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Neoliberalism, child of the Keynesian state

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The desire to see neoliberalism as the ’70s ruination of an earlier public consensus, is a desire to which state-backed capital is all too willing to direct us.

Michael Gardiner
18 July 2013

The received wisdom of neoliberalism as belonging to the 1970s is problematic. More locally we might track back to see a social base in Keynesian state-managed markets, which were ‘massed’ in 1940-42 in large part in defence of a constitution unusually well-equipped for expropriation. This defence gave rise to a state-managed consensual public which would be fertile ground for neoliberalism, and which helps maintain neoliberalism even now. 

Or – we might see the state projection of Keynesian markets, the total mobilisation and militarisation of the ‘mixed economy’, as a solution to a periodic crisis in the British constitution, in this case demanding a dynamic reinvention of labour following the passing of the height of imperial industry. And the constitution being protected, coalescing in the long eighteenth century, is unusual in never having been formalised, but rather naturalising money as human exchange.

The frame of Whig progressiveness is crucial here, since it is also the frame of the British state. For John Locke, citizenship was born of property as nature adapted by human labour: the state was created ‘that men might have and secure their properties’ – and the expropriation of property from ‘nature’ is ‘the great and chief end… of men’s uniting into commonwealths, and putting themselves under government’.[1] So ‘property rights precede, both temporally and logically the prerogative of civil government’ – something much discussed during the era of neoliberalism as markets seemed to rise over governments.[2]

It is important to remember here that Locke’s labour theory of value is not only one model for government, but the immediate intellectual force behind state formation, relying in perpetuity on property as nature and continuity. Locke’s insistence on property as citizenship was presented after 1688 as the rationale for the ‘revolution’ of the Hanoverian credit state, itself soon naturalised as restoration, and underwritten by stable money guaranteeing future profits across the imperium. To retain its basis in natural property, the constitution had to remain uncodified and flexible, as it does today; and as Whig literature repeatedly confirms, the new state is fundamentally built on money.[3]

The constitution’s job then is to protect money as a guarantor of future profits across time from popular experience now. This demands a public understood as mediated consensus, a public continuous because it is never defined, and able to adapt itself when faced with threat. The most modern understanding of the public is the modification which follows a new twentieth-century constitutional crisis of diminishing colonial returns, an exhaustion of expansion forcing the personal to open up for expropriation.

Thus also the iconic importance of the defeat of coercive fascism, which in turn takes on the images of anti-Jacobinism (and Romanticism) already standing as a sign of permanence – white cliffs, informal government, Anglophone mission.[4] Both World War Two propaganda and Whig propaganda stressed continuity against the kind of rupture which might awaken active negotiation, and both had to modify ‘property citizenship’. Freud’s description of trauma has been widely taken up in descriptions of disaster capitalism – but so also the total attack of World War Two was trauma, forcing standing capital to redefine the bases of its power. And however much popular energy post-war reconstruction absorbed, it was always directed towards constitutional continuity, and an embattled sense of community which would remain largely intact during neoliberalism. 

Elements of the reinvention of labour in the ‘public personal’ terms so familiar in neoliberalism would become obvious quite soon after the war. They included: the growth of management science and human resources; workers’ psychology as a productive tool; Keynesian risk management; flexibilisation of work (flexible work as the labour form of the flexible constitution);[5] and the move to capture sociability or ‘baseline communism’, the stuff of everyday relationships –[6] with the struggle of the war now taken as a consensual proving ground.

So in his classic account Nikolas Rose describes the managerial turn enabled by the ideological concentration of the 1940s, as in the Beveridge Report ‘conceptualising and regulating the bonds that tied individuals into social groups’, the total economy of wartime and the original austerity which allowed the personal to be shaped around labour:[7] ‘the personal and subjective capacities of citizens [were] incorporated into the scope and aspiration of public powers’.[8] The eventual result of this subjective reshaping is the entrepreneurial self which would be hauntingly described by André Gorz in terms of the inability to escape the social responsibility of the workplace, the destruction of both purpose and opposition in labour’s capture of personal time.[9]

The new post-war social psychology then defines a ‘productive subjectivity’, or the public self in commodity terms (and, similarly, in terms of identity).[10] Meanwhile, educational streaming helped underscore ‘personal’ self-making through meritocracy, a neo-eugenic management of future ambition which can be seen in relation to today’s idea of student experience as debt. (However, the unevenness of tuition fees through the UK also makes it clear that the informal, expropriating Lockean constitution is uneven. The legal tradition which insisted on really existing popular sovereignty, mostly in Scotland, rose within a few years of the war. And Scotland, despite its image as a nation of benefit junkies, is now showing signs of having lost faith in the 1940s-style welfare state).[11] 

The ‘managerial revolution’ of Keynesian markets also prepares the ground for neoliberalism in its separation of management from owners. This is ultimately a revivification of a British bourgeoisie dependent on primary accumulation and made phobic of constitutional action, the fate of the potentially Jacobin class described by Tom Nairn’s analysis.

Haunted Magazine

Despite the later understanding of consensus, from the late ’50s and soon after the legal popular sovereignty tradition, constitutional sceptics surrounding the growing New Left, including Stuart Hall and Raymond Williams, were addressing the continuity which had been enabled. As Ralph Samuel puts it in 1958, as he warns activists of a ‘creeping authoritarianism’ in the new labour, ‘The managers are, in the British context… the old ruling class in a new managerial role… although the interests of the managerial and property-owning groups often diverge, there is no fundamental antagonism’.[12] And even in the first decade or so of War Keynesianism, welfare consensus had been seen as the totalised victory of a market public in writers as diverse as Karl Polanyi (1944), George Orwell (1949), and Hannah Arendt (1951), who describe the sweep of the ‘Oceanic’ constitution in its modern role.

Nor, on the other hand, should we rest on a vision of Thatcherism as anti-consensus in the 1940s understanding of the term. The empowerment of the managers brings up a little-discussed aspect of Thatcher’s legacy – her arch-meritocracy, ultimately a product of the communitarian public of the 1940s and ’50s, and the training ground for the personal for many of the most vociferous class warriors later associated with neoliberalism. And the nationalist, meritocratic conception of the public places aspects of Thatcherism within the scope of a reconstruction based on the ‘real’, fund-managing Keynes. As Peter Clarke reports, ‘“No, no, no”, she told one interviewer in 1979, “I am afraid Keynesianism has gone mad and it wasn’t in the least little bit what Keynes thought”. Nor was this a stray remark – she returned happily to this theme on numerous occasions’.[13]

The strength of the post-1940 British public, a powerful incarnation of British flexible governance, has been that it has been able to demand ethical support even while privatising, and as a kind of ‘social’ desire for privatised competitiveness: it is this ‘traumatised’ common sense that allows us to go on describing seriously as public almost entirely privatised transport, universities, communications, and health, which demand moral support as if they were commonly owned. And behind this is the universalism of Locke’s expropriation (and indeed imperial culture) as natural governance. The British constitution takes its ethical appeal from an ideal beyond the national, ultimately, of course, the continuity of money itself.

To historicise the modern British public as already a product of an expropriating constitution then diverges from saying that public institutions have wandered from a common path – as wistful look back at the deviations of ‘New Labour’ imagine mistakes to have been made in an otherwise popular progress. Constitutionally, these institutions have never been within the people’s determination at all, and ideologies of continuity have allowed them to be kept away from the people’s determination – most iconically for our time, with the emergence of managed markets in the 1940s.

The post-war reconstruction must then be appreciated alongside the adaptations of the ’70s, as a crucial ‘social’ element in the state underscoring of market fundamentalism. So also as neoliberalism is troubled, the signs of commonsense consensus become objects of appeal, and the signs of the ’40s become a fetish from an establishment point of view. Amongst many other examples: in 2008, the chancellor who would later lead the campaign against constitutional change renewed Trident as public spending.[14] After 2007 Gordon Brown turned to Blitz imagery to describe the financial crisis.[15] The ‘Keep Calm’ motif rode the financial peak and was being pictured as ’40s retro as soon as the 2006 film Children of Men; the now-infamous 2005 security posterSecure Beneath the Watchful Eyes’ brought ’40s retro into the surveillance state; a wave of make-do-and-mend TV has aimed to revive ‘our’ fight for the economy; and the already exhausted patriotism of the Olympics presented public health and the multiculturalism Windrush in the mode of their 1940 inception.

None of which is to say that nothing changed in the 1970s, when the oil shock and stagflationary crisis encouraged a drastic amplification of a liberal tradition – but in Britain, home of the Keynesian settlement, neoliberalism has been not only a market fundamentalism enshrined as state policy, but a market fundamentalism enshrined as state policy under specific signs of national character which have owed much to 1940s managed markets. An exhausted British left returning to this reinvention of labour and defence of the constitution,[16] just at the moment neoliberalism looks least tenable and most desirous of a reinvention, is not a cause for celebration. The desire to see neoliberalism as the ’70s ruination of an earlier public consensus, is a desire to which state-backed capital is all too willing to direct us.


[1] Locke, Second Treatise on Government, Ch.9

[2] Consantine George Caffentzis, Clipped Coins: Abused Words and Civil Government. John Locke’s Philosophy of Money (New York: Autonomedia, 1990), 51

[3] cf. Daniel Defoe, History of the Union (Dublin: J. Exshaw, 1799 (1709))

[4] Cf. Michael Gardiner, The Constitution of English Literature (London: Bloomsbury, 2013)

[5] on the flexible constitution A.V. Dicey, An Introduction to the Law of the Constitution (London: Macmillan, 1979 (1885)), 127-133

[6] Cf. David Graeber, Debt: The First 5000 Years (London: Melville House, 2011),, Debt, 95-96

[7] Nikolas Rose, Governing the Soul: The Shaping of the Private Self (London: Routledge, 1989), 228

[8] Rose, Governing the Soul, 103

[9] André Gorz, The Immaterial (London: Seagull, 2010 (2003)), 16-17

[10] Rose, Governing the Soul, 117

[11] E.G. Newsnet Scotland, ‘Labour ditches universalism as Scots declare support for Holyrood control of welfare and taxes’: http://newsnetscotland.com/index.php/scottish-politics/7527-labour-ditches-universalism-as-scots-declare-support-for-holyrood-control-of-welfare-and-taxes-

[12] Ralph Samuel, ‘New Authoritarianism – New Left’, review of Norman MacKenzie, Conviction, Universities and Left Review 5, Autumn 1958, 67-69: 68

[13] Peter Clarke, Keynes, 17;

[14] for example, Allegra Stratton and Ashley Seager, ‘Darling invokes Keynes as he eases spending rules to fight recession’, Guardian 20 October 2008

[15] Jean Eaglesham, ‘Brown hails blitz spirit as way ahead’, Financial Times 12 Oct 2008: http://www.ft.com/cms/s/0/2e3d97d8-98a7-11dd-ace3-000077b07658.html#axzz1V5dLEipt

[16] ‘Left for Dead’, http://automnia.tumblr.com/; ‘Nothing Left in Britain: Dear Parent/ Guardian’: http://athousandflowers.net/2013/06/05/nothing-left-in-britain-dear-parentguardian/

Top right image: cover of This Magazine is Haunted # 5, Fawcett Comics (1952).
Wikimedia Commons/Sheldon Moldoff. Public domain.


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This article is part of an editorial partnership between openDemocracy and the Centre for Modern Studies at the University of York. It was funded by the University of York's Pump Priming Fund, the British Academy, and York's Centre for Modern Studies.

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