Neoliberalism and Environmental Calamity

Photograph by Nathaniel St. Clair

Current conditions represent a political emergency of sorts, meaning that ways of solving environmental and social problems will either be worked out or circumstances, led by the environment, will assume a life of their own. Given that these conditions are the result of historical processes that were decades and centuries in the making, understanding how we got here is crucial to resolving them.

The relevant ‘we’ here is being redefined through the relation of late-stage capitalism to the world. Climate change and species loss are shifting boundaries, shrinking the universe of arable land, breathable air and drinkable water. Fortress America, previously a conflation of place with one’s status in the imperial order, is largely the source of this vengeful gravity. Political geography is about to get interesting.

In this regard, the IPCC just won’t quit issuing proclamations. Joining climate change and mass extinction is dead and dying land. It seems that you can’t just denude a few hundred million acres of arable land, destroying the ecosystems to which it belongs, without consequences. What mystical clairvoyance could have imagined such an outcome? And more to the point, what can be done about it?

With updates on the breadth and depth of environmental calamity coming fast and furious, still missing is the political path to salvation. The only certainty— as offered by the authors of said calamity, is that we, the little people who add up to 90% or thereabouts of the demos, want— nay demand, calamity. The proof: we still eat, live indoors, wear clothing and find our way to and from work.

However, this is but mere paraphrase. The direct proof is that we consume. And we do so through the social mechanisms— stores, the internet, etc., that have been provided. From this slim foundation the certainty is built that we ‘demanded’ state corporatism, a/k/a neoliberalism, a/k/a rule from above. Markets are the transfer mechanism through which the purchase of a bag of rice becomes support for industrial agriculture.

Amongst the background premises that has made American political economy close to immutable is this idea of self-generation, that capitalism and democracy emerged from the free choice of the governed. Ironically, the neoliberal form that has permeated the West in recent decades was conceived by liberal intellectuals after WWII. And it was imposed by cadres of government and business leaders beginning in the 1970s.

Crucially for electoral politics, no vote to transform American political economy from the managed capitalism of the New Deal to neoliberalism was ever taken. Ryan Grim, political reporter for The Intercept, places the Koch Brothers funding the neoliberal Democrat’s Third Way and on the executive board of the DLC (Democratic Leadership Committee) at crucial moments in this history. It seems that the political ‘center’ has long had an agenda.

This, along with abundant evidence of capitalist machinations from the Powell Memorandum to right-wing think tanks created and funded in the 1960s and 1970s by the rich, gives provenance to the claim that neoliberalism was imposed from above. This imposition carried out through trade agreements, financialization and privatization, to which none amongst the demos agreed, contradicts theories that it self-generated through democracy, markets, or anything of the sort.

Among the more brazen pushbacks to taking collective action to right social and environmental wrongs in the present is the assertion that ‘we,’ variously phrased as citizens and / or consumers, chose the world we inhabit, and therefore ‘own it’ in its current form. This isn’t to deny agency, but rather to point out that claims regarding political ownership are more plausible when it is chosen than imposed.

Through its Anglo-American provenance, this logic of self-generated political organization is the basis for ideological explanations of both capitalism and democracy. Through our individual purchases we indicate our material desires. And through our votes we indicate our political preferences. Capitalist democracy is posed as an historical accumulation of these individual choices— just without the actual history.

To work this anti-history back into an historical context, none other than the IMF (International Monetary Fund) has stepped into the environmental arena to offer that direct and indirect subsidies of fossil fuels were around $5.2 trillion globally in 2017. Environmental destruction has long been built into this historical process. The solution: raise the price of gasoline to $15 per gallon and hamburgers to $14 and presto-change-o, environmental problems will be solved.

In a narrow sense, this should produce a WTF moment. Who decided that $15 per gallon gasoline should be sold for $3? And who decided that a $14 hamburger should be sold for $3? The answer, that a complex interaction between government bureaucrats, elected representatives, private interests, trade groups and military strategists— considered together through something called history, resulted in these subsidies.

The takeaway from the IMF report is that markets had next to nothing to do with it. As the locus of exchange, markets provide the ‘signal’ of how much gasoline and beef needs to be supplied to sell cars, lay out suburbs, use 80% of agricultural produce as animal feed, burn the rain forests to the ground to grow soybeans and keep Fourth of July barbecues supplied with animal lips, hooves, assholes and cockroach bits (hot dogs).

Lest this seem flippant, think about it: if the market price of gasoline and food bear no relation to their costs of production, what market prices do? Without a military to enforce property rights, what is the market price of an iPhone made in China? Without government backed banks lending people money to buy houses, what is the market value of a house? The claim that markets are the locus determination is to mystify the social and historical contexts of production.

The theoretical justification for markets is that price signaling tells capitalists where to allocate resources. But implied in market prices is the entire order of the world. Consider again the price of the iPhone made in China. What role did subsidized fuel and food prices play in its determination? These were in turn determined through a host of political and economic considerations. The concept of a clean price, one that stands outside of politics, geography, history and happenstance, is a fantasy.

Paradoxically, the measure of capitalist ‘efficiency,’ the difference between market price and production costs that finds its way into profits, is also the measure of market inefficiency through the costs of production not reflected in market prices. The exception— the commodity that in some particular space-time trades at its cost of production plus a market profit, is extrapolated to define the totality of market exchange.

The incoherence of this neoliberal conception would be academic if it weren’t the organizing principle of Western political economy. Industrial agriculture ‘works’ by externalizing environmental costs. Industrial production ‘works’ by externalizing greenhouse gas emissions. Industrial fishing ‘works’ by externalizing the costs of overkill and depletion. Environmental devastation is fundamental to claims that neoliberalism ‘works’ at all.

Deference to nature through markets and prices mystifies the power relations at work. Externalized costs are economic taking from the rest of us. Deregulation, posed as a reduction in unnecessary paperwork, is a transfer of state power to private interests. Privatization is a transfer of ownership control from the pubic to private owners. State corporatism of the neoliberal form has precedence in Italian fascism of the twentieth century.

The Koch Brothers, with family ties to neoliberalism through Friedrich Hayek, supported the rise of liberal state-corporatists in the DLC (link above). Current back-and-forth over ‘fascism’ pits liberal state corporatism— Democrats, against racialized state corporatism— Republicans, to hide that they are both state-corporatist forms. The reactionary nationalism of Russiagate offered clues to this relation. The elevation of racialized state corporatists (Joe Biden) amongst 2020 presidential contenders offers more clues.

The point isn’t to argue over labels, but rather to illuminate the problems in their various dimensions. Neoliberalism was on the ballot in 2016 and it was voted out. That it reappeared through the person of Donald Trump is evidence of the nature of neoliberalism, not necessarily of Mr. Trump. Patrician tool George H.W. Bush was unable to get NAFTA passed by congress. It took liberal, state-corporatist, icon Bill Clinton to get it passed.

Writer and founder of The Land Institute, Wes Jackson, wrote that land degradation— the topic of the recent IPCC report, was the object of Federal government concern from the 1940s through the 1970s. Under the auspices of agencies of FDR’s New Deal, loot and pillage agriculture was replaced by sustainable methods, or at least that was the goal. Of relevance is that 1) the public interest in sustainable agriculture was represented 2) by and through government agencies.

‘Markets’ weren’t conceived as the locus of this sort of social negotiation until the neoliberal era. Market ideology gradually replaced institutional memory through the perpetual now of state corporatism. The premise that markets efficiently price energy and industrial animal products was never put to a test; it was simply assumed. Assertions of mispricing are always claimed to be the result of imperfections in the world.

Not only was neoliberalism a real revolution in that it changed the distribution of political power, it is a closed political form in the sense of being a totalizing— circular and self-referential, belief system. As such, neoliberal explanations of the Great Recession quickly reverted to blaming government interference in markets. The anti-historical idiocy of the claim can be found in the scope and breadth of government support for capitalism, without which capitalism wouldn’t exist.

Fifteen dollar per gallon gasoline wouldn’t just act as a regressive tax that would unduly burden the poor. It would end the car industry as we know it— possibly a good thing except inasmuch as a large number of people are employed making cars and in ancillary industries. The entire infrastructure of modernity has been built around cheap gasoline. Food security is dependent on the long-distance transport of essential foods.

Taken at face value, the market paradox is that the longer that gasoline is priced below its true cost, the higher this price will need to rise because of the accumulation of ‘excess’ greenhouse gases. Ironically, this idea of a ‘true’ market price emerges from wholly subjective premises. This is to argue that as long as subjective determinations are being made, why waste time with dubious exercises for the benefit of neoliberal ideologues?

The ‘meta’ point here can be made by analogy. Consider the paradox of imposed freedom. Markets didn’t / don’t create markets. Cadres of government officials and business representatives created neoliberalism by fiat. The market choice between Ford and Chevrolet, or between Democrats and Republicans, is made within an imposed setting. Sure, there’s a choice between market and / or political products, but there’s no democratic say in the form and function of broader political economy.

House leader Nancy Pelosi says as much when she invites industry leaders to determine public policy, just as Dick Cheney did in the run-up to the Iraq war. What do you call political economy where business leaders base decisions of war and peace on profit and loss calculations? Where is the moral, political and economic accountability when a million Iraqis are killed to benefit business interests? The choice within neoliberal political economy is fundamentally different from the choice of neoliberalism.

The Green New Deal as it was put forth by AOC was / is brilliant because it addresses the breadth of the environmental conundrum confronting us. Raising the price of gasoline to $15 per gallon, its production cost as determined by the IMF, would last about ten minutes before all market-based solutions were deemed infeasible and there was a return to business as usual. Keeping the market price below its true cost was a calculated political decision, not market mispricing.

Fossil fuel usage was systematically built into Western political economy. The process by which this was done is historical, meaning that it took place over time, with multiple interactions and dependencies created. Without carefully backing out of these interactions and dependencies, any substantial efforts to reduce fossil fuel usage will cause economic disruptions that will quickly render them politically infeasible. Leaving this process to markets grants primacy to strategic misdirection, to power politics carried out under the guise of natural processes.

The broadening of the realm of environmental concern by the IPCC and other organizations is heartening. What is implied is that the economists’ approach of treating problems as individuated outcomes to be addressed discretely, is entirely at odds with the nature of the problem. The second order implication, or first depending on your order of preference, is that neoliberalism as market-centered state corporatism, is a really bad idea. To consider it immutable is to say goodbye to a livable world.

Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.

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