HUGO RADICE explores the social, cultural and ideological changes that have embedded neoliberalism so deeply in the daily life of our modern world. To challenge it, he says, we need to recreate a sense of common purpose and the public good.
Forty years after Mrs Thatcher’s first election victory, the term neoliberal remains the basic shorthand for the new form of capitalism that replaced the post-1945 settlement in all parts of the world.
When the global financial crisis erupted in 2008, for a brief period it seemed that this new form might be challenged, but the threat to international trade and finance was headed off by a coordinated effort in which the major powers, joined in the G20 by a wider group of states, intervened on a massive scale in the money markets.
Their success in re-establishing order, and even resuming economic growth, however, was aimed at propping up the world of high finance and global corporations, with the costs imposed on the rest of us.
That leads to two questions:
- Why did so few experts predict such a devastating breakdown in financial markets?
- Why were our rulers able to re-establish ‘business as usual’ with such ease?
The answer to both is that we did not appreciate just how deeply our social order had been transformed under neoliberal capitalism.
The failure to predict the crisis led to a great deal of criticism aimed at the theory and practice of economics, but that in itself does not go far in answering the second question. To do that, we need to explore the social, cultural and ideological changes that have embedded neoliberalism so deeply in the daily life of our modern world.
The four pillars
The narrowly economic view of neoliberalism sees it as comprising a specific set of economic institutions and practices, and in particular the four pillars of privatisation, deregulation, financialisation and globalisation. In Britain, these processes were all under way by the end of Mrs Thatcher’s first term in 1983.
Privatisation involved selling-off public assets, notably the main utilities (water, gas, electricity, railways) and council housing, and outsourcing supplies to the remaining public sectors (such as the NHS, education and public administration).
Deregulation meant removing or reducing legal restrictions in particular markets such as those for money, financial assets, labour and land.
Financialisation entailed the transfer of power in private enterprises from managers to shareholders, and the development of novel forms of finance and insurance, such as derivatives.
Lastly, globalisation meant growing economic integration between countries through trade, but also increasing international flows of money, capital and labour.
Although these changes are widely seen as shifting power from the state to the private sector (especially to big corporations), they had to be implemented through legislation. Rather than becoming weaker, the state now resisted the temptation to intervene and redistribute on behalf of the economically disadvantaged; instead, it sought to enable a more energetic and entrepreneurial business class at the expense of workers and welfare recipients.
Neoliberalism was thus based on a free economy and a strong state; it was not only a transformation in the economics of capitalism, but also in its politics.
Historically, this went back to attempts in the 1930s, across Europe and in the UK and USA, to revive a liberal capitalism that seemed to be under assault from the authoritarian alternatives of communism and fascism. Calling themselves ‘neoliberals’ or ‘ordoliberals’, the advocates of liberal renewal aimed to resolve what seemed to be a fundamental contradiction between property rights and political democracy.
However, the crisis of the 1930s and the global conflict that followed instead led to a shift towards forms of social democracy that included the extension of welfare and labour rights, active fiscal and monetary policies, and the construction of a global capitalist order under US hegemony that appeared to enable every individual nation-state to fashion institutions and practices that were appropriate to their own traditions and needs.
The legal and political rights of their citizens were now based on universal suffrage and equality before the law, while social rights were added, notably the right to a basic level of subsistence, and to freedom of association in civil society, such as the right to organise trade unions.
This new order in the developed capitalist countries also provided the template for less developed countries, including those emerging from colonial rule.
Freedom and aspiration
By the 1960s, all these gains seemed to be entrenched and permanent. Yet across the developed world, opposition to the ever-expanding role of the state continued. With slowing economic growth, and later in the 1960s increasing industrial unrest, political economists such as Milton Friedman in the USA and Friedrich Hayek in Britain argued against the financing of state spending through borrowing, which they saw as the main cause of high inflation and economic conflict. They emphasised not social rights, but the freedom of individuals and their aspirations for self-advancement.
At first, this was expressed on campaigns for lower marginal tax rates, and the outlawing of restrictions on trade such as the closed shop in labour markets, the dictation of retail prices by manufacturers, and the financial market regulations designed to head off speculative crises. Slogans such as ‘value for money’ and ‘the nanny state’ popularised these ideas, and individual ownership of houses and financial assets were encouraged through subsidised sales of public assets.
In the 1990s, these originally Anglo-American reforms spread across western Europe (through the 1992 Maastricht Treaty), the global south (through the debt and aid policies of the Washington Consensus) and the formerly communist countries of eastern Europe and Asia (following the Chinese opening up of the 1980s and the collapse of the Soviet bloc in 1989-91).
During that decade, neoliberal ideology also extended its reach into workplaces, through a re-thinking of management methods in private firms and the public sector alike, and into the home, as the internet enabled companies to target individual consumers and anticipate their needs at very low cost.
Any discussions of class interests or social purpose were abandoned in public discourse, while individual aspirations and identity politics were emphasised. Fiscal redistribution and welfare benefits were linked to willingness to work (‘workfare’), while the idea of social justice was transformed into social inclusion and an individual pursuit of social mobility regardless of economic need.
Entrepreneurs of the self
Each individual was expected to conform to this model of self-improvement – a reincarnation of the Victorian morality peddled by Samuel Smiles, in which everyone is expected to be an ‘entrepreneur of the self’.
In addition, a widespread process of depoliticisation began in the 1990s, with rapid falls in membership of political parties, the convergence of party platforms towards a neoliberal consensus, and falling electoral participation. Governments focused on ‘enabling’ entrepreneurship and aspiration.
It is these more recent changes, in the common-sense ways of understanding society and our place in it, that is responsible for the resilience of a form of liberal capitalism that has proved just as crisis-prone and socially divisive as its earlier forms.
In order to challenge this, especially in the shadow of the climate emergency, it is not enough simply to return to the left’s old policy recipes.
Somehow we have to recreate a sense of common purpose and of the public good. We need to renew our critique of capitalism, not as an economic system, but as a way of life and a way of seeing things. We need to pursue equality of economic condition, not equality of opportunity, since socialism means a classless and equal society.
We can start by helping to flesh out Labour’s plans for a Social Justice Commission, and ensuring that a concern for equality is built into all areas of party policy.
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Hugo Radice is visiting Research Fellow at POLIS (the School of Politics and International Studies), University of Leeds, and Policy Officer of Richmond (Yorks) Constituency Labour Party.
This article is based on a talk given to North East Leeds CLP on 27 June 2019.
Add your comments below and to the author at: hugoradice@btinternet.com.
1 December 2019
Yes Jonathan, it is a strange general election. In pushing for votes for Labour I am for pressing the matters raised here by Barry and David.
But if such matters could lead to a Labour victory (or even a Labour-involved coalition) I am aware that we will immediately be back into what we do about Brexit. That only leave 12 days in which to bite the bullet.
21 November 2019
I agree with Harry that Labour’s Brexit policy isn’t convincing.
A customs union (as opposed to ‘the customs union’ that actually exists) is a vague offer which doesn’t address the reason why many people voted to leave. It wasn’t primarily about jobs and immigration caused by EU freedom of movement, as Len McClusky believes. It was, as John Mills says in his engaging pamphlet, Left Behind: Why voters deserted social democracy – and how to win them back, because ‘the strongest motivating factor … was to do with democracy and control’. Most people voted leave knowing that it would slow down the economy and impact on them, at least in the short to medium term. What they wanted was ‘to take back control’.
Labour’s customs union doesn’t address those concerns at all – in fact, it offers less control than staying in the EU. It is difficult to argue that this respects the result of the referendum at all. Add that to a second referendum and the Labour leadership refusing to say which way they would vote in that referendum, and we have a massive vote loser. It pleases neither remainers nor leavers. The reason why Johnson is so far ahead at the moment in the polls is that he’s been able to attract Brexit party votes. In contrast, Labour has been unable to attract Lib Dem voters to any great degree because of the party’s ambiguous and unattractive stance.
Labour could have avoided this mess either by voting for Mrs May’s deal, which is preferable to Johnson’s, or coming out as a remain party. Ironically, Corbyn’s main political failing as leader has been his attempt to triangulate policy in the way that Blair did.
The problem is that Labour’s base is split because of changes to the class system created by neoliberalism, in its modified Blairite form in this country. Corbyn’s keenest supporters come from the younger generation, who may have been to university (though not all of them), but are finding it difficult to establish themselves in secure occupations and get on the housing ladder. These are the networked people that Paul Mason, a key Corbynite, sees as replacing the working class as ‘the mid-wife’ of socialism. Culturally, they are miles away from the traditional working class, though some of them may be from that kind of background. Being a remainer is a vital mark of their metropolitan ‘networked’ personal identity.
Meanwhile, the traditional working class are left feeling more isolated and unrepresented. It’s worth reading Mill’s analysis, his criticisms (from a centrist perspective) of Blairism, and his solution, which is to revitalise manufacturing industry and suppress the power of the City of London.
17 November 2019
Jonathan is right, up to a point. Not everything the Blair and Brown governments did was bad insofar as some policy initiatives were hugely progressive and welcome. Billions pumped into the NHS, a national minimum wage and the flagship Sure Start programme with its primary focus (at least in the early years) on deprived neighbourhood communitiies. All good. And of course, lots of good and compassionate labour people, members, counsellors and MPs, then and since, have worked their socks off helping vulnerable citizens and are engaged in promoting and running community development programmes.
But political economy is rarely all good, or completely black and white, insofar as outcomes are usually shades of grey and often controversal and dependent on one’s political viewpoint and spending priorities. From a social democratic perspective, Labour’s embrace of neoliberalism was an unmitigated disaster, the more so for the working class communities it claimed to represent.
So, the good the Blair and Brown governments did pales in significance next to the damage done to social cohension and community development by the Iraq war and Labour’s imperial mindset supporting never-ending middle east wars, the private finance initiative, outsourcing public services, quantitative easing and support for bond holders, big money and crooked bankers, prefiguring the Tory/Lib Dem coalition and its full frontal attacks on the poor and most vulnerable, who would pay a heavy price for a global financial crisis that was none of their making.
14 November 2019
Ernie is right to say that the ‘Blair Project’ either assisted in the hollowing out of working class communities or did next to nothing about it. The question is how did neoliberalism help shape New Labour policy and was that policy entirely neoliberal.
I do think New Labour tried to replace Tory laissez faire with a more interventionalist approach. To that extent, it remained a social democratic party.
However, its interventions were shaped by neoliberal ‘end of history’ thinking about state control of the economy. For example, the Regional Development Agencies did try to stimulate local economies through involving communities in channelling funding into infrastructure and business development and training. They tried lots of ways of improving things and on occasions developed some good projects and initiatives. Ultimately, they failed.
This is partly because Labour declared social ownership out of bounds, except in exceptional circumstances. For example, when Rover in Longbridge went bust, Labour did not explore ways of nationalising or part-nationalising it, or even try out an updated Lucas plan approach. They just worked with venture capitalists, doing some behind-the-scenes deals. Two generations of my family worked in that plant and they just let it go. I’m not saying there was an easy answer, but the government wasn’t even asking the question.
Lots of communities simply saw all the good jobs disappear. Some working class people adapted to the new circumstances reasonably well and became small business people themselves. Not infrequently, they did well for themselves and made their own good jobs. But they were no longer motivated in the same way by collectivist values. Others ended up in gig economy ‘self employment’, like the indebted van driver Ken Loach mentioned recently, who committed suicide.
On the other hand, New Labour did some stuff that only a Labour government could do. For example, Surestart. There’s a reason why a central plank of Labour’s promise to the electorate is to restore Surestart to communities as it was in the days of Blair and Brown. This is because it made a real difference to young families. Surestart was as important a state institution as the NHS. And it came from the heart of the Blair Project. So, Blair, for all his faults, wasn’t Pinochet or Thatcher.
I think it’s important for there to be a proper inquest about Labour’s successes and failures during its time in government between 1997 and 2010. Unfortunately, all I ever get is caricatures, from both sides.
25 October 2019
Hello Ernie,
I am with you on the key policy points you raise. But would adjust your overall approach.
(1) There is a massive need for the development of affordable homes of decent standards, especially for safe social housing. Whilst this would require building over numbers of greenfield as well as former brownfield sites, any potential adverse consequences this led to over climate change could be overcome by measures such as tree planting programmes in other green belt areas. Then the utilising of wind, tide and sun powers is essential.
(2) Offshore tax havens provide a clear resource for the provision of funds for social purposes. But accessing such funding is also likely to require us developing links with other major financial nations to tackle the problem. For even if we can access our own offshore areas, there is a danger of their funds being transferred to other offshore areas.
(3) Other nations with imporant offshore links include some of our current EU partners. Even outside of EU membership we can work with these to tackle the above problem. One avenue is via the Party for European Socialists of whom we will retain Labour’s membership.
(4) On Remain and Leave zealots in the Labour Party, I feel that although I was against holding the referendum and then voted to remain we should accept its result. This is especially the case as working class areas voted strongly to leave and we should hold onto their votes and seek their involvement in the Labour Party. A no-deal Brexit would, however be a disaster and I feel that the best we can expect is something lke the current deal. To hold out for a customs union will look as if we are really for staying in the EU as non-members, but not then having any internal say.
(5) I feel that without Corbyn selling out on his overall principles, he should do what he can to seek to reconcile the two main conflicting approaches within it, between roughly Blairite and Momentum styles. At the moment the main thing that has been done in this direction is the botched position over the EU – try for a customs deal and if successful then go for a second referendum. Yet the Labour Parliamentary supporters of such an approach are really doing it for remain purposes.
(6) What is needed within the Labour movement is some serious discussion on the above issues. There are, of course, some other matters to consider, such as those I floated in an ILP item which appeared on 19th June.
17 October 2019
Hi Harry,
Thank you for the link about Labour’s conference policy announcements and manifesto intentions. They’re good as far as they go, and a million miles from where we are today – policy initiatives that are an implicit criticism of neoliberalism and the Blair and Brown years.
As a lifelong trade union man, I am pleased to see plans for a £10.00 living wage for all and to phase in a four-day working week. Also, plans for a free prescriptions and point-of-need social care will be a welcome relief and a life-saver for millions of UK citizens as they approach their old age.
But there’s nothing on the conference list about housing which, like food, safety, health care and education, is a fundamental human right. I have looked at Labour’s plans for housing and they are a bit wishy washy about the need for millions of affordable houses when what is needed is a clear-cut commitment to overhaul planning regulations and (after Grenfell Tower) building standards.
A decent and affordable house is a basic human right and Labour should commit to instructing local authorities to borrow money (as the post-war Labour government did when the country was bankrupt) at low interest rates and build good quality houses (to Parker Morrison standards) for all those on waiting lists. If necessary, it should stand up to the NIMBYs on the basis that a decent home for every UK citizen trumps the needs of green belt, and to the middle classes (who often have two houses or more, and wish to maintain their own idyllic countryside views).
Of course, the Tories, Liberals and closet neoliberals within Labour will talk about Corbyn’s magic money tree and warn against turning the nation into the mirror image of Venezuela and North Korea. But the magic money tree is, in reality, in offshore tax havens. Some estimate the tax avoidance industry to be worth £35 billion annually, but it’s likely to be very much more, in the hundreds of billions. Dealing with these corporate and super-rich crooks won’t be easy – stiffer penalties along the lines of those handed to benefit cheats would make a difference.
What is needed is a Labour Party that engages in a bit of political education and a full-frontal attack to rubbish neoliberalism, while accepting that the private sector might have a big role to play in the economic well-being of our society, although not in monetising health and social care, education, law and order, our welfare state and strategic utilities.
Barry Winter once said: “Neoliberalism in embedded in our modern world. To challenge it we need to create a sense of common good.” Hugo Radice seems to be saying something similar with his suggestion there has been a “widespread process of depoliticisation” and that the new politics focus away from equal opportunities to “equality of economic condition”. If that means extending democracy to the economic sphere, then I could not agree more.
Jeremy Corbyn appears to be doing that in spades, with the support of a few shadow cabinet colleagues and like-minded MPs. But really they are lone voices, whistling in the wind, and are being blocked out by the noise of Remain and Leave zealots who seem to think that life begins and ends with Brexit.
While I am not a Labour Party member, I do believe Corbyn is one of the few sensible politicians trying to unite a fractious party and country over a Brexit dilemma that has and is splitting families and communities. The fanatics on the Leave and Remain sides are like schoolchildren fighting in the playground. They are self-centred and create lots of noise but are going nowhere. Time for some in the Labour Party and the nation to grow up because people rarely get everything that they want in life.
Labour is fortunate to have a leader like Corbyn. But whether he will lead his party to victory in the coming general election and be able to challenge the neoliberal establishment is questionable. Those of us with a trade union mindset know that when facing an existential threat, “A house divided against itself cannot stand.” At the moment, Corbyn is a bit like Sisyphus – likely to spend the rest of his political career challenging the neoliberal monolith but doomed within an inch of the summit, of creating a new political economy, to be undermined by a fractious Labour Party many of whom have a different agenda and a political mission to maintain the status quo.
14 October 2019
Ernie : How far do you feel that decisions adopted at the recent Labour Party Conference would meet your requirements ? Are additions and adjustments needed ? See – https://labourlist.org/2019/09/policies-announced-and-motions-passed-at-labour-conference-2019/
14 October 2019
A brief, thoughtful and clear account of the four pillars of neoliberalism (privatisation, deregulation, financialisaton and globalisation) and its dominance from the days of Margaret Thatcher to today.
But as well as moving on to what alternatives there might be and what a social democratic manifesto under (hopefully) a Corbyn government might look like, don’t you think it might be helpful to consider Labour’s shameful embracing of neoliberalism under the Blair and Brown administrations?
You know the Peter Mandelson school of thought aka: “we are all Thatcherites now” and his being: “intensely relaxed about people getting filthy rich as long as they pay their taxes” remarks. From a Labour MP in arguable the most deprived town in the UK where for decades the working class (who he was supposed to represent) got a good kicking and today (because of the likes of Blair and Mandelson) live in drug induced deprived housing estates and Victorian squalor of the kind Charles Dickens used to write about.
Also, at the level of local government where Labour council’s up and down the country embraced neoliberal economics with alacrity, knowing full well what the outcome of privatising and outsourcing services would mean for those they once employed and for those working class communities they claim to serve.
If neoliberalism is now dead (hope so) we need to also call to account those in the Labour Movement who gave it oxygen and who (just happened) to benefit financially from an economic and honours system that hardly ever trickled money and wealth down to those at the bottom of our society, but rather hoovered-up it from deprived neighbourhood communities and millions of working class families lost jobs, a living wage, turned to food banks, and had their lives systematically trashed over decades.
If Labour is unwilling or incapable of putting its hands up and admitting to its own role in the trashing of the welfare state, our NHS and community support services, it will never be able to learn from past mistakes or creating a new political economy that serves the many and not the rich and powerful few.