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Title: Neoliberalism Author: David Graeber Date: 2009 Language: en Topics: neoliberalism, bureaucracy Source: Retrieved on 28th November 2021 from https://davidgraeber.org/articles/neoveralism-or-the-beuracratizatiom-of-the-world/ Notes: Chapter 4 of The Insecure American: How We Got Here and What We Should Do about It, edited by Hugh Gusterson and Catherine Besteman, University of California Press, 2009.
Americans often find it difficult to talk about politics with people
from other parts of the world. Consider three quotes culled, more or
less at random, from world newswires around the end of December 2005. In
Bolivia, newly elected president Evo Morales declared that in his
victory “the people have defeated the neoliberals.” “We want to change
the neoliberal model,” he added. In Germany, Lothar Bisky announced the
creation of a new political party that, he hoped, would “contribute to
creating a democratic alternative to oppose the damage caused by
neoliberalism to social cohesion.” Around the same time, a pan-African
Web journal announced a special issue whose articles “reflect a growing
debate on economic alternatives to neoliberalism from countries as far
afield as Mauritius, Swaziland and Mali.”[1]
These are just three: I could easily have chosen dozens of them. Across
most of the planet, neoliberalismis a household word. Arguments about
neoliberalism form the stuff of everyday political conversation.
Politicians are accused of being neoliberals or pursuing neoliberal
agendas; opposition candidates get elected by running against
neoliberalism (then, often as not, are accused by their former
supporters of caving in to it). Neoliberalism is seen as the dominant
ideological force in the world, an attempt by the United States, as the
world’s sole remaining superpower, to extend its own social and economic
model to the rest of the world. Some say it is inevitable, even
desirable; others organize against it. But almost everyone has an
opinion on the matter.
In the United States, few have ever heard of it. Mention the word to
almost anyone but an academic or international affairs correspondent,
and you are likely to be met with empty stares. If you want to talk
about the same issues, in fact, you are forced to rely on obvious
propaganda terms like free trade, free-market reforms, or globalization.
The bias in the first two is pretty obvious. You don’t put the word free
in front of a name if you’re trying to be neutral about it.
Globalization is only slightly more subtle. When you call something
“neoliberalism” you are saying that this is a set of ideas, simply one
theory among many about the best way to organize an economy.
“Globalization,” in contrast, is always treated as something inevitable.
There’s not much point in having an opinion about whether the sun will
rise tomorrow, argues Thomas Friedman, probably the most prominent
American advocate of neoliberalism (which of course he never refers to
by name): one simply accepts it as reality and tries to make the best of
it.[2] Globalization just somehow happened. No one is really
responsible. Perhaps it had something to do with the Internet. At any
rate, now we all have no choice but to adapt.
From the point of view of those who feel neoliberalism is simply a
matter of the United States imposing its own model on the rest of the
world, all of this is exactly what one would expect. To be fair, though,
there are many more innocent reasons why most Americans would find the
term neoliberalism confusing. In the United States, political language
has developed very differently than it has in the rest of the world. For
example, in the nineteenth century, the word liberal was applied to
people who believed in individual liberty, which they saw as founded on
private property rights. These “classical liberals,” as they are
sometimes called, tended to reject government interference in the
economy as much as in personal affairs. This is still what
liberalimplies in most of the world. But in the United States, over the
course of the twentieth century, the term was adopted by the moderate
Left until it came to mean something like “social democrat.” Starting in
the 1980s the Right responded by turning the word liberalinto a term of
opprobrium: liberalbecame, in the minds of many working-class Americans,
a designator for latte-sipping cultural elitists, “tax-andspend”
politicians, proponents of gay marriage, and similar bĂŞte noires.
Meanwhile, free-market enthusiasts—the sort of people who elsewhere in
the world are referred to as “liberals”—began casting about for a new
name. The one they ended up fixing on was libertarian—a term they
borrowed from the Left. The result is that it is even more difficult for
Americans to talk to anyone else about politics, since, in the rest of
the world, libertarian still largely retains its traditional meaning as
a synonym for anarchist. In Europe or South America, it is perfectly
unremarkable to talk about “libertarian communism”—referring by this to
the idea that states should be dismantled and control over economic life
placed in the hands of democratically organized communities. Use a term
like that in front of the average U.S. citizen, and he will assume that
you are one of those annoying people who like to confuse others with
intentional oxymorons—or perhaps that you are insane.
It is never a good thing when people cannot talk to each other, and it
seems particularly unfortunate right now, when so many Americans seem
confused about the widespread anger about their role in the world. In
the press, opposition to neoliberalism—particularly in Latin America—is
often referred to as “anti-Americanism,” as if neoliberalism really were
simply identical to the American way of life. In fact it is nothing of
the kind. Indeed, a case could well be made that the majority of
Americans reject its core ideas and institutions and that Americans have
actually been the first historic victims of neoliberal
“reforms”—policies that are the ultimate cause of many of the
insecurities described in this volume. Certainly, Americans have also
played a prominent role in the growing global movement against
neoliberalism.
As the above suggests, I am not making any claim to neutrality here. I
think it is fair to say that anyone speaking of the roots of global
poverty or the nature of capitalism who claims to be providing an
“objective” or “scientific” account is either extraordinarily naive or
trying to sell you something. It seems more honest to simply reveal
one’s biases and let the reader take it from there. For over six years I
have been deeply involved in a global movement against neoliberalism,
whose overall effects, I feel, have been an unmitigated catastrophe.
What follows, then, are a series of efforts to conceptualize the present
historical situation, at a time when, across the world, thoughtful
people are increasingly trying to imagine a way out.
Neoliberalism as an economic and political theory is based on a few
relatively simple assumptions. A minimal sketch might run like this:
are not competent to run large industrial and commercial enterprises; in
fact, private firms operating in pursuit of profit in a market
environment can always be expected to do a better job providing public
services than public institutions. Government should therefore restrict
itself to providing a legal environment in which it is easy for private
firms to do this and maintaining necessary infrastructure.
protectionist policies need to be abandoned; rather than trying to
develop autonomously, each nation should pursue its particular
“competitive advantage” (whatever this may be: cheap labor, an educated
workforce, natural resources) in a single global marketplace.
supports for basic foodstuffs, provision of free medical services, or
guaranteed pension funds, are ultimately They should be pared back or
eliminated, since they distort the workings of the market. Instead, if
governments limit spending so as to maintain balanced budgets to
guarantee the stability of their currency, they will create a market
environment favorable to foreign investment, and the market itself will
provide better solutions to these problems.
Since 1980, almost every country in the world has adopted some version
of neoliberal reforms. Only exceptionally, however, did they do so
because politicians got elected by promising to do so. Arguably the
first neoliberal experiment was carried out in the mid-1970s by General
Augusto Pinochet in Chile after he had overthrown an elected government
in a military coup. Most reforms, however, were carried out not by force
of arms but by what might be termed fiscal coercion.
The real paradigm here, as David Harvey notes, was New York City’s
financial crisis that began in 1975.[3] It is worth considering in some
detail. The crisis began with the city teetering on the edge of fiscal
default. After the federal government refused to provide a bailout and
investment bankers refused to roll over the debt, New York was driven to
technical bankruptcy. Creditors then proceeded to form what they called
the Municipal Assistance Corporation, an entity independent of the city
government and hence unaccountable to voters, that as a condition of
rescuing the city began to remake its political landscape. One must bear
in mind that at the time New York was a kind of enclave of social
democracy in America. It had not only the most extensive rent control in
the country but America’s most unionized workforce and most extensive
public services and even maintained its only free public university. In
the name of balancing the budget, the MAC broke the power of the
municipal unions, slashed services, rolled back pensions and job
security, offered enormous tax cuts to business and developers, and
began to restructure the very shape of city government.
Gone first of all was any pretense that city government existed equally
for all its citizens. Rather, the city was a product to be marketed.
Logos and jingles were invented (the Big Apple; I Love New York). As the
city center was rebuilt as a glittering advertisement for itself, the
poor were to be pushed out of sight of potential tourists and investors.
The calculated withdrawal of fire crews allowed peripheral neighborhoods
like the South Bronx and East New York to descend into burnt-out
wastelands; infrastructure like subways, crucial to the working class in
the outer boroughs, was allowed to crumble; CUNY was compelled to charge
tuition; at the same time, city government poured money into supporting
gentrification campaigns and the creation of a new telecommunications
infrastructure in the city center aimed at creating a better “business
climate” for investors.
New York in the late 1970s and early 1980s normally evokes images of
hedonistic yuppies sniffing cocaine at Studio 54, or, alternately,
images of urban decay: graffiti, crack houses, the epidemic of
homelessness that at the time inspired comparisons with Calcutta or
Bombay. The increasing divisions between rich and poor that made these
images possible were not, as apologists often claimed, the inevitable
results of deindustrialization and the growth of the communications or
service industry. They were the product of policy decisions that New
Yorkers as a whole had not and would never have collectively chosen,
that were, effectively, imposed on them by financiers philosophically
opposed to the very idea of public goods. The gradual result, however,
was the emergence of what might be called a neoliberal ethic:
simultaneous emphases on personal self-realization for the affluent and
“personal responsibility” for the poor. Both seemed to rely on the
rejection of any notion that democracy implies some common dedication to
a community (let alone that community members should therefore be
guaranteed access to those minimal needs, food, shelter, and free time,
that would allow them to participate in a community’s democratic life).
Margaret Thatcher, who was one of the few politicians to state it
explicitly, put it most succinctly: “There is no such thing,” she said,
“as society.” There are individuals, and families, and the outcome of
their independent self-interested decisions isdemocratic choice. If
community was to be evoked, it was—as in the “I Love New York”
campaign—just another sales gimmick, since, after all, in the neoliberal
universe, reality itself is simply whatever you can sell. The same sense
of fragmented individuals left with nothing but their own capacities for
self-marketing echoed on every level of the emerging culture of the
time, from the savvy postmodernism of New York’s art scene to the
endless subdivision of consumer identities identified and targeted by
its advertising agencies.
Not only does the history of New York show that politicians can rarely
get elected running against community;[4] it also shows that, once the
process of social triage is already accepted as a fait accompli,
politicians can often quite readily win elections on law-and-order
tickets, promising to protect middleand working-class citizens from the
chaos and violence that such policies invariably unleash. In New York,
the election of Rudy Giuliani in the 1990s was only the culmination of a
long degeneration of politics into an obsession with violence and
crime—essentially, with cleaning up the mess made in the 1970s. The
pattern was to be reproduced worldwide, again and again, in city after
city.
In the 1980s, the Third World debt crisis allowed the Reagan regime to
begin applying the same model on a global scale. The origins of that
debt crisis go back to the Organization of the Petroleum Exporting
Countries (OPEC) oil embargo of the late 1970s. Essentially, what
happened was that with the spike in oil prices OPEC countries were
suddenly awash in so much money that Western banks (in which they
invested it) soon ran out of anyone willing to borrow it. The result was
a period of “go-go banking,” with bank representatives jet-setting about
the world aggressively trying to convince Third World leaders to accept
high-interest loans based on wild projections of the economic bonanzas
that would follow. A large amount of this money was simply stolen; much
of the rest was invested in ill-conceived grandiose projects (such as
the enormous dams the World Bank became so famous for) that were later
used to showcase the foolishness of the very idea of governmentsponsored
development. Needless to say, within a few years many of the poorer
nations themselves teetered on the brink of default. It was at this
point that the U.S. Treasury, working closely with the International
Monetary Fund (IMF), fixed on a policy that under no circumstances were
such debts to be written off.[5] This was, I should note, a major
departure from previous economic orthodoxy, which took it for granted
that those who lend money are assuming a certain risk. It showcases, in
fact, a crucial element of neoliberalism: that, while the poor are to be
held accountable for poor economic decisions (real or imagined), the
rich must never be. In practical effect, it meant that even if a banker
were to lend a hundred million dollars to a corrupt dictator, knowing
full well that he was likely to place the sum directly in his personal
Swiss bank account, and even if that dictator were to be subsequently
ousted by a popular uprising, he could rest assured that the full
apparatus of world government and financial institutions would lock into
step to insist the money could still be recovered—at generous rates of
interest—from the dictator’s former victims. If thousands therefore had
to starve, so be it.
The innovation was not just insisting on the inviolability of debt but,
as in New York, using it as a political instrument.[6] Loans soon became
unpayable; the terms had to be refinanced. Before the IMF was willing to
do so, however, governments had to agree to undergo what were called
“structural adjustment programs” designed by neoliberal economists.
Their first priority was always to balance the budget, ostensibly so as
to create a stable currency and a favorable climate for investment. This
was to be done primarily by slashing social services, most dramatically
by the removal of price supports on fuel or basic foodstuffs, or the
imposition of “users’ fees” for previously free services like health
clinics and primary education. This was to be accompanied by selling off
public resources and fully opening the local market to foreign trade and
investment. As one might imagine, these policies inspired constant
rebellions on the part of the urban poor, but governments were able to
say they had no choice. They were right. On the few occasions when
leaders of poor countries outright refused to sign an IMF agreement— for
instance, Madagascar’s President Albert Zafy in the early 1990s—they
soon discovered that in the absence of one all other countries would
shut off foreign aid; without aid, private capital pulled out; without
insurance credits, it was not even possible to export products. The
effects were—at least in terms of purely economic devastation—roughly
comparable to what might have been achieved by a minor nuclear
attack.[7]
The 1980s and 1990s were, of course, the very period when, in much of
Europe, Africa, and the Americas, dictatorships were being replaced by
elected governments. Voters quickly discovered, however, that their
choices had next to no effect on economic policy, since the levers of
economic decision were simultaneously being removed from the hands of
governments and passed to unelected, and unaccountable, neoliberal
technocrats. This did not happen just through debt. Another leitmotif of
the era has been the passing of jurisdiction over economic matters to
bodies meant to enforce trade agreements: the signing of the North
American Free Trade Agreement (NAFTA), in 1994, for instance, committed
Mexico to make major constitutional changes—notably, abolishing all
forms of communal land tenure, including the collective ejidosthat were
one of the main legacies of the revolution— without the matter ever
coming up before the electorate.[8] In Europe, European Union agreements
played a similar role, forcing governments to eliminate social
protections and institute “flexible” labor regimes in the name of
balancing the budget, so as to maintain the stability of Europe’s new
common currency. This was soon followed by the expansion of similar
trade agreements—the General Agreement on Tariffs and Trade (GATT), then
the World Trade Organization (WTO)— worldwide. In each case appointed
bodies of bureaucrats were empowered to strike down laws that were
deemed overly protectionist, including laws designed to protect working
conditions or the environment.
Perhaps the most dramatic case, though, was that of Eastern and Central
Europe. Surveys taken immediately after the fall of communism in 1989
and 1991 revealed that in pretty much every case most citizens preferred
to see the creation of some kind of Scandinavian-style social welfare
state, with substantial minorities in favor of the maintenance of
socialism and almost no one in favor of instituting a pure free-market
model. Yet as soon as elected governments were in place, they uniformly
began administering “shock therapy” programs designed abroad to
institute exactly that, as quickly as possible. It was all the more
striking since these states were not, for the most part, burdened with
substantial debt. By that time, it had apparently become impossible to
fully integrate with the world economy on any other terms.[9]
In fact, by the 1990s one can genuinely speak of a system of global
governance operating on neoliberal lines. Imagine it as consisting in a
series of tiers. On the top are the money traders. One of the great
innovations of recent decades is the enormous efflorescence of finance
capital: at this point, over 90 percent of economic transactions in what
is called the global marketplace no longer have any immediate connection
with manufacturing or trading commodities of any kind but consist simply
of currency trading and other forms of financial speculation. This acts
as an enormous disciplining mechanism, since the “electronic herd,” as
Thomas Friedman likes to call them, can instantly pull money out of
“emerging markets” seen as betraying neoliberal orthodoxy. The effects
of such a currency run can be, again, near-nuclear in their
implications. Next are transnational corporations, whose incomes are
often far larger than the GDPs of most actual countries. During the
1980s and 1990s, thousands of formerly independent enterprises—from
newspapers to department stores to construction companies—have been
absorbed into gigantic conglomerates organized on bureaucratic lines.
Next are the various trade bureaucracies—the IMF, the WTO, the EU, the
Association of Southeast Asian Nations (ASEAN), NAFTA, the various
Reserve Banks, and so on, whose economists regularly evoke the threat of
the financiers to insist on policies amenable to the transnationals.
Finally, one has the endless elaboration of nongovernmental
organizations (NGOs), which have come to provide services—from childhood
inoculations to the provision of agricultural credits—previously
considered the work of national governments.
All of these tiers—including the huge brokerage houses and hedge funds
that conduct most of the world’s financial trading—together constitute a
single huge, de facto, administrative system. It is the first
administrative system in human history that actually has the power to
enforce decisions on a planetary scale, since, after all, no empire has
ever spanned the entire world, and the UN, the first genuinely global
institution, never had more than moral authority. There is of course a
word for large, hierarchically organized administrative systems. They
are called bureaucracies. Certainly, most of those operating within this
new administrative system do not like to think of themselves as
bureaucrats. And certainly, these organizations tend to operate in a far
more decentralized and flexible style than the government bureaucracies
they aimed to (largely) supersede.[10] But it is only to be expected
that a planetwide trade bureaucracy would be organized differently than
those with which we are most familiar. The remarkable thing is that it
has been so effective in imposing its dictates that most of those
inhabiting the richer countries are effectively unaware of its
existence.
Supporters of neoliberal reforms were usually perfectly willing to admit
that their prescriptions were, as they often put it, “harsh medicine” or
that the effects would, at least initially, be “painful.” The
justification was—it was Margaret Thatcher again who put it most
succinctly—that “there is no alternative.” Socialist solutions having
failed, and global competition being what it was, there was simply no
other way. “Capitalism” (by implication, neoliberal capitalism) had been
proven “the only thing that works.” The phrase itself is significant,
since it shows how thoroughly we have come to see states and societies
as business enterprises; it rarely seemed to occur to anyone to ask,
“Works to do what?” Nevertheless, even if neoliberalism is judged in its
own terms—in which success is measured almost exclusively by economic
growth—it has proved, on a global scale, remarkably unsuccessful.
Remember here that “free-market reforms” were supposed to be a reaction
to the shortcomings of the state-sponsored development strategies of the
1960s and 1970s. Here numbers are available. In the 1960s and 1970s,
global growth rates averaged 3.5 percent and 2.4 percent per year,
respectively. During the period of neoliberal reforms in the1980s that
number fell to 1.4 percent, and during the neoliberal “Washington
consensus” of the 1990s it fell to 1.1 percent.[11] The effects were
even more dramatic in the countries of the developing world, which were
supposed to be the greatest beneficiaries of “free trade.” If one
excludes China,[12] the first two decades saw an overall 3.2 percent per
year per capita growth in real domestic product in the global
South—higher, in fact, than the global average at that time. During the
neoliberal era (1981–99) this fell to 0.7 percent.[13] Many economies
actually shrank. What’s more, low rates of growth were almost invariably
accompanied by increasingly unequal distribution. As national elites
established themselves in the glittering metropolises of global cities
or locked themselves away in Ethernet-wired gated communities,
governments abandoned any commitment to policies once meant to ensure a
minimal degree of social protection to all their citizens. The effect
was, as in New York, a kind of social triage, with government’s role
largely to sweep the poor or newly impoverished away and keep them out
of sight, while international NGOs attempted to limit the damage. Taken
on a world scale, overall social indicators like literacy rates and life
expectancy declined dramatically.[14]
If this is not general knowledge, it is partly because proponents of
neoliberalism never talk about the big picture. It is in the nature of
the global market that there are winners and losers, they say; then they
try to demonstrate that the winners are those that followed their advice
most closely. Hence Lithuania is doing better than Russia, Uganda than
Angola, Chile than Brazil. Even this usually requires a fair amount of
cooking the books. In the 1980s, for example, reformers liked to point
to the success of the “Asian Tigers” like South Korea and Taiwan. This
required soft-pedaling the fact that both had actually relied on heavy
tariffs, massive government investment in public education, and even
government-directed industrial five-year plans—basically, exactly the
opposite of what neoliberals were recommending. In Europe, Great
Britain, easily the most assiduous in carrying out freemarket reforms,
now has living standards lower than Ireland’s, while Finland, which of
all European countries has the largest share of its economy dedicated to
social welfare programs, has, according to the World Economic Forum, now
replaced the United States as the most economically competitive nation
on earth.[15] At the same time, the two great winners in the world
economy during the last decade, the United States and the People’s
Republic of China, are those in a position to most systematically ignore
the advice of the IMF. It is little known in the United States, for
example, that every year the IMF chastises the U.S. government for its
massive budget deficits and demands the slashing of tariffs and farm
subsidies. The government simply ignores it, since in the United States
the IMF lacks any means of enforcement.[16] China, as the United States’
largest creditor, has also managed to avoid almost all of the
“discipline” applied to other developing countries: if it were in the
same position as, say, Brazil, it would never have been allowed to
maintain policies like extending endless credit for the building of
industrial infrastructure, let alone systematically ignoring foreign
patents and copyrights—policies that have been, arguably, the keystones
of China’s spectacular economic success.
IMF economists are of course aware of the disastrous effects that so
often seem to follow when countries adopt their policy recommendations.
Their reaction is always the same: such countries had not gone far
enough. Even harsher medicine is required.
As the Filipino economist Walden Bello remarks, this is at the very
least somewhat puzzling. Most of these economists have worked
extensively with the private sector. They are aware that if a private
firm hires a consultant to recommend an economic strategy, and the
strategy recommended fails completely to reach its stated objectives,
that consultant can normally expect to be fired. At the very least he
will be expected to come up with a different strategy. When those same
economists insist that countries like Uruguay or Mali pursue the same
policies year after year for decades without seeing any significant
positive effects, one has to wonder if the best interests of Uruguay or
Mali are really foremost in their minds.[17] Certainly many in Uruguay
and Mali concluded from quite early on that this was not the case.
There has been a great deal of speculation on this account. David Harvey
has noted that neoliberalism, however ineffective as a strategy for
global prosperity, has proved remarkably effective in solidifying class
power—a power that had been widely threatened by revolutionary and
democratic movements in the 1970s. (To this I would add, the greatest
beneficiaries of neoliberal policies have been the staff of the emerging
administrative apparatus itself.) Bello himself makes a similar
argument, but in geopolitical terms. By the end of the 1970s, countries
like Brazil were indeed emerging as significant industrial powers, and
the general economic position of the South was advancing so quickly that
its political representatives in the nonaligned movement were beginning
to demand changes in the very structure of the global economy. The OPEC
oil embargo was only the most dramatic manifestation of this general
flexing of new economic muscles. If so, structural adjustment has proven
extremely effective in blunting the offensive and turning many countries
of the South into impoverished suppliants. This perspective, however,
raises the intriguing question of the degree to which the United States
was, through neoliberal policies, simply postponing the inevitable. This
is the view, in turn, of Immanuel Wallerstein, who points out that if
one peeks behind the virtual universe of finance capital one discovers
that American economic power relative to the rest of the world has been
declining continually since at least the 1960s. The main reason, he
argues, is low overall productivity. While the United States appears on
paper to have the most productive workforce in the world, this is
because statistics measure the productivity only of wage laborers—who in
the United States are squeezed more than almost anywhere—and never of
managers. To put it crudely: in the United States, it takes two or three
executives to do the work done by one in Europe or East Asia, and U.S.
executives demand to be paid five or six times more. One of the main
effects of U.S.-promoted neoliberal reforms around the world, according
to Wallerstein, has been to encourage the creation of a similarly
parasitical executive class in other countries, with the effect of at
least slowing down the rate at which the rest of the world is overtaking
it. The rapid rise of India and China suggest this game might soon be
up.[18]
We are left with a paradox. How did a philosophy of radical
individualism become the justification for creating the world’s first
global administrative bureaucracy? Here I think we have to return to the
nineteenth century. If old and new liberalism have anything in common,
it is first, that both saw human freedom largely as the ability to enjoy
one’s personal property, and second, that both nonetheless saw
themselves as progressive, even revolutionary forces in human history.
Let us consider briefly the political context of such claims. When,
during the Putney debates in 1647, radical factions in Cromwell’s army
argued that “every man by nature [is] a king, priest and prophet in his
own natural circuit and compass,” the sole proprietor of his own person
and possessions “on which none could trespass,” even the government,
this was a very radical claim.[19] Two hundred years later, it was
distinctly less so. By that time, workers’ movements were beginning to
level a fundamental challenge against the political power of private
wealth. Liberals, on the other hand, were that fraction of the Left most
likely to defend private wealth and particularly market economies.
This is not to say that nineteenth-century liberals were not, as they
generally claimed, radicals and even leftists. Most were honest
opponents of slavery and militarism, proponents of individual rights and
universal suffrage. Free-market enthusiasts, they also tended to follow
Adam Smith in seeing large chartered companies as government-imposed
monopolies and restraints on genuine economic competition. The liberal
ideal was of a world of autonomous individuals or small family firms
buying and selling their wares on a global market. If most looked with
favor on the British Empire of their day, it was because that empire
did, to a certain degree, put these ideals into practice. For example,
though it used force of arms to open markets, it refused all forms of
protectionism at home. Since chartered monopolies like the East India
Company had been dismantled at the beginning of the century, British
capitalism of that time actually was largely a matter of relatively
small family firms. Finally, for all the depredations of the industrial
revolution, liberals were able to see even wage labor as progress in the
direction of freedom when compared with the slavery, debt peonage, and
forced and bonded labor on which capitalists had largely depended up to
that point, and on which, globally, to some degree they always have
depended and still do depend.
American capitalism began even closer to the liberal ideal than British,
but by the 1870s and 1880s it had begun to take a very different
direction. Its key innovation was the creation of the modern joint-stock
corporation. Corporate charters— which potentially allowed joint-stock
companies with thousands of employees to be treated, for legal purposes,
as individual persons—had for most of the nineteenth century been
considered privileges granted by local governments to local businessmen
in a position to afford them some specific public service, such as
building a canal or railroad. By the 1880s and 1890s, corporations not
only had attained permanent status but had come to dominate the national
economy. In the twentieth century, America led the way in creating
transnational corporations that effectively spanned the world. As
Giovanni Arrighi notes, when the United States replaced Great Britain as
the dominant world power, it brought its own, bureaucratic, form of
capitalism.[20] The torch was formally passed after World War II, and
one of President Roosevelt’s first acts at the time was to create the
original framework for what I have called the emerging global
bureaucracy. These came to be known as the Bretton Woods institutions,
after the ski resort in New Hampshire where the conference was held at
which they were created: the IMF, the World Bank, and the GATT, ancestor
of the WTO. Technically under the legal umbrella of the newly created
United Nations, they soon came to overshadow it as an effective system
of global administration.[21] Arrighi also notes that unlike Great
Britain, the United States at its most powerful was never particularly
committed to free trade. It never opened its home markets in the way
that England had. Even today, roughly a third of all transactions
counted as “international trade” under the American aegis are not trade
at all but simply transfers between different branches of corporations
that, in their internal organization, are often barely distinguishable
from enterprises in the old Soviet Union.[22]
So how does the second wave of liberalism fit in? It seems to me it can
be understood only in the light of what Wallerstein calls “the world
revolution of 1968.” The riots, uprisings, and campus revolts that shook
the industrialized world in the late 1960s were rebellions against
capitalism but equally against the welfare states with which capitalists
were then allied. They also tended to declare a complete break with both
the “respectable” Marxist opposition and Leninist regimes of the day.
The rebels of May 1968 in Paris wanted nothing to do with the French
Communist Party; theirs was a revolt in the name of individual
liberation, pleasure, and self-expression against every sort of stifling
social convention and bureaucratic constraint. And the same was true of
the spirit of 1968 in America as well. It hardly seems coincidental that
neoliberalism became the dominant ideology at precisely the moment when
the generation that attended college in the late 1960s began to come to
institutional power. As an ideology, it appears designed to do exactly
what the liberalism of the nineteenth century had done: to recuperate
revolutionary energies, ideas, even revolutionary language, for
capitalism.
Probably the best example here is the history of the word capitalism
itself. A key element in neoliberal rhetoric has been the idea that
capitalism is, itself, a revolutionary force. This kind of language is
actually quite new—at least, coming from capitalists. Capitalists have
historically never used the word capitalism at all, preferring terms
like free enterprise, entrepreneurialism, private enterprise, or
economic freedom. Capitalismwas a term employed almost exclusively by
its critics to describe what they saw as a sordid economic reality, one
where productive wealth was controlled by the few for their own benefit.
“Socialism,” in turn, was the unrealized ideal of a world where
productive wealth would be administered democratically for the common
good. One of the most characteristic intellectual moves of the
neoliberal era was to flip this around. Capitalism became the unrealized
ideal: a utopian dream of a perfectly free, self-regulating market.
Socialism was the sordid reality of government regulation. All progress
in human happiness and freedom could therefore be attributed to
capitalism and everything bad to the lingering effects of socialism.
This was not traditional capitalist rhetoric. It was, rather, a kind of
Marxism in reverse. Tellingly, the language was first employed largely
by defectors from the other side: most notoriously Russian exile Ayn
Rand; her Capitalism: The Unknown Ideal, originally published in 1946,
was a powerful influence on the young Alan Greenspan, who, as head of
the American Federal Reserve between 1987 and 2006, was to become the
veritable high priest of neoliberal orthodoxy. What began as the
language of the hard Right was soon to be adopted almost everywhere. By
the 1980s, the revalidation of the word capitalism seems to have been
adopted as a special cause by the editors of the supposedly left-leaning
New York Times, which probably ran at least a hundred different
headlines and editorials during that period announcing that some
left-wing regime or party had been forced to embrace “capitalism.” After
the collapse of Marxist regimes, Timescolumnists had become so
intoxicated with the idea of capitalism as a radical force that there
was a lively debate in its pages on whether Che Guevera, were he alive
today, would have become a free-market reformer out of sheer
revolutionary enthusiasm.
Only in this context, I think, can we understand how a rhetoric of
absolute individualism could ever have become the basis for an emerging
bureaucracy. It arrived tumbled breathlessly together with the language
of revolution. The problem was that this was not just a language, and
the aspects of the revolutionary that it drew on were, mostly, the most
disastrous. The essence of the neoliberal position in fact bears
stunning similarity to Stalinism—that is, to the very arguments used by
Marxist revolutionaries in the 1920s and 1930s to justify the creation
of a bureaucratic state. One might summarize it like this: “Science has
shown that there is only one possible way forward, and it is the same
for any society on earth. There is a scientifically trained elite who
understand this and must be given the power to reengineer society
appropriately. The economic views of those not trained in this science
are irrelevant. So shut up and do what you’re told, because, even if in
the short run this may cause tremendous pain and dislocation, even
starvation and death, somewhere down the line (we’re not quite sure
when) it will all lead to a paradise of peace and prosperity.”
The same line touted by Soviet apparatchiks to Russian peasants in the
1930s is now being touted to just about everyone; the only significant
difference is that now historical materialism has been replaced by
Milton Friedman–style free-market economics. It is hardly surprising,
then, that since 1989 so many actual Stalinist apparatchiks, from Poland
to Vietnam, have found it so easy to simply switch from one orthodoxy to
the other. It didn’t really require much of a fundamental leap.
Obviously, neoliberal global bureaucracies are not nearly so directly
hands-on as old communist ones were in trying to impose their utopian
vision. But the ultimate ideal, to subject every aspect of life to the
logic of the market, is—as defectors like financier George Soros like to
point out—if anything just as totalitarian in its ambitions. What’s
more, many of the effects have been curiously similar. Under Soviet
regimes, political life—let alone ideological debate—was outlawed. All
political questions were deemed settled; all that remained was the
administration of economic affairs—supposedly aimed at eventually
creating a consumer paradise. As a result, the only way one could stake
a political claim on the center was by playing to some kind of ethnic or
cultural identity: for example, if the Khazaks get a nuclear power
plant, surely we Uzbeks deserve one too. Identity politics was the only
kind the bureaucratic apparatus found acceptable. One result was that
when these states dissolved, many instantly descended into ethnic
warfare. It is clear that something rather similar is now happening on a
global scale. The fall of communism in particular was taken to mean that
ideological—in effect, political—debate was over. The result was that
identity politics not only were seen as legitimate but were in a very
real sense the only sort of politics seen as entirely legitimate. In
some cases the link to global bureaucracies is quite clear.
Neoliberalism, as I have noted, seeks to eliminate all collective forms
of property—the only exception that seems to be allowable is for people
classified as “indigenous.” One result has been a worldwide outpouring
of attempts by groups to claim indigenous status, including many (such
as the pastoral Maasai in Kenya) that would never have dreamed of
describing themselves as such before. On a broader scale, Samuel
Huntington’s argument that, now that the age of ideological struggle is
over, a “war of civilizations” (i.e., religious and cultural identities)
is all that remains is a perfect expression of the logical results of
trying to declare an end to any other kind of history.
Without this Manichean framework, borrowed from the cruder varieties of
Marxism, it would be impossible to argue that, since “communism failed,”
there was no alternative but to strive toward some ideal of pure
free-market capitalism—one that has never actually existed anywhere.
Otherwise the argument would make about as much sense as the argument of
someone who, witnessing the collapse of the Catholic Church after a long
struggle with Episcopalianism, concluded that therefore we all had to
become Baptists (or maybe Jews). It seems to me that a more sober
assessment of history would rather have concluded that the most
effective way to win a cold war is through limited social welfare
programs combined with massive government military spending to stimulate
the economy; that the most effective way for poor countries to play
economic catch-up with rich capitalist ones is by combining market
forces, protection of key industries, strategic exports, and massive
government investment in education and infrastructure; and that if one’s
aim is to create the richest possible material life and greatest freedom
for about 10 percent of the world’s population while tossing the bottom
third to the wolves, neoliberalism is surely one’s best bet. It also
seems to me that none of this has any necessary bearing on other
questions, such as “What is the most effective way to bring about a
world in which ordinary people are secure in their basic needs, and thus
free to pursue the things that are most important to them?” or “How do
we ensure that the planet is not destroyed?”
Capitalism itself—industrial capitalism at least—has had a very brief
historical run. During a mere two hundred years, however, it has
nonetheless shown a remarkable ability to come up with threats to the
very existence of the species: first nuclear destruction, now global
climate change. There are good reasons to believe it is simply not a
viable long-term system: most obviously, because it is premised on the
need for continual growth, and economic growth cannot continue forever
on a planet with finite resources. Capitalism that was not based on the
need to continually expand production would simply not be capitalism;
its fundamental dynamics would change; it would become something else.
Whatever economic system predominates in fifty years, it is very likely
to be something other than capitalism. Of course, that something might
be even worse. This is why it seems to me this is precisely the wrong
time to give up on imagining alternatives to capitalism: that is, to
come up with ideas for what might actually be better.
This is why, for me, the movements of resistance against neoliberalism
have been so crucially important. These began almost immediately in the
1980s in most parts of the world, largely taking form around grassroots
campaigns in defense of one or another form of common property.[23] At
first they were largely unconnected. The Zapatista revolt in Chiapas in
1994 was a key moment; it was the Zapatistas, in fact, who sponsored the
first international meetings that eventually gave birth to what the
media came to call “the antiglobalization” movement—really, a global
movement, as the Zapatistas put it, “for humanity and against
neoliberalism.” The spectacular mass actions during the WTO meetings in
Seattle in November 1999, then afterwards in Washington and Prague
(versus the IMF), Quebec (versus the Free Trade Agreement of the
Americas [FTAA]), and Genoa (versus the Group of Eight), were all
intended first and foremost to reveal to the world the undemocratic
nature of the bodies that had come to control global economic policy.
They served, in other words, to point out the very existence of this new
global bureaucracy, on the assumption that most people in the world
would draw the obvious conclusions. In this they were strikingly
successful: within less than two years’ time most of the key tenets of
neoliberalism, treated as self-evident truths in the 1990s, had
everywhere begun to be called into question. Ambitious plans to expand
the WTO and create new trade pacts like the FTAA treaty stopped dead in
their tracks.
It is a bit ironic, in fact, that ever since the war on terror began
distracting U.S. activists and the U.S. public, no one seems to have
noticed that most of the original apparatus of neoliberalism has entered
into a crisis. The “Doha round” of the WTO was declared a failure in
2006, and the very existence of the institution is being called into
question. The IMF is if anything in even deeper crisis. After the
meltdown of the Argentine economy in 2002, and a veritable popular
uprising against the entire political class, the social democratic
president elected in 2003, Nestor Kirchner, had to make a dramatic move
to restore the legitimacy of the very idea of government. So he
defaulted on Argentina’s foreign debt. This is precisely what the IMF is
supposed to ensure never happens, and international bankers urged it to
step in and punish the country, but for once it was unable to do so.
This was for various reasons (partly the fact that the global movement
had rendered it a pariah, partly that everyone knew its disastrous
advice was largely responsible for the crisis in Argentina to begin
with), but as a result the entire edifice of power-throughdebt has begun
to crack. Argentina and Brazil paid off their entire IMF debt; soon,
with the help of Venezuela’s petrodollars, so had the rest of Latin
America. (Between 2003 and 2007, Latin America’s total debt to the IMF
declined by 98.4 percent. They basically owe nothing.) Russia, India,
China all followed suit and, along with countries like Korea, Thailand,
Malaysia, Indonesia, and the Philippines, now refuse to even talk about
new loans. As a result the IMF itself, reduced largely to lording it
over Africa, is rapidly itself going bankrupt. The World Bank holds on,
but its revenue is radically reduced.
All this seems to be happening under the radar of the U.S. public.
Meanwhile, in most of the rest of the world, lively arguments continue
on what a different, more humane world economy might actually look like.
In the United States, the movement has seen enormous debates between
reformist (“anticorporate”) and revolutionary (“anticapitalist”)
approaches. In much of the world, these arguments have come to turn more
on the potential role of the state: pitting those that wish to see the
creation of new forms of commons (the restoration of rights in land,
water, oil, as communal resources) through the aegis of national
governments against those that reject the state entirely and dream of a
world of what is sometimes called “true globalization,” without national
borders or government bureaucracies, built on confederations of free
communities managing their resources through direct democracy—in effect,
through some form of libertarian communism. It is far too early to tell
what will emerge from these conversations, whether new democratic forms
will actually emerge or whether we will just see a reshuffling of the
architecture of global bureaucracy. Neoliberalism is by no means dead:
similar reforms are being carried out on a massive scale within newly
emerging powers like India and China, where it is much harder to
mobilize international opposition. But we might do well to pay attention
to the arguments, because they may well prove critical to the future
history of humanity.
[1] The sources are, respectively, Alex Emery, “Bolivia’s Morales to
Challenge U.S. after Election” (Update 3), Bloomberg Wire Services,
December 19, 2005, www.bloomberg.com/apps/news?pid=10000086&
sid=aEbMZeNviHPE; “Alternative Left Parties Sign Cooperation Agreement,”
Deutsche Welle, December 11, 2005,
www.dw-world.de/dw/article/0,2144,1811746,00.html; George Dor, ed.,
“Alternatives to Neo-Liberalism,” special issue, Pambazuka News, no. 234
(December 15, 2005), www.pambazuka.org/ en/issue/234.
[2] That was a paraphrase. The exact quote reads: “I feel about
globalization a lot like I feel about the Generally speaking, I think
it’s a good thing that the sun comes up every morning. It does more good
than harm But even if I didn’t much care for the dawn there isn’t much I
could do about it.” Thomas Friedman, The Lexus and the Olive Tree(New
York: Anchor Books, 2000), xxi–xxii.
[3] David Harvey, A Brief History of Neoliberalism(New York: Oxford
University Press, 2005).
[4] Thatcher was something of an exception in this regard, though it is
to be noted that even she never got more than about a third of the
popular vote.
[5] Or to be more accurate, interest would not be counted as principal.
By the mid-1980s most poor countries had in fact paid out much more than
they had ever borrowed. The interest rates, however, were set so high as
to make full repayment effectively impossible.
[6] The idea of tying debt relief to political reforms was the
brainchild of Reagan’s secretary of state James Baker and become known
as the Baker Plan.
[7] The case of Madagascar is all the more telling because Zafy, a
surgeon who was placed in power by a nonviolent revolution that replaced
former dictator Didier Ratsiraka, had the impertinence to demand that
the IMF provide one example of a poor country that had taken their
advice and was now rich. After he refused to sign, the economic
devastation was such that in the next election he was defeated by
Ratsiraka, who vowed to reverse the policy. Five years later Ratsiraka
was ousted by another popular uprising, but this time by a neoliberal
yogurt magnate.
[8] All the more so considering that the government that signed NAFTA
had not been honestly elected but had won by fraud.
[9] See Janine Wedel’s Collision and Collusion: The Strange Case of
Western Aid to Eastern Europe, 1989– 1998(New York: St. Martin’s Press,
1998). Wedel was the first anthropologist to tell this remarkable story.
[10] The relation of this larger system and national governments has
changed in significant ways over the course of the neoliberal period. At
first government itself was widely represented as the problem: its
simple removal was supposed to lead to the spontaneous emergence of
market mechanisms. Investors, however, soon discovered that the open
encouragement of greed and disparagement of the very idea of government
tended to foster extreme corruption, which got in the way of business,
all the more so after “shock therapy” in much of Eastern Europe led not
to free markets but to lawless “gangster capitalism.” Under Clinton, the
emphasis shifted to the idea of “good governance,” emphasizing
especially the need to maintain an honest legal climate conducive to
foreign investment.
[11] World Commission on the Social Dimension of Globalization, A Fair
Globalization: Creating Opportunities for All (Geneva: International
Labour Office, 2004); UN Development Program, “Human Development
Report,” 1999, and “Human Development Report,” 2003.
[12] China is excluded for several reasons: in the first period, its
autarkic policies kept it to a certain degree outside the larger system;
in the second, its government dramatically flaunted major principles of
neoliberal policy, strategically deploying just the sort of planning,
protections, and easy credit arrangements that the rest of the
developing world was being forced to abandon.
[13] Robert Pollin,Contours of Descent: U.S. Economic Fractures and the
Landscape of Global Austerity(London: Verso, 2003).
[14] If statistics sometimes seem ambiguous, it is largely because many
of these figures improved in much of East Asia—usually, in precisely
those countries that resisted IMF pressure to pare back or privatize
health and education. The declines in Africa and Latin America, where
few countries were in a position to resist, were quite dramatic.
[15] It has held pride of place since 2004. In the World Economic
Forum’s 2004–5 rankings, Finland is followed by the United States, then
Sweden, Taiwan, Denmark, and Norway. Note that the top six do not
include a single country following neoliberal orthodoxy, since the
United States itself regularly defies most of the precepts it urges on
other governments. For the full report, see World Economic Forum,
“Global Competitiveness Report 2004–2005,” October 2004,
www.weforum.org/en/initiatives/gcp/Global%
20Competitiveness%20Report/PastReports/index.htm.
[16] One might consider this a perfect example of that hoary piece of
economic wisdom: “if you owe the bank a million dollars, the bank owns
you. If you owe the bank a hundred million, you own the bank.”
[17] Walden Bello, Future in the Balance: Essays on Globalization and
Resistance (Oakland, CA: Food First Books, 2001). See also Walden Bello,
Dark Victory: The United States, Structural Adjustment, and Global
Poverty(Oakland, CA: Institute for Food and Development Policy, 1994).
[18] Bello, Dark Victory;Harvey, Brief History of Neoliberalism;
Immanuel Wallerstein, The Decline of American Power: The U.S. in a
Chaotic World(New York: New Press, 2003).
[19] The line is from Richard Overton’s An Arrow against All Tyrants
(Exeter: Rota, 1976). The best discussion of the political theory of
possessive individualism is in C. B. MacPherson, The Political The- ory
of Possessive Individualism(Oxford: Oxford University Press, 1962).
[20] Giovanni Arrighi, The Long Twentieth Century: Money, Power, and the
Origins of Our Times(London: Verso, 1994).
[21] The fact that the IMF operates under the UN umbrella is
particularly ironic when one considers that the UN’s Universal Charter
of Human Rights specifies that all human beings have a right to food and
shelter. It has never shown much ability to enforce such rights. The
IMF, however, has intervened quite systematically and effectively
against any country that has attempted to enact policies inspired by
such principles.
[22] The 1980s and 1990s certainly saw more market elements introduced
into some of these bureaucracies, particularly with outsourcing of
primary production, and new, Asian-inspired “just in time” production
strategies. On the other hand it also saw unprecedented concentration of
ownership. Few Americans are aware that almost all department stores in
the United States, for instance, are now owned by one company, Macy’s
Retail Holdings. So in effect corporate bureaucracies became more
flexible but far larger.
[23] The most incisive analysis on the importance of different sorts of
“commons” to capitalism has been made by the Midnight Notes Collective:
they were the first to emphasize that while capitalists preferred to see
a world in which all forms of common property administered by
communities for their own collective benefit would be privatized or
otherwise eliminated, they also promoted the creation of new forms of
commons for their own benefit: for instance, collective responsibilities
for research, transport, waste disposal, and new and elaborate security
functions. Struggles over the definition and management of collective
resources are thus the common theme of global resistance struggles that
might otherwise seem to have next to nothing to do with one another,
such as those of the Twenty-first Century Socialists in South America
and of Islamic movements in the Middle East. See “Midnight Notes
Collective,” last updated January 4, 2005,
www.midnightnotes.org/index2.htl, for the best introduction to this line
of thought.