Neoliberalism

According to David Harvey, “Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade… [and] …holds that the social good will be maximized by maximizing the reach and frequency of market transactions, and it seeks to bring all human action into the domain of the market” (Harvey 2006:2-3). But what does this mean?  What could be wrong with “liberating individual entrepreneurial freedoms,” owning property, engaging freely in markets and trade? Why would people want to be regulated and ‘controlled,’ as opposed to having the universality of “the market” effortlessly decide (or guide) things for us?  Much of modern – and especially Western society sees these buzzwords as positive things that allow people to work hard and create their own lives.  However, this narrative is only a very small part of what neoliberalism entails.

According to Anthropologist Tejaswini Ganti, neoliberalism is highly complex and has many meanings, but she claims that “the concept has four main referents: (a) a set of economic reform policies that some political scientists characterize as the “D-L-P formula,” which are concerned with the deregulation of the economy, the liberalization of trade and industry, and the privatization of state-owned enterprises; (b) a prescriptive development model that defines very different political roles for labor, capital, and the state compared with prior models, with tremendous economic, social, and political implications; (c) an ideology that values market exchange as “an ethic in itself, capable of acting as a guide to all human action and substituting for all previously held ethical beliefs;” and (d) a mode of governance that embraces the idea of the self-regulating free market, with its associated values of competition and self-interest, as the model for effective and efficient government (Ganti 2014:91).

But what does this mean in real-life terms today? For this I take a historical approach using David Harvey’s Conditions of Postmodernity (1990) where he keenly examines how neoliberalism develops throughout the twentieth century. Harvey starts his narrative in 1914 with Henry Ford’s car assembly line where he pays a very high wage of $5 for an 8-hour workday. According to Harvey, it was not this process that was so revolutionary, rather it was Ford’s “vision.” Ford seemingly understood that mass production meant mass consumption, which ushered in a new “politics of labour control and management… a new kind of rationalized, modernist, and populist democratic society” (Harvey 1990:125-6).  Ford believed that this wage would offer him the best and most committed workers, and also provide them with the money and leisure time to consume both his and other goods (Harvey 1990:126). This ideology ushered in a period of general progress in advanced industrial societies. Using Keynesian economic policies and theories, the power of the state had increased in conjunction with the development of the social welfare state; and within which labor rights were protected and advanced by strong unions and the structural aspects of Fordist production practices helped foster community involvement and cohesive and organized labor groups (Harvey 1990).

According to Harvey, this process changed greatly in the early to mid-1970s.  Following the oil and economic crises during that decade, there was a massive push for deregulation and more flexible modes of production. Fordist-era production had been based on building single factories where companies could produce an entire line of goods from start to finish in one place. As per the nascent neoliberal ideology, this rigidity did not allow businesses to react nimbly to shocks in the market, recessions, supply chain problems, and labor issues. Any problems the economy faced were also said to be exacerbated by increasingly inadequate Fordist methods of macroeconomic management (Harvey 1990).  During this time, Harvey points to a political economic shift that he labels “flexible accumulation,” and is “marked by a direct confrontation with the rigidities of Fordism. [Flexible accumulation] rests on flexibility with respect to labour processes, labour markets, products, and patterns of consumption. It is characterized by the emergence of entirely new sectors of production, new ways of providing financial services, new markets, and, above all, greatly intensified rates of commercial, technological, and organizational innovation” (Harvey 1990:147).

The key component that Harvey points to within this process is an acceleration of the “time-space compression” modern society experienced over the last several centuries. With technological advances in communications, satellites, transportation, etcetera, the world had “shrunk” and it became easier to communicate, ship to, or even be in, faraway places quickly (Harvey 1990). This meant that the era of a fixed factory with local workers producing an entire product, morphed into a process where companies simply rented production facilities in cheap locations (such as China) for a month, produced a product or part of a product, continued or finished the production in a separate facility, and then sold it in whatever market they could make the most money. This principle started what has been called the “race to the bottom,” in which developing countries offer the most “business friendly” incentives (such as tax breaks, deregulation, decreased labor power and oversight, etc.) to companies that locate production within their borders. This heightened global competition between states as companies evaluated entire supply and production chains from raw materials to market to find the cheapest places to procure and produce each individual component and product. Companies started locating their production where they had the lowest costs to market, specifically the lowest overhead costs per worker (basically less pay, less benefits, less safety at work, etc). Countries started deregulating their labor industries to attract more businesses. This weakened labor power and unions, and ushered in higher levels of structural un/underemployment and an expansion of part-time contract work. According to Harvey, all of this led to an incredible fragmenting of society and social connections, severing community ties, creating more individualized populations, and decreasing the capacity for workers and individuals to organize politically and economically (Harvey 1990:153). 

Building upon Harvey’s discussion of the shift to flexible modes of accumulation, this ideology is also traced to the Mont Pelerin Society (Ganti 2014) founded in 1947, and the “Chicago school” (of economic thought) led by Fredrich Hayek and Milton Friedman in the 1960s and 1970s and built upon neoclassical economic theory. The new form of this ideology was then instituted politically by Ronald Reagan and Margaret Thatcher in the 1980s, and globalized by technocratic regimes such as the figurative “Washington Consensus” in the 1990s. It is during these decades that John Gledhill (2006:332) believes neoliberalism as an ideology and global capitalism become intertwined, and spread throughout the world economy.

If we go back to Ganti’s four common themes we can see the outcomes of these policies on the ground, and that the state is still very much involved. Neoliberal policy initiatives deregulate, liberalize, and privatize economies; redefine political roles for labor, capital, and the state in marked ways; believe that an ethic of market exchange is capable of guiding all human action; and that a self-regulating free market (based on competition and self-interest) becomes the model for effective and efficient government. However, this was not in the traditional welfarist and Keynesian tradition, for the State loosens (or alters) its control by actively deregulating business climates, extricating itself from the market as much as possible, yet wholly redirecting state power toward allowing a “friendly business and regulatory climate” and within markets (Gledhill 2006:333). Neoliberal ideology is not about simply providing free markets as neoclassical ideology prescribed, but rather pushed for a “concerted political effort and organization” of society that was the most advantageous for businesses (Ganti 2014:92).

State services became the domain of non-profit actors, previously state-owned companies were privatized to allow for individual ownership and control, and labor practices and subsidies actually aided businesses beyond simply freeing up markets. The core tenets of economic society still involved individuals acting as rational actors working toward maximizing individual and corporate gains, but now businesses interests were placed above the interests of states, communities, and individuals (think of Harvey’s flexible accumulation and a more fragmented, individualist society as per Hayek and Rand’s positions, but that actively incentivized business interests above individual people’s interests). This was a decided divergence from Adam Smith’s belief that business leaders should not be listened to in matters of politics for this would be taking advice “from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it” (Smith 1991:220).

This shift towards business interests led to increased competition among some individuals, groups, and companies, but not those companies with close ties to neoliberal and Western governments (think World-Systems and Accumulation by Dispossession). This process of neoliberalization lead to increased inequality locally among individuals, but also globally among people and countries, and – while said to be aimed at empowering individuals – predominantly empowered the wealthy and “well situated” by increasing their economic and political power (as well as their profits). To Gledhill, neoliberalism is “the ideology of the period in which capitalism deepened to embrace the production of social life itself, seeking to commoditize the most intimate of human relations and the production of identity and personhood” (Gledhill 2006:340). It is within neoliberalism that human interactions cease to be human interactions and (as every component of human interaction is brought within the scope of the market) are institutionalized as market interactions. 

However, there are some complexities within this process. The work of Andrea Meuhlebach (2012) shows that despite David Harvey and John Gledhill’s observations positing the fragmentation of neoliberalizing societies as wholly negative, this fragmentation also creates (or forefronts) individual subjects’ longing for (and enactments of) a human morality that is intent on caring for others (Meuhlebach 2012). Her work shows that people in northern Italy volunteered and cared for less fortunate people both in spite of, and buttressed by, neoliberal policies. Meuhlebach’s analysis however, based on ethnographic work with caregivers, focuses primarily on everyday individuals and the elderly. As a result she seemingly ignores the obvious critique of the very divisive neoliberal ideology used by elites and capitalists that causes the need for this voluntary human caring in the first place. Still, her research complicates our analysis of neoliberal societies by showing a connectivity and caring that others claim is minimized in neoliberal society. 

Neoliberalism is further complicated by Jamie Peck and Adam Tickell’s work showing the localization of experiences with neoliberalism, which illuminate “local neoliberalisms [that] are embedded within larger within larger networks and structures of neoliberalism” (Peck and Tickell 2002).  Kingfisher and Maskovsky critique neoliberalism for its use as a thing that is often wielded to singularly explain or explore anywhere in the world or any type of experience. They see neoliberalism as an experiential and contextualized moment that happens in a multitude of ways in a multitude of places, and that each experience should be seen as singular, even if patterns can be recognized (Kingfisher and Maskovsky 2008). Within this synthesis, Kingfisher and Maskovsky attempt to:

“move beyond the view of neoliberalism as a unitary external structural force — conceived either as a set of economic policies or discourses — that bears down on states, civil society institutions, populations or individuals, whose agency is conceived narrowly in terms of either accommodation or resistance. This structure/agency binary, while oft-times noble in its emphasis on resistance, nonetheless risks describing neoliberalism ‘as something that is perhaps more powerful and all-encompassing than it really is, ignoring in the process its contradictions, fractures, partialities, contingencies, and both dialectics with and determinations by other social forces.’” They seek specifically to “interrogate, situate and problematize (rather than overstate) neoliberalism’s power to reshape the world” (Kingfisher and Maskovsky 2008:119).

As if that does not disjoint our understandings enough, Simon Springer (2014) believes that we are actually moving into a postneoliberal world.  He claims that since the economic crisis of 2008 there has been great pushback and protest surrounding neoliberal institutions and politics, and that many of the major industrialized countries in the world reinstituted Keynsian economic practices, and therefore increased state intervention (Springer 2014:2). His analysis points toward a global society moving towards something new, though he is not willing to say this explicitly, as amid the multitudes of non neoliberal practices, neoliberal patterns still dominate global political economic ideologies.  This is especially true at the level of governance and business decisions – places where capitalism carries profound power. Hence, while in the streets, neoliberalism may be seen as a disaster; but to those in positions of power – those who are making decisions about shaping our political, economic, and social futures (and are being rewarded by the status quo) – neoliberalism is very beneficial and therefore worth continuing.  Yet still, the fact that there is discussion of other ways of organizing society shows that communities and individuals who are not wealthy (or “successful”) are fighting against this version of capitalism and a greater rule of their own lives.