Wednesday, June 17, 2015

Colin Crouch on neoliberalism (1 of 2)

Colin Crouch's The Strange Non-Death of Neoliberalism (2011) is a good primer on the dominant corporate economic doctrine of neoliberalism, which is the basis of the Washington Consensus on which the IMF and the World Bank operated so long. Neoliberalism as we know it now emerged as a late 20th century version of classical "free market" neoliberalism.

The word "liberal" in the American sense, which for decades has meant pro-labor politics, causes confusion in understanding neoliberalism. Neoliberalism has both "left" and "right" versions, the left version's main role being to sell the hardline pro-corporate positions to workers and organized labor. President Obama during his first term mostly operated as a left version of neoliberal. I'm not so sure that term fits his second term, in which he has explicitly proposed cutting benefits and Social Security and Medicare and seems to be trying to build a pro-austerity consensus with Republicans and Blue Dog Democrats against not only progressive Democrats but virtually all Democrats. The Social Democrats in Germany, France, Italy and Spain have so completely embraced the neoliberal paradigm that I wonder how long they can regain the ability to compete as major national parties.

But I'm getting ahead of myself.

Crouch gives a good description of what classical liberalism was:

'Liberalism' is about as slippery as a political term can be. Today it tends to move to the political left as one heads westwards. In Europe, and especially in the former state-socialist countries of central and eastern Europe, it is associated with political parties that stand for the strict application of market principles to economic life, as well as for extensive civil liberties. The former is normally associated with the political right, the latter with the left. In the USA it tends to refer to the political left in general; this shares the European commitment to civil liberties and criticism of any political power exercised by organized religion, but is diametrically opposite to this tradition when it comes to the market. American liberals are likely to believe in government intervention in the economy, the opposite of the usual and historical meaning of the term. [my emphasis]
I would say if there is a meaningful continuity between American liberalism of the Democratic party sort and classical liberalism, it is mainly to be found in an emphasis on civil rights and civil liberties. How strong that emphasis is within today's Democratic Party is certainly open to debate.

Crouch goes on to observe that, by the 1950s, "The defence of economic liberalism had become highly illiberal. This contributed to the way in which the word liberal in the USA stood on its head, coming to signify support for the welfare state and other government interventions in the economy." In the edition I'm using, he makes a comical mistake in the passage just before the one I quoted of giving Joe McCarthy's name as Eugene McCarthy.

He credits the name neoliberalism to the United States but also connects it with German conservatives' Ordoliberalism, which is the doctrine to which Germany Chancellor Angela "Frau Fritz" Merkel is so heavily committed. He says of the advocates of Ordoliberalism, "The system they advocated was not one of unrestrained markets but of ... an economic liberalism, whose
competitive order would be guaranteed by law." In other words, private corporate control of the economic a strong state. He continues:

Their ideas spread easily to the USA, where they became known as 'neoliberal', because liberalism as such had acquired such a totally different meaning there. There are now many varieties and nuances of neoliberalism, but if we stay with that fundamental preference for the market over the state as a means of resolving problems and achieving human ends, we shall have grasped the essence. [my emphasis]
This translates in practice to: privatization of public services; weakening and/or eliminating unions; financialization of economies through big banking sectors, proliferation of credit instruments and free movement of capital; international trade treaties with minimal environmental and labor protections; deregulation of industries; low taxes for corporations and the wealthy; corporate and One Percent domination of the state via money, lobbying and personnel.

We could say that these tendencies have always been present in capitalism to some extent. And especially in the years after corporations came to dominate the advanced capitalist countries, a process which is generally assumed to have occurred between roughly 1870 to 1900. But Crouch is explicit in saying that he is not making an anti-capitalist analysis:

It is not ... the purpose of this book to argue that somehow we should rid ourselves of giant corporations. The odd bedfellows of Jeffersonian liberals and Marxists who would have sought such an outcome both belong to an unrealistic past. Instead, this book looks to a fourth force, the busy but small voices of civil society, not to abolish, but to criticize, harry and expose the misdeeds and abuses of the cosy triangle. This in no way promises a different social order from corporation-dominated capitalism, but, provided our societies remain open and vigilant, it can make life far better than states and corporations will do if left to themselves.
Still a tall order for a short book. But with his task defined as primarily one of describing neoliberalism, he does an impressively good job of it in accessible language.

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