Neoliberalism exists to disable democracy

Whilst the Mont Pelerin Society was founded 1947, it is interesting to discover that the origins of Neoliberalism go back forty years or so before that.

When, in 1907, Austria saw its first elections held under universal male suffrage – a full eleven years before Britain, and seven years before the First World War, the old order viewed with abject horror the idea that the people, acting through their political representatives, were now the highest authority and were entitled to rewrite the law including (just think!) property rights.

For those that already had it, wealth and power needed to be maintained in spite of this new ‘democracy’ idea, which of course received a considerable boost after the the end of the First World War. This is one of the tenets of an intriguing new book ‘Globalists: The End of Empire and the Birth of Neoliberalism‘ by Quinn Slobodian.

The Harvard University Press summaries the book’s direction:

…In the 1920s, empires were dissolving and nationalism, socialism, and democratic self-determination threatened the stability of the global capitalist system. In response, Austrian intellectuals called for a new way of organizing the world. But they and their successors in academia and government, from such famous economists as Friedrich Hayek and Ludwig von Mises to influential but lesser-known figures such as Wilhelm Röpke and Michael Heilperin, did not propose a regime of laissez-faire. Rather they used states and global institutions—the League of Nations, the European Court of Justice, the World Trade Organization, and international investment law—to insulate the markets against sovereign states, political change, and turbulent democratic demands for greater equality and social justice.

Far from discarding the regulatory state, neoliberals wanted to harness it to their grand project of protecting capitalism on a global scale. It was a project, Slobodian shows, that changed the world, but that was also undermined time and again by the inequality, relentless change, and social injustice that accompanied it.

The book quotes the German-Swiss economist Wilhelm Röpke “If we desire a free market, the framework of conditions, rules and institutions must be all the stronger and more inflexible. Laissez-faire yes, but within a framework laid down by a permanent and clear-sighted market police.” Which is of course, not laissez-faire at all. A strong state was needed to beat “back the attacks of the re-distributors.” One of the author’s most illuminating conclusions is that the neoliberal programme was an endeavour to establish a social order in which (re)distribution was not a political question at all. For money and markets to be the central organising principle of society, they have to appear natural—beyond the reach of politics. What they are really against is not redistribution so much as “the destructive belief that global rules could be remade to bend toward social justice.”

Neoliberalism thus started as a project to protect the privileged from loosing out in spite of the rise of democratic control. And so it has continued.

Perhaps the Mont Pelerin Society simply gave improved opportunity for coordination between the academics and the bureaucrats, where the latter translated ideas into practical policies and thus made them important and relevant, embedding them in international discussions long before the ideological transformations, promoted by academics, of the Thatcher/Reagan era. Remarkably, by then neoliberalism had been around for a full seventy years.

So the neoliberal idea is to preserve property, wealth and its privileges in spite of democracy. Quinn Slobodian suggests that they use two principal methods:

Ensure that the the rule of money is accepted as objective, inevitable, and outside the scope of collective decision-making.

On this, one has to accept that they have done a remarkably good job. Money is treated, even now, throughout the developed world as more important than the economy, rather than as an instrument within it. ‘Trickle down’ was a tailor-made idea as it implied that money actually came from the rich and not the democratically elected government. The electorate has to be subject to austerity, simply because monetary debts have to have priority over the wellbeing of the electorate. The neoliberal idea is to establish that economic outcomes are simply beyond human influence.

Second, after “The realization of the 1930s for neoliberals was that the self-regulating market was a myth.” their technique was to establish as much global control as possible, where a larger treaty can be arranged to constrain national democratic governments from exercising their full freedom and independent economic control. In a sense this was using other governments to restrain national governments – so the more border-crossing economic relations or even international companies, the better. A good tangled web that will complicate control by setting up potential conflicts of interest between governments. State national power is still required for legal enforcement but its legal origin should, ideally, be an international treaty to put it out of the way of everyday national democratic scrutiny.

This second strategy is probably the less successful of the two, for as the author points out, institutions created to insulate power from democratic politics can themselves end up as new spaces for politics.The EU would be a classic example; it has some democracy as well as, now, a rather neoliberal structure, with the democrats wanting to reform that structure.

Capitalists haven’t really got much of a look in because although there is some conflict within the neoliberals a movement that was started by the property owning classes has been joined now by the money men, who not only feed on the capitalists, but have likewise managed to deceive as to where money comes from and how the economy works, whilst all the while trying to subvert the democratic control of the state.

Though not in the book, I am reminded of this speech by David Rockefeller, Chairman of Chase Manhattan Bank (now part of JP Morgan) in an address to the Trilateral Commission meeting 1991:

“We are grateful to The Washington Post, The New York Times, Time Magazine and other great publications, whose directors have attended our meetings and respected the promises of discretion for almost 40 years. It would have been impossible for us to develop our plans for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto-determination practiced in past centuries.”

Quinn Slobodian’s intriguing history leaves me wondering if similar private speeches were being given at somewhere like Davos even in 2018 because I fear the neoliberals are still clinging on.

Comments

  1. Graham -

    In more febrile moments one could begin to believe in conspiracy theories. Two other books examine how some rich and democratically unaccountable people, assisted by some tame and/or right wing ideologically driven academics, are attempting and perhaps succeeding in capturing government. Nancy MacLean’s “Democracy in Chains” I’ve read while Jane Meyer’s “Dark Money” is in the queue.

    Deeply worrying, but they and this blog raise the question of what is Democracy. It’s a catch-all phrase that perhaps slips too easily off the tongue and seems to imply the apotheosis of political development. What we have in States we call Democratic is nothing of the sort. It’s representative government, where generally an oligarchy and to some extent a plutocracy have or control the levers of power. Meanwhile, the citizenry are, effectively, powerless.

    1. Ivan Horrocks -

      Graham, you ask ‘what is democracy.’ Well, back in 2000 I jointly edited and contributed to a book on democratic governance and new technology in which we argued that across Europe most people lived in what we defined as ‘managed democracy’ which was in itself a greater or lesser synthesis of democratic elitist and consumerist models of democracy. In some countries – such a Germany and the Netherlands at that time – it was more demo-elitist and less consumerist, whereas in the UK it was markedly consumerist. But whatever the ‘weighting’ of the two models ultimately we lived under/within managed democracies. I note that in the intervening years Russia under Putin is referred to as a managed democracy – indeed I think Putin may have used this phrase to describe how he sees democracy functioning in Russia. Of course – and with reference to my previous blog about hegemony – obviously coercion needs to be more pronounced in Russia than in other managed democracies because it is a weaker hegemonic system than say in the UK. So as with all these things the degree to which democracy is overtly ‘managed’ differs from context to context.
      Ref: Hoff, J. Horrocks, I. and Tops, P. (2000) Democratic Governance and New Technology. Routledge/ECPR Studies in European Political Science.

      1. Graham -

        “Managed democracies” – yes indeed. And one of the management tools is the election, which, as one writer argues, was designed to keep the people out of power and elites in power.

  2. Sean Danaher -

    Graham
    the capture of the Senate and Congress by oligarchs is scary. I’m not sure if it is reversable. Robert Reich’s http://www.nybooks.com/articles/2015/12/17/robert-reich-challenging-oligarchy/ is more optimistic.

    I’m also deeply worried about the UK, we seemed to cross a Rubicon with PM May deliberately lying about the Brexit Dividend for the NHS.

    1. Peter May -

      Agreed I thought that was unbelievably brazen, overt lying. And from the Prime Minister, where she knows full well its existence had previously been objectively denied by govt statisticians.

      And whilst I agree with Graham’s post that what we have now is suspect democracy, it is undoubtedly a bit more democratic than when there was no universal suffrage – which is where Neoliberalism came in – trying to disempower it.

      1. Ivan Horrocks -

        Your quote from David Rockefeller is a stark example of the workings of a hegemonic system, Peter. The ‘pillars’ of what constitutes the modern state – and democracy, of course – working in tandem to maintain and advance the system.

      2. Peter May -

        Quite. I was actually quite shocked when I first read that quote. Just shows how duped I was before!

    2. Andy Crow -

      I think we crossed that particular Rubicon a good while ago.

      Margaret Thatcher was either stupid, (my preferred interpretation) or she was a barefaced liar. Tony Blair was certainly a consummate liar.

      Theresa May is not at all special in this field of communication, except she is not much skilled at it. She seems to be holding her party together by lying alternately to one side and then the other of her leavers and remainers and we watch mesmerised at the display of gullibility as if we were not the inevitable victims.

      If there was an opposition in Westminster (with a policy alternative) she would have been minced.repeatedly, but once would have done.

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