Brian Holmes on Sat, 23 Apr 2016 22:16:43 +0200 (CEST)

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Re: <nettime> Guardian > Monbiot > Neoliberalism -- the ideology at

It is rather astounding to me - a token of the profound laziness and irresponsibility of contemporary intellectuals - that people still be in doubt or even in complete ignorance as to what neoliberalism is, how it has developed, what its major doctrinal differences have been, how its theory has been made into practice, the role of technology, of the financial markets, of the military, etc. THIS IS YOUR LIFE, FOLKS. It's also your death due to climate change. Maybe study up a little? Maybe produce some arguments that can help others?

If you are too busy with your job or you don't like concepts (there are other ways of dealing with society, for sure) then just don't bother with the below. It is long, but fascinating for those who care about how are societies are governed.

I highly recommend Philip Mirowski's book Cyborg Economics as well as the subsequent edited volume on the "neoliberal thought collective." The latter came AFTER Mirowski had read Foucault's The Birth of Biopolitics (Sorbonne course in 1978-79/ English publication in 2008).The new clarity of Mirowski's thought after this encounter speaks volumes about the importance of Foucault's analysis. For Foucault, capitalism is not a single, essentially unified system bearing essential contradictions, as the classical Marxists still think. Rather, it is a thoroughly political process and therefore it is susceptible of reformulation at each turning point or crisis. Now, you can respond like the Regulation school or even Deleuze and Guattari, and say that capitalism continually changes certain axiomatic propositions, in order that its major principle of endless accumulation through labor exploitation can continue. That's what I think. But such a statement still demands that one understand each new bundle of axioms, with its inner variations and their political origins, as well as their specific consequences. I don't see any other way to confront neoliberalism. It is so powerful that most of what we think stands against it - especially, most anarchism - is merely subsumed beneath it. In the 70's, emergent US neoliberalism was often called "anarcho-capitalism." Let's look at some of Foucault's central arguments about the Freiburg school of German Ordoliberalism, and then maybe we can discuss it all much better.

To begin, Foucault explores the background of the German "social market state" that emerged against heavy contestation from the left, who obviously wanted a socialist state, not a social market one:

"In 1955, Karl Schiller, who will later become Minister of the Economy and Finance in federal Germany, writes a book that will cause a big stir since it bears the significant title Socialism and Competition, that is to say, not socialism or competition, but socialism and competition. I don't know if he states it for the first time in this book, but anyway he gives the greatest publicity to what will become the formula of German socialism: "as much competition as possible and as much planning as necessary." This is in 1955. In 1959, at the Bad Godesberg congress, German social democracy first renounced the principle of transition to the socialization of the means of production and, secondly and correlatively, recognized that not only was private ownership of the means of production perfectly legitimate, but that it had a right to state protection and encouragement. That is to say, one of the state's essential and basic tasks is to protect not only private property in general, but private property in the means of production, with the condition, adds the motion of the congress, of compatibility with "an equitable social order." Finally, third, the congress approved the principle of a market economy, here again with the restriction, wherever "the conditions of genuine competition prevail."

Foucault's point here is that yes, we have a social market state in contemporary Germany, but its aim is primarily to plan for the marketization of society, and not for the socialization of the economy. In other words, this is a political strategy for running a neoliberal economy under conditions where there is a strong push for socialism. How to argue for this plan? and how to implement it? Let's start with the argumentation, which turns mainly around the ordoliberal quest for a rule of law utterly distinct from Nazi authoritarianism:

"The search for a Rule of law in the economic order ... was directed at all the forms of legal intervention in the economic order that states, and democratic states even more than others, were practicing at this time, namely the legal economic intervention of the state in the American New Deal and, in the following years, in the English type of planning. What does applying the principle of the Rule of law in the economic order mean? Roughly, I think it means that the state can make legal interventions in the economic order only if these legal interventions take the form solely of the introduction of formal principles. There can only be formal economic legislation. This is the principle of the Rule of law in the economic order. What does it mean to say that legal interventions have to be formal? I think Hayek, in The Constitution of Liberty, best defines what should be understood by the application of the principles of l'Etat de droit, or of the Rule of law, in the economic order. Basically, Hayek says, it is very simple. The Rule of law, or formal economic legislation, is quite simply the opposite of a plan.
[snip - and then the very interesting part] ...

"In short, both for the state and for individuals, the economy must be a game: a set of regulated activities.. but in which the rules are not decisions which someone takes for others. It is a set of rules which determine the way in which each must play a game whose outcome is not known by anyone. The economy is a game and the legal institution which frames the economy should be thought of as the rules of the game. The Rule of law and l'Etat de droit formalize the action of government as a provider of rules for an economic game in which the only players, the only real agents, must be individuals, or let's say, if you like, enterprises. The general form taken by the institutional framework in a renewed capitalism should be a game of enterprises regulated internally by a juridical-institutional framework guaranteed by the state. It is a rule of the economic game and not a purposeful economic-social control."

This idea that the state should be run as a rule-of-law-governed game is so close to hacker ideas about transparency and equal access and open-source code watched over by civil society and so forth, that you have to suspect that they read Hayek - and of course, the libertarians who are responsible for so much anarcho-hacker ideology DID read Hayek, he was one of their sources. Is that not curious? Maybe worth thinking about? What would a pure rule-of-law society be like? Well, in my view, you would have to specify, not only which laws, but how are they oriented. What is their goal, their telos? What kind of society and what kind of cosmos does it construct?

Foucault's argument comes to a kind of high point, for me anyway, when he describes how the emergent ordoliberal principles (ie the German variant of neoliberalism) were applied to the problem of how to found a postwar German state. It was not an easy problem, because any reference to the previous state was simply impossible. So here are some long excerpts from Foucault:

"The problem posed to Germany in 1945, or more precisely in 1948... was: given a state that does not exist, if I can put it like that, and given the task of giving existence to a state, how can you legitimize this state in advance as it were? How can you make it acceptable on the basis of an economic freedom which will both ensure its limitation and enable it to exist at the same time? This was the problem, the question that I tried to outline last week and which constitutes, if you like, the historically and politically first objective of neo-liberalism. I would now like to try to examine the answer more closely. How can economic freedom be the state's foundation and limitation at the same time, its guarantee and security? Clearly, this calls for the re-elaboration of some of the basic elements of liberal doctrine -- not so much in the economic theory of liberalism as in liberalism as an art of government or, if you like, as a doctrine of government."

[snip- over several pages Foucault analyzes all the things that the ordoliberals found unbearable in Nazism, which they traced back, not to capitalism, but to the authoritarian planner-state. Then he continues:]

"The essential thing is the conclusion the ordoliberals drew from this series of analyses, namely: since Nazism shows that the defects and destructive effects traditionally attributed to the market economy should instead be attributed to the state and its intrinsic defects and specific rationality, then the analyses must be completely overturned. Our question should not be: Given a relatively free market economy, how should the state limit it so as to minimize its harmful effects? We should reason completely differently and say: Nothing proves that the market economy is intrinsically defective since everything attributed to it as a defect and as the effect of its defectiveness should really be attributed to the state. So, let's do the opposite and demand even more from the market economy than was demanded from it in the eighteenth century. In the eighteenth century the market was called upon to say to the state: Beyond such and such a limit, regarding such and such a question, and starting at the borders of such and such a domain, you will no longer intervene. This is not enough, the ordoliberals say. Since it turns out that the state is the bearer of intrinsic defects, and there is no proof that the market economy has these defects, let's ask the market economy itself to be the principle, not of the state's limitation, but of its internal regulation from start to finish of its existence and action. In other words, instead of accepting a free market defined by the state and kept as it were under state supervision--which was, in a way, the initial formula of liberalism: let us establish a space of economic freedom and let us circumscribe it by a state that will supervise it--the ordoliberals say we should completely turn the formula around and adopt the free market as organizing and regulating principle of the state, from the start of its existence up to the last form of its interventions. In other words: a state under the supervision of the market rather than a market supervised by the state."

"I think this idea of a legitimizing foundation of the state on the guaranteed exercise of an economic freedom is important. Of course, we must take up this idea and its formulation in the precise context in which it appears, and straightaway it is easy to see tactical and strategic shrewdness. It was a matter of finding a juridical expedient in order to ask from an economic regime what could not be directly asked from constitutional law, or from international law, or even quite simply from the political partners. Even more precisely, it was an artful move with regard to both the Americans and Europe, since by guaranteeing economic freedom to a Germany in the process of reconstruction and prior to any state apparatus, the Americans, and let's say different American lobbies were assured that they could have the free relationships that they could choose with this German industry and economy. Secondly, both Western and Eastern Europe were reassured by ensuring that the institutional embryo being formed presented absolutely none of the dangers of the strong or totalitarian state they had experienced in the previous years. But beyond these immediate tactical imperatives, and beyond the immediate context and situation of 1948, I think there was the formulation in this discourse of something which will remain a fundamental feature of contemporary German governmentality*: we should not think that economic activity in contemporary Germany, that is to say, for thirty years, from 1948 until today, has been only one branch of the nation's activity. We should not think that good economic management has had no other effect and no other foreseen and calculated end than that of securing the prosperity of all and each. In fact, in contemporary Germany, the economy, economic development and economic growth, produces sovereignty; it produces political sovereignty through the institution and institutional game that, precisely, makes this economy work. The economy produces legitimacy for the state that is its guarantor. In other words, the economy creates public law, and this is an absolutely important phenomenon, which is not entirely unique in history to be sure, but is nonetheless a quite singular phenomenon in our times. In contemporary Germany there is a circuit going constantly from the economic institution to the state; and if there is an inverse circuit going from the state to the economic institution, it should not be forgotten that the element that comes first in this kind of siphon is the economic institution. There is a permanent genesis, a permanent genealogy of the state from the economic institution. And even this is not saying enough, for the economy does not only bring a juridical structure or legal legitimization to a German state that history had just debarred. This economic institution, the economic freedom that from the start it is the role of this institution to guarantee and maintain, produces something even more real, concrete, and immediate than a legal legitimization; it produces a permanent consensus of all those who may appear as agents within these economic processes, as investors, workers, employers, and trade unions. All these economic partners produce a consensus, which is a political consensus, inasmuch as they accept this economic game of freedom."

[end of quotes]


Neoliberal capitalism takes the form of a state supervised by the market, where the primary reference, and, as it were, the permanent referendum founding the legitimacy of the market state is society's expression of its preferences through buying and selling, as signaled by prices. The volume of exchanges along with price discovery and the gradual emergence of a "just price" for each type of product tells the state not only what people value, but also, what is the most efficient way to produce what people value. Every move of the state that furthers the cheaper production of whatever people value is therefore legitimate in neoliberal politics and foundational for neoliberal society. That is the foundation of the ordoliberal state through a pure reference to the market. So, why did Germany veer away from being a society oriented toward labor unions, social welfare and complete inclusion, to gradually become the society that promotes unequual competition and savage inequality on a European scale? And why is there such a broad consensus around that transformation within Germany itself? Why has the German government been so *legitimate* throughout the years of the current crisis? The answer is that neoliberalism in general, and ordoliberalism in particular, was and remains a political technique, an art of governing, specifically designed to effect the transformation from socialist principles (or indeed, national-socialist principles) to market principles of the kind outlined by Hayek and later by Milton Friedman. A similar thing was done, somewhat differently in each case, in the US, the UK, Chile, China, and countless other countries. Germany, not the US, may have been the pioneer. But Germany was, of course, under relatively strong American influence in 1948! Hayek himself, one may recall, was Austrian.

There are things one can only learn through a bit of hard work. I would recommend reading the Birth of Biopower, twice or three times. It is not like Foucault's other books. It is full of lengthy analyses of political-science details drawn from both the pre- and post-war experience on both sides of the Atlantic. Unfortunately Foucault conducted no further investigation along these lines. Without any way of knowing, I suspect that he was so awed and frightened by the capacity of neoliberalism to do exactly what he had been calling for - namely, a Nietzschean transvaluation of all values - that he felt compelled to begin his own exemplary Nietzschean self-transformation through the return to and reworking of the subjectivizing discourses of Antiquity. That was, imho, a big mistake. Had he pursued his analyses and made them public in an authored book, rather than a seminar that was only released in French in 2004, an entire generation would have had a philosopher's analysis of neoliberalism to go on. Well, we have it since 2008 in English, and perhaps it can help us to clear the rubble of a collapsing neoliberalism and chart out the possibilities of new forms of government (and perhaps indeed, of new, more useful variants of capitalism or of socialism) in order to face the terrible challenges that climate change and its attendant social chaos are already bringing.


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