[Photo: Annie Spratt via Unsplash]

The Slow Death of Neoliberalism: Part 1

This is the first of a short series on my long-term project on neoliberalism. The questions I started with were 1. How did neoliberalism become the dominant discourse; 2. Was there an alternative; and 3. How can we move to some other form of discourse.

I started with the premise that the neoliberal project has two prongs, a theory of the person in society and an an economic theory.

The person in society is as a rational actor whose only important role is to get a job producing stuff which provides money to buy stuff based solely on a rational calculation of utility. The work part doesn’t apply to people with money. They just rationally concentrate on getting more money. People with no money and no job are subject to discipline by the carceral state. It doesn’t matter why they don’t have jobs. No work, no money, no freedom.

The economic theory is based on neoclassical economics, with its roots in 19th Century morality and the idea that everything can be stated mathematically. The morality is Jeremy Bentham’s utilitarianism, with a strong dose of Calvinism evidenced by the phrase “the lash of hunger”.

My project and my premise are based on reading books which broadly fall into three categories: theory (Foucault, the Frankfurt School, Kuhn, Mirowski), history (Arendt, Veblen, Polanyi), and economics, (Mankiw’s text, Samuelson and Nordhaus’ text, Jevons, Piketty). The plan was that by placing neoliberalism in a broader context, I could get some idea of how it took hold and what were plausible alternatives.

This post discusses theoretical issues. Neoliberalism is a positivist theory.

Positivism is the view that the only authentic knowledge is scientific knowledge, and that such knowledge can only come from positive affirmation of theories through strict scientific method (techniques for investigating phenomena based on gathering observable, empirical and measurable evidence, subject to specific principles of reasoning). The doctrine was developed in the mid-19th Century by the French sociologist and philospher Auguste Comte (1798 – 1857).

The scientific method is a good way to understand physical phenomena. The key step is eliminating all aspects of the object of study that cannot be measured and accounted for. If you want to know the charge of an electron for some reason, there’s an old experiment for that. In this experiment, that includes measuring the viscosity of air, but it also includes several assumptions that may or may not be accurate; one is that the droplets of oil are spherical.

In the double slit experiment you fire photons at two slits and get interference bands. Some of the photons hit on one of those bands, and others hit others. We don’t know exactly the route that they take between the photon gun and the target, and we can’t predict which band the particle will hit. There is only statistical prediction. So, there are limits to what we can know in the positivist sense. That’s true of math too for other reasons; see Godel’s Theorems.

One difficulty with positivism is what constitutes a proof in non-physical sciences. Obviously we can’t separate things analogously to the way we isolate photons. And we don’t have a way to repeat experiments and we can’t be sure we understand all the relevant considerations or their magnitude at any point in time, and anyway, people change, societies change and context is controlling.

Besides positivism, neoliberalism is centered on utilitarianism. We can see this in the writings of the inventor of marginal utility, William Stanley Jevons, as I note here. We also see it in Pareto Efficiency. These ideas, and positivism generally, are very useful in rationalizing the production of goods and services.

According to the Frankfurt School the theory that positivism provides the only authentic truth is central to the Enlightenment. Ideas and theories that cannot be proved according to the requirements of positivism cannot be taken seriously. The drive to extreme positivism leads us to ignore concepts like love, social cooperation, justice, morals and all intellectual concepts because they cannot be measured and are inconsistent over time and across societies. As an example, Keynes says that “animal spirits” lead development and stock markets. How do we measure animal spirits? Positivism tells us to find a formula to replace those concepts. Eventually it leads us to focus all our energy and attention on production for profit because that is tangible.

Critical theory rejects another underlying assumption of positivism, the absolute separation of subject and object. In order to study something, it must be segregated from other things. When one person studies another, the investigator must treat the other person as an object. If the object changes, we have to assume that the changes are measurable and predictable. In the same way, when the ruler deals with the subject, the kings treat citizens as objects, and employers treat employees as objects.

To put this in our time, Facebook algorithms treat users as objects and the company sets out to draw a picture of the not-exactly-human user so as to exploit it for profit. Facebook also allows others to use its tools to exploit for profit or for other purposes.

Every society has a system for deciding what goods and services it will produce and a system for dividing up the goods and services it produces. These systems cannot be addressed easily in a positivist framework because there is no way to predict outcomes with any certainty, and because we don’t have a scientific way to assess the quality of the current system, let alone a new arrangement. For that reason, the Frankfurt School claims that positivism reinforces the status quo, and cements it for the benefit of the current group of elites.

The effect of this extreme positivism is to reduce or eliminate imagination by focusing people’s attention on the immediate present. The emphasis on work means that people have less time and energy to think about societal issues.

This all seems terribly arid. Or boring, your choice. But it describes our putrid politics. Lambert Strether analyzed the Sanders/Klobuchar vs. Graham/Cassidy debate at Naked Capitalism; I highly recommend it. Here’s Amy Klobuchar, fn omitted:

KLOBUCHAR: [Y]ou can have things available to you like treatment, right, but if it’s too expensive, is it really available to you? And if you see a Ferrari in a car lot, well, it’s available to you, but you can’t really buy it. And that is the problem if the prices skyrocket.

So it’s doing something immediately to stabilize these prices, but then in the long term making sure we can make health care more affordable. Bernie has one idea; I have some others. And we can talk about them later.

As Lambert Strether shows, Sanders can talk about both now, while Klobuchar can’t, and it’s because she can’t imagine that kind of change as a real possibility. She can’t formulate a radically different vision of society. And that’s the problem facing the whole Democratic Party and especially its last presidential candidate.

9 replies
    • Ed Walker says:

      I’ve read Mirowski’s book Never Let a Serious Crisis Go to Waste; and wrote extensively about it at FDL. I’ve read others of his papers as well. The history of the rise of neoliberalism is also the subject of massive work by Foucault, whose work Mirowski credits. It’s also covered by David Harvey and others.

      I do not think you can explain neoliberalism’s domination of economic and political discourse as resulting from the efforts of a group of economists, or by the money behind them. The ideas are reductive at best, and silly when sitting alone. Yet people lap them up. It’s bad enough that the obviously failed economic theories control our discourse. What’s worse is the idea failure is your fault. That hoffifying idea has penetrated the minds of most of us, and even I think it from time to time and have to push it back down. We didn’t always think in such stupid and simple-minded terms.

        • MaDary says:

          Thanks for this video.  I’ve read a lot about these ideas and given some thought to them.  Perhaps I can briefly offer a somewhat distanced view – that is the long overview.

          As we discover form the video, economics is NOT A SCIENCE can not qualify as science – and even then, scientific “truth” does not exist as there is no such thing as objective “truth” and most importantly ONLY GOD AND RELIGIOUS FAITH CONTAIN ABSOLUTES nothing outside faith is absolute.

          These examinations of this cultural phenomenon I have so far seen leave out the mythological nature of economics.  To me economics must be understood as a mythology which blended with and supported the more dominate mythology of  the protestant reformation (Calvinism).

          Seen as an organizing mythology of society and the manipulation of that myth to support the interests of the elite economics makes more sense to me.

          There is no space here for me to further examine my theory of economics as myth, but let me just say this:  Capitalism itself is little more than feudalism in a fancy dress.  All the charts and models and convoluted logic and importantly the introduction of unnecessary complexity to keep the myth going.  The reason I say this is because, well, look at the outcome,  under feudalism wealth flowed to the elites everyone else suffered – and under capitalism…it’s just another way to justify domination by those who’s only desire is domination, accumulation and zero concern for the interests of others.

          Again, I can’t go into it now but this in a way is just a subset of Calvinist ideology.  Economics does not operate outside the mythology of religion, the desire for absolutes and beginnings and endings all the hallmarks of the authoritarian religious domination.

          The dominate mythology of Western culture rewards ruthlessness and personal interests above all else.  Any concern for the interests of others simply never comes under consideration.  Again – Calvinism.

          Neoliberalism has really gone to the extreme – from the beginning we remember Thatcher “Society, doesn’t exist.” that is exactly what she meant.  Neoliberalism just wrote off the bottom half of society nothing about the economy now even considers their interests – for Neoliberals they really do not matter.  Second of all because of technology the elite feel they can survive climate change and “life” will be supported by the technology so nature itself does not matter any more either.

  1. TarheelDem says:

    As long as infrastructure (goods and services available to all and rationed in some way other than markets) is equated with “totalitarian Communism socialism” coded as “socialism”, neoliberalism will be the refuge for politics (just as it was for Amy Klobuchar).  And there will be the search for some “market” or “public/private” way of fudging infrastructure to once again be rationed by the ability to pay.  At what point can we start calling this “There is no alternative.” response what it is — “totalitarian capitalism”.  Insisting that politics, culture, subsistence economic aspects of life make a profit before they are considered legitimates parts of society.   And the craziness we never accepted in the 40 years after the election of FDR will continue to harm almost everyone and drive US politics and culture into collapse.

    Neoliberalism’s death (and the death of movement conservatism) has been much too slow considering the among of definite harm to human beings have been done in its name in the past 50 years.  Wonder what Taft, Buckly, and Goldwater would think of their offspring.  Or those who persuaded Jimmy Carter to begin deregulation.  Until real infrastructure is possible and paid for again, it doesn’t matter what you call it.   It still lacks the idea that there are social obligations of human beings (other than saluting and killing on command.)

    Any critical view that takes on the Enlightenment must deal with the fact that a good part of the attempt to nail down indisputable facts was the intellectual reaction to 200+ years of religiously driven warfare between Protestants and Catholics in which the dominance of asserting the reality of the faith was the excuse for shedding blood and destroying infrastructure (the primary function of wars before the total population became seen as infrastructure).  Post-modernity has not successfully dealt with that challenged yet.  Thus, the notion of human rights and civil right hang in suspension in the current zeitgeist and cynicism becomes everyone’s operation principle.  That is not the way out.

    A massive practical restoration of infrastructure that halts the preparation for the absolute destruction of infrastructure might be a better project than a new philosophical edifice.  Restoring general prosperity and peace might have the effect of clearing some minds, cleansing some corrupt institutions, and opening opportunities for new generations.   The death of the war “realism” of neoliberalism cannot come soon enough either.

  2. Alan says:

    According to the Frankfurt School the theory that positivism provides the only authentic truth is central to the Enlightenment.

    Got a citation for that? The claim is clearly nonsense at one can easily cite examples of important Enlightenment philosophers who are not positivists and who focus on such central issues as “social cooperation, justice, morals”.

    • Ed Walker says:

      Dialectic of Enlightenment, p 3, e.g.

      I see that I have not stated this properly. I should have said “…central to the Enlightenment as it has evolved up to the time they were writing.” Certainly Horkheimer and Adorno weren’t talking about all of the Enlightenment Philosophers; you are right, that would be foolish.

      I’m just starting on Dialectic of Enlightenment, rereading Chapter 1, after reading Dialectic of the Imagination by Martin Jay. I think Horkheimer and Adorno are saying that  we have gone past rejection of myth and superstition to rejection all philosophical inquiry, including metaphysics, and have arrived at rejection of any any statement that doesn’t arise from scientific inquiry. At the same time, they saw a massive wave of anti-reason and anti-knowledge, which is in a way a return to pre-Enlightenment thinking. They were referring to the horror of the Nazis, but we see it today in our own country.

      This is all very new to me, and I am struggling with these ideas.

  3. Alan says:

    Interesting. Adam Smith, I will note, was opposed to a sterile mathematical and scientistic understanding of social relationships. His approach to human relationships has very little in common with utilitarianism or neoclassical economics.

    On the rational or rational undoing itself: This is a theme in Foucault who gets it from Weber although he doesn’t reference Weber much. I haven’t read enough Weber to comment in detail but I’ll dig up some references that discuss Foucault’s debts and relationship to Weber. Weber is of course also important to the Frankfurt School.

    Colliot-Thélène, Catherine. 2009. “Modern Rationalities of the Political: From Foucault to Weber.” Max Weber Studies 9 (1-2): 165.

    Flew, Terry. 2015. “Foucault, Weber and Neoliberal Governmentality.” Theory, Culture & Society.

    Gordon, Colin. 2015. “The Soul of the Citizen: Max Weber and Michel Foucault on Rationality and Government.

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