The Two Prongs of the Neoliberal Project

It may seem odd that a site focused on national security, domestic spying, and US foreign policy should have a secondary focus on the economy and on neoliberal economic theory. As I see it, these are the two prongs of the overall neoliberal project. That project is to free up the entire globe for the profit-making activities of a few gigantic corporations and their billionaire owners, with minimal interference from governments or any other social institution.

That is obviously the goal of the Trans-Pacific Partnership deal, particularly the provisions on Investor State Dispute Settlement. Senator Warren explains it in this WaPo op-ed. The examples she gives are fascinating:

Recent cases include a French company that sued Egypt because Egypt raised its minimum wage, a Swedish company that sued Germany because Germany decided to phase out nuclear power after Japan’s Fukushima disaster, and a Dutch company that sued the Czech Republic because the Czechs didn’t bail out a bank that the company partially owned. U.S. corporations have also gotten in on the action: Philip Morris is trying to use ISDS to stop Uruguay from implementing new tobacco regulations intended to cut smoking rates.

The US Trade Representative has an explanation of the benefits:

  • Freedom from discrimination: An assurance that Americans doing business abroad will face a level playing field and will not be treated less favorably than local investors or competitors from third countries.
  • Protection against uncompensated expropriation of property: An assurance that the property of investors will not be seized by the government without the payment of just compensation.
  • Protection against denial of justice: An assurance that investors will not be denied justice in criminal, civil, or administrative adjudicatory proceedings.
  • Right to transfer capital: An assurance that investors will be able to move capital relating to their investments freely, subject to safeguards to provide governments flexibility, including to respond to financial crises and to ensure the integrity and stability of the financial system.

Obviously this benefits the rich and their profit-making corporations, but it doesn’t benefit the rest of us. That is the legacy President Obama sees for himself: cementing the rights of the rich at the expense of the rest of us. Obama wants to insure that this part of the neoliberal project is in place to cut deals that only benefit the rich and their corporations.

The neoliberal project has always had a special place for disciplining the proles. Prison, parole, draconian court systems, all are directed at keeping the proles from interfering with the ability of the rich and their corporations to make lots of money. The legal system has completely broken down when it comes to disciplining Wall Street thieves, but it’s great at wrecking the lives of the poor and near poor. This is not an accident. Here’s the explanation written by the soi-disant public intellectual and Judge on the Seventh Circuit Court of Appeals Richard Posner:

The major function of criminal law in a capitalist society is to prevent people from bypassing the system of voluntary, compensated exchange — the “market,” explicit or implicit — in situations where, because transaction costs are low, the market is a more efficient method of allocating resources than forced exchange. Market bypassing in such situations is inefficient — in the sense in which economists equate efficiency with wealth maximization — no matter how much utility it may confer on the offender. … (P. 1195, footnote omitted)

Posner says that the rich are to be disciplined by tort law, after the fact court enforcement of laws, but the poor, having nothing, need jail for discipline. He concludes:

I contend, in short, that most of the distinctive doctrines of the criminal law can be explained as if the objective of that law were to promote economic efficiency. Ibid.

There’s a fine statement of neoliberal economic theory. Posner is himself a member of the neoliberal front group, the Mont Pelerin Society, and his theories of law and economics are an integral part of their project.

Domestic spying and collection of all our information are tools to enforce discipline against the citizenry. Marcy documents those activities. Regular readers know that the collection efforts are prodigious, far more that conceivably useful in hunting for terrorists. But these ideas can be traced a long way back, as Michel Foucault explains in Discipline and Punish. Here’s an extended (and slightly angry) discussion.

As the US continues to sink into third world status, it will be more necessary to plan for disruptions from those left behind. This isn’t going to change by itself. The first step is recognizing the situation. That’s just as true of National Security/Domestic Spying as it is of neoliberal economic theory. That’s why I write here, next to the best analyst in the country. With Marcy on a well-deserved vacation, I’ll be putting up more posts than usual, and I hope they help in the counter-project.

Notre Dame undergrad (math); JD, Indiana University at Bloomington; 1st Lieutenant, US Army.; private practice in corporate and securities law; Assistant AG in Tennessee for consumer protection and securities; Blue Sky Securities Commissioner, Tennessee; private practice, bankruptcy and corporate law.

I have had a lifelong interest in economics. For most of my career, that interest was practical, focused on the problems in front of me. Lately I have been more interested in economics as a theory, especially its impact on the lives of people like those I met in my bankruptcy practice, and on the politics of money in the US. I also enjoy reading philosophers, starting in college and steadily expanding my reading ever since. I wrote at FireDogLake for a number of years.

Generally, I think the problem facing the US is the dominance of neoliberal discourse. I think it clouds the vision, and limits the kinds of problems that can be identified and solved. For example, the existence and danger of climate change can easily be identified in a scientific discussion. However, the problem does not fit the neoliberal discourse because science insists that the pursuit of individual and corporate self-interest will lead to devastation. In neoliberal discourse, the pursuit of self-interest always leads to Eden.

The neoliberal project has two prongs. One is the police function of crushing dissent and alternative views. The police function is provided by government agencies and private and institutional actors. The counterpart is the economic system , which is operated by government and by private and institutional actors. Some of these actors operate in both spheres. I focus on the second prong.

19 replies
    • phred says:

      Not odd at all : ) Really nice to have you here. And I am particularly pleased to see you have already linked to Gaius Publius’ piece in which he discusses at length the argument Morrison makes about the unconstitutionality of ISDS.
      .
      So, I will ask the same question here, that I asked at Naked Capitalism (GP’s article was posted there as well)…
      .
      Since we have current examples of ISDS decisions that are already forcing changes to our laws (e.g., Country Of Origin Labeling, aka COOL), who has the standing to challenge the constitutionality of ISDS in an Article III court?
      .
      It seems to me that while we are pressuring members of Congress to stop fast track and to legislatively work through trade agreements the old fashioned way, we ought in parallel to be challenging the unconstitutionality of provisions in current trade deals.

        • phred says:

          Yes.
          .
          Sadly, the resident lawyer broke into the liquor cabinet early to drown his sorrows over DOJ allocating their resources to pursue MLB miscreants rather than our current USTR and his coup attempt. Maybe when said lawyer sobers up, he’ll have something to say about standing…

            • phred says:

              My apologies counselor, I ought not to have impugned your character ; ) And you are probably right to not depress me with tedious legal realities v. my 10th grade understanding of these things ; )
              .
              Speaking of the liquor cabinet though, any chance for a World Cup Trash soon?

          • bsbafflesbrains says:

            If you show up in Court drunk enough does that automatically make your case “ripe” ?

      • Ed Walker says:

        Good question. It sort of feels like the government is estopped to sue because it agreed. Maybe a legislator who voted against the bill? Maybe the US can’t pay the penalty because it isn’t authorized by Congress, so the victor would have to sue in US courts to collect and at that point the constitutional issue could be raised by the Government?

        • phred says:

          If you are correct about a federal challenge not being possible since they agreed to such an arrangement, then perhaps the best option would be for a state or local government challenge on the basis of the feds overstepping their authority. I think Morrison mentioned something along those lines in his letter.
          .
          I hope someone makes the effort, since it is hard for me to understand how Congress can just exclude the Article III courts (and simultaneously circumvent the legislative process for local and state governments, as well as the federal government) without revising the Constitution first.

          • Ed Walker says:

            That’s a pretty good idea. If a state were sued for its regulations, say, an increase in the minimum wage, it might well have standing to raise the constitutional issue.

  1. ArizonaBumblebee says:

    The TPP and TTIP proposed trade agreements are best understood not as free trade agreements but as another attempt by the American national security apparatus to cement the affected countries into an almost neo-colonialist relationship with the United States. As Pepe Escobar and Alfred McCoy have demonstrated in their writings, the elites in Washington are alarmed by China’s and Russia’s attempts to overturn the remnants of the Bretton Woods system and minimize the importance of the petrodollar in international trade. Take Germany as an example. Germany’s trade with China and Russia has increased substantially over the past decade. Projects by Russia and China to promote Eurasian economic development and integration are dancing in the eyes of German businessmen. This could threaten the United States position in Germany if it is allowed to happen. The American solution is to manufacture a crisis in Ukraine and push for the TTIP to drive a wedge between Russia and Germany. I have believed for a few years that President Obama is a fake progressive. Reading some of the leaked provisions in the proposed TPP has confirmed my belief. If the Democrats think they can attack the Republicans on income inequality while supporting these so-called trade deals, they are deluding themselves.

  2. galljdaj says:

    The so called ‘trade’ agreement makes clear the PNAC and the Bilderbergers have gone underground like snakes in winter… , with lackies doing their bidings!

  3. Alan says:

    Ed, I am glad you are making this connection. I think it is odd that this connection isn’t made more often. I look forward to further posts and discussion.
    *
    I think the discussion has to move beyond the notion of surveillance articulated in Discipline and Punish. Foucault’s work after DP elaborated much broader notions of surveillance and government. See for example the first chapters (at least the first 4) in Security, Territory, Population.
    *

    The central point of the panopticon still functions, as it were, as a perfect sovereign. On the other hand, what we now see is [not] the idea of a power that takes the form of an exhaustive surveillance of individuals so that they are all constantly under the eyes of the sovereign in everything they do, but the set of mechanisms that, for the government and those who govern, attach pertinence to quite specific phenomena that are not exactly individual phenomena, even if individuals do appear in a way, and there are specific processes of individualization

    .
    *
    I don’t believe Foucault ever wrote about computers, networks and databases but in STP in starts to look at early public health and the type of surveillance practices  that operate at a population level that in many ways are much more relevant to some of the surveillance practices that concern us now.
    *
    In the lectures the following year, published inThe Birth of Biopolitics, he provides a detailed analysis of neoliberalism. Neither of these sets of lectures was available in English until fairly recently but over the years a fairly substantial literature has developed that has expanded and elaborated these lectures on ‘governmentality’ and his later work on the self.
    *
    Neoliberalism is a sort of reversal of liberalism: the state, its institutions, and the modern self are reconceptualized as market phenomenon. This is what Posner is doing in the quote you provide: law is being reconceptualized as a market phenomenon but it doesn’t end with the law. The market absorbs everything including the self. It’s a form of totalitarianism.
    *
    See work by Mitchell Dean, Thomas Lemke, Nikolas Rose, Colin Gordon, Nicolas Gane, Jamie Peck, Stuart Elden, William Davies, Bernard Harcourt and others. 

  4. earlofhuntingdon says:

    Rather than seeking only “minimal interference” from government, is it possible the billionaires demand explicit support for their programs while maximally interfering in all other programs the government does or might undertake?

  5. earlofhuntingdon says:

    Posner’s vapid “economic” explanation of the purposes of tort and criminal law wouldn’t get him a gentleman “C”, except perhaps at Harvard, Stanford or Chicago, where such arguments pass with nods or recognition and sympathy.

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