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Neoliberalism – An Idea Swallowing The World

In the aftermath of Davos, what we’ve learned is that that gathering is a busted flush, not least because billionaires don’t ever bite the hand that feeds them. This hand is an economic ideology called, “neoliberalism” and it has created a tiny proportion of people who now own most of the world’s wealth. This inequity has been facilitated by centrist politicians who use neoclassical economics to deliver economic extremism.

So, as Davos melts away, are we now willing to address this pernicious economic idea that is responsible for almost all the chaos we see around the world?

Economist Mary Wrenn and the economist and writer, Frances Coppola recently met up with Renegade Inc. to discuss what 40 years of neoliberal economics has done to us and our political landscape.

What is neoliberalism?

Neoliberalism is a difficult concept to define because of its multifaceted nature. “It’s a sort of formless enemy…or a formalist concept and it’s defined differently in different places. For Mary Wrenn, neoliberalism is an ideology that, since the Reagan and Thatcher era in the early 1980s, has guided economic policy-making.

It’s also an ideology “that prioritizes the health of the economy over the health and well-being of the state’s constituents”, argues Wrenn…..”The idea is that if the economy is healthy…. and growing then all other social ills will be remedied through that market activity.”

The idea is that where service provision has deemed to have fallen short, the market is encouraged by the state to cover the shortfall. In other words, “if a particular region is lacking in services…. that will be a profit-making opportunity in the market, so the [state will ensure] that service is provided…

It’s an idea that the economy’s health is the number one priority of the state and the way that the state takes care of the economy is leaving it alone.

The invisible hand

Governments’ promote neoliberal ideology in terms that imply the state does not intervene in ‘market forces’ because such forces are regarded as an exact science and therefore the most efficient way of allocating resources. But as Wrenn points out, “the problem is that the ideological rhetoric of the ‘hands-off state’ actually involves a lot of state support and state intervention on behalf of business interests as opposed to actually the state helping its people.”

Coppola takes the argument further pointing to the notion that one of neoliberalisms core tenets relates to the primacy of the individual. This is embodied in Mrs Thatcher’s famous aphorism, “There’s no such thing as society”, which implies an underlying singular human rationality, when in reality people are guided by a multitude of behaviours and emotions.

Coppola says that “one of the big problems with neoliberalism [is that] it has assumed…people will always be able to take responsibility for themselves and that all their actions will always better themselves, when actually that’s not always the case.”

Wrenn agrees:

“The core ideological drive of neoliberalism, is the individual over the collective, that’s what underpins all of the ideological rhetoric, all of the economic policies.”

Moreover, both economists concur with the thesis that inculcated within the ideology is a form of moral authoritarianism in which it is assumed that unemployment is a lifestyle choice rather than a necessity.

Neoliberalism is sold to the public as a simple package that’s easy to understand, in the capable hands of professional politicians and economists. The economy is sold as an external force out of the reach, and separate from, people’s lives.

Wrenn argues that the principal villains in the neoliberal story are not mainstream economists but politicians and business interests:

“I think that there is a collusion between those two. And economists enable that but I wouldn’t say that [they] orchestrate anything”, she says. Rather, politicians began to focus more on the rhetoric of the economy at the expense of society which emerged in the late 1970s.

Ayn Rand

Underpinning this shift, argues Coppola, is the philosophical movement led by Ayn Rand whose writings emphasized individualism over everything else – what historically has been denoted, “selfishness”.

Rand, a former Soviet refugee whose writings were highly influential during the late 1970s and early 1980s, was essentially a product of the Cold War period. In many respects, she came to symbolize “the notion of the collective versus the individual; the collectivism of the Soviet bloc versus the individualism of the West, and particularly America”, says Coppola.

In this extract from the ‘Neoliberalism – The Force Isn’t With You’ episode of Renegade Inc, Paul Verhaeghe discusses the problems with the way we interpret success and failure.

Neoliberalism – an ideology whose days are numbered

Mary Wrenn argues that the reason why the system is in free fall can be explained by neoliberalisms inherent contradictions:

“I think that the longer the system is in place, the more the contradictions become apparent…Neoliberalism is built on the rhetoric of free markets and the rhetoric of a small state. But in practice it’s something very different.”

Indicative of the cracks in the system, in other words, is the mismatch between the reality and the rhetoric.

These cracks have started to emerge in a very big way. “What happened with the collapse of the Soviet bloc is instructive here”, argues Coppola, adding, “There are two parts [to this]. One is that the instinctive reaction from…people who run this kind of show is to shore up their defenses when the cracks start to appear. But there’s another reaction as well and that is to give concessions. But in fact giving concessions destabilizes it even more.”

The economist points to the Soviet era of glasnost and perestroika – the opening to the west and the moves towards a market economy while still trying to hang on to communist ideology –  as an example of a concession that destabilized the Soviet bloc economy and the people’s way of life and ways of thinking. “This is what in economics we would call an unstable equilibrium”, says Coppola.

Concessions since the crash

The concessions since the financial crisis of 2008 have been marked by two things, argues Coppola:

“First of all we have seen the shoring up of defenses. Central banks have been doing a lot of that – shoring up defenses trying to keep the whole show on the road for longer while at the same time governments have been doing austerity – again to try and shore up the defenses and keep the show on the road for for longer. But now we’re actually seeing them also start to make concessions.”

Coppola continues:

“I mean, even Philip Hammond’s budget in the UK [amounted to] concessions…. to people who perceived that they had been hurt by the austerity of the last eight years – particularly the British sacred cow, The National Health Service. So we’ve got to give lots more money to that. [Also] lots more money to people who think they are taxed too much. We’ve got to give… lots more money to whatever the….flavour of the month problem is so we… people are shouting loudly about, you know, universal credit…There’s lots of disaster stories about it so better give some more money to that. But we’ve got to do it in a way that continues to maintain the ideology so we do it by increasing work allowances for people in work so they can keep more of their earnings when they’re working. But we give absolutely nothing to the sick and disabled who are unable to work.”

Wrenn intercedes:

“And if you don’t give those concessions that’s when you get things like Trump; that’s when you get Bolsonaro; that’s when you get the rise of these right-wing fanatics.”

But, as Coppola acknowledges, the concessions that give rise to the kind of right-wing forces outlined by Wrenn, represent the culmination of a snowball effect that ultimately results in destabilisation. This process is indicative of a fatally flawed economic ideology –  the neoliberal consensus – which as, Coppola attests, “is on its way out.”

But is there anything on the horizon to replace the dying system?

Not, according to Coppola.

The space between the old and a yet to be born new, is a void that is currently being filled by populist right-wing forces, who maintain an uneasy status quo, but can’t deliver.

“This kind of paradigm shift is often a period of considerable instability which can last for quite a long time….It’s hard to see how this one will pan out”, says Coppola.

In terms of the forces unleashed by neoliberalism from a UK perspective, Coppola implies a form of political stasis permeates society indicative of a culture in nostalgic retreat, devoid of new ideas:

“It’s more this kind of trying to hang on to what we have. It’s astonishing the way we seem to be looking back towards people whose political heyday was in the 1970s, rather than trying to look for political leaders in the new generation and saying, ‘Do they have fresh ideas?’ We seem to have the kind of… monstrous regiment of the old at the moment.”

How has neoliberalism impacted on the  NHS?

“A lot of people criticise the introduction of markets into the NHS – and with good reason”, argues Coppola, adding, “but I think that we have a tendency in the UK to see the NHS as something of a sacred cow. It’s actually extraordinarily difficult to push through any kind of sensible reform in the NHS. I’ve had some dealings with it myself in recent years and my view of it – as somebody who used to do business process redesign for a living – is that the business processes in it absolutely stinks.”

In relation to the US healthcare system, Wrenn has described it as “barbaric” – the apex of a neoliberal system, predicated on profit and ones ability to pay as opposed to offering treatment based on need:

“Your access to healthcare in the United States is predicated on your ability to pay. [But] healthcare is a right that all people should have access to …Healthcare is not something that you want a gate for people to have to go through. It’s only since the 1990s that legislation was introduced that hospitals have to treat you if you have a life-threatening illness – so we were late to the game in that. At this point our emergency rooms – our A&E’s – are overcrowded but that’s because people can’t afford to go to the doctor. So what do they do? They put off going to the doctor until they…have a life-threatening situation.”

Wrenn continues:

“They show up at the emergency room where they have to take them in. Now at the moment [if] they decide that it’s not a life-threatening condition they will boot them out to a hospital that either takes in people without insurance or they’ll recommend that they go to some other convalescence facility or to their own doctor. If you arrive at the emergency room in an ambulance and it’s not a life-threatening condition, before they take you out of the ambulance, they will check to make sure you have your insurance cards on you so that they can get that information – so that they can make sure that their bills will be paid.”

A neoliberal ideology – which puts profit before people – reinforces the notion that the misfortunes people suffer are their own fault.

“If [people] have a health problem and they’re not insured. “Well tough! You should have insured yourself…And if the reason you didn’t have insurance was that you were out of work -because in America the ‘ability to pay’… is actually very much tied to your ability to work.”

Coppola adds:

“Because so much health insurance is provided by employers. If you have a work-limiting health condition, therefore, the chances of you being able to afford healthcare are really pretty small.”

In this extract from the ‘NHS – Where From Here?’ episode of Renegade Inc, Dr. Bob Gill considers the significance of public awareness concerning changes in the NHS.

Deception or corruption?

Is it the case that politicians across the developed West have fallen for a massive deception, or is neoliberalism indicative of a corrupt political system prone to the lobbying power of corporations?

Coppola believes it is the latter:

I’m very concerned that we seem to be losing the entire concept of civic duty and public service and that is the legacy of neoliberalism.

“Once you start saying everything is about individuals and their self-interest then politics also is about individuals and their self-interest and self-interest of individuals is about enrichment. That’s going to be what politicians are going to be interested in too.”

The political class appear to be more interested in introducing gimmicks as a way of attempting to convince the public they are doing something fundamental to address underlying social and health problems of the kind neoliberalism engenders. The hiring by Theresa May of a loneliness czar is an example:

“This is another example of what I was saying about concessions”, says Coppola. Loneliness is regarded as a fault of the individual, not of a society overwhelmed by neoliberalism.

Similar concessions are made to people with mental health problems:

“I don’t think it’s any accident that mental health services in the UK are the pariah because [neoliberalism is the diagnosis that relate to] the misfortunes that happen to people – the health problems that people suffer – are their fault. We are amazingly intolerant of people who have fragile mental health”, claims Coppola.

Wrenn alucidates further:

I’m not surprised at all that loneliness is a problem in neoliberalism. When you have isolated, atomized individuals who are treated as individual units rather than any kind of emphasis on collective action; on community; on local governance as sort of a communal effort.

When these kinds of legitimate concerns are aired, the reflexive response from neoliberals and their apologists – as an antidote to notions of collective action – is to exclaim socialism. Marxism etc:

“This is why… the language needs to change”, says Coppola….We’ve been talking quite a bit about… rebuilding communities without really seeing that in order to rebuild…and get [them] to hang together and cohere and support each other, you’ve actually got to make radical changes to the way in which your economy works. When your whole economy works upon the idea that you’ve got these incredibly flexible labour markets, people just move for work all the time. How are they supposed to do that? And then we complain about the failure of our communities [and the devastating consequences are deemed to come as a surprise”].

What are the solutions to the crisis of neoliberalism other than language?

Coppola and Wrenn agree that what is required is a return to a spirit of generosity; of kindness, unselfishness and community – more of a philosophical approach as a basis to re-evaluate what our values are as a society. Then the economics and politics can flow from there.”

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