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The difficulty of 'neoliberalism'

Disagreement over words is surely to be welcomed in a pluralist intellectual and political culture. Why is neoliberalism so provocative? Why is it Blairites in particular that are so provoked?

Margaret Thatcher on tv, Margaret Thatcher on tv, 1990. Flickr/ R Barraez D'Lucca. Some rights reserved.In a leader published in December, the Blairite pressure group Progress took aim at a particular word: ‘neoliberalism’. It argued that “lazy use of language covers up intellectual laziness. ‘Neoliberal’ has become a catch-all for anyone with whom you disagree”. The charge was bolstered with the usual nod to George Orwell and the fear that “ugly writing leads to ugly thoughts” (a principle that would scarcely reflect well on the author of A Journey).

This is not a new critique. ‘Neoliberalism’ is a term that has attracted a remarkable degree of frustration and fury, in politics, the media and within academia. Journalists such as Independent columnist John Rentoul and Newsnight policy editor Christopher Cook have expended some energy on twitter and in print dismissing the term as vacuous. Orthodox economists, who do not encounter the term in their microeconomics training, dismiss it as useless. In academia, ‘neoliberalism’ has been criticised by historians and some social scientists as over-determined. Since Jeremy Bentham, the English tradition of positivism has rested on the notion that only acutely defined terms are politically valid – a premise that can quickly flip into the idea that if I don’t know exactly what you mean, then you are talking nonsense.

Some of this can be put down to political alignment, intellectual insecurity or a combination of the two. Since Jeremy Bentham, the English tradition of positivism has rested on the notion that only acutely defined terms are politically valid – a premise that can quickly flip into the idea that if I don’t know exactly what you mean, then you are talking nonsense. Benthamite utilitarianism has been slowly subsumed by welfare economics since the end of the 19th century, to the point where policy wonks can argue that esoteric terms such as ‘price elasticity’ or ‘market failure’ mean something, but ‘neoliberalism’ doesn’t. This implies that terminology is something to be overseen by HM Treasury (for example in its Green Book), which would be a surprising position for any devotee of George Orwell to find him or herself in.

Hostility to ‘neoliberalism’ is often entangled in this sort of flawed philosophy of language. ‘Meaningful’ words are supposed to be those which connect cleanly and unambiguously to some object, without disagreement regarding their use. Politics, by this account, needs to be a branch of science (probably neo-classical economics), because science is deemed to be beneficially separate from culture and – though this is somewhat more embarrassing – democracy. Intellectually, this results in the sort of crass debating culture in which a student begins an argument by quoting from the Oxford English Dictionary.

And yet this doesn’t explain why ‘neoliberalism’ has become such a bogey word as opposed to, say, ‘capitalism’, ‘globalisation’, ‘competitiveness’ or ‘the market’, all of which have been included in mainstream political rhetoric over the past 30 years. All words are abstractions of a sort, and the words of the social sciences are abstractions applied to human (and therefore self-interpreting) activity. The fact that abstract terms are not necessarily used by everyone or not recognised by those to whom they apply does not suggest they are useless or meaningless. The fact that people disagree on what words mean is surely to be welcomed in a pluralist intellectual and political culture. What is it that neoliberalism provokes so much? And why is it Blairites in particular that are so provoked?

Between sociology and economics

I have written elsewhere on the topic of neoliberalism and attempted to provide some clarity surrounding the term’s meaning, without abandoning the recognition of its complexity and ambiguity (this bibliographic review and this glossary entry provide some of my own analysis). Here I want to address the particular question of why this term is so routinely dismissed, given the panoply of other socio-economic categories deemed acceptable. Philip Mirowski has offered his own take on this question, focused particularly on the critiques of historians and anthropologists. Modern individuals face a fundamental question of who to be, as forseen by Nietzsche and dragged into the mainstream by the cultural movements of the 1960s.

At the root of the difficulty and meaning of neoliberalism is the way it straddles the terrain of sociology and economics. One way of understanding it is as an effort to anchor modernity in the market, that is, to make economics the main measure of progress and reason. Economics is amplified by neoliberal intellectuals, to address problems that might otherwise have been viewed as political or sociological. For example, mutual or intergenerational commitments, on which the institutions of ‘society’ or ‘nation’ are dependent, become reconfigured in monetary terms as debts, rendering them explicit and quantitative in the process.

This amplification of economics is quite explicit in Ludwig Von Mises’ famous 1920 essay which launched the socialist calculation debate. For Von Mises, rational action (in the sociologist Max Weber’s sense of instrumental rationality) was efficient action, and efficiency was something that only the price system could reveal. Socialism would be mired in politicised disagreements around value, and be consequently incapable of progress. Hence, rationality and modernity become the preserve of market-based institutions and behaviours, namely price, money and entrepreneurship. In the contemporary era, this same equivalence can be seen in the way that ‘modernisation’ of, say, the NHS has become a euphemism for marketisation and more competition.

To be sure, Weber himself was also complicit in this equivalence, which is why scholars such as Nicholas GaneWerner Bonefeld and Andrew Gamble have pointed to his importance in the genesis of neoliberalism. Weber’s work on the methodology of the social sciences granted economics the role of a general science of individual rationality. This risks leaving sociology in the role of the science of individual irrationality or at least ‘substantive reason’. It is then only a matter of time before areas of meaningful, uncalculated social activity (community, family, education, political organisation and so on) become rationalised by economics in a seemingly modernising, progressive fashion. This was indeed the chief contribution of the Chicago School of economics and Virginia School of public choice from the 1950s onwards.

The reason ‘neoliberalism’ appears to defy easy definition (especially to those with an orthodox training in economics or policy science) is that it refers to a necessarily interdisciplinary, colonising process. It is not about the use of markets or competition to solve narrowly economic problems, but about extending them to address fundamental problems of modernity – a sociological concept if ever there was one. For the same reasons, it remains endlessly incomplete, pushing the boundaries of economic rationality into more and more new territories.

The central aspect of modernity that neoliberal ideas and policies promise to cope with is value relativism. In this, ‘neoliberalism’ shares some heritage with ‘liberalism’, but I would suggest that the value relativism of the 20th century is a more radical, more existential problem than that confronted by the early liberals of the 17th and 18th centuries. It derives from the fact that modern individuals face a fundamental question of who to be, as forseen by Nietzsche and dragged into the mainstream by the cultural movements of the 1960s. In a sense, it is a problem of modernism as much as one of modernisation. With its emphasis on entrepreneurship and competition, neoliberalism has a very effective way of dealing with this problem: you can be anyone you wish to be, but a) you will have to pay for it (possibly over many years through debt repayments) and b) you will be tested against competitors. These two things are guaranteed, by legislation if necessary. Marketization of the NHS may not make sense economically, but to a Whitehall mandarin or Minister it makes sense politically.

The virtue of competition, from a neoliberal perspective, is not that it maximises welfare (as orthodox economists are trained to assume) but that it is agnostic about the right solution to institutional, cultural and political problems. Marketization of the NHS may not make sense economically, but to a Whitehall mandarin or Minister it makes sense politically. It reduces the burden of authority, decision-making and expertise that otherwise lies heavily on their shoulders, opening up managerial questions of what to do to a broader set of experts.

The central feature of modernity, from a neoliberal perspective (and Hayek’s Road to Serfdom captures this as well as anything else) is that we cannot know in advance what will work, who to be, or what to invest in, but nor can we really duck such choices either. The role of the state is to rearrange society in recognition of this fact, with competition and the provision of information (such as food-labelling or the ranking of universities) as the main tools with which to do so.

This modernisation-via-marketization is not difficult to point out across Britain’s public sector. And it is creeping further into our personal lives with the rise of social media, personal debt and self-tracking tools, each of which lead us to take more calculated, ‘rational’ decisions in the present, with a view to future outcomes. The dramatic rise of student indebtedness in the UK makes little economic sense for anyone (even the government) but it succeeds in placing higher education in a quantitative framework, linking past, present and future.

To describe Blairism as ‘neoliberal’ may sound to Progress like a form of abuse, but it is technically very accurate. It doesn’t mean that Blairism was not ‘progressive’ or ‘modernising’, on the contrary. The introduction of market mechanisms and quasi-market mechanisms into the public sector modernised governance in ways that was arguably very well-suited to an age of reduced political and cultural deference, and rising consumerism. This was Anthony Giddens’ sociological diagnosis in The Third Way, and it is possible to agree with it while also recognising the sociological peculiarities of the situation and seeking to name them. Saying that this was ‘just liberalism’ or ‘just the market’ represents a refusal to analyse or interpret, as if nothing new has occurred since 1870.

Is there an alternative?

In their critique, Progress reveal the heart of their anxiety as follows: “The challenge to those using ‘neoliberal’ as a putdown to those accepting economic realities is simple: what system do you propose instead?” While this is a somewhat unsophisticated basis for political or intellectual dialogue, it reveals something of the difficulty people have with ‘neoliberalism’. If I am right, and neoliberalism represents a perspective on modernity, and not only on the economy, then the challenge of abandoning or replacing neoliberalism comes to appear far greater than previously thought. It may therefore be easier (especially for those working in policy) to view calculation and competition as parts of human nature, and try to ignore the extensive work that the state does in defending, extending and designing them. It may therefore be easier... to view calculation and competition as parts of human nature, and try to ignore the extensive work that the state does in defending, extending and designing them.

But there is an important reason why ‘neoliberalism’ is now discussed today to the extent that it is: it has proved a far more able system in dealing with sociological problems than in dealing with economic ones. This might sound surprising, given the apparent dominance of economics that it involves. Yet its capacity to generate or tap into social and political consensus – especially between 1989-2008 – was actually quite remarkable. This derives from its foundational relativism, which chimes with a socially liberal worldview. Today, we inhabit a post-1960s common sense, in which self-respect and individual taste are our defining ethical commitments. These then become tangible via the exercise of economic choices. Where these commitments start to slip – as when individuals fall into depression and inactivity – policy-making now acts fervently to restore them, often via quite aggressive tactics aimed at reinforcing the entrepreneurial self (as this important paper on positive thinking outlines). The idea that we should have to cover the cost of our own life decisions and preferences (if necessary through debt) mirrors this common sense.

But economically, the system must now be deemed a failure. Private sector growth and job creation has never been sufficient to offset the de-industrialisation of the 1980s or the public sector cuts of the post-2008 period. Economic inequality now provokes anxiety from bodies such as the IMF, with mountains of cash being hoarded, and large swathes of the population lacking any spending power, other than via more debt.

It is not all that difficult to imagine a more effective economic system. Economists from across the political spectrum have made various suggestions, and ‘Corbynomics’ includes many plausible ideas. The far greater difficulty lies in imagining a different form of sociological modernity from that represented by neoliberalism. We live in a society which now views mutual commitments as forms of debt, existential questions as matters of entrepreneurship and cultural pluralism as just another form of competition. Disentangling this is beyond the scope of public policy alone, which, again, may be why some policy thinkers would rather pretend it was all ‘meaningless’. It is not all that difficult to imagine a more effective economic system...  ‘Corbynomics’ includes many plausible ideas.

Perhaps, therefore, the role of sociologists is to revisit the question of modernity and alternative modernities. Nick Srnicek and Alex Williams’ Inventing the Future offers one way in which this can be done, Mark Fisher and Jeremy Gilbert’s Reclaim Modernity offers another, while Erik Olin Wright’s ‘real utopias‘ work might be another. A defining question of our age is whether we can undo ‘neoliberalism’ without also undoing ‘the 1960s’ – a dilemma that has been at the heart of communitarian movements such as Blue Labour. Corbynites might do well to reflect on these sorts of cultural questions and on which aspects of 21st century modernity their economic vision seeks to corroborate and draw energy from. Yet the Blairite attempt to close down this avenue of enquiry and theory altogether turns politics into an exercise bike, in which endless pedalling leaves us rooted to the spot.

This article was originally published on January 1, 2016 by the Political Economy Research Centre, Goldsmiths, University of London.

 

About the author

William Davies is a Senior Lecturer at Goldsmiths, University of London, where he is Director of the Political Economy Research Centre. His weblog is at www.potlatch.org.uk and his new book is The Happiness Industry: How the government & big business sold us wellbeing (published by Verso).


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