Neoliberal shock medicine

The National Health Service is going through attempts at reorganization in the context of public sector debt, while the Royal College of Nursing is worried about ‘front line’ provision. Treatments and expectations continue to rise calling into question our ability to pay for them. The population ages putting further demand on health and social care while inequalities in health still reveal differences in a range of health indicators between socio economic groups. These are all elements of a social and health superstructure that rests upon a creaking economic base. The ‘social determinants of health’ approach require us to examine that base upon which we build social as well as individual health.

 

The links between health and the economy are thus worth examining, and a key feature of our economic base has been underpinned by a particular theory (neoliberalism) since the 1970’s. However, this approach to financing health and social welfare needs a radical rethink to address inequity in the system.

 

The neoliberal ‘project’ espouses values of:

 

Individual freedom.

Personal responsibility.

Liberty.

 

These are hooray words that we can all sign up to, and explains why neoliberal politics have been so successful, for who can be against liberty, individual freedom and personal responsibility? The economic policies to deliver these values include privatisation, free markets and free trade. Economic theorists, such as Hayek and Friedman, and their political followers Reagan and Thatcher (Clinton, Blair/Brown) have won the day.

 

However, much of the emphasis on freedom and liberty is espoused theory whereby freedom is applied much more forcefully for Capital while Labour is asked to exercise personal responsibility. Capital needs the freedom to go where the profits are and will invent new mechanisms to get around any barriers to this free movement. Labour is exhorted to take more and more individual responsibility for its own education, health and social welfare, and to keep pay demands down. The third sector and the ‘big society’ function to provide essential welfare needs within a framework of non state intervention as free organisations focused on individual liberties, the individual’s needs and wants which (it is argued) are best often expressed through the market. Freedom in this context is also freedom from state regulation on all market transactions. The Tea Party republicans in the United States best exemplify where this thinking may lead.

 

However, this is actually class politics dressed up as rational economic activity to encourage freedom and prosperity for all while in reality it impoverishes many.  Thus, this approach legitimises policies that have restored and consolidated capitalist class power since the 1970’s. It is ‘lipstick on a pig’.

 

Paradoxically, actual practice by global capital elites fly in face of their espoused theory. The theory argues for freedom from regulation and state intervention but not when it comes to the results of systemic financial risk. This has resulted in the perverse situation whereby support for the financial sector is based on privatising profit but socialising risk. Thus personal responsibility is not extended to actions at the macro level as finance capital is too big to fail and too big to be responsible to anyone. No one, not even the nation state can call the markets to account. Attempts to regulate and control new financial instruments such as negative credit default swaps have met with failure. Nations such as Italy and Greece have to bow down to the markets or face default and market exclusion. The United States faces a real risk (unusually) of defaulting on its debt, and if the political classes do not agree a lift on the debt ceiling, the bond markets will force measures on the US government by making credit more expensive imposing a cost to the US taxpayer. ‘Freedom’ also has a mixed meaning. It means freedom to make profit but not freedom from want, unemployment and insecurity.

 

The political ideology masking this process also ignores the driving mechanism underpinning the whole process, a mechanism which was overlooked (and continues to be overlooked) by most of the world’s leading economists who were then unable to spot the looming problem. This key mechanism is the capital surplus absorption problem – i.e.profits produce a capital surplus which has to recapitalize and be reinvested or face devaluation. New avenues for profit have to be found. If this does not happen then recession arises. This results in the failure to make a profit, and a rise in unemployment.

 

TheCapitalist class has been historically very successful in reinvesting the surplus. In recent times global GDP doubled between 2000 and 2008 going from $30 trillion to $60 trillion (not adjusted for inflation) dropping since the crash to $58 trillion in 2009 (see Global GDP ). Questions you may wish to ponder: who has benefited from this doubling? Who owns the wealth, who has the lion’s share of income? You may wish to ponder on the question of ‘affordability’ of pensions – this is not about quantity of capital it is about distribution and who controls that distribution.

 

Related to this mechanism is that a healthy rate of growth is 3%, anything less is seen as sluggish and once below 1% recession looms. Throughout history, and evening out the highs and lows, the actual rate has been about 2.25%. Barriers exist to this mechanism which periodically produce a crisis for capital. These barriers include material and labour shortages (for example based on restrictive labour practices or ageing populations).  Growth at 3% faces environmental, spatial, market and profitability constraints which have to resolved, or got around, to continue the growth.

 

The current crisis is a result of the world being awash with surplus liquidity needing a home for 3% compound growth.  Capital’s move to financialisation was a way of solving the 3% compound growth problem but meant obfuscation of capital movements and the construction of complex financial products that few could understand. Thus the answer (finance capital) to the driving mechanism resulted in systemic risk which was solved (temporarily) by the bad boys of neoliberal theory: the state.

 

Social democratic states have not been immune to this process. When they were in power, parties of the centre left kept in check the outcomes of neoliberalism  but they failed to address this underlying logic of capital accumulation. The defeat of social democracy (e.g. Labour becoming (neoliberal) New Labour) merely paved the way for neoliberalism to be given its head, freeing up finance capital even more.

 

Now, asking for morality to be brought into the market or for tougher regulation will not address the underlying mechanism at play. Surplus capital is still in the financial game, still trading in complex products bringing huge profits for finance capitalists while austerity measures and ‘structural readjustment’ is called for everyone else. Surplus capital has to have a home for at least 3% growth, and is therefore still driving financial innovations giving fantastic returns but not to those who need it.

 

Why should nurses give a damn about any of this? Their job is to promote health, help heal the sick and assist with dignity in death. These issues may be a world away from the hospital bed and treating a patient who has septic shock involves a completely different skill set and knowledge base. However, nurses are citizens and as citizens they will be affected by wider social and economic processes that will impact on them, their workplace and their clients/patients. As a potential powerful and numerous semi-professional group they have a moral obligation to lay bare the social determinants of health and to hold power to account for the health and welfare of populations.

 

While we have a political system that refuses to address this structural mechanism we will not be able to come up with an answer that provides an economy that works for all of us. The lack of even a debate or a discussion on this question does not bode well.

 

Anyway, this may well be wrong but it is worth examining as so far no current solution is even coming close.

 

See David Harvey: View his full lecture at the RSA.

 

Harvey, D. (2011) The Enigma of Capital and the crises of capitalism. Profile. London

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