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Criticism of Neoliberalism: Book Review

by Klemens Himpele Wednesday, Nov. 21, 2007 at 2:10 PM

The neoliberal understanding of freedom restricts the possibilities of individuals to participation in the market. Structural and economic power are faded out.


By Klemens Himpele

[This book review of: Butterwegge/Losch/Ptak/Engarten: Kritik des Neoliberalismus, 2007 published on: NachDenkSeiten, November 14, 2007 is translated from the German on the World Wide Web, http://www.nachdenkseiten.de/wp-print.php2p=2767. Klaus Himpele is an economist who lives and works in Vienna.]

[NachDenkSeiten seeks to be “a concentrated source for information for citizens who question the mainstream of public opinion-makers and oppose current slogans.” For some years, this mainstream has consisted of a supply-oriented economic policy with a strong emphasis on competitive elements – summarized under the term neoliberalism. In a new book, Christoph Butterwegge, Bettina Losch, Ralf Pfak and Tim Engarten analyze how this arose, what the priority of the market means, how the welfare state is undermined and how neoliberalism endangers democracy.]

In the first part of the book, Ralf Ptak examines the historical foundations of neoliberalism. The theoretical and organizational development of the German variant of neoliberalism is the focus of attention. The development of neoliberalism to its present significance is described. Neoliberalism can also be understood as a counter-reaction to the flourishing Keynesianism (p.19).

One central ideological working model is combating “collectivism” as the alleged root of all crises. Collectivism is often described expansively as “the negation of the individual” (p.25). The goal was identifying “the socialist planned economy” and Keynesian full employment policy with the national socialist war economy” and thus delegitimating Keynesianism. Through a high mathematical formality, “the economy is presented as an abstract and quasi-neutral greatness suggesting universality without reference to time and space and making economics into a de-politicized zone” (p.29). The logical consequence of this supposed neutrality leads the person to submit under the “permanent practical necessity” (p.61) of the market. In this logic, state interventions are only sensible when they protect from coercion in the sense of physical force (p.63).

Ptak (p.66) describes this succinctly. “In neoliberal doctrine, social development is a process of the unconscious adjustment of people. Human existence is grounded on the selection mechanism of competition so that the free market economy arises as the highest form of civilization. The person was an individual by submitting to this process in humility, not by shaping development. Selfishness or self-interest is the ethical foundation of the neoliberal individual who rejects everything collective (with the exception of the family) as an alleged relic of pre-modern society. The neoliberal understanding of freedom restricts the possibilities of individuals to participation in the market. Structural and economic power is faded out. Whoever will not accept this must reckon with the harsh hand of the competition state.”

In the fourth part of the book, the question of the democratic perspective is raised from another vantage point. Bettina Losch grapples with the danger for democracy caused by neoliberal hegemony. On one hand, a lack of alternatives is inculcated. However democracy lives from alternatives.

On the other hand, the market model is also applied to the political process and reinterprets this process. “Democracy is not measured by values but is constituted as a market model” (p.224). As a consequence, candidates for political leadership can only prevail “if their offer corresponds to the preferences of voters and surpasses the offers of the competition” (p.229). Parties are no longer collaborators in the democratic process. They choose concepts to win elections and do not engage in elections to realize their ideas. The voters are customers. “But customers and voters are only free as far as different goods and different decisions are offered by the suppliers” (p.229). The idea of fighting for alternatives is ultimately inconceivable in a world of subordination under the spontaneous order of the market.

Losch insists civil society has adopted many thought patterns of neoliberals. “PR campaigns like `You are Germany!’ inform citizens that the claims once made to the state now fall back to themselves” (p.267). The Hayek thesis of the greatest possible repression of the state (from market- and social interactions) is popularized. That the idea of the trim state finds broad support – even if surveys constantly show that the population does not follow neoliberal promises in central questions – is a prerequisite for its enforceability. Political decisions are results of advertising budgets and not of arguments any more. Some neoliberal strategists even plan this.

In the second part of the book, Tim Engarten tackles the privatization- and liberalization-strategies of the neoliberals. Handling the distribution of all goods through the selection mechanism of the market is emphasized. “Only readiness to pay counts in this line of thought, not the frequent case of insolvency or limited financial resources. This is the basic attitude of neoliberal theoreticians and practitioners […].” (p.90). The range of private property – and financial possibilities – is understood as a “reflection of different human abilities” so that market-based distribution of goods is stylized as just and the possibility of public control is denied and even decried as harmful. In many examples, Engarten illustrates the vast extent of privatizations. From 1982 to 2005, “the number of immediate and mediate state enterprises fell from 985 to 109” (p.108). “The claim of applying market mechanisms across the sectors is the messianic dimension of neoliberalism,” (p.96) Engarten explains.

The central problem in these liberalizations is that “decisions about the extent of benefits after privatization are mad3e on the private plane, not on the political plane – often under criminal contempt of the constitutive mark of societies: the public interest” (p.107). Engarten shows how these losses in political control lead to hardly desirable and even misanthropic results in the sense of a democratic community and the cohesion of a society.

In the third part, Christoph Butterwegge criticizes the “justifications, measures and consequences of a neoliberal (social-) policy” (p.135). The dismantling of the welfare state justified by advocates of neoliberalism with the “two great narratives of our time” (p.136) is at the heart of his criticism. Both globalization and the demographic development are used as practical necessities in justifying the dismantling of the welfare state. The counter-arguments are well-known and repeated again and again in NachDenkSeiten. Butterwegge takes them up and supplements them with profound analyses. For example, the redefinition of the justice term is central. Distribution-justice is regarded as antiquated and too costly. It should be replaced by a participation-justice. Distribution-justice could be complemented by participation-justice. “The question should be asked: Why money’s significance (for distribution-justice) has fallen in a time when money is more important than before on account of the increasing economization and commercialization of areas of life while being more unequally distributed than ever. Butterwegge makes clear that the increasingly unequal economic power- and market structures can only be changed through redistribution and that equal opportunity is impossible without more distribution-justice. (Translator’s note: Justice is also redefined as rewarding achievers; cf. “Neoliberalism in Crisis” by Christoph Butterwegge.}

In summary, Butterwegge declares that “competitiveness in the sign of neoliberal modernization has become the pivot of individual life” (p.216) which has consequences for the social climate. The tighter the distribution-possibilities, the greater the temptation to exclude so-called marginal groups from resources.

The book by Butterwegge, Losch, Ptak and Engarten describes the theory and praxis of neoliberalism and offers convincing criticism.

[Translator’s note (Marc Batko): As crisis and opportunity are represented by the same Chinese letter, the crises of exploding inequality, environmental ruin, finance market profiteering and endless wars call us to rethinking. As giving is part of thanks-giving, restructuring is part of a human future where corporate profits are not confused as community health and the welfare state is not dismissed as “Bolshevism”. Nature is not a free good, external or sink but our despoiled mother and foundation of future life. The land does not belong to you; you belong to the land (chief Seattle).]

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