This paper was prepared as background to the 4th edition of ‘Communication and Interpersonal skills in nursing (Grant, A. and Goodman, B. forthcoming). In that book discourses of neoliberalism and their effects on health and health service delivery as well as the interpersonal communications nurses have with people will be explored and critiqued. An example is the discourse on ‘individual responsibility for health’ and ‘lifestyle drift’ responses to public health which draw upon the concept of ‘sovereign individual’ of neoliberal philosophy. This paper explores what neoliberalism might be to argue that it is more a discursive practice than a political action.
Neoliberalism is at once everywhere and nowhere. There is ‘appearance’ and ‘reality’, there is reification and fetishisation. Its name is spoken in certain circles and vilified (Springer 2016), it is an ‘imprecise exhortation’ (Thorsen and Lie 2007, Thorsen 2009), in others there is denial that it even exists (Talbot 2016). It might be best to understand neoliberalism as a ‘discourse’ (Foucault 1969) rather than an actuality of political practice, as a “rather radical set of ideas which nevertheless have had a certain influence on society and politics in recent times” (Thorsen 2009 p20). It is a word used by the progressive and critical left, e.g. Saad-Filho and Johnson (2005), to counter what the right call the ‘free market’ in the context of the breakdown of the post war consensus around the social welfare democratic state.
I suggest that the discourse of the ‘Free Market’ was, and is, used to reshape the State, and civil relationships, away from ownership and control of the means of production, away from Keynesian state intervention in the economy and away from providing all social security (including housing, health, education, and transport). Free market rhetoric is used to mask the reshaping of State apparatus towards State intervention for wealthy landowners and corporates (financial and industrial). This is a bid by a capitalist class to (re)capture the State’s support for capital and property accumulation in their favour. This ‘support’ is referred to as a ‘framework’ in which ‘free’ markets are to operate. I also argue that there is nothing ‘neo’ or ‘new’ about the practical reality of this form of liberalism, tied as it is to the capitalist State.
The term ‘Free market’ is often preferred to ‘neoliberal’ by its supporters according to Talbot (2016) and Thorsen (2009) who argues that the term neoliberal is now most often used in a pejorative way by the left. We say ‘Neoliberal’ you say ‘Free Market’. ‘Free market’ or ‘neoliberal discourse’ is used as part of the Ideological State apparatus backed up by the Repressive State apparatus of the judicial system, police and ultimately, if needs be, the military.
An important idea of ‘Free Market/Neoliberalism’ is the espoused theory of a minimalist State. The theory in action is a State becoming minimal for social security but otherwise continuing the facilitation of capital accumulation and the ownership of wealth especially by the 0.01%. The ‘Nightwatchman’ minimal state of the 19th century is a goal of free market (or liberal) ideology, but this has not been achieved for all of the talk of the Reagan/Thatcher years of the 1980’s. This is possibly because the reduction of State spending down to 10% of GDP from the current 40% of GDP (per year, see figure 1 in the appendix) would be as disruptive for the capitalist class and the political power elites as it would for everyone else. This is also because key sectors of the economy such as agriculture, the military-industrial complex, and the nuclear power and fossil fuel industries, rely on government funds and subsidies without which their business models would have to be radically altered. Capitalism’s ‘creative destruction’ is a lauded dynamic feature, as long as its not your industry or business model that goes bust or, in the jargon; is ‘disrupted’. It is also because in theory, liberalism is not a monolithic philosophy, ‘classic’ and ‘modern’ Liberalism (Ryan 1993) have different views of the State’s role.
The minimalist state (‘Nightwatchman’) ‘classic liberal’ solution to questions of political economy might still be the goal of some current thinking. This may include the Tea Party in the US, kicked into life by Rick Santelli’s comments on President Obama’s mortgage bail out plan (Pallasch 2010), and perhaps in the UK by the Adam Smith Institute. Yet in current practice many of the Conservative capitalist class, and their political voices in the Tory party, seem as wedded to state intervention as they claim socialists to be.
Neoliberalism as a discursive practice, embedded and supported by an ideologically driven, highly funded ‘intellectual’ infrastructure, can also be linked to around 1,000 self conscious neoliberal intellectuals organised in the Mont Pelerin Society (Plewhe et al 2007). Its proponents fight for hegemony in research and development, and engage in political and communication efforts with well funded, well coordinated and highly effective new types of knowledge organisations: partisan think tanks such as the Cato Institute and the Heritage Foundation in the US, the Institute for Economic Affairs (IEA) and the Centre for Policy Studies (CPS) in the UK and the Institute of Public Affairs in Australia (IPA) (Beder 2001).
A Discursive Project.
This is an ongoing rhetorical project in the UK because as Desai (2007) argues, the values and principles of Thatcherism, which did not call itself neoliberal but did emphasis similar ‘free market, small state’ principles mixed with ‘Victorian values’, were not wholly accepted by the British public. This is evidenced in surveys of public opinion in the 1980’s and 90’s and arguably even today if support for the socialist inspired NHS is an indicator.
Support in elections since 1979 have not won over majorities of the electorate, and it is only thanks to first past the post that Tories and clause 4 ditching ‘Tory lite’ New Labour, were able to win. See figure 1 (appendix) which shows what % of the electorate actually voted for the government of the day.
These figures show that at its peak only 33% of voters could be bothered to put an x next to free market rhetoric. This was down to 24% by 2015. Neoliberals/Thatcherites/ Conservatives have not won the hearts and minds of the British Electorate and neither has the goal of a small state in terms of GDP spend been achieved. Their success in the US and the UK, is to be measured not by the popular vote, but by their assaults on Trade Unions, by Privatisations, Tax breaks and Labour market and Financial deregulations. And by the increasing share of wealth and high pay going to the 1% and 0.01% (Saez and Zucman 2014, Dorling 2014, Moshinsky 2016).
I argue here in accordance with Desai (2007) that:
“Market dogma may well be entrenched in capitals around the world, but its intellectual vacuity and practical failures have been documented in a vast literature. It would be truer to say that neoliberalism’s intellectual pretensions are designed to provide a fig leaf of intellectual respectability to the most naked pursuit of the interests of capital and property (my emphasis) than that neoliberalism has motivated this pursuit by intellectual force and political influence” (Desai 2007 p220).
In other words, powerful and rich individuals have used talk of free markets (and neoliberalism) to justify their ongoing grab of global wealth through using the levers of State power, rather than it being the case that the intellectual case motivates their actions.
Graham Scambler (2012) also points in this direction in his exposition of the ‘Greedy Bastards Hypothesis’ which is underpinned by the strategic actions of ‘focused autonomous reflexives’ in the capitalist class executive and the political power elite.
In common understanding a ‘discourse’ is an exchange, perhaps of ideas, between two people involving language as the medium of transmission. This can be seen as a neutral exercise between two people of equal power and status using certain phrases, words, jargon and syntax to share understanding or to question the other’s statements. Consider the situation when two Tory MPs are talking to each other about a ‘flexible labour market’ or the need for people to be ‘taking responsibility for one’s health’. The first is an example of the neoliberal/free market discourse that favours weak labour regulations to make it easy to hire and fire staff making them ‘flexible’. The second brings in and joins the ‘Moral Underclass discourse’ (Carlisle 2001) to the free market’s central idea of ‘free sovereign individuals’ in charge of their own destiny in order to shift responsibility fully onto the shoulders of individuals. This discourse can then blame individuals for being obese, for smoking or for any other ‘moral failing’ such as catching an STI or binge drinking.
Discourse as a critical concept is associated with Michel Foucault. For Foucault (1969) discourses are institutionalised patterns of speech and knowledge seen and felt in ‘disciplinary’ structures, e.g. in the medical clinic or in the prison (Foucault 1963, 1975). Discourses connect knowledge to power. Knowledge is power. To oversimplify, the concept refers to the idea that a discourse shapes, or constructs what we know, what we can say and also reflects differences in power between people. Becoming a Tory MP introduces one to the institutionalised patterns of speech which might be very familiar to that experienced in public schools (e.g. Eton) and certain Oxbridge clubs (e.g. Bullingdon).
Discourses are more than mere words. A discourse, Foucault (1969) suggested, actually brings into being that of which they speak.
“…discourses…are not…a mere intersection of things and words….”
The task of analysing discourses is to show that they are not just:
“groups of signs…but as practices that systematically form the objects of which they speak….discourses are composed of signs; but what they do is more than use signs to designate things. It is this more that renders them irreducible to language and to speech. It is this ‘more’ that we must reveal and describe (1969 p 54)” (my emphasis).
By continually repeating the discourse, and getting it accepted by enough people, that “There is no money” or “There is no Alternative” or “Labour caused the public debt” or “Banks are too big to fail” or “Top cornflakes rise to the top” or “high pay rewards hard work and intelligence” or “Inequality is good for competition” or “Skivers v Strivers” or “In this together” or “we must balance the books and bring down the deficit” these things are brought into being. They are part of a larger, taken for granted, understanding of the ‘proper’ role of the state, the individual and the corporation.
What then is ‘Neoliberalism’ and what is formed by that of which it speaks?
Traditional Enlightenment ‘classical liberalism’ (Ryan 1993) emphasises:
- Individual Freedom (liberty) through limiting government and maximising capitalist market forces.
- Civil liberties under the rule of law and laissez faire economics.
- Free markets, utilitarianism, natural law (inherent rights which are universal, uncovered by reason) and progress.
Key thinkers: Adam Smith, John Locke, Thomas Hobbes, David Ricardo. Alexis de Tocqueville
Modern liberalism accepts a greater role for the State in the economy, manifested in regulation and the State supplying of goods and services (Ryan 1993). Laissez faire economics cannot in this interpretation meet the goals and purposes of liberalism. Thorsen (2009) argues that liberalism has many facets and has become in effect a contested concept particularly over the role of the State.
Neoliberalism is associated with ‘Austrian’ economists Ludwig Von Mises (1881-1973), Friedrich Hayek (1899-1992) and the American economist Milton Friedman (1912-2006). Around 1950, the classic liberal state had grown into, for some, a social democratic monster driven by Keynesian economic theory and the growth of Welfare States. In both the US and the UK, governments were beginning to spend more and more of GDP and intervening in many areas of the economy including social security programmes. Von Mises, Hayek and Friedman would have noted that the share of GDP spent by the State on welfare and public services had grown from about 10% in the middle of the 19th Century (figure 2 in the appendix) to around 40% by the 1970’s. Today the share of GDP spent by the government in the UK is about 41% (figure 3 in the appendix).
In the context of the centrally planned Soviet Union and Hitler’s Germany, Hayek (1944) argued that any government control of economic decision making through central planning leads to tyranny and that civilisation requires liberty as a prerequisite for wealth and growth (1960). Hayek and Freidman (in the 1950’s) referred back to classical liberalism rather than ‘neoliberalism’ in their reaction to the amount of state intervention in the economy. Yet, they accepted some aspects of welfare provision by the State although this provision in their view should be greatly reduced. Their status as fringe economists in the 50’s was altered when their economic theory and political philosophy was then taken up by Reagan in the US and Thatcher in the UK around the late 1970’s. At this point there had been a sort of post WW2 consensus between Conservatives and Labour regarding the level of state intervention in the economy.
Margaret Thatcher was to change that cosy relationship.
At a Conservative Party policy meeting in the late 1970’s, Thatcher made it clear upon what her approach to the economy was based:
“Another colleague had also prepared a paper arguing that the middle way was the pragmatic path for the Conservative party to take…the new Party Leader [Margaret Thatcher] reached into her briefcase and took out a book. It was Friedrich von Hayek’s The Constitution of Liberty…..she held the book up for all of us to see. ‘This’, she said sternly, ‘is what we believe’, and banged Hayek down on the table.” (Ranelagh 1991).
Neo simply means ‘new’ and refers us back to the earlier liberal small state. The ‘Nightwatchman’ state in the 19th century provided for property rights, contracts, markets and personal/national security. That was about it. No provision for schools, health, transport or subsidies for industries. Hence the relatively small % of GDP being spent by the government. Talbot (2016) argues that the 1950’s Neoliberalism was new in that it also embraced social as well as economic and political rights. Social protection, workers rights and public health would actually help the capitalist society, however following the Chilean coup of 1972 a theoretical inversion took place in which it now meant a reversion to 19th century free market liberalism.
Stuart Hall (2011) argued that:
“The term ‘neo-liberalism’ is not a satisfactory one. Intellectual critics say the term lumps together too many things to merit a single identity; it is reductive, sacrificing attention to internal complexities and geo-historical specificity. However, I think there are enough common features to warrant giving it a provisional conceptual identity, provided this is understood as a first approximation…..What, then, are the leading ideas of the neo-liberal model? ….neo-liberalism is grounded in the idea of the ‘free, possessive individual’. It sees the state as tyrannical and oppressive. The state must never govern society, dictate to free individuals how to dispose of their property, regulate a free-market economy or interfere with the God-given right to make profits and amass personal wealth”.
A ‘tyrannical and oppressive’ State was of course Hayek’s view.
George Monbiot (2016) outlined its main principles in this way:
“Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning. Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions, that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counter-productive and morally corrosive. The market ensures that everyone gets what they deserve”.
David Harvey (2005) defines it thus:
“Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police, and legal structures and function required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets. Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture. State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit.”
Thorsen (2009) after an examination of literature on liberalism including the critical literature argues:
“Neoliberalism is…a loosely demarcated set of political beliefs which most prominently and prototypically include the conviction that the only legitimate purpose of the state is to safeguard individual liberty, understood as a sort of mercantile liberty for individuals and corporations. This conviction usually issues, in turn, in a belief that the state ought to be minimal or at least drastically reduced in strength and size, and that any transgression by the state beyond its sole legitimate raison d’etre is unacceptable (cf, especially Mises 1962; Nozick 1974; Hayek 1979).
This latter two descriptions are that of the ‘Nightwatchman State’. Remember at this time in the 19th century less than 10% of GDP was spent by the government on public activities. Is this the goal of current Conservatives? Or is neoliberal/free market discourse an ideological mask for something else?
A minimal state safeguarding individual mercantile liberty and that is it?
We have to question whether in action Tory ministers believe this and wish to cut public spending from around 40% to 10%. To see what that would mean, we would need to look at the current 2017 budget (approximately £800 billion which is 40% of GDP) and note that to get down to 10% of GDP the budget would have to be £200 billion. See the appendix figure 4 for the 2017 budget. This is not 10% of GDP. Social Protection (pensions in the main) is over 10% on its own.
This is not a ‘Nightwatchman’. Is it a socialist utopia? The State is spending a lot of money still. However, what is actually happening is that in each sector, privatisation means that more and more government money (taxpayer’s money) is subsiding private provision. This is an explicit aim of the Adam Smith Institute who explicitly call for private provision but public funding for health. In Rail the government is subsiding private train operating companies and in housing the government is subsidising landlords through housing benefit. In employment the government is subsidising employers through tax credits. Figure 5 in the appendix shows where the revenue comes from.
The UK government spending accounts for about 40% of GDP, leaving 60% going elsewhere. Spending on health, social care and social protection (pensions) accounts for £426 billion, that is over 50% of the total spend. Add £102 billion for education (total now is £528 Billion).
Who pays for that? Well, whoever pays Income Tax, National Insurance, VAT, Council Tax and excise duties. All of this accounts for £628 billion.
What we have is redistribution from the 99.9% to the 99%.
‘Neoliberalism’ as rhetoric actually works for 0.01% – the plutocrats, the global capitalist executive. Henry (2012) argues that anything between $21 to £31 trillion as of 2010, has been invested tax free in about 80 ‘offshore’ secrecy jurisdictions. That is trillion not billion.
What we don’t have is a minimal state focused solely on safeguarding liberties for markets.
This idea of a small state free market economy is of course patent nonsense as it has just not happened. The reduction of public spending and deficit reduction are two current policy goals (i.e. Austerity) but this is hardly neoliberalism. Neoliberal purists have failed to get the Tory party to reduce spending to these ‘classic liberal state’ levels. So what was all that Thatcherite talk for?
The reduction of state spending down to 10%, I suggest is either a complete failure of the neoliberal project or it is deliberate policy failure in that this is not the neoliberal goal at all.
It could be the case that the free market discursive practice is a cover for capital and property accumulation through curbing what is seen as labour power but more importantly by capturing the levers of the State. Cutting state spending to 10% would be seen by the capitalist executive and the political power elite to be socially and politically dangerous to capital accumulation.
Marx once remarked in the Communist Manifesto:
“the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie”.
One does not have to be a communist to begin to see how executive power is being used to the advantage of Capital (deregulations, subsidies and offshore tax breaks) while at the same time weakening labour through strict union laws, wage freezes and labour market ‘flexibility’.
Prior to 1900, no state spent more than 3% of GDP on ‘social programmes’. Around 1870 the average public spending level of ‘advanced economies’ was 10% (Talbot 2016). The 1914-1918 war saw an increase to 20%, followed by a steady growth to the 40% of today. This leads Talbot to argue that the neoliberal state of the 1970’s with 40% spending is actually little different from liberal market/social democratic states. Therefore it is all talk and no action since that level of spending has not been reigned back to 19th century levels.
Does this mean that Thatcherism was not neoliberal in action? Yes, if by that we define a neoliberal state as that in which only 10% of GDP is spent. Was Thatcherism even ‘free market’ in action given the continuing level of state intervention in many sectors of society and economy? Both Thatcher and Reagan promised to ‘roll back the frontiers of the state’ or that ‘government was not the answer, it was the problem’. This was ‘New Right’ talk to distinguish it from post WW2 Conservatives who accepted the post war social democratic consensus based on around 40% GDP spending and intervention.
Talbot (2016) argues that neoliberalism exists only as a ‘bogeyman’ created on the left to oppose various conservative attempts to ‘rebalance’ government-market relations. Bruff (2017) however argues that ‘neoliberalism’ is not about a return to free markets and 10% spending levels but is an ideology to mask a coercive, non-democratic and unequal reorganisation of society. There is seeming agreement that this is not about cutting government spending per se down to 10% but about reshaping democratic social and political relationships in favour of Capital. To repeat Desai (2007):
“neoliberalism’s intellectual pretensions are designed to provide a fig leaf of intellectual respectability to the most naked pursuit of the interests of capital and property”.
Bruff (2017) points out that many current governments are not neoliberal in that they actually oppose free markets in practice and instead are engaged in protectionist rhetoric and practice. A 40% GDP spend does not indicate much in the way of ‘cutting back the state’ except for the working classes as a result of austerity politics and social security spending decisions.
This results in socialism for the rich (state spending) and neoliberalism for the poor (welfare cuts).
If neoliberalism is narrowly defined as a political programme valorising free markets then indeed leaders such as Trump, Modi, Erdogan and Abi are not neoliberal. Instead ‘free market’ rhetoric is just that: rhetoric. Bruff goes on to suggest that actually Hayek et al constantly invoke ‘free markets’ as an abstract principle but then they have a preference for certain types of markets to prevail in actuality. Neoliberalism in this definition is the use of the State in a central role to maintain a certain kind of market:
“neoliberalism has nothing to do with markets as commonly conceived, and everything to do with the orchestration of social relations in the name of markets…it is about the coercive, non democratic and unequal reorganisation of society along particular lines…intensification and extensification of the differences, inequalities, hierarchies and divisions that pervade capitalist society as delivered by authoritarian states and global corporations…neoliberalism is a way of seeing the world that is carved from the empty words ‘free’ and ‘markets’ ”. Bruff calls this ‘Authoritarian Neoliberalism’
Some Free Market advocates get this too.
Jamie Whyte is a free market advocate and in the BBC radio programme Analysis ‘Keeping the Free Market faith’ (8th October 2012) thinks Conservatives are now losing that faith in the free market, implying neoliberalism has lost its grip. Of course, as figure 1 to 5 show, it never had one.
Three Conservatives said this about the state of politics in 2012:
“An Unholy alliance between a free market ideology which took over a government and a process of social change in which fair dealing and trust were ditched in favour of get rich quick economic libertarianism”
“We have to challenge the assumptions of laissez faire economics…”
“…the left wing account (of a conspiracy of the rich against poor people) is much more believable (since the credit crunch) than in 1990, although I don’t believe it”.
(Jessie Norman, Matthew Hancock (Tory MPs) and journalist Charles Moore).
In the ‘Free Enterprise Group’ in the Tory party, Andrea Leadsom argued deregulation in the banking sector had caused major problems. Ferdinand Mount also queried deregulation and the big bang which ‘had its downside’. Matthew Hancock (Tory Minister for Skills) also of the Free Enterprise Group, argued free markets need strong frameworks. He argued we should not muddle up laissez faire economics with free markets, and that the banking sector is special, it is an exception where free market principles should not hold! The State also should have a view of what are sustainable business models for many industries.
Jamie Whyte interviewed Ferdinand Mount, who helped write Thatcher’s manifesto in 1983, argued in the radio programme that ‘bankers are the worse kind of oligarchs, immune to old standards of corporate governance, paying themselves whatever they like. Shareholders are sleeping and are not taking them to account’. Qualms about high pay, argued Mount, is about social justice and economic efficiency (rewards gained despite performance). He argues against total deregulation and against withdrawal of state support for the ‘too big to fail’ banks.
Whyte interviewed Lord Griffiths (advisor to Thatcher in 1986) who dents Thatcher’s image as a neoliberal or free market ideologue. He argues that Thatcher believed in a ‘moral market’ and the value of enterprise but was never a total free marketeer. Free markets yes, but within a boundary of social justice, including consumer protection. Thatcher he suggests was not a purist Hayekian. Despite the earlier Hayekian gesture in the 197o’s, Griffiths argued that Thatcher believed that the market economy had a moral basis in a Judeo-Christian ethic; a ‘moral market’ and this was the underpinning of the economy. Thatcher was free market enough to let the UK coal mines close and railed against support for ‘lame duck’ industries. She also began the wave of privatisation of nationalised industries.
What then now of Theresa May’s reintroduction of industrial policy, of explicit talk of government involvement in various sectors of the economy? Since 2010, there has been the setting up of a British Business bank and the rebalancing of the economy as policy goals. Government should now have a view over the structure of the economy (Matthew Hancock MP), and support for successful business is a legitimate role. ‘Active and thoughtful’ government should support successful companies, and not be neutral between sectors. Hancock argued that there needs to be a strong framework around a market supporting successful industries, i.e. those that work well. An industry strategy must allow new challengers, but there must not be a planned economy. This must be done through looking at regulation and providing industry with the skills it needs.
Pro-Business rather than Free markets?
However, businesses are good at lobbying government (Zingales 2012), they ask for and get support rather than just asking for arm’s length regulation. Zingales (2012) also argues that the US risks deteriorating into a pro-business rather than pro-market system. Jamie Whyte calls the relationship between business and government ‘cosy and corrupt’.
Trump’s election and his appointees and advisors might indicate or vindicate Zingales’ point. His first big meeting in January 2017 (Feloni 2017) was with 12 CEO’s of the United States’ largest companies and he told them that he would ‘prioritize corporate tax cuts and decrease regulation’ (free market talk) and impose a ‘border tax’ on companies that move production outside the US (state interventionist).
Key appointments include:
Rex Tillerson (ex CEO of ExxonMobil), Steven Mnuchin (Goldman Sachs, Hedge Funder), Robert Lighthizer (Corporate and Trade Lawyer), Andrew Puzder (CEO of restaurant chains) and Wilbur Ross (Billionaire Investor). Well, who else would you want to run the capitalist executive but capitalist executives? Smith (2016) suggests that ‘Trump’s billionaire cabinet could be the wealthiest administration ever’:
Todd Ricketts ($5.3 bn), Betsy DeVos ($5.1 bn), Wilbur Ross ($2.9 bn), and Steve Mnuchin ($46 m).
In the UK, May’s cabinet are pretty rich but look like paupers compared to Trump’s (Saner 2017).
As for business connections, in the UK, there are 50 official ministerial ‘business buddies’ for large firms in the Business Council. Glaxo Smith Kline had David Willetts while Vince Cable worked with Oil and Gas. Hancock in the Whyte radio programme argued they ‘listen’ to their companies and the government then does what they would like. This is not only a UK phenomenon. Angresano (2016) argues there is a ‘Corporate Welfare Economy’ in which the US government has increasingly been influenced by corporate lobbyists with regulation skewed in order to suit the interests of the privileged.
Other examples include the United States Department of Agriculture’s plan to buy 11 million pounds of cheese worth $20 million (USDA 2016) to support US dairy farmers. The Overseas Development Institute (ODI) and Oil Change International found that as a whole, G20 nations are responsible for $452bn (£297bn) a year in subsidies for fossil fuel production. Bergin (2016) reported that compensating carmakers in Britain for any post-Brexit tariffs on exports to Europe could see the government hand the companies more money than they need to pay the salaries of all their British workers. For decades British farmers have received subsidies under the EU’s Common Agricultural Policy (CAP). Full Fact (2016) report that the average farmer made £28,300 in subsidies in 2015 and £2,100 from agriculture. Wealthy land owners, such as the Daily Mail’s Paul Dacre, the Queen, a Saudi Prince, the Dukes of Westminster and Northumberland, the Earl of Moray also received subsidies from the CAP (Press Association 2016). Hinkley nuclear power station will have a subsidy worth £30 billion (Ward 2016). George Monbiot (2011) wrote:
“the Guardian revealed that the government’s subsidy system for gas-burning power stations is being designed by an executive from the Dublin-based company ESB International, who has been seconded into the Department of Energy. What does ESB do? Oh, it builds gas-burning power stations. On the same day we learned that a government minister, Nick Boles, has privately assured the gambling company Ladbrokes that it needn’t worry about attempts by local authorities to stop the spread of betting shops. His new law will prevent councils from taking action”.
The Economist (2012), a free market paper, also reports on the US Chamber of Commerce and its lobbying and influence in US politics:
“Small firms can get a lot out of the Chamber—its annual small-business summit is well-regarded, for instance. But some feel under-represented: most of the firms represented on the board are large. Others worry that they are being used as pawns. In a letter to a Philip Morris executive just after he took over, Mr Donohue said that small firms “provide the foot soldiers, and often the political cover, for issues big companies want pursued”, because Congress listens more to them than to big business”.
Traynor et al (2014) similarly reported on corporate lobbying in the EU, claiming that there are over 30,000 lobbyists operating in Brussels while Drutman (2015) argues US lobbying is ‘America’s Business’ leading to ‘politics becoming more corporate’.
Jamie Whyte argues for a genuine free market, unregulated and free from government, even in the banking sector whereas Ferdinand Mount argued that it would be a ‘brave thing to do’, and it is “rather terrifying”. Whyte argues however that the market is a mechanism for experiment and trial and thus there is no place for state regulation and subsidy. Banks should be allowed to fail. However, not bailing out the banks in 2008 would have been a brave thing to do, argued Mount, but he thinks ‘free market’ ideology will return. Luigi Zingales (2012) supports Whyte in arguing that too much intervention creates perverse incentives. The State’s involvement in protecting money lent by the banks, means we have socialised the losses and privatised the gains. Free markets should apply to banks, they should not be bailed out, and government protection of their lending, subsidises the bank’s risks.
Neoliberalism, if defined as ‘small state’ and free markets, does not exist. If however ‘neoliberalism’ is understood as a discourse including ideas around individual liberty within free markets with minimal state intervention including cutting welfare programmes aimed at the ordinary people, then it does. Its function is to reshape society by using the rhetoric of free markets while at the same time controlling certain markets though state intervention. Neoliberalism for the poor, socialism for the rich.
We have the data on wealth and income distribution, land ownership, offshore tax wealth, derivative values, corporate subsidies and the connections between the capitalist class executive and the political power elites which includes the military-industrial complex. We know what money is, that it is not a physical commodity or has material existence in any form whatsoever (Harvey 2008, Pettifor 2017) and is therefore not in short supply. We know that it is now nothing more than a set of social relationships, ‘promises’, and thus is in infinite supply, but it is backed by judicial and ultimately military power. One reason we perhaps do not join the dots is too many of us have swallowed neoliberal ideology that argues ‘free markets and individual effort brings success’ while ignorant of its real effect to cover the actions of Capital which operate in rigged markets.
What should current neoliberalism look like?
The Adam Smith Institute (ASI) (https://www.adamsmith.org) is a free market think tank. It calls itself, “independent, non-profit and non-partisan…(to) promote neoliberal and free market ideas through research, publishing, media commentary and educational programmes”. Their priorities:
“…are driven by a desire to rid the system of rent-seeking and inefficiencies that destroy wealth, and to create public services that are both innovative and in the hands of the people who use them, not the people who run them”.
The use of the word ‘neoliberal’ is interesting because it is not easily clear at first from the website that the ASI wants actually to be as neoliberal as Talbot’s ‘Nightwatchman’ state. It is not immediately obvious at first glance that they would wish to reduce public spending from 40% to 10% of GDP. However, the ASI published a blog on the level of public spending (as a % of GDP) that states that we are stuck with current levels “much as we ourselves would prefer the Hong Kong option”. Hong Kong’s spending ranges from 5.7% in 1960 to 10.9% and in 2015 was 9.15%. Therefore, buried in a blog an aim would be levels of spending equal to the ‘Nightwatchman’. The ASI believes in ‘market efficiency’:
- Low, simple, flat taxes that encourage investment and innovation, and hence economic growth (OK, need to read upon on that).
- A voucher-based education system that gives parents and schools complete freedom over how and where children are educated. (Hang on, vouchers, who is paying for that?)
- A privately-provided, publicly-funded healthcare system where patient outcomes, not NHS wages, are the focus. (what, publicly funded?)
- Freedom of trade with the world, and a liberal immigration system that is designed to work for migrants and natives alike.(open borders and requires ‘flexible’ labour markets?)
- A liberalised planning system that lets many more houses be built, so everyone can afford to own their own home. (so, environmental protection to go?)
- A simple welfare system based around a Negative Income Tax or Basic Income that tops up the wages of the poor and guarantees that work always pays. (basic Income…that’s more like it…something Marx would approve of)
- Free market money and an end to bailouts of private banks, in all their forms (Yes, nothing for a Marxist to disagree with).
The need to ‘rid the system of rent seeking’ echoes Thomas Picketty’s (2014) analysis of current capitalism and Marxist critiques of rentier forms of capitalism. The importance of wealth in attracting rent, is once again asserting itself as wealth grows faster than economic output. The ASI is sounding a bit marxist here.
If it is serious about a minimalist state and protection only for market transactions then free market/neoliberal ideology ought to be seeking to get private corporate and wealthy landowning snouts out of the State trough. In that, Marxists would agree. A free market should be just that. No bank bail outs, no subsidies for private schools in the form of charitable status; Oil, Gas and Nuclear power to stand on their own two feet; Farmers to earn from agriculture not government handouts; Aristocratic grouse moor owners likewise; Employers should pay what the market bears and not rely on working tax credits; Private health care companies should rely on what private individuals are willing to pay; Train operating companies should pay the full price of running the network and keep all of the profits from passengers while receiving no state funding; social care to be provided by charity, families or private individuals buying from care companies; private citizens should insure themselves for ill health and old age; Schools and Universities should compete in a market for students paid for by their parents or themselves with no state funding or through loans at market rates of interest; the road network sold off and motorists to pay to access; no housing benefit, no unemployment benefit, no sickness benefit, no pension unless paid for by private schemes, no business rates, no corporation tax; Free trade across borders with no tariffs, free movement of people, capital and services. With the state off your back: “no income tax, no VAT, no money back, no guarantee…Good Bless Hooky Street” in a ‘Del Boy’ economy. Libertarianism for all. Freedom from the State! Let the market decide!
A bit much?
The problem with neoliberalism and free market ideology is indeed a Hobbesian one: life could be ‘nasty, brutish and short’ as we compete one with another in a dog eat dog ‘ubermensch take the hindmost’ world. And there’s the rub. Do they really mean it, or have they not only accepted a role for the state but embraced it for their own ends under the guise of ‘market efficiency’?
||Total who did not vote
Who voted for
Figure 1. Voter support for free market discourse. Increasingly it is the case that nearly a third (range 23% to 40%) or more of voters were either apathetic, disillusioned, disengaged or too distracted to bother to give their support for any political party.
Figure 2. 1900-2010 spending as % of GDP
Figure 3. 1996-2017 spending as % of GDP.
The following two figures illustrates the degree of State involvement in the economy. The spending accounts for about 40% of GDP, leaving 60% going elsewhere. Spending on health, social care and social protection (pensions) accounts for £426 billion, that is over 50% of the total spend. Add £102 billion for education (total now is £528 Billion).
Who pays for that? Well, whoever pays Income tax, National Insurance, VAT, Council Tax and excise duties, accounts for £628 billion. What we have is redistribution from the 99.9% to the 99%.
‘Neoliberalism’ as rhetoric actually works for 0.01% – the plutocrats, the global capitalist executive, as Henry (2012) argues that anything between $21 to £31 trillion as of 2010 has been invested tax free in about 80 ‘offshore’ secrecy jurisdictions.
Figure 4. 2017 UK budget. Spending £802 billion
Figure 5 Revenues. £744 billion.
UK Budget: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/597467/spring_budget_2017_web.pdf accessed 22 march 2017
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