One hears the term Neo Liberal used, overused and misused. I thought it might be helpful to try and get a simple definition and history and then some thoughts on how we should refute it when we engage with people who unknowingly accept all its tenets.
Classical Economic Theory
Neo (“revived”) Liberalism is an update of the Classical Liberal Economic theory that developed out of the writings (and misapplications) of Adam Smith’s work after his death at the end of the 18 th century.
“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and the tolerable administration of justice; all the rest being brought about by the natural course of things.” Dugald Steward: Biographical Memoir of Adam Smith (1811)
The other commonly used term Laissez-faire Economics came from the expression, “Laissez-faire, laissez-passer, le monde va de lui-même (“Left alone, the world goes by itself”).
The state required nothing more than:
- protection against foreign invaders, (extended to include protection of overseas markets through armed intervention)
- protection of citizens from wrongs committed against them by other citizens, which included protection of private property, enforcement of contracts, and suppression of trade unions
- building and maintaining public institutions, and
- “public works” that included a stable currency, standard weights and measures, and support of roads, canals, harbours, railways, and postal and other communications services
The concept originated in the 1930s as a response to the first major crisis of the 20 th century – the Great Depression. It continued to develop as a distinct body of thought in the face of the development of the welfare state and the increasing size and interventionism of central government. It now has its tentacles in the departments of nearly every major university economics department in the world and has confronted the other two major crises of capitalism of the last 100 years – the 1970s crisis of Keynesiasm caused by the breakdown of the Bretton Woods agreement in 1971 and the banking collapse of 2008 – with more and more extreme pronouncements.
Neo Liberals believe, in essence, that markets can do no wrong – left to themselves, and over time, they will correct any imbalances. Yet Neo Liberals also accept corporate monopolies and the way in which they rig markets – an interesting conundrum and the one which is its most important aspect for us today. Multinational / corporate power now far exceeds that of states. International trade agreements like NAFTA, CETA and the proposed TTIP all demonstrate the power of Corporate lobbyists. ISDS (the interstate dispute settlement process) that is central to the TTIP process is a free pass to Corporates to take governments to a private court if their future profits are put at risk because of actions taken by government which might improve the wellbeing of the state’s workforce. (See Veiolia v The State of Egypt http://investmentpolicyhub.unctad.org/ISDS/Details/458).
There is, therefore, a redefinition of both the corporation and the individual A corporation is redefined as an arbitrary set of contractual obligations, not the repository of any production expertise. Corporations can do no wrong or should not be blamed if they do. On the other hand the individual is seen only as an entrepreneurial self. Every disaster is the result of risk-bearing and personal fallout from choices in investment.
On the rhetoric of the “small state” that was the watchword of the Neo Liberal revolution from Reagan and Thatcher to Osborne, there is an acute disjunct between that supposed aspiration and the actual (hidden) desire for a “coercive” state – one that will force changes in the interest of the market and thus entrap or imprison a high proportion of the population. So in brief, Neo Liberals want:
- Free Markets
- Small State
- Low Tax
- Individual Liberty
- Big Defence
For the individual this means:
- The monetisation of everything or the extraction of economic rent from everything.
- I am financialised , therefore I am.
- Anyone not willing to yield to rent or financialisation (those in social housing / libraries / health care / free education) is marginalised and risks being portrayed as ‘scroungers.’
- There are only two classes: the wealth syphoners and the syphonees.
The Refutation of Neo Liberalism
There has been a debate on the NEON thread on this topic for some time and most recent response to this destructive system was posted by Guardian journalist, Zoe Williams (living proof that that the paper does still employ the odd genuine socialist). It is the result of a Compass meeting and is still very much work in progress, but is an excellent starting point for us to consider when we engage with people in North Somerset.
- The wealth of a country is in its people. The real waste of a country’s resources is in failing to create the conditions in which everybody can flourish.
- Education is a public good
- The state is the best of all of us, combined. It is our pooled sovereignty to protect us from predators and our pooled wealth to realise our ambitions.
- The state is not there to supplement low wages and subsidise corporate super-profits.
- Generosity drives progress (shared ideas, shared resources), and justice drives prosperity. Both traits are innate, not cultural, and they alter very little over time. We are as generous and just as we have ever been; we are the same people that created the rule of law and the NHS.
- Inequality is wrong because it fatally limits your bargaining power, when you’re on the arse end of it. Not because someone else has a Porsche and you want it.
- People are worth more than the productivity they add to an economy
- If you can do a full-time job and not be sure at the end of it that you can afford shelter, food and warmth, then there is nothing wrong with you, there is something wrong with your employer, your housing market, your food supply, your utilities’ ownership structure, or most likely, all four.
- A state in which people cannot afford necessities is a primitive, failing one.
- The market is quite good at answering small questions, but quite bad at answering important and/ or long-term questions.
- Only invest in a future you’d want to live in.
- We have the technology to answer the pressing environmental questions; or at least, the technology to bridge our needs while we figure out the rest. All we need is for stupid people not to be in charge.
- Markets are social spaces; they need morals as much as any other space where people meet each other needs morals.
Steve Timmins is on the Executive Committee of North Somerset Constituency Labour Party and is proud to be one of the many, many new Labour supporters in the constituency fighting for a Labour victory in 2020.