Thursday, June 18, 2015

Colin Crouch on neoliberalism (2 of 2)

Colin Crouch in The Strange Non-Death of Neoliberalism (2011) defines the major elements of the post-Second World War, New Deal/social-democratic economic consensus:

These then were the principal ingredients of the socioeconomic order that came eventually to be called social democratic, without initial capital letters:
  • Keynesian demand management in which government action, far from trying to destroy markets, sought to sustain them at levels avoiding self-destructive booms and slumps alike;
  • strong welfare states that enabled people to receive some services in kind rather than through the market and some forms of income not dependent on market performance or property-ownership, bringing diversity to what would otherwise be purely market-determined life chances;
  • in some cases, neo-corporatist industrial relations, trying to balance workers' freedom to organize with the need for labour markets to function efficiently.
He traces how the One Percent and their spokespeople undermined this consensus over time, with inflation playing an important role.

But it's important to note where the neoliberal model, initially based on Chicago School conservatism that took Milton Friedman's monetarism as a major element, was first able to take strong hold:

In 1973 agents of the US secret services assisted in a coup d'etat in Chile, violently displacing the elected Marxist government of Salvador Allende. The army general who seized power, Auguste Pinochet, instituted a wave of execution and torture of opponents, and installed a group of Chilean economists who had been trained at Chicago, the so-called 'Chicago boys', to establish a neoliberal economic regime. Acting as they could with all opposition liquidated, they were able to establish what remains the most thoroughgoing experiment in neoliberal policies. Friedman paid Pinochet a well-publicized visit.
Freedom from the constraints of democracy facilitated the adoption of neoliberal prescriptions:

A wide array of policies thus constitutes the general approach designated by the term 'neoliberalism'. They are very rarely to be found in pure form. The main exception would be Chile, which was notably not a democracy when the experiment was launched. Singapore is also often considered to come close to the neoliberal ideal, but it too is not a democracy, and government there has a large moral presence within the society, even if welfare is privatized and labour laws very weak. Within democracies comprising populations with different values and interests coherent, monolithic approaches of all kinds usually have to compromise. For example, while governments in the Nordic countries have accepted large components of the neoliberal agenda, in particular privatization, they continue to have extensive welfare states and powerful trade unions. These two potentially opposed forces come to terms with each other, with considerable apparent success. [my emphasis]
Crouch doesn't discuss Argentina. But the military dictatorship of 1976-83 was also aggressive there in following the neoliberal of privatization, deregulation, financialization, lowering wages and union-busting, all of them leading to much greater concentrations of wealth in fewer and fewer hands. Post-Soviet Russia also got a strong dose of neoliberal economics, with some pretty dubious results.

The Reagan Administration in the US and the Thatcher regime in Britain placed both countries on a neoliberal policy path which both have largely continued today. The European Union, as it turned out, wound up being the vehicle which made neoliberalism dominant there.

But understanding the change from the Keynesian/social-democratic consensus in the advanced countries, which was reflected in much of the non-Communist developing world in various ways with different degrees of success, to the dominance of neoliberalism is not a description of a monolithic ideology being imposed everywhere. In countries like Chile and Argentina, the process was more radical and extensive. The pushback and reconstruction from the results in Argentina have moved it away considerably from the neoliberal model when it crashed and burned there in 2001.

And we've seen variations in the North Atlantic countries in the current depression. While both the US and the EU generally pursued a deeply misguided austerity policy, the Obama Administration initially pursued a more stimulative and affirmative response, and the differences in the results when compared to the most drastic practitioners of austericide in Europe have been significantly better. While the shift from the New Deal/Keynesian/social-democratic consensus to the neoliberal/"Washington Consensus" one is a historical development of major importance and very serious consequences, both are forms of managing corporate capitalism.

Crouch makes a similar point in a useful though not altogether satisfying way:

Finally, we must return to the flexibility of the neoliberal paradigm. Particularly in the Nordic countries, but to some extent also in the UK and generally in EU policy, it has shown a capacity to combine with other ideologies and political approaches. It is important that ruling ideas show a capacity to do this, not just because it is a better guarantee that the diversity of interests represented in plural societies achieves some recognition, but also because of the abiding uncertainty of all human projects. We never know that one particular set of ideas contains all the right answers; even if it does today, it might not be equipped to face unexpected challenges tomorrow. Monolithic doctrines that are certain that they have a monopoly of wisdom and which crush all opposition usually end by being confronted by challenges to which they have no responses in their repertoire. This was the case with Soviet communism. Neoliberal ideologues certainly show strong tendencies in that direction, but the practical realities of life in democracies force them to compromise. The links remaining between neoliberalism and the broader historical liberal tradition mean that it can respond to that challenge. This will be an important issue in its future likely transfigurations.
In other words, it's better to see this as a messy historical process, not as an inexorable development with which we're stuck. It's less Chomsky with his near-omniscient rulers driving developments than Adam Smith and Hegel. Although in this case, the Smithian Invisible Hand is thrashing around clumsily. And the Hegelian World Spirit is lurching from one contradiction to another like it's under the influence of more liquid spirits.

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