Neoliberalism has proven itself to be a durable form of laissez-faire late Capitalism. The ‘free market system’ has been the dominant economic ideology in the Western world since the fall of the Berlin Wall in 1989, informing the tacit knowledge of billions around the definition of a successful life and how to achieve it.
The Coronavirus presents the greatest challenge to Neoliberalism’s authority since it became the dominant economic ethos. The Neoliberal rule book has been torn up in ways that would have been unthinkable 10 weeks ago. Will it survive?
The ‘For’ side argues that the Coronavirus will indeed deal a mortal blow to an ethos and system of economic and social organisation that was already facing serious challenge.
‘Against’ counters that, notwithstanding the short-term global shock the virus has delivered, Neo-liberalism will prevail as the dominant system of economic organisation once the crisis has passed.
Yes. Neoliberalism is Way Past its Prime.
It’s Time to Bid it Adieu.
In the past week, I believe that we have witnessed the beginning of the end of Neoliberalism as the dominant economic ideology on both sides of the Atlantic.
Speaking just five days ago on 29th March, Boris Johnson said: “If there is one thing that Coronavirus has proved, it is that there is such a thing as society.”
This comment is significant, because in making it, he carefully and directly contradicted one of his most famous predecessors. Margaret Thatcher railed against the attitude of citizens who had been brought up to default to a mind-set of dependency:
“[They say] I have a problem, it’s the government’s job to cope with it. They are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people.”
Margaret thatcher, women’s own magazine (1987)
This remains a succinct and powerful rallying cry for Neoliberals to this day.
Under the Keynesian economic model adhered to during the post-war era, governments were free, even obliged, to intervene directly in economic life to promote positive social outcomes. These interventions included funding State-owned utilities, legislating for Trade Union membership, providing universal healthcare, delivering free education for all, and managing extensive State house-building programmes.
This came at substantial cost to already-burdened Exchequers. By the late 1970s, the public mood was grim, inflation rampant and it seemed that Neoliberalism had the answers. Reagan and Thatcher implemented it with gusto.
By encouraging ruthless competition between private firms, by promoting seamless multinational trade, and by diminishing the power of Trade Unions, the Neoliberal approach promised to banish the sclerosis that afflicted the Western World and free citizens from the effects of excessive central planning and ‘Big Government’ intervention.
Whole industries were privatised or off-shored, once-proud communities were ravaged, unions systematically emasculated, and the Welfare State hobbled by under-funding. Returns to Capital rocketed, while returns to Labour stagnated. Nevertheless, it seemed that the Neoliberal model had triumphed, and the working assumption was that free markets were the most efficient, the most conducive to growth and the most inherently sympathetic to innovation.
Until September 2008.
The Global Financial Crash was the inevitable result of the naïve abrogation of social responsibility and political power to the free market, and to the financial sector in particular.
The Head of the Federal Reserve, Alan Greenspan was forced to admit that the ‘Invisible Hand’ of the market had failed to prevent the disaster. Speaking to the US House Committee on Oversight and Government Reform in 2011 he said, “Yes, I’ve found a flaw (in the system). I don’t know how significant or permanent it is. But I’m very distressed by that fact.”
The Emperor, it turned out, had no clothes.
In order to keep the economic system afloat, enormous tracts of private debt were socialised, world-wide, at eye-watering cost to the taxpayer. During the years of austerity that followed, the Public Sector world-wide was emasculated. The importance of the Public Sphere as a place of reasoned debate and the idea of the Commons as a protected, shared public resource both came under sustained attack.
Nevertheless, by 2018, it seemed as if the free market system had proven to be ‘anti-fragile.’ Until Mother Nature fought back, in two distinct ways.
The first is the Climate Emergency, which has placed ever-increasing demands on the ability of Late Capitalism to sustain itself. The second is the novel Coronavirus. Together, they have signalled that Neoliberalism’s number is finally up.
The Climate Emergency is the defining subject of our time. And in fact, the solutions that we employ to deal with the Coronavirus may prove to be just a dry run for the larger-scale, more complex measures necessary to tackle the Climate Emergency.
Why does the Coronavirus mark the beginning of the end for the Neoliberal project?
- It affects whole populations indiscriminately, spreading like wild-fire with deadly effect
- It respects none of the artificial social boundaries erected by Neoliberalism
- It demands the erection of barriers to travel and trade if it is to be tackled successfully
- It exposes the powerlessness of Global institutions to direct and control the behaviour of nation-states
- It insists on the suspension, even the removal, of ‘freedoms’ heretofore deemed sacred under Neoliberalism
- It has caused us to lionise the previously forgotten, the utility workers, distribution and delivery men and women, the back-room staff who do the hard work that keeps the shelves stocked, and the machines operational
- It motivates us to applaud, quite literally, the heroines and the heroes who work to make the sick healthy again
This coronavirus crisis has required a collective effort of will on the part of entire populations made newly conscious of their inter-dependence. When this is all over, its impact will not be confined to the inevitable financial reckoning that must ensue.
Nor will that impact be transient.
Experiences as radical as this has been (and there is no guarantee that it will be over any time soon, or that it will not return with a vengeance before year-end) leave a lasting imprint on the collective psyche. Brexiteers are still living out World War 2; 9/11 has shaped US foreign policy ever since; Europe has yet to overcome the trauma of its chaotic response to the crash of 2008.
The Coronavirus will cause many of us to re-examine our definition of what it is to live a successful life.
- There will be a new sense of the importance of the things that should really matter to us, of connection, of solidarity and empathy
- There will be a revival of respect for true, fundamental needs
- There will be an appreciation of the value of hitherto taken-for granted blessings like physiological well-being, security, connection and community
- We may feel less need to court esteem from our peers or seek self-actualisation for ourselves (my new Insta-story anyone?)
This challenge posed by our shared Coronavirus experience to the Neoliberal ethos, and to the economic and social system that is shaped by its guiding principles, could not be more direct.
It will not survive that challenge in its current form.
Neo-liberalism is way past its prime. It’s time to bid it adieu.
EC
No. Fukuyama Was Right. Neoliberalism Really Is The End of (100% Human) History
Open your window, close your eyes and feel the spring breeze upon your face. Do you hear the birdsong, the drone of a distant radio, the laughter of neighbourhood children, the wailing and thrashing of exhausted parents? Or do you detect the cacophony of a crowd? The crackle of a conflagration or the banging of drums? The chorus of a human microphone? Does the fug of smoke, or the suggestion of burnt brioche taunt your nostrils?
Is anyone storming the Bastille?
The Coronavirus may have reawakened the masses to the shortcomings of Neoliberalism, but it will take more than an unequal opportunity plague to inspire a wholesale overwriting of the socioeconomic OS—never mind the conversion of Western culture from individualist to collectivist necessary to underwrite such an effort.
The theoretical road back to Citizen from Consumer may be paved with the best intentions, but current levels of civic participation suggest that a counter-outbreak of armchair activism, and the sort of performative politics that accompanies hashtag bombs, is more likely than real transformation by and for the people.
The ruling class has long understood the power of inertia and the people’s preference for creature comforts. The Davos Massive has learned from recent history’s minor uprisings that revolutions are best prevented by tokenism, incrementalism and the smooth rhetoric of compromise.
After all, what followed the global protests of 1968, the Miners’ Strikes of the Thatcher era, The Battle of Seattle in ’99 and the post-GFC Occupy Movement were not significant economic reforms for social or environmental justice, a return to collective bargaining, higher wages, debt forgiveness, or job security, but the birth, feeding and rapid growth of Neoliberalism. Its untethering of central banks, unfettering of capital markets and corporate interests, and eventual financialisation of everything, meant the 99% were free to slide into easy debt, which equated to more entertainments and less likelihood we might publicly criticise, let alone bite, the invisible hand wot feeds.
Only fools and children are free to point out naked emperors, innit?
The Stockholm Syndrome from which we all suffer (if not enjoy) is evidenced by global declines in political participation, a withering of the collective will to take a stand against anything unrelated to identity politics and—as suggested by Edelman’s annual Trust Barometer—the apparent widespread belief in the merit of corporate intervention in public life. If nothing else demonstrates how deeply entrenched Neoliberalism has become, this openness to corporate sponsored social justice, if not corporatism itself, should indicate just how far we are from abandoning market logic.
This holy-shit moment will not culminate in a wholly shift. Corona reforms will come, but in the absence of revolution (physical or philosophical), the new world order will look a lot like the old world order, albeit with less freedom to and more freedom from. It may be gussied up, the aesthetic tweaked for the sensitivities of a new generation, but in the end, Neoliberalism will prevail: bigger, badder and all the more emboldened by watchful technologies. Nation-states weakened by bailouts will fly their flags and make hearts swell and eyes well, but tears of pride will only serve to obscure who owns the masts propping them up. Not that it will matter. For by the time this crisis has passed, we will be so grateful for any semblance of the status quo, we will convert to the Corporate Cosmology of Arthur Jensen* fully and completely.
Unless of course, we abandon Netflix for the town square and our smart phones for placards and pitchforks.
But seriously—have you seen the Tiger King?
TV
*For the uninitiated, Arthur Jensen is the Chairman of the Communications Corporation of America, in Sidney Lumet’s 1976 cult classic Network. Further explanation would ruin the fun. So watch the film. Or click the link to get the reference.
Interesting EC – I think it all depends. I think of Neo-liberalism as a sort of silent political force. There seems to be almost nobody that will own up to it. It’s an orphan of an idea. Business and political leaders give away their allegiance to its creed when they talk about cutting red tape / wealth creation / job creation. The simple truth is that Neo-liberalism is all about wealth transference, not wealth creation. What profit it a man to toil away creating wealth when you can more reliably accumulate wealth by taking it from another? I’m not as optimistic as you though. I worry that the coming tidal wave of inflation will be matched by an outbreak of crony capitalism. The end result will be an even greater concentration of wealth, as those with unlimited access to central bank ‘coupons’ exchange them for real assets that the indebted will have to pony up. The rich have always preyed on the poor – but now the super rich will prey on the rich. The natural order of the Neo-liberal agenda is this: ever spiralling wealth transference / accumulation, until practically the only wealth that is left will be in the hands of billionaires (trillionaires?). And then they will turn on each other for the final showdown. At the end of game of monopoly, there is only one winner who has all the cash.
Very interesting perspective, Mark.
To a degree, it seems like you’ve been possessed by Trista, my co-author here at The Liffey Accord. Not a bad person to be possessed by.
As her rebuttal essay on the blog outlines persuasively, she is inclined to believe that neo-liberalism will survive this and any other crisis as the true economic faith of the human race – precisely because we are human.
And perhaps the key point we’re all agreed on is the importance of positioning oneself not to survive the immediate crisis (which unfortunately impacts disproportionately on those least able to resist the virus) but rather to prosper/survive the aftermath.
Thanks for getting in touch with us and for a very stimulating response.
Eamon
Thank you for undertaking this important discussion. It is interesting that you conceived this project, The Liffey Accord, before Covid-19 transferred into humans in December 2019, when you thought it important to start an international discussion because of the way the world was heading, but it’s importance has increased dramatically since then. So, well done.
It feels like our lives, at the macro, political and global scales, are controlled by economics. This economics, in turn, is solely focused on the flow of money through the “economy”. Current economic theory is a very incomplete definition of the life and society that most of us wish for and yet it has the greatest influence on public policy in many of the leading economies. An alternative theory, that may be much closer to the answer most of us seek, can be found in doughnut economics. This is a theory developed by Kate Raworth of Oxford University, who spent years working with emerging economies in Africa at a practical level. It seeks a balance between what humans need and what the planet can deliver on a sustainable level.
The City of Amsterdam is now adopting Doughnut Economics as it plans for economic recovery in the post Covid-19 environment. Perhaps we in Ireland should look at the benefits of a different view of economics that doesn’t have destruction of the biosphere and destructive concentration of wealth as its inevitable outcome.
Colm
Thanks for that thought-provoking contribution.
Your meta-observation, that there’s more to life than money, and that there’s more to our society that ‘economy’, is a point very well made.
And thank you for introducing Kate Raworth’s theory into the debate. ‘Doughnut Economics’ is a memorable moniker, as well as an astute one.
We’ll reach out to her via social media and we would welcome her to the Comments board of the Liffey Accord if she can find the time.
It seems that the search for a ‘third way’ between the polar extremes of late Capitalism and radical Socialism is well under way.
The Labour Party, in both Ireland and Britain, seems to be on this path, as are the Greens and the Social Democratic parties throughout Europe.
We look forward to hearing from you again as the Liffey Accord evolves!
Eamon
I have been arguing with American friends, particularly Republicans, that their greatest failing is not understanding the word ‘Society’!
They are content for 90% of wealth to be rigidly held in 1% of hands, hoping vainly that trickle down economics will work in their favour. This, in a country where 40 million people have no health insurance, 50 million people go to bed hungry every night, infrastructure is crumbling and the middle class are behaving like frogs in gradually heating water. They laud the virtues of the Pilgrim fathers, as stoic survivors who did it all themselves, forgetting the early generosity of native Americans, and eventual food ships from UK. They forget what appalling bigots they were, who only left the UK, because they could not live with people who disagreed with them. With a mind-set like this laissez faire economics will thrive and nothing will improve much. It’s time to step up to the plate and advocate serious change and the formation of a third party would be a good start, as well as the abolition of lobbyists.
Chris,
Thanks for taking the time to comment on The Liffey Accord. Yours is a harsh critique of the state of US society at present, and given the dark sequence of events that has transpired there over the past month or so, I can understand why you might take this position.
Nevertheless, the US has been the catalyst of many of the advances in technology and elsewhere that, as Steven Pinker argues, have made our generation one marked by ‘Science, Reason, Humanism and Progress’.
Since the US remains the most powerful nation on earth, perhaps we must all hope that from this present turbulence there might emerge in America a fairer, more sustainable and more civil society than has been on view these past few weeks, starting next November!
Best wishes,
Eamon
Like!! Thank you for publishing this awesome article.