There have been great points in this debate (notably Allan's and
David's), yet still it leaves me totally unsatisfied. I'm amazed how no
one seems to care about the history of ideas, and with all due respect
there's no way I can accept Florian's claim that ultimately,
neoliberalism is what people think it is -- in other words, it's some
kind of popular meme. No, it has a long and complex history with
diverging and reconnecting strands that can be excavated, reconstructed,
examined and evaluated. History matters and the devil is in the details.
We know that Ordoliberalism emerged in reaction to the crisis of
classical liberalism in the 1930s (and especially, in the Weimar
Republic) and we know it was based on the refusal of Keynesianism as a
solution. One of the leading Ordos, Rustow, coins the term
"neoliberalism" at the Walter Lippmann Colloquium in 1938. All the
leading figures of the school subsequently join Hayek's Mont Pelerin
Society. It is generally known (but apparently not accepted on this
list) that for the Ordos in the late 1940s and early 1950s, the concept
of the "social market society" was a conciliatory strategy to overcome
Keynesian demand-oriented policies and socialist panning in favor of a
strong moralizing state enforcing competition as a bedrock principle. As
Rustow declared in 1953: "the only consequent, properly thought-out,
unified and independent program of economic policy from our side known
to me is the one of so-called neoliberalism or ‘Social Market Economy,’
according to the fortunate coining of my colleague Müller-Armack who has
just recently been appointed to the Federal Ministry of Economics"
(quoted by Ralf Ptak in Mirowski's edited volume "The Road to Mont
Pelerin," p. 102). As in all the variants of neoliberalism, the
enforcement part was the key: the modern bureaucratic state had to be
recognized as a major actor, then theoretically remodeled to serve
rather than counter market ends.
All of that was a long time ago, and there is no way to reduce the
complexity of a large country's development to a few old theory books.
Definitely the social market society has been a distinct political
economy, centered around the ideals of full employment, state support
for industry and generous welfare benefits. No one would care at all
about defining what Ordoliberalism is or how it compares to
Anglo-American neoliberalism, if it were not the case that a continuing
Ordo tradition in government all the way up to Schauble and therefore
Merkel herself is behind current German austerity policies, based on
repugnance toward unpayed debts and fear of inflation. To convince
yourself of the damage that old theory can do in new times, just search
"Ordoliberalism today" and read for an hour or so. What you will find
(but everyone knows this, we discussed it at length in 2014) is that
while the rest of the so-called Western world including Japan has turned
to a kind of financialized Keynesianism, pumping newly minted money into
the banks and asset markets rather than into infrastructure programs and
people's pockets, Germany has pursued a policy that aims at slashing
welfare benefits, not so much within the country (that was done to a
great extent by Shroeder/Harz in the early 2000s) but rather in southern
Europe. In this respect, Merkel's Germany is most comparable to Ronald
Reagan's USA. In both cases a hugely unpopular and socially destructive
monetary policy (extraordinarily high interest rates in Reagan's case)
was imposed in a bid to end a crisis, restore competitiveness and
institute a new principle of authority. With their policy, Reagan and
Volcker (his central banker) ignited a giant new growth wave in the
world economy. Will Merkel/Schauble do the same? I think we already know
the answer. No. What they have done is to help prove that no variant of
neoliberalism has a response to the ongoing major crisis of capitalism.
If you want more proof, look around you: the global lurch toward
rightwing populism is gathering steam in country after country.
Neoliberalism in all its variants is about the regulation of the economy
and of society as a whole according to market accounting of profit or
loss on invested capital. Accounting means what it says: price and
volume of exchange are the two crucial pieces of information. More
competition = greater speed and efficiency = more volume = higher profit
= lower prices. Globalization and just-in-time logistics derive from
these principles. State remodeling of educational, health and cultural
systems, the financialization of money by central banks, and the
military imposition of corporate rights to exploit resources anywhere
across the globe are the complements that a strong moralizing state can
bring to the neoliberal program (that's the "neocon" side of it). But
the neoliberal program does not work. The neoliberal program has in fact
collapsed. One of the results, but far from the only one, is that the
flagship neoliberal society, the USA, has become politically ungovernable.
In the middle of the major crisis of capitalism to which both
Keynesianism and neoliberalism responded, Karl Polanyi wrote this:
"Our thesis is that the idea of a self-adjusting market implied a stark
utopia. Such an institution could not exist for any length of time
without annihilating the human and natural substance of society; it
would have physically destroyed man and transformed his surroundings
into a wilderness."
Today this statement can be intuitively recognized as a literal
description of the facts. Greek society is devastated by austerity.
Resource grabs by the US have given way to chaotic civil wars in Iraq,
Syria, Pakistan and Afghanistan. India and China are both threatened by
industrial pollution on unprecedented scales. No one knows if Russian
society will withstand the condition of near bankruptcy brought by the
global depression. And the earth system itself is now signaling that its
limits (the planetary boundaries) have been breached by industrial
acceleration combined with overall population growth. All of the above
are negative externalities, left off the books by neoliberal accounting.
Yet deadly real, clearly perceptible, and they are now foremost in
everyone's minds, hearts and dark imaginations. These factors produce
the gnawing fear driving the populist turn to authoritarianism. So what
is to be done? I agree with Alex, that's the question, that's the urgency.
Notice the conditional tense in the quote above: capitalism "would" have
destroyed humanity -- if not for what you may ask? Polanyi's claim is
that we have never been capitalist (much less neoliberal). Because of
the radically devastating effects of the self-regulating market, in his
view social reforms and correctives to market rule will always somehow
arise, for better and worse (the worst being racist fascism, conceived
as an exclusionary response to economic crisis). Society, according to
Polanyi, continually tries to protect itself from capitalism. I think
the world panorama now reveals many varieties of elite and grassroots
attemps at social self-protection, from central bank money-pumping to
interventionist infrastructure-building programs in China to populist
demands for closed borders and trade barriers to vast global movements
for climate justice. None of these programs is as yet in any way
promising, because no one is stating the enormity of the threat or the
radicality of the transformations required to meet it. The continuing
intellectual bankruptcy of the present is a lot worse than the momentary
financial hiccup of 2008.
Rather than a market state we need an ecological state. Obviously that
implies a reorganization of energy production and consumption
(considering that all consumption of goods and services is
simultaneously, inextricably, energy consumption). But it also implies a
social ecology of regional co-development, as opposed to the predatory
labor- and resource-grabbing imperialism that marked the neoliberal era.
Furthermore, as Guattari or Bateson would have said, we need, not a
moralizing authoritarianism, but a psychic ecology able to turn
sensitivity, vulnerability and codependence into fundamental ethical
guidelines for political conduct. When Eucken, Rustow, Ropke and the
others formulated their miserable Ordoliberal precepts in the '30s and
'40s, they tried to turn concerns of a similar nature into quantifiable
and calculable programs for social development, as the Keynesians around
them also tried to do, and as the Friedmanites later did with
considerably more success. No vague "spiritual renewal" is going to
replace that kind of work today. Societies are not changed by mumbling
or dreaming. We need an ecological aesthetics expressed in art, a
coevolutionary vision elaborated in philosophy and a social mathematics
built out into machines that can help reshape the behavior of
populations overstepping the planetary boundaries. And we need a
state-form to institute such sweeping transformations. No leader or
resurrected ideology is going to generate any of that. This is a
tremendous challenge that can give meaning to lives degraded by
nihilistic individualism. The awakening from neoliberalism is a
once-in-a-lifetime chance, take it or leave it. Either educated people
(including the huge ranks of self-educated ones) finally realize this is
a major systemic crisis and start working on middle and long-term
solutions, or Polanyi will be proven wrong: the dangerous mirage of the
self-regulating market *will* have physically destroyed humanity and
transformed our surroundings into a wilderness.
I prefer not to. Let's start transforming our society, which means our
damaged global ecology.
Brian
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