With the upcoming Summit of the Americas and its central agenda of establishing the Free Trade Area of the Americas (FTAA), we again face the neoliberal specter-vicious, ferocious, relentless in its drive to enforce a world capitalist order.
Through its various institutions, public and private, national and transnational, this neo-liberal capitalist order seems to be extending itself everywhere, into all domains. It becomes increasingly global-total, complete-and thus exclusive, uncompro-mising, all-powerful. It allows no alternative, nothing different from itself, and will let nothing stand in its way. It seems unconcerned and unphased by what-ever damage it may do-supremely confident and untouchable.
Proponents of this globalization claim it to be a rightful triumphant march into eternity of the victorious capitalist mode of production. Opponents call it a corrupt aberration, a re-versal of the achievements of the many for the sake of the sinister greedy designs of the few. Neither questions the overwhelming power of this increasingly global system.
But in the shadows of this triumphant global march of power, unspoken and unspeakable, lies a profound weakness.
The neoliberal project plays out a dynamic which in its conceptual and world-historical content differs substantially from the popular presentations of globalization, whether by its promoters or opponents. Here, to delineate the conceptual and historical space of neolib-e-ralism, or \”new liberalism\”, we must first ascertain what \”old liberalism\” is. In particular, we must look at whether neoliberalism, insofar as it is new, is new because it is something essentially different from old liberalism, or if it is \”new\” only in the sense that it is a more recent stage or part of the same \”old\” liberal-ism.
Postulates of power
Liberalism is primarily a social and eco-nomic philosophy, though it encompasses other aspects and thus can be characterized as a complete world view. As the term itself implies, a central concern of liberalism is liberty or freedom: liberalism can thus be defined as a philosophy of or belief in free-dom as the essential or primary \”thing\” in life-the essential principle from which all others follow, the essential value upon which all others are built, the essential goal through which all others are attained, and in particular, the fundamental guiding value of political economy.
While it may not generally be known under that term, liberalism is in fact a very familiar notion. It is, in a slightly modified localized version, the official ideology of the United States, as well as other \”Western Democra-cies\”. The notion of human rights or civil rights is one of the basic elements of the liberal ideology. Freedom of speech, associa-tion, conscience, occupation, etc., are all typical values or desiderata of liberalism. The sepa-ration of church and state, equality before the law, checks and balances are all classic lib-eral constructs. Representative democracy is the basic liberal form of government. Individu-alism is a liberal mantra. Choice is a liberal obsession.
But how is this freedom to be imple-mented and secured? The liberal solution is simple: Liberty = Property. Only through the free disposition of private property can all other freedoms ultimately be secured. The free disposition of property can be broadly under-stood as the freedom to own whatever one desires and do with it whatever one sees fit, and in particular involves the freedom to deploy and control one\’s existing private property to increase one\’s property holdings (accumulation of capital). The freedom (right) of property is thus the fundamental freedom and one which must be defended at all costs, since all other freedoms depend upon it. Note that in this context, private property refers not so much to one\’s personal effects-the things one uses in the course of daily life-but rather to ownership of things beyond one\’s personal effects, things which other people may need or use. In particular, it refers to private owner-ship of the means which oth-ers need for their economic activity, i.e. the means of produc-tion.
As a corollary to the basic principle of lib-erty, a fundamental liberal principle is that any restrictions on liberty must be justified. While certain real or perceived infringements on the \”rights of others\” may serve as such causes for restriction within the context of social in-stitutionalization of human relations, when it comes to securing the continuation of the private-property profit system, liberalism pro-vides for absolute liberty in imposing restric-tions (up to and including total annihila-tion) on those who would stand in that sys-tem\’s way. No degree of cruelty, no level of destruction, nothing is unjustified in defense of the right of private property.
Furthermore, when the rights of two prop-erty holders collide, the holder of the greater property prevails. When rights in property collide with other rights, the property rights must prevail (thus, for example, from a liberal point of view, the genocide of the indigenous population of North America, while perhaps unseemly and maybe even unfortunate, is certainly not unjustified: their right to live stood in the way of the right to accumulate property by the colonial capitalist ruling class, which is a higher right). The system of private property is complex in all its details, but it\’s basic logic is simple.
Liberal ideologues are not unaware of the potential (and indeed inevitable) problems of such an arrangement, and have suggested various ways of curbing its excesses so as to ensure its stability: however, they do not question the desirability or even the inevitabil-ity of the basic arrangement itself. This is not surprising, for as the history of its emergence and development makes clear, liberalism is the ideology of capitalism.
Liberal ideology, rather than presenting a single coherent world picture, fractures on many points into apparently contradictory views, which in summary may be reduced to the issue of positive versus negative liberty. Positive liberty refers to the view that liberty is something that needs to be enabled and em-powered, while negative liberty indicates that liberty requires the absence of interfer-ence. With reference to the function of gov-ernment (the guarantor of liberty), the princi-ple of posi-tive liberty is expressed in the ideological and functional constructs of the welfare state, while negative liberty is identi-fied with liber-tarian notions of laissez-faire, free-market capitalism. In the United States, this opposi-tion is often understood in terms of Democrat vs. Republican. This apparent inter-nal conflict or contradiction is important for the function of the liberal system.
Now, it requires no great feat of the imag-ination to see that freedom, insofar as it has any reality, comprises both positive and nega-tive aspects, and simply emphasizing one over and against the other per se, either in degree or in toto, is not a fundamental argu-ment of principle: what is required for freedom de-pends inextricably upon the act for which one seeks to secure freedom, upon the spe-cific conditions and requirements which make the given exercise of \”freedom\” possible. As an abstraction, a disembodied concept, free-dom means nothing.
By shifting the dialogue on freedom into this rarefied, disembodied realm, the liberal ideo-logical machine guts the notion of free-dom, emptying it of precisely that which makes freedom meaningful, and thereby elimi-nates the concern with freedom as an obstacle to total domination by the coercive institutions of free-market capitalism. This sort of shift and redirection from essential substance to rare-fied abstractions and institutional arrange-ments is a fundamental liberal technique for the implementation of the repressive hierar-chies of capitalist power relations.
The primary institution which supports the implementation of the core liberal principle of private property is the free market. Much like the marketplace of old which served as a gathering place for the community, this free market defines the space of interaction be-tween people. However, unlike the market-place of old, the function of which was strictly subordinated to the customs and traditions of the community, this free market is controlled by entrepreneurs. The market system defines the transactional economic relations through which capital may be accumulated by various individuals and entities of the bourgeois ruling class, as well as ensuring that those who own no or insufficient capital be free to sell their labor to the holders of capital. The primary freedoms enshrined in the market are the freedom to exploit and to profit.
The behavioral model of the market is one of competition. Market participants are to be guided by greed and self-interest, with those most aggressive in their quest for profit emerging on top in a hierarchy of domination. The full expression of self-interest (i.e. free-dom) as demanded by this competition is seen as being conducive to the greatest good. The market is a primary modality for deter-mining the variable aspects of socioeconomic organi-zation, such as wealth distribution.
Within the liberal ideological apparatus, the market is primarily viewed as a self-con-tained perpetual machine; however, like all ma-chines, it is subject to malfunctions and thus may require repair or intervention. The inter-vention is traditionally provided by the state, which through its overwhelming coer-cive force is able to function as an arbiter of market relations, facilitating smooth function-ing of inter-capitalist competition, ensuring the availability of workers for exploitation, and enforcing their subservience to the require-ments of the capitalist ruling class.
Again, within the liberal dialogue, the in-volvement versus non-involvement of the state in market processes is treated like a point of contradiction, with two sides favoring either one or the other position, along the lines of positive vs. negative liberty as dis-cussed above. However, from the point of view of the functioning of the system, these two sides are not in any fundamental contra-diction to each other: the nature and degree of involvement of the state (as well as the relative dominance of one of these two sides in any given period) is dictated by specific historical conditions. In the end, the modality of the market is an unquestioned postulate of liberal societies.
Implementing a new world order
Toward the end of the 19th century and extending well into the 20th, a new trend emerged in the dominant economic ideology. This trend reached its peak in the wake of the Great Depression, with the as-cendancy of Keynesianism. Basically, this new trend in-volved increased government intervention (particularly in the realm of fiscal policy) and policies of the welfare state, and stood in contrast to the traditional laissez-faire free market notions dominant in earlier liberal thought. Against a backdrop of increasing instability in international financial and money markets, British economist John Maynard Keynes proposed the formation of a perma-nent organization to oversee and guide the economic operation and interaction of the various capitalist states. An agreement on this was signed in July 1944 by forty-four nations at Bretton Woods, New Hampshire. The name of the newly formed organization was the Inter-national Monetary Fund (IMF).
The International Monetary Fund and its related institutions are often seen as the van-guard in promoting and imposing neoliberal policies-policies which are viewed as being diametrically opposed to the Keynesian eco-nomics upon which those institutions were founded. As globalization critic Susan George states in A Short History of Neo-Liberalism, \”In 1945 or 1950, if you had seriously pro-posed any of the ideas and poli-cies in today\’s standard neo-liberal toolkit, you would have been laughed off the stage or sent off to the insane asylum… The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the econ-omy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection-such ideas were utterly foreign to the spirit of the time.\” So why the sudden change?
As should be clear from the preceding dis-cussion, the \”left-wing\” Keynesian econom-ics are not in fact diametrically opposed to the \”right-wing\” liberal/neoliberal economic poli-cies. Both are part of the standard liberal tool-kit. They are the left and right hand of the capitalist ruling class. Depending on the \”spirit of the time\” (the objective historical condi-tions), either one approach or the other (or some combination thereof) will be used.
The point that the IMF, World Bank, etc. were Keynesian in origin is telling-but it is easy to be misled as to just what it tells. The very notion that there should be something like the IMF (a coordinating and regulating agency) goes against the supposed spirit of neoliberalism, of the free market unfettered by intervention. Yet there is no question that neoliberalism is precisely what the IMF pro-motes. Unraveling this apparent contradiction is crucial to understanding the dynamic of capitalism.
The liberal economic order which devel-oped in the context of the industrial revolution took its root in the area of economic activity which was the first to be industrial-ized-agri-culture-and can be traced back to the enclo-sure acts, thousands of which were passed in England in the late 18th and early 19th cen-tury. During the middle ages, the primary form of economic organization was what is known as the manorial system, which consisted of self-sufficient economic units (manors) or-ganized and governed largely by local cus-tom. In England, under the manorial open field system, most of the land was held in common. Families were allotted strips of land to cultivate and had access to common land (the commons or meadow) which could be used for pasture, collecting firewood, gather-ing fruit, public celebrations, etc. The lord of the manor received certain services or pay-ments in kind from the tenants. The mano-rial (feudal) system was above all a static system: while you could not do or live differ-ently from the way you and your ancestors had lived, you could also not be prevented from doing and living in that ancestral way. Tenant farm-ers, generally speaking, could not be evicted and their rents could not be raised.
With the rise of imperialism and the revival of commerce, large landowners and members of the gentry discovered new oppor-tunities for increasing their wealth, which first of all took the form of producing wool for export, and later expanded to large-scale agriculture to supply urban markets. To facili-tate this process, which began in the 16th century, it was necessary for the would-be entrepreneur to secure large contiguous tracts of land for his exclusive use-what today would be called privatization. While at first this process was carried out through local arrangements be-tween major landholders, it encountered much resistance from the tenant farmers and small freeholders, and so the incipient bour-geois class sought and received assistance from the increasingly powerful central gov-ernment, which legislated and enforced their business interests in the form of Enclosure Acts.
The Enclosure Acts repartitioned and di-vided up common land into large private es-tates, revoked the traditional gleaning rights which allowed poor peasants to scavenge ungathered crop on their lord\’s fields, gave the small farmers the poorest pieces of land or expelled them outright, and required that costly fences and gates, which small farmers could not afford, be built around all such re-divided landholdings.
This process of \”sensibly dividing the coun-try among opulent men\” (Adam Smith) had an important side effect: it generated a large class of landless, homeless and moneyless peasants, left to subsist as beggars and vagabonds in the cities. They would eventu-ally form the basis of the industrial proletar-iat-the wage slaves. However, the peasant class, which had never held \”jobs\” in the modern sense, was neither willing nor able to submit to the dehumanizing rigors of indus-trial slave labor. To bring it into line, the free-market entrepreneurs called upon the power of the state. Thus, as early as 1530, in a break with the Christian tradition of almsgiv-ing, a law was issued in England mandating that beggars upon a first offense be \”whipped until the blood streams from their bodies\”, whipped and incarcerated for half a year upon a second offense, and executed upon the third. Such proto-liberal policies proved suc-cessful in instilling the Protestant work ethic which Max Weber celebrated as a precondi-tion for capital-ism.
This is precisely the picture of freedom that liberal ideologues of capital envisioned. You must freely submit to the domination and ex-ploitation by the holders of private property, and being unwilling or unable to do so justi-fies the imposition of punitive restrictions upon you: \”Sloth should be punished by temporary servitude at least\”, in the words of Adam Smith\’s teacher Francis Hutcheson. Any means of gaining subsistence outside the parameters of the capitalist system as dic-tated at any given time by the bourgeois ruling class by definition infringes upon the unalien-able right of property (profit) and must be prohib-ited (criminalized).
All this of course is in essence not much different from what today we call IMF poli-cies: all the things which those policies seek to prohibit, undercut or destroy are things which for whatever reason do not correspond to the current requirements of the capitalist mode of production as practiced by the imperialist corporate ruling class-whether these things be local customs, social arrangement, labor regulations, strong local industries, even life itself. The institutionalization of that which supports the capitalist mode of production and the criminalization of that which opposes, interferes with, or differs from it, is a funda-mental precept of liberal philosophy. Killing people per se is not a violation of the much vaunted liberal principle of human rights-so long as the killing is justified by a greater good, i.e. the good of those with greater capital.
The enforcement of free-market conditions through brutal state repression may appear as a contradiction to the libertarian principles of governmental non-interference and non-regula-tion, but again, the contradiction is only appar-ent. In the end, the fact that \”freedom\” was imposed upon you makes you no less free, however brutal the mechanism of impo-sition.
This situation parallels the contradiction pointed out by observers such as Chomsky, to the effect that neoliberal policies seek to shelter the corporations and the rich while subjecting the poor to free-market discipline, which too is indeed no more than apparent, which is to say, really no contradiction at all. The point, as it were, of subjecting to or shel-tering from the vagaries of the free market should not be seen as fulfillment or failure of some sort of religious belief or ideological drive, even to the extent that such a drive does exist. Rather, such a selective applica-tion of market discipline, far from being a contradic-tion of the espoused liberal princi-ples, is in fact an essential step in their im-plementation. A king that can factually be overthrown and beheaded, however almighty and supreme he may fancy himself, cannot substantially act as such, precisely because he can indeed be beheaded and overthrown: thus, he must shelter himself behind guards and palaces like a cringing powerless coward. And it is indeed through a thorough institu-tionalization and systematization of these \”guards and palaces\”, as it were, that the king can finally ascend to the ultimate throne of power.
Neoliberalism is frequently put for-ward as representing a cancellation or roll-back of various \”gains\” made under liberalism: deregu-lation, cuts in social services, loosen-ing of environmental regulations, rescinding of labor rights, infringement upon human rights, usur-pation of democracy-basically, an attack on all things good. However, such a characteriza-tion reveals a poor understanding of the rela-tionship between neoliberalism and what came before. To do so, let us examine the concept of institutionalization.
Institutionalization can be viewed as the creation of formal arrangement to control and govern some activity or set of relations in a manner disconnected from the actual content of the activity. The institutionalized set of rela-tions penetrates all specific relations under the institution, while at the same time veiling the institution behind these specifics and ren-dering it intractable by forcing a reproduc-tion of the institutional relationships whenever any specific relation is instantiated. To put it an-other way, an institutional arrangement forces people to go through certain channels and act in certain ways whenever they wish to do something about a specific set of issues or affairs, thereby guaranteeing that those insti-tu-tional arrangements persist even though that may not be what the person wants. Lib-eral institutional arrangement are put forward by liberals as being essentially neutral if not good, and thus not prejudicing any particular outcome of the institutionalized process: they are the rules for playing out the game of free-dom which liberalism posits as the ulti-mate if not only game.
The IMF, WTO, etc. are liberal institu-tions. The stock market, representative democ-racy, the existing legal system, and the like are also liberal institutions. The governing princi-ple of liberal institutions is individual free-dom: thus, you can vote for whomever you want, you can invest in whatever stock you want, you can do business with whomever you want-so long as you don\’t prevent others from doing the same. So what if you believe that profit is immoral (as the Christians did before the ad-vent of capitalism) and don\’t want to deal with profiteers in your commu-nity? Or what if you have a well-established traditional sustainable way of life and don\’t want to be serviced by corporations? Well, that is a violation of the rules of the game, because it infringes upon the freedom of the capitalist ruling class.
Liberal institutions are characterized by the use of contradictory principles (conflicts) in order to achieve an ultimate objective: allow-ing the conflicting forces which may naturally exist or arise in relation to a certain issue to play themselves out within a carefully crafted context prevents those forces from challeng-ing the interests embedded in the institution itself and reinforces the institutional frame-work. These conflicting forces may play them-selves out both in time and in space.
The incipient bourgeoisie needed to insti-tute various rights and freedom in order to destabilize and displace the preceding en-trenched feudal/manorial hierarchy. While the details differed locally, generally speaking, under the manorial system the serfs of a manor in theory had no rights at all in relation to their lord and existed solely at his whim. However, in practice, the relationship of lord and serf came to be governed by various entrenched and essentially inviolable customs which provided the serfs with a stable if mea-ger existence and practically granted them all sorts of rights which in theory they didn\’t have. The bourgeoisie sought and implemented a reversal of this order, whereby in theory the (ex-)serfs would have all sorts of rights, whereas in practice they may have none at all and exist solely at their bourgeois master\’s whim. This transformation was achieved by institutionalizing those rights.
The processes of institutionalization en-sured that the rights acquired by the bourgeoi-sie would not be challenged in the same way they were obtained, by shifting the locus of those rights away from the immediate politi-cal, economic and military power at the capitalists\’ disposal and onto a complex system of power management (government) which on the face of it would protect the rights of the bourgeoisie only insofar as it protected the rights of people in general. By providing a mechanism (democracy) for challenging the representatives of government without infring-ing upon the essential function of government itself, opposition to the tyrannical rule of capital was effectively neutralized. It made the people free to expend what for them would be enormous energy and resources in the political arena, the rules of which were crafted so as to ensure that those efforts would prove ineffec-tual.
The institutionalization is itself a pro-cess-it is not something that can necessarily be im-posed all at once in a single stroke. Thus, for instance, in the United States (\”the greatest democracy\”), the voting franchise was granted to various segments of the population in a gradual manner, once the power of the ruling class was sufficiently entrenched and institu-tionalized to ensure that it would be unchal-lenged. An underclass within the system is much less of a threat than an underclass out-side the system, because it is that much more difficult for it to challenge the system. Granting specific rights and freedoms substan-tially ensures that those rights and freedoms will be exercised in accordance with the rules of the game laid out by the grantor, and that other rights and freedoms will not be exercised at all. Such a granting or guaranteeing of these rights is precisely what is required as a pre-condition for their eventual complete revoca-tion. Your human rights, however unalienable they may be claimed to be, are vested in you not because you are human, but at the whim of the ruling class-at the whim of the ruling system.
These essential values and rights which we all supposedly cling to and uphold, and assert as being infringed upon by an unrestrained all-too-global turbocapitalism, are thus pre-cisely those rights which must be clung to and upheld for this turbocapitalism to gain motive force. And as an object or focal point for such clinging, in terms of its efficacy as means of lubricating the neoliberal trajectory, nothing beats the state.
It is in a way not surprising to see promi-nent critics of neoliberalism such as Pierre Bour-dieu put forward the state as the thing that will protect us all from capitalism gone wild. In their forlorn attachment to the nanny state, advocates of the liberal-reformist agenda have blinded themselves to the fact that the neoliberal order which they suppos-edly oppose suckled at that nanny\’s breast. This philosophy of wooing the parent to exco-riate the child is morally, philosophically, ideologically and practically bankrupt.
It is a philosophy which proffers reinforc-ing the maggot to ward of the fly, strengthen-ing the larva to protect against the moth-bliss-fully unaware that the larva begets and is the moth, and will no less become a moth for being stronger. No doubt the larva-moth entity, at least, appreciates these sorts of efforts.
By focusing on some immediate surface contradictions, liberal critics of neoliberalism find it sensible to insist upon the former as a means of warding off the later. The former, in terms of historical order, is, essentially the welfare state. But as we have seen, the wel-fare state and free market system are not in any fundamental contradiction to each other. The capitalist ruling class deploys one or the other in accordance with the specific historical conditions at any given time, in this way play-ing out a dynamic through which its power may be totalized. The structures ap-pealed to by \”progressives\” as a bulwark against further encroachment by corporate interests are thus all too often precisely the prerequisites for corporate domination.
So what is neoliberalism all about? It is all about extending, fortifying and totalizing the program of domination laid out under liberal-ism. By leveraging the technologies devel-oped and the concentration of capital achieved under the welfare state, the capital-ist ruling class is poised to extend its dominion into regions and spheres of human activity previ-ously at the periphery of or even beyond its control. The market, which served as the primary determining process of social organi-zation, is to become, as much as possible, the only process.
This is to be achieved by maximizing the number and effect of market transactions, by diversifying, extending and multiplying the number of markets and submarkets. Already we see things like the \”volume of trading\” being put forward as an important indicator of our collective well-being, although it is well known that the vast majority of such trading is purely speculative and materially useless.
Deregulation is a strategy employed in a similar vein. Deregulation should not be viewed as a move toward the absence of regulations: a given deregulated market or sphere of activity may have as many if not more regulations than the regulated one did. Rather, deregulation is a set of regulating principles intended to increase the volume of transactions and reinforce the process of accumulation of capital.
Click Here for Part II