Friday, January 31, 2014

The truth about neoliberalism

“That which seems the height of absurdity in one generation often becomes the height of wisdom in the next”
 --John Stuart Mill

And so tyranny naturally arises out of democracy, and the most aggravated form of tyranny and slavery out of the most extreme form of liberty.
--Plato, The Republic, Book VIII

Since we're on the subject, I thought I'd share this interview featured on the BBC podcast Thinking Allowed a while back. It's about the history of neoliberalism, and why it's become so dominant. I think the critical point made by author Philip Mirowski in the interview is that neoliberalism claims it's in favor of small government, but nothing could be further from the truth! In fact, since markets are always created by government, it needs a large, activist government to impose its will on society. In fact, the size of government has historically been driven by the size of the market - these things aren't opposed, they're complementary. Thus "getting government out of the way" is just a smokescreen peddled to the rubes for the rich being allowed to do whatever they want to the wider society to maximize their profits. It also discusses some of the underlying philosophical issues that we have all just internalized, which is why there is no resistance to these ideas:

It begins with the show host asking for a concise definition of neoliberalism:
Philip Mirowski: Neoliberals are not conservatives, and they don't believe in laissez-faire. They believe in a strong state that has to impose certain kinds of market societies that they think should exist. And they have a few key doctrines - the one I'll mention here is that they believe that the market is an information processor much more powerful than any human being. The beauty of stating it in that short way is that that's their argument against socialism - all attempts at planning must fail because no human being can know what the market knows. But interestingly enough, it's more than just  economics, it's also a philosophy about what it means to be a successful human being.

Laurie Taylor (host): It is surprising to hear that it is in favor of a strong state. the assumption is that neoliberals are infavor of a weak state and allowing the market to rule all.

Philip Mirowski: Right. Well, we can follow up on that by pointing out that they have different ideas on how people should understand their own movement. And to say it in a very short way, they have ways of dealing with crises that develop different responses in different time frames. And so, for example, in the short term, one of their ideas is to create a fog of doubt in the public to neutralize any immediate tendencies to blame the market. And so that's where you get some of this confusion about 'are they really hostile to the state or not?'

Laurie Taylor: So we're talking about - it is a belief in markets - markets have knowledge which will solve all our problems. But from time to time Neoliberals would want to believe in a strong state which does something to enable the development of new markets, is that right?

Philip Mirowski: Yes, because, that's another part of their project. Let's say that people believe that markets have gone awry or failed in some sense. Their immediate-term project is basically to propose new and stranger markets to fix any problems with old markets or previous markets. And, in  order to do that, this doesn't just happen by itself. This is why need a strong state, because it takes a strong state to impose these new market forms to supposedly address the crisis. One can see this in the economic crisis with various maket-based forms of saving the banks and saving finance rather than simply nationalizing the banks and causing them to shrink and reorganizing them.

Laurie Taylor: So, if you talk about this development of new markets, what would be an example of that? How would the government enable the development of new markets which would be in line with neoliberalism's requirements?

Philip Mirowski: Well, a nice clean example has to do with global warming. The common way to address problems of carbon emissions recently since Kyoto has been to develop these markets in carbon emission permits. So instead of having the state cause various emitters to emit less, instead we have a marketplace of permits which will supposedly cut down on the amount of emissions that are being emitted. And so what's interesting about that is that even though these markets are very popular with certain--for example, in finance--that they don't actually reduce the amounts of emissions. So what happens is that you introduce various markets to fix problems, but really what it does is it just sort of spreads out the problem over the longer term.

Laurie Taylor: Now I said in my introduction that you look in great detail at the origins of neoliberalism in the thirties and forties; The Mont Pelerin Society, Hayek and Friedman and the group of thinkers which evolved into the neoliberal thought collective. You use the analogy of a Russian doll to talk about the development of neoliberalism. Why that analogy?

Philip Mirowski: Because there are a number of concentric rings of institutions that constitute the neoliberal thought collective. I tend to think that the center, perhaps the smallest of them all, is the Mont Pelerin society itself, founded in 1947 which was a discussion society for these various figures to rethink classical liberalism. And the figures that were involved in that history are people like Friedman, Friedrich Hayek, George Stigler, Lionel Robbins, Karl Popper, Gary Becker and many others. Then, as time went on, they developed a concentric ring around that discussion group built up out of think tanks, and these think tanks would be think tanks that some people are aware of like IEA in Britain, Heritage, Cato, Atlas, the Stockholm Network. And then you have a next layer, which is a layer of sort of media and promulgation of the ideas in various national contexts. One example woud be the Murdoch empire in America...

Laurie Taylor: Doesn't this sound a bit conspiratorial? I mean mightn't these think tanks and academic departments be deciding that this was the particular approach to economics that they want to adopt because they believe it to be true?

Philip Mirowski: See, I find that objection interesting because, remember, I'm also a historian of science. And it seems when people make that objection, they think either all thought is individual, you know a genius and their followers, or else it's a conspiracy, when in fact, even in the history of science, there's been a long discussion of what it means to have collective movements of thought and the ways in which people hold together their thought collectives, and in fact the whole idea of a thought collective is taken from Ludwig Fleck who theorizes about biology.

So why do I call it a Russian doll? I call it a Russian doll because in these different layers, the same people can perform different functions. And that what's interesting about it And that's what holds it together is that people can act in different ways in the different parts of the layers, and yet...

Laurie Taylor: Sorry to interrupt, but I want to move you on because time is limited. Neoliberalism's success lies in the fact the we all have to varying degrees internalized its logic. We've all become neoliberals. And indeed, this explains why we've returned to neoliberal solutions after the financial crisis which might have been thought to have subverted that type of thought forever.

Philip Mirowski: This is not anything novel or original with me, I mean this goes back to the work of Foucault who essentially says that the neoliberal agent is an 'entrepreneur of the self.' Now why do we need an entrepreneur of the self? That's because people never know as much as the market, so because we're a flawed thinker, we must learn to transform ourselves to take in these packets of truth delivered by the market and alter ourselves to respond to them.

So in this view, there's no true self you should remain faithful to. And I'll give you some examples. Like education is no longer about finding myself or my true self or about becoming a solid citizen, its just about investing in human capital for a future payoff. Or another way of thinking about this, is that all my failures are personal, either because I didn't take enough risk or else a risk went bad, so in that sense whatever happened to me was all my fault.

So I tend to think of this as, 'your credit score is as important as your blood pressure, and its *your* job to monitor both,' see health is your fault.

Laurie Taylor: So this emphasis on your fault would seem to be one of the reasons we cant have any political mobilizations against neoliberal idea, because were all locked into that notion of individual fault.

Philip Mirowski: Well, that's part of it, but I also think that there's this larger idea that people who don't care about politics at all imbibe this kind of neoliberalism from their environment. For example Ilana Gershon has this lovely series of articles showing how Facebook is a device for training youth how to be neoliberal agents, because it takes your information for free, it sells it to others for profit and what you're supposed to do is, you're supposed to construct a profile so you can play around with being a person who's different from who you really are and then you get little metric about how many friends you have and so forth and so on.  I mean what it is, is you have this sense of yourself as this wierd agglomeration of parts that you can put together.

Laurie Taylor: It's a very defeatist message isn't it, given the pervasiveness of neoliberalism? How on earth can we produce counter-narratives or visions that will help us to get out of it?

Philip Mirowski: Well, that's what the book is for. The book suggests the left these days has nothing as sophisticated as this combined political project plus a philosophical project, and instead it tends to fight one battle at a time, or make an argument about this kind of regulation, when in fact the way to fight this I would argue, and I do in the book, is that we have to change the notions of what markets do, just like the neoliberals did starting the nineteen thirties and forties. Before the Great Depression, markets were treated as a classical allocation of scarce resources to given ends. What the neoliberals have done is they've made it an intellectual project; they've made markets to be information processors. The left needs a different story about markets in order to tell a story about why we should have different kinds of social arrangements.
Work and Consumption; Neo-liberal Economics (BBC). The truimph of Neoliberal economics in the post Recession world. Laurie Taylor talks to US Professor of Economics, Philip Mirowski, about his analysis of why neoliberalism survived, and even prospered, in the aftermath of the financial meltdown of 2008. Although it was widely asserted that the economic convictions behind the disaster would be consigned to history, Mirowski says that the opposite is the case. He claims that once neoliberalism became a Theory of Everything, providing a revolutionary account of self, knowledge, markets, and government, it was impossible to falsify by data from the 'real' economy. Neoliberalism, he suggests, wasn't dislodged by the recession because we have internalised its messages. Have we all, in a sense, become neoliberals, inhabiting "entrepreneurial" selves which compel us to position ourselves in the market and rebrand ourselves daily? Also, why do work almost as hard as we did 40 years ago, despite being on average twice as rich? Robert Skidelsky, Emeritus Professor of Political Economy, suggests an escape from the work and consumption treadmill.

Here's a suggestion: we can start getting people to think of markets as what they really are: basically just giant casinos. We run our entire economies as a casino, and we wonder why it keeps turning into disaster.

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