political practice, ably defined by others in this thread, is alive and well, and governs the debate about what counts as ‘legitimate’ state/political action. I have no rosy-eyed view about mid-century social democracy, but it’s an interesting thought experiment: if climate change arrived in the 1940s, would the government be setting up emissions trading schemes?

  59. Mark

    Some good points, Adam. That’s the key thing with neoliberalism – it’s a logic which constrains some forms of action and what’s thinkable and enables others.

  60. wizofaus

    I think if we needed a good example of what wouldn’t have happened had neoliberalist thought not been so dominant especially under Howard is the complete privatisation of Telstra as a single entity. That never really made much sense, and the share price if nothing else stands as testament to that. The other obvious example is WorkChoices
    – which quite explicitly set limits on the rights of workers presumably because it was thought that collective bargaining/strike action/etc. interfered with the ability of the market to price worker’s wages correctly and deteminine suitable workplace conditions (it’s true also of course that the Liberal party had a strong political motive in wanting to undermine unions, but it didn’t surprise me at all that WorkChoices caused almost the exact opposite result, whereby unions were firmly placed back in the public eye as a good and necessary thing. Could the anti-Union types pushing for WorkChoices really not forsee that result?)

  61. wizofaus

    FWIW, slightly off topic, but after that last post and trying a couple of searches, I came across something interesting: apparently union membership is up in both Australia and the US recently, bucking a long-term downward trend. Which doesn’t surprise me particularly – after all, unions formed in the first place because workers were clearly at a disadvantage to employers and often got short shrift. So as laws are changed to move the advantage back towards employers (something which could be argued that neoliberalism has generally encouraged), the eventual outcome is surely going to be increased union membership, as workers see more value in it. It does surprise me that it’s taken so long for the effect to kick in, and it’s a bit too early to tell if it’s anything much more than a statistical blip.

  62. Adrien

    Mark #25 – ..it’s also being blamed on Clinton…
    .
    Yes and as we all know Clinton was such a social-democrat – Not! The guy makes Nixon look bolshie.
    .
    I want to contest the view that “Keynes” was fully appropriated by the economic management consensus of the 50s and 60s. He simply wasn’t. For a start, there’s his own view of what ought to happen at Bretton Woods and the actuality and aftermath, and secondly much of what he had to say which was more radical was certainly ignored.
    .
    Well I didn’t say he wrote the book. Just the style guide. We both agree that theory will be distorted by contingency, vested interest and political expediency. Economists always bemoan the tainting of their perfect plans. This is foolish because their plans will always be tainted. I think Hayek’s views on increasing centralization were valid and valuable. However there seems to be this idea that the problem was that laissez-faire was corrupted and if only they’d stuck to the plan a la The Wealth of Nations everything woulda been jake.
    .
    The problem with this is that a. It’s bullshit; 19th century ‘laissez-faire’ America and Britain were highly protectionist, downright statist countries. Secondly as Adam Smith himself would agree, being a practical Scotsman, ye cannae prevent people from being selfish dickheads laddie. It defies the laws of human nature. Beam me up.
    .
    No-one gets to call every shot in life. Even Kim Jong-il faces limitations. (For starters he looks really ridiculous).
    .
    From the more sensible discourse on this fiasco coming both from IPA types and Stigliz types the key word today is – transparency.

  63. Adrien

    Andrew Reynolds – The hi-jacking of the term “progressive” to mean “left-wing” is, IMHO, ridiculous.
    .
    In my opinion the exclusive claim to being ‘progressive’ by any political-economic faction is, not so much ridiculous, as downright bad manners. I assert however that anyone whose political philosophy is grounded in the view that society can and should be improved is ‘progressive’. Their ideas may or may not be stupid but they’re still progressive.
    .
    Anyone whose critique of society stems from the perception that the game plan is being diverged from is a ‘conservative’.
    .
    According to this schema: libertarians are both ‘conservative’ and ‘progressive’. Most people are.

  64. Adrien

    wizofaus – WorkChoices wasn’t about a free labour market. It was doff-your-hat time. John Howard is a Tory toady not a liberal.

  65. wizofaus

    Adrien, perhaps, but Howard wasn’t the only driving force behind WorkChoices. Costello (and others) presumably supported it to the extent that it supposedly liberalised the labor market.

  66. Adrien

    wizofaus – I’m a supporter of minimal interference in my business but not by any means a dogmatic opponent of regulation. Just sayin’.
    .
    The thing about neoliberalism and the ‘free market’ rhetoric of people like George Dubya and Johhnie Coward is that it’s total crap. What they mean is that the rules that the rest of us are bound by do not apply to multinational corporations.
    .
    In an ideal world people should be free to make their own deal viz the labour market. The argument that minimum wages for example locks people out of the job market does have a certain validity. However eliminating them seems to create serfs for a Darwinian nightmare. What can you do?
    .
    Thanks of course to the experiences of Mr Howard and Stanley Bruce we won’t have the Libs trying that one again any time soon.

  67. wizofaus

    I suppose I generally accept the simplest explanation as to why many goverments have pursued policies like WorkChoices: because industrial lobbyists have convinced them that if they don’t, industries will either move offshore or go broke and Australia will become an economic backwater – the “race to the bottom” theory. This despite a long history of similar threats from industries in the past that have rarely come to pass, and the fact that to fall for such lobbying you effectively have to not believe that capitalism works: that if corporations moved offshore or went bust, others couldn’t possibly step in and work out how to be profitable in their place.

  68. OldSkeptic

    Oh lads, neo-liberalism was always a class war. A political idiotology to redress all the wrongs that the nut jobs and the greedy thought that happened after WW2. A weird fantasy to try and go back to some mythological British late 19th century paradise, where the upper classes got rich and the lower classes knew their place, and there was no pesky middle classes to get in the way. Oh the end of the USSR was nirvana, it meant they could pull of that idiot velvet glove and just get in with the iron fist, pre-emptively.

    Back to a glorious (fantasy) past, where money making was the pursuit of gentlemen, trading deals with each other and there was always force (or death or indefinite prison or deportation) to make sure the lower classes knew their place. A boot crushing into their faces all the time.

    As usual there were all sorts of sycophants to justify it. The mouthpieces, for a little bit of money they would say anything. To my eternal credit (not that I actually deserve much) I tried in some small ways in the 80’s and 90’s to raise a voice against it. And found out very quickly how nasty it really was, Govt officers ringing up my clients to say I was a (quote) ‘a charlatan’. I so loved a year of unemployment due to these clowns (boys … my time now).

    Oh I remember lots of (what I call) data points along the way. Terry Mcrann arguing in the late 80’s about sacrificing 25% of the population economically (which we actually did here in Oz anyone who believes the official unemployment numbers is an idiot). Or that great term ‘titty socialism’, from one of those great elite meetings (which I call greedy morons gobbing over greedy morons). Or even, one of the Murdoch/Packer (forgot which one) clan rabbiting on about the problem with “Australian elites”, and he was what?

    None of these idiots had any understanding of modern societies, technology or wealth creation.

    The death of science in the Anglo nations, the inventers of this nonsense. The death of manufacturing. The death of rationality. The death of anything meaningful but mindless consumption and watching ‘big brother’, while the big boys made their squillions. Oh and do you remember all the justifications for this, how much money we would all make. Productivity would climb, wealth would be made endlessly. I still await my millions from that arch neo-liberal clown Keating.

    All while the ‘big boys’ made gobs of money, nothing was too much, a hundred million, a billion, a trillion. All off our backs.

    Bail them out? I have a better idea this is a real use for Guantanimo Bay. Daily water boarding I say … after torture.

    But Dudd has the answer, Workchoices lite, more emigration (especially low skilled workers .. yes your wages have to drop even more from those miserably low levels), cut research .. et al. Oh and cut tariffs on textiles and car manufacturing even more .. we really don’t have enough poor people (or a big enough trade deficit).

    You know I remember when the left were the smart people, we saved capitalism from itself and developed systems to generate wealth for everyone. Here’s a radical thought why don’t we actually try that again.

  69. Adrien

    Old Skeptic – It ain’t the death of meaning you commie. It’s the comin’ of the Rapture. Halleluhah! We’s a goin’ up ta Heaven ta sit at the right hand of the Lord and watch you all get nooked by Martians.
    .
    That’s what Jesus meant went he said ‘the meek will inherit the Earth’. He meant we’s the one’s gits five star rooms in God’s Hilton Palace and y’all get scorched dirt.

  70. OldSkeptic

    Adien. Heh, heh, heh.

    Ah the ‘useful idiots’, tell the poor that god loves them better because they are poor, but god has a special place for the rich. EG the Anglicans, their head of church is the head of a country, yep Bessie talks to god all the time, which probably explains lot about the Hapsburgs (oh you dont know about the name change in WW1 from Hapsburg to Windser?), as well as the genetic inbreeding.

    god bless them (actually I first typed “god less them” .. which is a much better idea actually).

    If there really is a god, don’t you think she/he would be really, really pissed off right now?

  71. Mark

    (oh you dont know about the name change in WW1 from Hapsburg to Windser?)

    Nope, it wasn’t from Hapsburg who were the (Catholic) Imperial House of Austria.

    By virtue of Queen Victoria’s marriage to Prince Albert of Saxe-Coburg and Gotha – son of Duke Ernst I of the small German duchy of Saxe-Coburg and Gotha – her descendants were members of the ducal family of Saxe-Coburg and Gotha, with the house name of Wettin. Victoria’s son, Edward VII, and, in turn, his son, George V, reigned as members of this house.

    http://en.wikipedia.org/wiki/House_of_Windsor

    But this seems, well, a touch off topic.

  72. Andrew E

    A bit like Keynesianism really: fun while it lasted.

  73. Leon

    Academics, armchair economists, libertarians and House Republicans are the only ones who take the “principles” of neoliberalism seriously. Governments here and across the Atlantic only stick with it in as far as it entrenches the rule of capital.

    The right has provided an equally persuasive theory of why academics, armchair radicals, public servants, and arts students are the only ones who take the “principles” of Marxism seriously: that they are disaffected middle class idealists, with little experience in the non-public economy.

    You can’t just play the dialectical materialist, class forces card to dismiss views. Barely anyone in Australia devotes their time to discussing the finer points of Austrian economics. The actual institutions of “neoliberalism” — for example, think tanks like the CIS — devote their time to arguing for their policy ideas, at the best of times with appeals to evidence and shared values. Passing these ideas off as some kind of Althusser-style ideology of prejudices and taboos is a cheap shot — and one which is also taken by the other side.

  74. Adrien

    Passing these ideas off as some kind of Althusser-style ideology of prejudices and taboos is a cheap shot — and one which is also taken by the other side.
    .
    The ‘other side’ always sees your ideology clearer than you do.
    .
    To ‘you’ ideology is just good sense based on evidence. Any cursory examination of political discourse shows that to be true. In economics it depends on what you’re looking at and what you value. There’s been a marked unity of policy in the world since c 1980 generally identified with ‘neoliberalism’ that is: the post-Keynsian return to laissez-faire discourse associated with Milton Friedman and the like.
    .
    Naturally this ‘laissez-faire’ is a misleading term. There is not now, now has there ever been a laissez-faire economy except in those times perhaps when all humans were hunter-gatherers. But even that’s nonsense. In any event there are ideological twists of the truth all ’round. The references to some fictional history of the US and UK economies in order to get developing nations to lower their tariff walls is one such instance. Both the States and Britain practiced strict protectionism for their infant industries.
    .
    If you want to see ideology at work just check out all the: it’s the govt’s fault/it’s the market’s fault argument viz the Current Great Mess. Unsurprisingly the arguments fall along the same old lines.