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Why a Neoliberal Society Can’t Survive

Photo by Nathaniel St. Clair

Humans are complicated creatures. We are both cooperative and sectarian. We tend to be cooperative within in-groups (e.g., a trade union) whilst competing against out-groups (e.g., a business confederation). But complex societies such as ours also force us to cooperate with out-groups – in neighbourhoods, at work, and so on. In social systems, natural selection favours cooperation. In addition, we are biased toward ethical behaviours, so cooperation and sharing are valued in human societies.

But what happens when we are forced into an economic system that makes us compete at every level? The logical outcome is societal decline or collapse.

NEOLIBERAL DOGMA IN THE 20TH CENTURY

In “The Individual in Society,” Ludwig von Mises, teacher of Friedrich Hayek (the granddaddy of modern neoliberalism), wrote that in a contractual society, the employer is at the mercy of the mob. But in a self-interested market economy, “[t]he coordination of the autonomous actions of all individuals is accomplished by the operation of the market.” So, in this fantasy-world, employers can fire workers and replace them with cheaper ones without incurring the social costs associated with contractual societies.

Particularly after the 1970s, this kind of thinking began to permeate the culture of “free market” planners in Ivy League economics courses.

Robert Simons of the Harvard Business School notes that economics is by far the dominant academic discipline in the United States today, and that many graduates take that acquired ideology of self-interest into the workplace of asset management, hedge funds, insurance, liquidity, and so on. Simons criticises what he calls “the unquestioning and universal acceptance by economists of self-interest—of shareholders, managers, and employees—as the conceptual foundation for business design and management.” Simons notes that workers are self-interested “tribes,” as are managers, in that they try to gain more benefits. “To remedy this potentially catastrophic situation” of worker rights, “market economists attempt to channel errant behaviors by using stimulus-response theory” in the form of anti-union legislation, cuts to social services, and the threat of outsourcing jobs. Market economists “have elevated self-interest to a normative ideal.”

INFECTING THE LEFT

In 1988, then-Chancellor and Tory, Nigel Lawson, wrote that by the 1970s, “capitalism, based on self-interest, was felt to be morally disreputable” by the majority of Britons. But equally immoral for Lawson is state-intervention: “there is nothing particularly moral about big government,” he said (unless it is a big government to rescue big business). But, fortunately for the Tories, “the tide of ideas turned,” allowing them to re-enter office and impose further neoliberal reforms.

Perhaps the worst aspect of neoliberalism was its infection of the Labour party. To give some examples: one US neoliberal, Lawrence Summers (later Bill Clinton’s Treasury Secretary), taught a young Ed Balls, soon to become the economic adviser to future Chancellor, Gordon Brown. Then still an MP, Brown met with US Federal Reserve Chair, Alan Greenspan. This began in the UK a period of further financial deregulation under the self-styled “New Labour.”

Economists in the mid-2000s just prior to the crash, began seeing cracks in the ideology, noting:

“We see in the general public widespread unease about market solutions. Free trade and globalization, privatization of social insurance, and deregulation of energy markets all elicit opposition from many consumers, sometimes reasoned but often inchoate. It is no coincidence that support for market solutions is concentrated among the economically successful, and opposition among the less successful. Free choice has moral appeal, but moral fiber is strongest when not cut by self-interest.”

In 2008 the US, and thus global, economy was in meltdown. Greenspan testified to the House of Representatives: “I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and equity firms.” But self-interest means self-interest. The CEOs and top managers saw no need to honour their supposed obligations to their shareholders, let alone the general public.

THE SOCIAL CONSEQUENCES

The political consequences of decades of neoliberalism have led to disenfranchisement, particularly during the expansive period (1970s-2008), as marked by declining or stagnating voter turnout and the embrace of so-called extremist politics in the aftermath of the collapse (2009-present). But the ideology is deep-rooted among the ruling class. So, even after the inevitable crash of ’08, both the European Central Bank and the Bank of England continued with neoliberalism by imposing austerity on the populations of Europe and the UK, respectively.

Against this backdrop, predatory transnational financial institutions are profiting from the chaos. The collapse of the construction giant Carillon is a case in point. The company was allowed to collapse and its decline profited several hedge funds, including some based in the US.

The societal consequences of neoliberalism are even more dire. The American middle class has declined since the 1970s, as individuals become either very poor or very rich. A study in Harvard Business Review notedthat by the early-1980s, up to 49% of Americans thought that the quality of their products and services had declined over the last few years. Male and female suicide rates have continued to rise since the mid-1990s. And a recent study suggests that life expectancy has dropped across high-income countries

In the UK, Tory-driven austerity has created over a hundred thousand corpses over a ten-year period, according to the BMJ. Populations in more fragile countries have suffered even more. Between 1990-2005, Sub-Saharan countries whose governments adopted neoliberal IMF and African Development Bank structural adjustment loans experienced an additional 231 and 360 maternal deaths per 100,000 live births, respectively. Latin American countries which experienced just a 1% rise in unemployment between 1981 and 2010 experienced “significant deteriorations in health outcomes,” according to another report in the BMJ, including a rise of 1.14 child deaths per 1,000 births. All of this translates into millions of deaths.

As I’ve documented elsewhere, the most vulnerable societies, namely indigenous communities dedicated to maintaining their traditional ways of life, are literally going extinct, as “civilization” encroaches.

CONCLUSION

If this decades-long model continues to be imposed across the world, especially in nations with huge populations like India and China, which are increasingly adopting neoliberal policies, today’s divisive politics and crumbling infrastructure will seem like a minor headache, particularly against the backdrop of diminishing resources and climate change. If the cultural shift against neoliberalism that we are seeing today, taking expression in everything from progressive social movements to workers’ strikes, can sustain and expand, we might just save ourselves and plant seeds for a more equitable future.

This article originally appeared on Axis of Logic.

T. J. Coles is director of the Plymouth Institute for Peace Research and the author of several books, including Voices for Peace (with Noam Chomsky and others) and  Fire and Fury: How the US Isolates North Korea, Encircles China and Risks Nuclear War in Asia (both Clairview Books).

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