Neoliberalism as the Agent of Capitalist Self-Destruction
By Neil Davidson
The neoliberal era can be retrospectively identified as beginning with the economic crisis of 1973, or, more precisely, with the strategic response of state managers and employers to that crisis. Previous eras in the history of capitalism have tended to close with the onset of further period of systemic crisis; 1973, for example, saw the end of the era of state capitalism which began in 1929. The neoliberal era, however, has not only survived the crisis which began in 2007, but its characteristic features are, if anything, being further extended and embedded, rather than reversed.
Yet, although neoliberalism has massively increased the wealth of the global capitalist class, has it also restored the health of the system itself? The crisis which gave rise to neoliberalism was, after all, caused by the end of the unprecedented period of growth which characterised the post-war boom, and the consequent accelerating decline in the rate of profit, unimpeded by the countervailing tendencies – above all arms spending – which had held it in check since the Second World War. These levels of growth were never resumed, but it would be wrong to claim that capitalism experienced no recovery after 1973. The boom from 1982 to 2007 was certainly uneven and punctuated by particularly sharp financial crises and recessions in 1987, 1991, 1997 and 2000; but these were normal expressions of the business cycle and only a misplaced fixation with using the unique and unrepeatable period between 1948 and 1973 as a comparator could justify treating these as symptoms of crisis. When crisis did return in 2007–8, it simply proved that neoliberalism was no more capable of permanently preventing this than any other mode of capitalist regulation.
Neoliberalism does, however, represent a paradox for capitalism. Its relative success as a ruling-class strategy, particularly in weakening the trade union movement and reducing the share of profits going to labour, has helped to disguise that some aspects of this mode of regulation are proving unintentionally detrimental to the system. Serving the interests of the rich is not the same – or at least, not always the same – as serving the interests of capital and may, in certain circumstances, be in contradiction to it. Simply doing what the rich want is unlikely to produce beneficial results for the system as a whole, although it may help increase the wealth of individual capitalists. For not only are capitalists generally uninterested in the broader social interest, which we might expect, but they are also generally incapable of correctly assessing their own overall collective class interests, which might seem more surprising – although as we shall see, it is a long-standing phenomenon, observed by many of the great social theorists from late eighteenth century onwards. As a result, capitalist states – or more precisely, their managers – have traditionally acted to make such an assessment; but in the developed West at least, neoliberal regimes are increasingly displaying an uncritical adherence to the short-term wishes of particular business interests. This is not the only emergent problem: the increasingly narrow parameters of neoliberal politics, where choice is restricted to ‘social’ rather than ‘economic’ issues, has encouraged the emergence of far-right parties, usually fixated on questions of migration, which have proved enormously divisive in working-class communities, but whose policies are in other respects by no means in the interests of capital.
The self-destructive nature of neoliberal capitalism has nothing necessarily to do with the removal of restrictions on markets. The rise of neoliberalism made it fashionable to refer to Karl Polanyi’s The Great Transformation, the assumption being that neoliberalism is in the process of realising Polanyi’s nightmare: reversing the second part of his ‘double movement’ – the social reaction against markets – and unleashing the mechanisms that he saw as being so destructive of society and nature.
Leaving aside the fact that capitalism was always capable of producing social atomisation, collective violence and environmental destruction, even in periods when the state was far more directly involved in the mechanisms of production and exchange then it is now, there are two problems with this position. First, rhetoric apart, capitalists no more favour untrammelled competition today than they did when monopolies and cartels first appeared as aspects of the emerging system in the sixteenth century. Second, one would have to be extraordinarily naïve to believe that the neoliberal project has been about establishing ‘free’ markets in the first place, although this myth has been assiduously perpetrated by social democratic parties who, eager to disguise their own capitulation to neoliberalism, emphasise their opposition to the marketisation of all social relationships, even though no-one – except perhaps the followers of Ayn Rand – seriously imagines this is either possible or desirable. In what follows I will mainly draw on the experiences of the UK and the US, since these were the first nation-states in which neoliberalism was imposed under democratic conditions – unlike Chile or China, for example – and where it has in many respects gone furthest. To understand the real nature of the difficulties inadvertently caused for capital by neoliberalism we have to begin with the role of capitalist states ‘in general’.
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