Brian Holmes on Thu, 28 Apr 2016 16:35:43 +0200 (CEST)

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

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.


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