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The Question

Can repeated economic crashes and collapse disprove Neoliberal positions for neoliberals?

What are neoliberals?

‘Neoliberal’ is the name given by their opponents to a collection of people and economists (Mises, Hayek, Friedman are the traditional core) who support domination by corporate capitalists, through talk of free markets and through imposition of an unrestrained capitalist state (paradoxically often by supporting the idea of a small State or a demolished State). Neoliberalism seems primarily about re-regulating markets to preserve and increase corporate domination. Some neoliberals may propose a more humanistic corporate domination, while others may propose a more total form of that domination.

‘Neoliberal’ is not a neat category, it is defined by function rather than by ideology. Democrats and Republicans, Coalition and Labor[1] can be called neoliberal, depending on their level of support for capitalist plutocracy. That few people call themselves ‘neoliberal’ does not mean the term describes nothing. The term sums up the political dynamics of corporate dominance and the ideology of its supporters.

An answer

Repeated economic crashes and collapses cannot prove neoliberalism wrong, because the official pro-free market position is that capitalism can never be harmful, never produce unintended consequences, and never fail. Failure must, as a consequence, always be explained by something supposedly outside capitalism, or outside the “free market”, such as the State, or by any attempts by workers to soften the effects of capitalism, or diminish capitalist exploitation.

Some followers of ‘Austrian economics’ (Mises, Rothbard etc.), have argued to me that the superiority of free market capitalism can be deduced from obviously real/true axioms, and that no empirical check is ever necessary as the superiority and naturalness of capitalism becomes intrinsically obvious and only denied by the willfully stupid. This position also helps people to ignore failures or to explain them as being caused by the political obstruction of perfect free markets.

However, a theory which tells you some process of organisation is always the best, cannot fail and is only disrupted by ‘others’ is pretty clearly ideological. When Communists say communism does not display its full democratic glory only because of the actions of paid capitalist subversives, this ideological factor becomes clear to most people.

Capitalism as the State

Perfect capitalist non-State based free markets, as promoted by neoliberals, have never existed, because the State is part of the capitalist system. There is no known species of capitalism which does not have a State to protect capitalist forms of private property, capitalist types of market, extreme inequalities of wealth, and capitalist power. States have, largely through violence, also helped the establishment of capitalism through dispossessing people from their land and helping to stop people from being self-supporting so they have to become wage labourers and dependent on wage-payers.

In Capitalism, wealth not only becomes the primary token of virtue but it allows its possessors, as a class, to buy politicians, buy the State, buy the laws, buy the violence, buy the religions, buy the education, buy the media and buy public information generally (nearly all media is owned by corporations, and the media that is not corporately owned is constantly threatened). Through information control, PR, media and advertising, pro-capitalism becomes a form of “common-sense”.

Consequently, wherever there are successful capitalists, they attempt to take over the State (even if it was previously non-capitalist), or establish a State, to help protect themselves and regulate markets to benefit the corporate elites and discipline workers. Unrestrained capitalists always produce a capitalist State. The big contribution of Neoliberalism to this takeover has been to try and obscure the connection between business and the State, so as to shift blame away from capitalism.

In the neoliberal capitalist State, the idea of “free markets” is used to argue that the corporate sector must not be inhibited in any way, or by anything such as worker’s rights, as these disrupt the workings and perfection of a (non-existent) free market. Observation will show you that supposed libertarians will almost always vocally and hostilely oppose anything that could benefit workers, or give them some liberty from business control, and largely ignore regulations or subsidies that support the corporate sector. Neoliberal ‘liberty’ is always about the liberty of those with resources, although neoliberals usually do not say this as they would lose popular support.

Unrestrained capitalism always produces plutocracy. Hence it tends to be heavily promoted and supported by the rich. Capitalism almost always ends up undermining the liberty that it claims to promote.

The conditions we observe today of corporate domination, curtailed liberty, incoherent policy, an unresponsive State that people feel separated from, stagnant or declining wages and conditions, and massive environmental destruction, are probably what we could expect from the pro “free market” talk that we have been bombarded with over the last 40 years. Capitalism without regulation is, in reality, a contradiction in terms; an impossibility, or a joke.

[There are occasions in which other classes, or wild parties, can gain partial control over the State, but they generally end up protecting some corporations; we don’t have to assume the wealthy are always unified, although they will probably tend to support their class in general.]

The State and economic failure

Because there is no capitalism without a State, and neoliberal capitalism pretends it is different from the State it controls, neoliberals can always blame the State, and its unsuccessful attempts to prop up industries and finance, for any economic collapse or the hardship that anyone suffers to lower the costs of business (like mutilation and injury at work, wages too low to live on, no health care, heavy pollution, etc.).

Capitalists can also point to the failure of Communist States to prove capitalism is the best system going. This is hardly logical, as the failure of Communist States could equally be evidence of the wonderful success of Byzantine forms of State organisation. Neoliberal apologists then appear to confuse post-world-war II mixed economies and Nordic Socialism with communism, rather than seeing them as States where people had some participatory role in controlling their lives. This becomes part of the capitalist common sense, promoted by capitalist media.

These ideological non-falsifiable positions make it harder to restrain economic collapse, or even to observe how businesses generate collapse through the ways they pursue profit, organize themselves, pursue internal and external corruption, distort information for economic purposes, or use the State to keep themselves going.

The Neoliberal ‘Small State’

Neoliberals claim that because the State is always to blame, rather than business no matter how corrupt or stupid, it must be diminished. However, their ways of making the State small, always end up (possibly unintentionally) being about diminishing the power of ordinary people to oppose corporate domination. This is one reason why the State constantly expands while being controlled by people who talk about making the State small. They cut back social insurance, medical assistance, pensions, anti-pollution controls, working conditions, health regulations at work, etc., while massively expanding the military (subsidies to arms manufacturers etc.), using expensive private contracting, subsidizing already wealthy private schools, boosting tax concessions for wealthy people, extensively policing the workers or poor people heavily while giving liberty to the rich to rip people off, and so on. Again this is because actions by the working or middle classes that might curtail, or seriously challenge, corporate power are said to interfere with the completely fictitious and beneficial “free market”. [2]

Neoliberalism opposes any efforts to constrain the generation of climate change and its growing effects on the middle and lower classes, because that would interfere with the free market and the power of some corporations and wealthy individuals. If people die from bad health care or corporately generated disaster, that is their fault for not being wealthy enough to avoid it.

With neoliberal small State policies, the State usually becomes much more oppressive and useless for most people, and many can be persuaded to support making the State even ‘smaller’ and less useful to them.

Concluding Remarks

Neoliberals can be distinguished from anarchists, because anarchists recognise that corporate capitalism involves concentrated power, and they challenge that power.[3] Neoliberals can also be distinguished from real conservatives who recognize that capitalism often destroys tradition and virtue for profit.

Neoliberalism is an ideology of transcendent value imposed by money, experts and capitalist hangers-on with no regard for empirical reality, or attention to the ways capitalism is dysfunctional. It is, at best, a set of good intentions which produces harsh consequences for most people. It is designed to help its followers avoid noticing the ill effects of capitalism, and so cannot be disproved by those ill-effects.

NOTES

[1] The supposedly left wing Labor Party introduced neoliberal policies to Australia by floating the currency, privatising State-owned institutions, removing tariffs and so on, with many ‘humanistic’ qualities such as working public health, good social services, and a wages accord between unions and business. It has proven very easy to dissolve this humanistic framework in favour of corporate dominance. Support for ordinary people seems incompatible with neoliberalism; such support must be attacked. It has been argued that the neoliberal military coup in Chile demonstrates that neoliberalism is, however, completely compatible with dictatorship, violence and terror.

[2] Given that ideas about the free market function entirely to justify corporate dominance, then if the dominance of particular factions is better served by imposing tariffs, controlling prices, inhibiting competition, or providing taxpayer subsidies then this can be done. Sometimes this is done at the same time as praising free markets.

[3] It should be noted that plenty of trade and exchange has occurred without a State, but these systems are not capitalist. If you want learn how to establish a ‘market’ without a State, then you need to read some anthropology.

Tags: Disinformation, economics, free markets

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