This article is part of forum discussion on the uses and abuses of “neoliberalism,” responding to Daniel Rodgers’s essay in our Winter 2018 issue. Read the other responses—by Mike Konczal, N. D. B. Connolly, and Timothy Shenk—here.
Words matter. How we use words matters especially. Daniel Rodgers believes that the academic left employs the word “neoliberalism” too much, but specifies its meaning not nearly enough.
But why confuse ubiquity with error? Why assume that the more a word is used, the less it can explain and that fewer people can understand its meaning? What kind of political work do we expect from words?
Where Rodgers detects an unruly neologism, I perceive a flexible and germane analytical concept, a useful term of historical periodization, and yes, a name for the multifaceted configuration of power against which a truly diverse and democratic left could and should unite. “Neoliberalism” acknowledges the deep connections between a great many (certainly not all) of our most pressing challenges. It references much of what distinguishes our contemporary moment in history, both in this country and around the world.
Would it be more emboldening for the left to pretend as if the injustices and inequalities of the contemporary world possess no connections? Must our most pressing problems be understood only discretely, in terms of proximate causes? Would this approach have a better chance of uniting disparate groups into a winning coalition on the left? I doubt it.
Even so, caution is warranted. Words matter, yes. But human beings make our world, discursively and materially. “Neoliberalism” is not a historical actor itself. We should not treat “neoliberalism” as if it possessed a pre-determined historical trajectory or an essential nature. Rather, we must study how its social relations develop. We must identify the perpetrators and perpetuators of neoliberalism and hold them accountable. Sometimes, these may be us.
Rodgers wisely warns us that “bundling” too much together into this one word may “obscure what we need to see most clearly,” namely, “actually existing relations.” But it’s equally possible, I believe, that “neoliberalism” can help us explore those connections empirically, and to challenge outcomes that are often taken for granted or perceived as inevitable, when in fact, they are products of political actions (diverse, disjointed, non-deliberate, and disorderly ones, to be sure).
Using Rodgers’s treatment as a starting point, we can develop a four-part working definition of “neoliberalism” that, I hope, avoids too much academic jargon or hair-splitting. It locates ideas and agency within always-evolving structures of institutions, language, and culture.
Neoliberalism is a multifaceted configuration of power that involves 1) a set of coherent but flexible ideas, 2) a range of policies and institutions that accord loosely with those ideas, 3) a historically-specific form of capitalism shaped by those ideas, policies, and institutions, and 4) a particular disposition toward personal and social life.
1) Neoliberalism refers to a set of coherent but flexible ideas centered on the belief that markets organize society best. Financial markets hold primary place in the neoliberal model of the market, where investment and investors play pivotal roles.
In neoliberal thought, the market reconciles the aggregate judgment of countless diverse, competing, maximizing agents in the form of prices. These price signals guide the decisions and coordinate the actions of those agents.
The prices generated in financial markets—understood as efficient, that is, reflecting all available information—are particularly important. They indicate the value of assets, act as signals for the allocation of capital, and even register the health of the economy. Neoliberal theory collapses any distinction between primary markets (where enterprises obtain funding) and secondary markets (where investors trade existing assets). Lumping these functions together, neoliberal thought identifies “investment” and “investors” as the sources of economic growth and progress. Corporations exist to maximize returns to shareholders.
The market appears powerful but fragile. So powerful it should serve as a template and an instrument for all forms of social organization. So fragile that attempts to temper market outcomes—such as regulation, collective bargaining, or redistributive social policies—disturb the machine, distorting prices and compromising the efficiency, impartiality, and democracy of the market.
In neoliberal thinking, political liberty consists of the freedom of persons (including legal persons like corporations) to acquire and to dispose of property and labor in markets, solely based upon their own judgment and their willingness to assume risks. Markets never involve coercion. Citizens hold equal rights to participate in markets, which always produce winners and losers. These outcomes are merited.
These core neoliberal beliefs congealed gradually. They varied in their particulars depending on the local context to which they were applied, in ways that can only be understood empirically. In the United States, neoliberal thought reached back to progressive and modern liberal ideas about the potential of financial markets to democratize capitalism, even as it tapped into conservative critiques of state expansion and labor organization. It owes as much to the “common sense” of financiers, employers, and management consultants as it does to the theories of academics.
2) Neoliberalism is a range of policies and institutions that release markets from restraints that democracy might impose and that reconfigure the state and civil society in the image of the market. Neoliberal policy and institutions give priority to investment and investors.
Beginning in the 1970s, throughout the global North, neoliberal policies dismantled institutions that had promoted equality after the Second World War. These included welfare and other social benefits, organized labor, public education, pro-labor wage policy, trade protections, capital and currency controls, and progressive taxation. Neoliberal projects privatized public goods, eliminated and transformed regulations, and created markets (think school vouchers or carbon trading). In order to protect the value of investments, neoliberal monetary policy targeted inflation and abandoned the goal of full employment.
Even as inequality widened and work became more precarious, neoliberal policies and institutions pushed individuals to satisfy needs in product and labor markets and to pursue opportunity, accumulate wealth, and manage risk through financial markets (think tax-free retirement or education accounts, the ACA mandate, or the explosion of private student debt).
Across OECD countries and beyond, the pace of economic growth, wage gains, increases in life expectancy, and productivity growth slowed after the mid-1970s. The debt of households and governments rose, as did the level of inequality within countries.
This was not a retreat of state power. Especially not for marginalized populations, who suffered intensified surveillance and punishment (think workfare programs and mass incarceration). Meanwhile, states lavished favor on financial markets, institutions, and investors (think bank bailouts, TARP, tax preferences for capital gains, and reduced taxes on top incomes).
Nowhere was neoliberalism less laissez faire than in the global South. Here, neoliberal policies and institutions most often were imposed by authoritarian regimes or by global governance institutions like the IMF and World Bank in return for loans. They yielded no better outcomes in the global South than they did in the global North. And they subordinated national sovereignty and democracy—first in the global South and now in Europe—to local oligarchs, foreign investors, multinational corporations, global governance institutions, and trade agreements.
Neoliberal projects spread slowly and unevenly. Groups located across the political spectrum contributed in ways that historians are only now beginning to chart. In the United States, for example, they drew upon modern liberal commitments to use financial markets to build the wealth of white households. In Europe, left-leaning technocrats promoted rules-based financial integration. Nowhere did neoliberalism simply march down a mapped route, under the direction of a disingenuous cabal of academics bankrolled by rapacious right-wing plutocrats (although both certainly played critical roles).
Looking beyond nation-states, we find that other institutions advanced neoliberal projects to create markets and insulate them from democratic accountability, while existing institutions absorbed neoliberal beliefs. Corporations maximized shareholder value through outsourcing, downsizing, off-shoring, reductions in wages and benefits, linking executive pay to stock performance, and by paying out to shareholders instead of reinvesting profits. And as global governance institutions, NGOs, and multinational corporations collaborate on programs of poverty alleviation, micro-credit, and environmental “protection,” they commodify, capitalize, and financialize social relations and the natural world.
3) Neoliberalism identifies a specific moment in the history of capitalism. During the particular period of “financialization” that began in the 1970s, claims over wealth yet to be produced exploded, infiltrated the lives of people across the world, dominated corporate decision-making, and transformed international relations and global governance.
Across the OECD, financial activity increased its share of GDP after the 1970s. The financial sector increased its share of profits relative to other sectors as financial firms turned away from funding the production of goods and services and toward the origination and securitization of consumer debt and the trading of currencies, securities, and derivatives. States spurred financialization by deregulating the financial sector, by sanctioning its restructuring, and by extending favorable tax treatment. Blind to the build-up of debt by financial institutions and the consolidation of the financial sector, financiers and policymakers like Alan Greenspan assumed that financial markets—where volatility itself could be traded—properly allocated the very risks they created.
Non-financial corporations shied away from long-term investments in innovation and good jobs, particularly in the United States. After the 1970s, they garnered an increasing share of profits from the interest they charged on loans and from financial trading. Executives directed corporations to gobble up shares of their own stock to support and advance its price, aligning their firms with “shareholder value” theories of the corporation while inflating their own stock-linked compensation.
Where neoliberal policies dismantled both public and private institutions of social welfare and protection (and even financialized welfare), deregulated financial institutions offered citizens a bewildering array of investment products, along with bountiful credit to help them to seize opportunity and to grow their wealth. Credit flowed to groups previously judged unworthy, including students, the unemployed, and those living in formerly red-lined communities. Beyond the OECD, for-profit financial institutions and NGOs have collaborated to promote entrepreneurship by extending micro-credit to diverse groups like small artisans in Cairo, the South-African middle class, and poor women in Bangladesh.
All these projects, which mapped on to previous racial and colonial discourses and practices, created new sites for accumulation by dispossession. Fees, points, and exorbitant interest rates strip away any wealth accumulated. Debtors mine the affective bonds of family and community to meet their payments—just as lenders and policymakers intended.
And in an era marked by immense sovereign indebtedness and austerity politics, states and polities—no longer just in the global South—experience new forms of dependence and subjugation through financial relations.
4) Neoliberalism is a disposition toward personal and social life.
Do neoliberal ideas, policies, and institutions shape our values and aspirations, daily routines and habits, family life, interpersonal relationships, and political engagements? How could they not?
Admittedly, using “neoliberalism” to lend coherence to changes in all these domains may seem like a reach. Even so, I find the term far less overstretched, obscure, and de-politicizing than “postmodernism” (which I hope it overtakes).
Are we to believe neoliberalism possesses no cultural dimension, no cultural antecedents or repercussions? Or could it be that when financial markets replace the welfare state and welfare capitalism—and NGOs extend micro-loans and train recipients in entrepreneurialism—this might indeed encourage a sense of the self-as-investor?
It would be odd if this neoliberal sensibility somehow stood apart from other domains of human experience. Or if it failed to co-opt other projects of emancipation. The neoliberal subject commits himself or herself to accumulating financial and “human capital” for the self and for future generations, always looking to maximize returns on investments of money, time, or emotion. Following one’s bliss, engaging in self-care, building one’s network: neoliberal subjects constantly tend and mark to market their present and future value. Many of our culture’s success stories embody neoliberal dispositions, teaching—or deceiving—us that individuals can solve all their own problems if they practice enough positivity, mindfulness, hustle, and properly-managed multitasking.
If some experience the neoliberal disposition as empowering, liberating, or pleasurable, it should come as no contradiction or surprise. Power is never exercised solely through oppression and imposition. So we must ask, then, who is empowered and to what ends? Who decides the assessment benchmarks, the fit-bit metrics, the standardized tests, the pay incentives, the credit scores, the social media stimuli? What happens to those who fail to meet the mark? Who suffers discipline—and how is punishment packaged into bonds that pay interest?
Wendy Brown asserts that the neoliberal disposition destroys “shared political deliberation and rule,” justice, democratic sovereignty, and the rule of law. That’s a big indictment. But it’s one we should take seriously in the Trump era. And if her usage of “neoliberalism” seems totalizing, well, isn’t that how common sense works?
“Neoliberalism” allows us to hold all these phenomena together in our minds, at least, as we work on—and against—it, both as scholars and as citizens.
And the concept deserves credit. Critiques of neoliberalism by scholars and activists in the global South set a course for new directions in poverty studies and policy (including programs that may hijack neoliberal reasoning for redistributive ends). Despite criticism, “neoliberalism” has pushed historians of modern U.S. history beyond “right-turn” narratives and liberal versus conservative binaries. Scholars have deployed “neoliberalism” to reveal the structural underpinnings of mass incarceration and environmental racism, the centrality of race in poverty governance, and the way discourses of color-blindness, merit, and diversity obscure these phenomena.
Make no mistake, “neoliberalism” has accomplished plenty politically. Since Pinochet (at least), and culminating in recent “pink tide” electoral victories, diverse groups on the left in Latin America have united to oppose “neoliberalismo.” We could learn something from this history. And last year, an insurgent international group of feminists vocally rejected “lean-in” neoliberal feminism and articulated a new feminist project grounded in anti-racism, labor rights, environmental justice, and care.
True, the left must develop ways of talking about the economy that can compete with neoliberal rhetoric acclaiming so-called free markets. But Trump did not win with “verbal realism” and “unvarnished talk.” No, he dropped the dog whistle and barked out racism, xenophobia, and misogyny. And as we see in the recently passed tax law, Trump lied about his intention to reverse the effects of neoliberalism for (white male) American workers.
At the end of the day, the left’s problem is with ideas, not words. Personally, I’m sympathetic to a “green growth” economic policy agenda. But I also recognize that the left must offer more than promises that all racist, sexist, and heteronormative bugs will be eliminated in Keynesianism 2.0.
Words matter. But words can’t do the work for us.
Julia Ott is Associate Professor in the History of Capitalism and the co-director of the Robert L. Heilbroner Center for Capitalism Studies at the New School. She is the author of When Wall Street Met Main Street: The Quest for an Investors’ Democracy (Harvard University Press, 2011). Ott co-edits Columbia Studies in the History of U.S. Capitalism for Columbia University Press and serves as Senior Editor for Public Seminar.
Read other responses in this forum—by Mike Konczal, N. D. B. Connolly, and Timothy Shenk—here.