Neoliberalism represents a paradox for capitalism. Its relative success as a ruling-class strategy, particularly in weakening the trade union movement and reducing the share of profits going to labour, has helped to disguise that some aspects of this mode of regulation are proving unintentionally detrimental to the system. Serving the interests of the rich is not the same – or at least, not always the same – as serving the interests of capital and may in certain circumstances be in contradiction to it. Simply doing what the rich want is unlikely to produce beneficial results for the system as a whole, although it may help increase the wealth of individual capitalists. For not only are capitalists generally uninterested in the broader social interest, which we might expect, but they are also generally incapable of correctly assessing their own overall collective class interests, which might seem more surprising – although it is a long-standing phenomenon, observed by many of the great social theorists from late eighteenth century onwards.
Capitalist states – or more precisely, their managers – have traditionally acted to make such an assessment; but in the developed West at least, neoliberal regimes are increasingly displaying an uncritical adherence to the short-term wishes of particular business interests. The self-destructive nature of neoliberal capitalism has nothing necessarily to do with the removal of restrictions on markets. Leaving aside the fact that capitalism was always capable of producing social atomisation, collective violence and environmental destruction, even in periods when the state was far more directly involved in the mechanisms of production and exchange than it is now, there are two problems with this position. First, rhetoric apart, capitalists no more favour untrammelled competition today than they did when monopolies and cartels first appeared as aspects of the emerging system in the sixteenth century. Second, one would have to be extraordinarily naïve to believe that the neoliberal project has been about establishing ‘free’ markets in the first place.
Regardless of their class origins, state managers and capitalists are drawn together into a series of mutually supportive relationships. The former need the resources provided by individual national capitals, principally through taxation and loans, in order to attend to the needs of the national capital as a whole; the latter need specific policy initiatives to strengthen the competitive position of their sector of the national capital within the global economy. There have nevertheless always been tensions, above the fear on the part of capitalists that states – which they regard as Weberian autonomous entities with their own interests – will either restrict or abolish their right to private property. What gives these fears plausibility is precisely the fact that state managers have both to facilitate the process of capital accumulation and ameliorate its effects on the population and environment – an early example of this can be found in the Factory Acts and capitalist responses to them described by Marx in Capital I.
It is not the nature of capitalist states themselves that has changed: they still need to perform the core functions described at the beginning of this post. There are no ‘neoliberal states’, but there are ‘neoliberal regimes’. In the case of the UK the regime began, not with Margaret Thatcher’s General Election victory in 1979, but around half-way through the preceding Labour Government of 1974-79 and it persists, with variations, to this day, whatever the bleating from Polly Toynbee and others on the liberal left about the supposedly fundamental differences between the two main parties.
What has changed is that the relationship between neoliberal regimes and capital has since the 1970s prevented states from acting effectively in the collective, long-term interest of capitalism. Neoliberal regimes have increasingly abandoned any attempt to arrive at an overarching understanding of what the conditions for growth might be, other than the supposed need for lowering taxation and regulation and raising labour flexibility. Apart from these, the interests of the total national capital is seen as an arithmetical aggregate of the interests of individual businesses, some of which, to be sure, have rather more influence with governments than others. In so far as there is a ‘strategic view’ it involves avoiding any policies which might incur corporate displeasure, however minor the inconveniences they might involve for the corporations, which of course includes regulation. The reason is not simply because of successful lobbying and PR on behalf of individual businesses or industries, pernicious and pervasive though these increasingly sophisticated activities undoubtedly are. But corporations have always done this: why are state managers now so predisposed to respond positively to their efforts? The answer is in the way in which neoliberalism has reconfigured politics. The necessary distance between the state and capital (or between state managers and capitalists) that Smith, Marx and Schumpeter – from their different political perspectives – all regarded as being essential for the health of the system, is being minimised. In particular, the regime adoption of timescales associated specifically with the profit-maximising drives of financial capital is important as it indicates the short-termism involved. Three factors are important in producing this tendency.
The first is the depoliticisation of the political wing of the state managers through the delegation of functions away from the government in office to ostensibly ‘non-political’ bodies, the introduction ostensibly of ‘objective’ assessments of the effectiveness of policy and imposition of binding ‘rules’ which restrict the range of actions which politicians can take. In relation to the latter in particular, each successive phase of the neoliberal experiment saw the incremental abandonment of the repertoire of measures through which governments had traditionally influenced economic activity. As a consequence of their heightened ‘managerial’ function, politicians have increasingly become a professional caste whose life-world is increasingly remote from any other form of activity, economic or otherwise, and therefore more autonomous, while simultaneously becoming more committed to capitalist conceptions of the national interest, with business as an exemplar.
The second factor, opposed to the depoliticisation of politicians, is the politicisation of the non-political wing of the state managers: the civil servants. As the political parties became less distinct from each other, the officials required to implement their increasingly similar policies are also required to turn themselves more completely into extensions of the parties themselves. In the UK, following hard on the heels of the United States as always, there has been since 1979, and especially since 1997, a more generalised influx of private-sector appointees into the civil service, to the point where it has been effectively subject to a corporate takeover. But even in relation to the permanent home civil service, the expectation that senior civil servants in particular will not attempt to point out the difficulties involved in governmental policies or even consider alternative ways of delivering policies, but simply present arguments to justify them, regardless of the empirical data.
The third and final factor in producing chronic short-termism in neoliberal regimes is the de-politicisation of the electorate. Except it is not so much de-politicisation as abstention by sections of the electorate who no longer have any parties for whom to vote. Many of those electors still involved in casting their vote do so – appropriately enough – on a consumer model of political choice, where participation is informed by media-driven perceptions of which result will be to their immediate personal benefit. Unsurprisingly, the numbers prepared to carry out even this minimal level of activity are declining. This can be reversed, as was demonstrated in the popular insurgency for a Yes vote during the 2014 Scottish independence referendum, where 97% of the population registered to vote and 85% actually did; but under ‘normal’ conditions, those who vote are more likely to belong to the middle-classes, who tend to have a more focused view of their material interests and deploy more interventionist strategies for maintaining them than those bearing the brunt of austerity.
Clearly, in situations of absolute, immediate crisis, short-term emergency measures would be introduced in the same way as the effective nationalisation of banks and other financial institutions that took place in both the US and UK during 2008. But these were minimal interventions to prevent outright collapse, to save the institutions (and the practices which brought them to the point of crisis in the first place) without using them for any coherent strategic end, let alone any broader social purpose; and of course on the basis that they would be re-privatised as soon as possible.
I am not suggesting that it should be the work of socialists to propose solutions to the crisis of capitalism. It is always necessary to argue for reforms, of course, but the idea that the application of Keynesian solutions would restore the Golden Age of the post-war welfare state is simply illusionary and underestimates the extent to which those years were the result of a unique set of circumstances. Booms will continue to occur, as they did between 1982 and 2007, but the beneficiaries will become fewer and fewer. Consequently, I am not predicting that developments discussed here mean that capitalism will simply collapse under the weight of its own internal contradictions either. Scenarios of this type, from those of Rosa Luxemburg onwards, have been proved false in the past and there is no reason to suppose that they will be any more accurate in the future. Indeed, a collapse not brought about by the conscious intervention of the oppressed and exploited would not be to their advantage in any case, but simply a step towards the barbarism to which Marxists from Engels onwards have seen as the consequence of failing to achieve a socialist society. And this is no mere slogan: the condition of central Africa and parts of the Middle East today indicates the presence of actually existing barbarism as the daily reality for millions. Events in the developed world are unlikely to take this form, at least until environmental catastrophe becomes irreversible, but rather involve a gradual and, all but the very poorest, almost imperceptible worsening and coarsening on their conditions of life.
What I am suggesting is that neoliberalism as a strategy has almost been too successful as a method of capitalist regulation. It has finally brought about the situation that Schumpeter feared, where creative destruction has no limits or boundaries. Both Engels and Walter Benjamin envisaged capitalism as a runaway train heading for destruction. It appeared, within less than a decade of the latter’s suicide in 1940, that forces within capitalism itself were capable of ‘pulling the hand break’; it now appears that his initial intuition was right and that revolution is all that stands in the way of the disaster that otherwise awaits.
Originally posted on Progress in Political Economy, June 29 2015