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What is "Neoliberal"?

by Albert Mueller Friday, Oct. 16, 2009 at 2:11 AM

Building community centers could be a way to learn from O Canada and break from the false religion of the market and profit. When the market and competition are made absolute, they become idols. CEOs are called job creators and workers "cost-factors."


By Albrecht Mueller

[This article published in: September 2009 is translated abridged from the German on the Internet, http://www.nachdenkseiten.de.]


“Neoliberalism” has become a divisive term. With it, many people associate diffuse social developments that they feel are negative or threatening. No addressants for formulated criticism seem to exist. Practically no one describes himself as “neoliberal,” hardly any individuals, parties or other organizations. Is the “neoliberal” a phantom? Far more people do not understand the term at all. Perhaps they heard it here and there but they don’t comprehend it concretely. This is understandable since “neoliberal” thinking infiltrates (and undermines from within) more and more parts of society but is never practically recognized as such. This information is directed at both groups to enlighten them about the neoliberal stock of ideas and their fatal consequences. The analysis is especially directed to “multipliers” (teachers, unionists, journalists, party members – even of the “bourgeois” parties, academics and engaged citizens) who seek to contribute to enlightenment.

This brief analysis consists of two parts: a short outline of the history of neoliberalism and compilation of 20 characteristics of neoliberal ideology and its consequences…


The beginnings of neoliberalism go back more than 70 years to the worldwide economic crisis of 1929-32. In the course of this crisis, the failure of the largely unregulated markets and their inadequate capacity for self-healing were painfully clear to people. As a political reaction, globally strengthened Keynesianism arose, efforts to regulate the market more strongly and implement social security systems to mitigate the consequences of market dislocations. Old economic liberalism dominant in the past is regarded as failed. Many critics saw the causes of the fatal market failure and its grievous political consequences, the decisive influence on the rise of National Socialists in Germany and finally the beginning of the 2nd World War, in the market itself. On the other hand, economists of a new liberalism blamed other factors for the crisis. State- and political failure brought about the crisis, not market failure, according to the thesis of these neoliberals. [History repeats itself. From the neoliberal perspective, the 2009 worldwide economic crisis was also brought about by state- and political-failure that was decried only a year before by the same neoliberals as an exaction and excessive state intervention in the “free market.”] The sharp attack of economic liberal economists Eucken and Rustow on the Weimar Republic in 1932 is described as the birth hour of neoliberalism. Against the political chaos in Germany, they supported a strong state to drive back the influence of parties and unions. A “temporary dictatorship” (as though this were possible) did not seem wrong to them (on the eve of the assumption of power by the National Socialists). [To their honor, many of the early theoreticians of neoliberalism had far deeper ideas about optimal economic- and social forms than most of their contemporary disciples. Initially Rustow stood near socialism and later had to flee from the Nazis on account of his individual-liberal conception of society. The specific historical situation (e.g. political chaos of the Weimar Republic and the worldwide economic crisis) should be considered in judging these thinkers.] The highest goal was excluding the economic-political interventions of the state in the market as much as possible…

From the beginning, neoliberalism was not limited to Germany. Similar initiatives were introduced in many states. Interrupted by the war, the “Mont Pelerin Society (MPS) was founded in 1947 under the leadership of the later Nobel Prize winner von Hayek. At the outset, this was interpreted as an elite network and has around 1000 members today, divided in 100 interconnected “think tanks.” While the followers of the neoliberal project were initially divided internationally, they were only at first a small group of exotic market radicals with limited influence. In the years after the war’s end, its members described repressing the influence of the still powerful “great narrative” of socialism as a success. Nevertheless the MPS and other neoliberal thinkers in the 1960s and 1970s operated in the shadows of Marxist theories and welfare state concepts.

Soon the first successes appeared. Two members of the MPS were awarded the “Nobel Prize for economics,” Hayek (1974) and Friedman (1976). This increased the respect and influence of the movement. After dictator Pinochet seized power in a Chilean coup with US support, a state was first available as an ideal “test laboratory” for neoliberal theories. Without troublesome restrictions like democracy and human rights, the neoliberal group of the “Chicago Boys” filled the most important ministries in Chile and radically rebuilt the state in their sense. Tens of thousands of regime critics were tortured and murdered in resistance against the military dictatorship and the economic “shock therapy” in the following 17-year reign of terror. A million Chileans fled repression and economic collapse. As a consequence of the economic rebuilding, extreme inflation and drastic impoverishment of the population occurred. Nevertheless Chile was the Promised Land of their salvation doctrine for Hayek, Friedman and other MPS members that they defended against international criticism.

Neoliberal ideology had its decisive breakthrough in 1979-80 with Thatcher’s election in Britain and Reagan in the US. Thatcher even organized an expert-exchange to re-enact Chile’s “success” in Britain. [The central point of this policy is well known. The successful “reformed” Great Britain is the “land where milk and honey flow.”] From the beginning of the 1990s, neoliberalism was hegemonial in most western states after the collapse of the socialist states (and the definitive decline and fall of the “great narrative” of socialism). Nearly all large parties, organizations and churches have adopted considerable parts of the neoliberal system. A near “synchronization” of the press was carried out in some states. Alternative views in politics, economy, science and the press are largely marginalized today and made ridiculous. The last milestone of the “neoliberal project” [This term could wrongly imply neoliberalism was a secret project or conspiracy. This is not true.] was the probably causation (or at least strong encouragement) of the current grave worldwide economic crisis.


Recognizing the neoliberal stock of ideas is very hard for many people. The most different parties, organizations and individuals support neoliberal positions in such a multitude of variants and formulations that uncovering the underlying concepts and strategies takes some effort. In some cases, representatives of these ideas may not always be clear how far they represent neoliberal positions. The following compilation includes 20 characteristics of neoliberal ideology and its consequences. This list does not claim to be complete or perfect. But it could help identify neoliberal ideas in political addresses, newspaper articles, party programs and so forth. The more these points are reflected, the more certain you can be that the person, organization, newspaper or party propagates neoliberal ideas.

Persons with knowledge of neoliberal theories may object that some of the points are not part of this or that theory. While they are right, socio-political theories are proven in reality, not only on paper. Therefore the points refer more to the ideologized conversion of neoliberal tenets in praxis – than to a theoretical model. [Marxism and other ideologies also promised “paradise on earth” if only their doctrines were followed faithfully. All setbacks in realization were attributed to inadequate conversion of the doctrines, not to a deficiency in the theory. This is also characteristic for neoliberalism. If serious social dislocations occur on account of deregulation or privatization, this is only because the dosage was too low, not because these were wrong. This is like giving a new medicine to a sick person and he lands in an intensive sick ward. Instead of calling the medicine in question, Marxists and neoliberals conclude that the dosage was still too small to heal the patient.]


Constant expansion of the income- and assets-disparity in combination with the denial of this fact (through manipulative interpretation of statistics – for example, by using average instead of median) or legitimation by reference to higher tax payments of the “rich.”


The most extensive privatization of public goods and spaces was justified by the alleged inefficiency of state enterprises and competition distortion. Privatizations often lead to higher costs and/or poorer quality – especially in areas where oligopolies or quasi-monopolies of private profit-oriented businesses form (which is usually the case). Privatizations often go along with deregulation, that is the dismantling of state regulations and control mechanisms. The latter is not always bad, e.g. reduction of escalating bureaucracy. Excessive deregulation as in the financial markets can have far-reaching consequences up to causation of a worldwide economic crisis. Positive effects of deregulations often benefit only a few powerful market actors while society altogether is usually burdened with negative “collateral damage.”


Attempted division of society in many antagonistic particular interests, e.g. in the form of artificial conflicts employed-unemployed, young-old, men-women, large families-childless, striking-strike victims, officials-non-officials, public-private insured, “leftist”-conservative or “rightwing,” German-“foreigner” and so forth (according to the maxim “divide et impera). Strikingly the main conflict is never thematicized and does not seem to exist generally in the neoliberal thought world: poor against rich (strictly speaking, rich against poor). Every individual should act individually and simultaneously understand himself as part of a concrete interest group without making aggregate social connections.


From the highest (state) to the lowest (individual), society is increasingly penetrated with a kind of market logic or (micro-economic) entrepreneurial thinking (“personal company”etc). This is also reflected in a continuous domination of language with economic concepts and phrases (e.g. “newspeak”-Anglicism). With reference to (supposed or actual) efficiency gains, market-like structures are “forced” in more and more areas of society – with fatal consequences for all realms where micro-economic thinking only played a trifling role for a long time (schools, universities, health systems). This development often goes along with privatization efforts (see point 2).


An economic system not based on constant growth is regarded as bizarre and undesirable. Even a vague notion of what this could look like does not exist. The influence of (micro-economic) entrepreneurial thinking on macro-economic structures is also clear. A remarkable deliberate plan-lessness (in combination with a form of a-historicism, e.g. Fukuyama’s ridiculous proclamation of the “end of history”) goes along with that. This intentional plan-lessness is based on the firm belief that the “invisible hand” of the market with its very dynamic and complex processes is superior to every conceivable long-term human plan (for example, “5-year plans”). In the absence of a plan as a referential framework for development, “society” (in its form typically reduced to the economy) also moves in the “right” direction. Positive numbers are regarded as evidence for this while negative numbers are interpreted as movement in the “wrong” direction.

This way of thinking can be considered on one side as a “simple genial” means for complexity reduction (with which politics can quickly grasp and judge very complex situations). On the other side, a simplemindedness or naivety appears in the one-dimensionality of this approach, the neoliberal model. General plans are rejected as rigid and ineffective. No more goals or visions are possible any more about how future societies could appear… The current worldwide economic crisis makes clear that the one-dimensional orientation of nearly all (political) action in a single quantitative indicator can have catastrophic effects. As a complex system, the “invisible hand” can damage economics (and ecological systems) and cause great misery. The “invisible hand” becomes dangerous when these developments are allowed or even (intentionally or unintentionally) strengthened as long as only the indicator “growth” is emphasized.


The equality of all people is denied de facto. Only owners of capital and members of some (arbitrary) occupational groups (with powerful lobbyists) as “achievers” (see point 10) can claim many rights. Disputing this state occurs either with reference to the (formal) equality usually given de jure or not even seeing it as a problem (“that was always true everywhere and will always be true”). An elite of “achievers” and “experts” should make important social decisions. This is view is propagated more or less openly. Participation or even the right to join in the conversation of other social groups is neither necessary nor desirable. This continues in internal frameworks where unions, works councils and other forms of company joint-determination of workers in businesses are made difficult or even completely prevented.


Authoritarian-repressive efforts are reactions to negative consequences of homemade social division (criminality, political representation). Examples can be found in the inflationary expansion of power: the police, military and secret services along with a continuous restriction of civil rights. Either dramatized threat scenarios (terrorism) or highly charged emotional theme complexes (child pornography) are used as vehicles for the enforcement of – very unpopular – measures. This basic authoritarian mood along with market logic penetrates more and more social structures and is not limited to the sphere “security.” Examples from the education area are strengthening a single or few leaders like the school director to the “top management” of a university at the expense of formerly more shared and more democratic power structures. As in other areas, the argument is made of an alleged increased efficiency over old decision-making processes.


Without massive state counter-measures, the power concentration of a few market actors will occur sooner or later at the expense of the large majority in economies organized according to neoliberal doctrines. The latter are increasingly completely repressed from the market. In every economic sector, only an oligarchy (or even monopoly) of a few suppliers is left. This process is already very advanced in all “western” industrial states. In Germany, the “free market” in many areas of daily needs (for the “final consumer”) is only an absurd illusion. Five large suppliers provide Germany with food, four corporations supply Germany with electrical energy, a few oil companies with fossil sources of energy (petroleum, oil, gas and so forth), a few corporations cover almost the whole market for cars and trucks (despite a huge number of brands that give the impression of diversity), three firms dominate the IT-sector (Intel with processors, Microsoft with operating systems and office software and Google in Internet technology. Each of these is nearly a monopoly in its market segment).

Parallel to the increasing impoverishment of the middle- and lower class, an extreme concentration of capital and power occurs within a small circle (owner families, industrial clan, big shareholders and leading managers of businesses). In common parlance, this is known as the “money mobility” or “top 10,000.” Aside from some colorful personalities, these persons usually live very withdrawn behind high video-monitored walls and invest their assets in diverse tax havens. Nevertheless this group has a massive influence in political decisions. This happens on one hand indirectly through the media (10 mammoth media corporations almost completely dominate the German public and these often are owned by a few “super-rich”) and on the other hand through direct influence on politics by means of personal (informal) contacts, lobby groups, party donations and supplying “experts” for “technical consultation.”

This double-strategy is very successful. Through campaign journalism on the eve of important elections, the “rightwing” (that is, neoliberal) politicians obtain comfortable majorities. If this does not function, direct influence is exerted on political decision-makers passing by the parliament and other democratically legitimated institutions (to bring these under pressure through the media). These realize the “lack of alternatives” to the neoliberal path. The gradual suspension of democracy occurs through the concentration of financial and media power in the hands of a few persons. Similar to states known as “banana republics,” elections are held as a kind of “public theater” since a handful of powerful groups have long set the political guidelines – irrespective of how the elections turn out. Many people notice this and turn away resigned from politics. The power of the ruling elites is cemented again and the democratic culture is gradually destroyed (see point 6).


A weaker welfare state is urged, not a weaker state! On the other hand, a strong authoritarian state is preferred or at least accepted approvingly for the realization of the desired order and corresponding laws (protection of property and so forth) as long as the rights and economic interests of the owners of capital are defended.


Neoliberal actors often appear as advocates of supposed “achievers.” Despite varying rhetoric, all hard working persons are not meant, only those who are paid generously. Achievement is measured only by income according to the neoliberal market logic (see point 4). “Managers,” entrepreneurs, doctors, lawyers and academics are regarded as “achievers.” Only in Sunday addresses do neoliberals mention truck drivers, nurses and single mothers who “slave away” until they drop. In decisions on tax laws, only the former and no one else are meant by “achievers.” The concept of the “achiever” is the most important myth within neoliberal ideology alongside “equal opportunity” and serves to legitimate the increasingly unjust distribution of income and assets.


In contrast to the freedom rhetoric of neoliberal preachers, their many projects increase the monitoring and control of a huge part of the people. Although the state keeps out all social interests as much as possible, according to neoliberal dogma, politicians and “experts” of neoliberal parties demand expansion of state surveillance. This includes electronic health identification cards, online monitoring, monitoring at toll-bridges, video-surveillance with face recognition, storing data of telephone conversations and Internet use, electronic shackles and “naked scanners” at airports. All this is obviously harmless since Germany is a democracy and civil rights were never despised (many of these measures were violations of civil- and human rights!). In addition, German history teaches an assumption of power of an anti-democratic regime that could effectively repress any resistance is impossible. Therefore these incursions are completely harmless… The internal or company plane does not look any better. Illegally compiling great quantities of data about their own co-workers and applying this data against them if necessary without their knowledge has become common in many forms.

Both the state and private monitoring measures show that leaders obviously do not trust many citizens (or co-workers) and seem to have a fear of panic. This paranoia is not entirely unjustified when one considers the rapidly growing injustice both within firms and within society altogether (see point 1). While this is never called an argument for surveillance measures, supposedly threatening dangers are hypocritically proffered like “international terrorism” and “network of pedophiles.” Permanent pressure on citizens or co-workers is another intentional side effect of these measures. Whoever expects being constantly monitored and controlled will act in a more conformist and devoted way out of fear. Enforcement of these measures often occurs insidiously by means of “salami tactics” to lead the population step by step to the surveillance level that could trigger a cry of indignation.


Social failure is only the responsibility and problem of the individual. Neither the state nor society is responsible for personal “failure” in the socio-economic competition (the family is also not liable for the crimes of one of its members). A combination of extreme individualism, de-solidarity and an inability (or unwillingness) to recognize or understand larger connections (see point 19) appears here. According to this logic, a minimal emergency provision for a limited time is given only as a form of alms (without legal claim) for which the recipient should thank his generous benefactor and not make any far-reaching demands. While this is already reality in states where the neoliberal reorganization already started (for example, the US), Germany is on the way. The social net is gradually thinned. Benefits are no longer paid according to need but only as a lump-sum benefit (regardless whether this is enough to lead a dignified life). The next step is the further reduction and temporal restriction of transfer payments. This is always justified with alleged practical necessities like the state’s high debt burden.


“Flexibilization of the labor market” is one of the most frequent demands made by neoliberal politicians and economists. This involves the following measures: dismantling protection from unlawful termination, cancellation of industry-wide contracts, allowing wage-adjustment clauses, loosening shop-closing laws and more flexible regulations of working hours. The conversion of these measures, argued again and again like a prayer wheel, will lead to more growth and fewer unemployed… If an employer can hardly terminate in case of a crisis, he will presumably be rese3rved with new hires. When the wage contract turns out too high, he will not hire additional workers any more. Is this logical so far? Since Germany is one of the “stragglers” or “late-comers” concerning neoliberal “reforms,” we are in the happy position of viewing the consequences and effects of a “completely flexibilized” labor market in other states where these measures were carried out. A glance at the US and Britain helps here. The pipe dreams of the German employer lobby have long been reality there. If one considers the course of the unemployment rate in both states, full employment was nearly reached in economic boom times (with the unemployment rate under 5%). But unemployment quickly rose again (between 8 and 10 percent) in crisis times. This corresponds entirely to the neoliberal theory. Through a flexible labor market, layoffs in crisis are quick and problem-free. In boom times, firms rehire workers just as quickly. With a good will, one can say for the US (and with restrictions also for Britain) the statistical “unemployment rate” is somewhat lower than in Germany. But one should glance at the situation of workers in the two afore-mentioned states before one strikes up the song of praise for flexibilization. The meaning and goal of politics is concretely improving human life, not “cooking” the statistics. But what does politics look like now?

If one looks closely, one quickly recognizes nearly all the jobs created through flexibilization are precarious jobs. These persons fall out of unemployment statistics but often hardly earn enough for life. They are constantly at or below the poverty line. Any additional blow of fate like accident, sickness or divorce can mean the final financial and social end. The majority of them works in two or more “jobs” simultaneously and often cannot afford health insurance. If a business cycle downswing or economic crisis occurs, these persons can be “put on the street” from one day to the next, according to the “hire and fire” system. Since many of them constantly live “hand to mouth” anyway, one can easily imagine what it means for them to be suddenly without money and social security. If they are lucky, the family can cushion them. Otherwise only homelessness (e.g. sleeping in cars when they exist) and food cooperatives are left to them. Precarious employment afflicts large parts of the US population and is not a “fringe group problem” any more. According to studies of the “Economic Policy Institute,” a worker in the US needs a wage of $14 an hour to lead a simple life in the middle class (with stable housing, telephone and health insurance and no extras like restaurants, cigarettes or Internet). In the meantime 60% of workers in the US earn less than the hourly wage; some earn only half of that amount. Precarious employment is the reverse side of a “fully flexibilized” labor market. Both go hand in hand, which neoliberals like to conceal by pointing to the “glittering” statistics. In Germany, this development has already begun with the partial flexibilization of the labor market. If it continues (according to neoliberal ideas), German conditions in several years will not be far from the situation in the US.


The guarantee of purely formal equal life chances (formal equality of all citizens before the law) is equated with real equal life chances. Individual “handicaps” (in the form of different capital holdings) are denied or ignored (in discussions, neoliberals like to switch to another theme or start a rhetorical counter-attack to avoid a central contradiction in their theory). The fatal consequence of this equation is that every social failure is now ascribed to personal failure.


The dogmatism of neoliberal thinkers often goes along with the claim of sole interpretation sovereignty over political-economic processes and structures. This happens mostly through the (never thematicized) construction of “practical necessities,” which force measures as “natural” and the only possible measures, not derived from certain (questionable) values and norms. Every deviating standpoint consistently loses credibility and is made ridiculous as “naïve,” “ideological,” “idealistic” and “not financable.” A merger of politics and purely economic (monetary) aspects of practical conduct occurs.


Today there is a massive propaganda of the neoliberal stock of ideas through a huge part of public commercial mass media and many “intellectuals” and “academics” (mainly from the legal-economic area). This “stock of ideas” (mostly positive variants of the sketched positions) are seldom questioned and practically never interpreted as ideology but rather characteristically as the only proper answer to certain “practical necessities<’ for example “globalization” (another creation or working model!) – even if it is not represented by economic interests. For people without great media competence, it is very hard to scrutinize the claims of neoliberal actors that are often subtle.


Damages resulting from economic/entrepreneurial activity burden the general public while the vast part of profits remain in the private possession of individuals. Nuclear power, the financial crisis and environmental destruction are several examples. These “collateral damages” are legitimated with reference to jobs and decried as regrettable – without drawing any consequences for changing conduct. This form of subsidizing the entrepreneurial “rich” by the general public can be understood as a kind of indirect tax (see point 18). Even the slightest criticism of these subsidies calls lobbyists into action who immediately threaten with migration and job losses. On account of this practical necessity (see point 15), everything – unfortunately – must always remain as it is…


One core concept of nearly all neoliberals is the practically obsessive lowering of tax rates. Only the constant reduction of (direct) income-, assets- and inheritance taxes is meant here (relief of the “wealthy” and “top-earners” at the expense of middle and lower income earners, see point 1). The arising tax shortfalls should be largely compensated by raising indirect taxes and fees (the “value-added tax”). Workers are burdened compared to employers and the lower income sector in favor of the big earners.


Many (vulgar) neoliberal “dogmas” are captivating by their simplemindedness and supposed logic that corresponds to “common sense” and everyday experience. The neoliberal answer to high unemployment is that “wages are too high” and protection from unlawful termination too far-reaching since dismissals are prevented. If an article is too expensive in the supermarket, it stays there. If it is on sale at a reduced price, it is quickly gone. Everything and everyone is quantified and ultimately reduced to a commodity-value, corresponding to the market logic (see point 4).


Legitimate criticism of existing abuses and (monetary) injustice is mostly discussed with the pejorative labels “grumbler” and “envy debate” without entering in the substantive matters. In the US, “the people” are allegedly not envious but given an acknowledging pat on the back to “achievers and the rich” although this phenomenon has considerably decreased of late. Unlike the ridiculous and unfinanced proposals of political opponents, the projects of neoliberals are described as “real politics” dictated by “practical necessities” and “without alternative.” That the powerful profit and those already disadvantaged are hurt again as always happens is purely accidental.

Beside the “simple-minded” belittlement of criticism, neoliberal politicians and journalists apply a second more brazen strategy. The core of this strategy is reversing it into its opposite, not only denying certain facts. This is very clever since they can regain the initiative from a defensive position and start a rhetorical offensive (vehement assertion of a new fact). Typical examples for this strategy are stylizing deviationists as poor persecuted victims of a wicked media smear campaign… Only (inter-subjective) interpretations of a section of reality occur, never objective facts. However there are criteria for judging the structural agreement of the asserted facts with “reality” (academically expressed, the partial isomorphs). Assertions only supported by little or no evidence are put in question by counter-evidence as very doubtful or delusions in the extreme case. Even if these assertions are not always convincing, neoliberals usually succeed through their massive broadcasting in calling all counter-presentations in doubt and leaving people unnerved. This is more than enough for maintaining power.

The third possible variant in dealing with criticism occurs more infrequently… Some half-educated academic “journalists” are always found to interpret a corresponding editorial or commentary. Two points are at the heart of many attempts to annul the neoliberalism reproach. One is the explanation “neoliberalism” is an empty combative political term of “good persons” in order to criticize the allegedly cold, harsh “globalized world” in a naïve and unrealistic way. The other often grants that “globalization” has partly negative consequences but these have nothing to do with real neoliberalism, as practiced by L. Erhard.


"2009 Preliminary Report of the UN Stiglitz Commission" (109 pages, pdf)

"VIDEO: Conversation with John Kenneth Galbraith." 52 minutes
link to www.google.com

"VIDEO: Chomsky on Reagan and Friedman Economics"

"Capitalism is the Problem: System Error" by Bernd Druck and Yaak Pabst

"The Crisis of Capitalism: Credit-Doping" by Rainer Roth

"The Crisis of Speculative Capitalism" by Rudolf Hickel

"Economic Policy after the Financial Crisis" by Kai Burmeister and Till von Treek

"One Nation, Two National Economies" by Max Fraad Wolff

VIDEO: Eduardo Galeano on Grit TV"
link to lauraflanders.firedoglake.com

"Blame Canada" by the Stimulator on www.submedia.tv

May knowledge-maximization replace profit-maximization! (cf. Rainer Roth)


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