Financial
meltdown, environmental disaster and even the rise of Donald Trump –
neoliberalism has played its part in them all. Why has the left
failed to come up with an alternative?
by George
Monbiot
PART 3
It may seem
strange that a doctrine promising choice and freedom should have been
promoted with the slogan “there is no alternative”. But, as Hayek
remarked on a visit to Pinochet’s Chile – one of the first
nations in which the programme was comprehensively applied – “my
personal preference leans toward a liberal dictatorship rather than
toward a democratic government devoid of liberalism”. The
freedom that neoliberalism offers, which sounds so beguiling when
expressed in general terms, turns out to mean freedom for the pike,
not for the minnows.
Freedom from
trade unions and collective bargaining means the freedom to suppress
wages. Freedom from regulation means the freedom to poison rivers,
endanger workers, charge iniquitous rates of interest and design
exotic financial instruments. Freedom from tax means freedom from the
distribution of wealth that lifts people out of poverty.
As Naomi
Klein documents in The Shock Doctrine, neoliberal theorists advocated
the use of crises to impose unpopular policies while people were
distracted: for example, in the aftermath of Pinochet’s coup, the
Iraq war and Hurricane Katrina, which Friedman described as “an
opportunity to radically reform the educational system” in New
Orleans.
Where
neoliberal policies cannot be imposed domestically, they are imposed
internationally, through trade treaties incorporating “investor-state
dispute settlement”: offshore tribunals in which corporations can
press for the removal of social and environmental protections. When
parliaments have voted to restrict sales of cigarettes, protect water
supplies from mining companies, freeze energy bills or prevent
pharmaceutical firms from ripping off the state, corporations have
sued, often successfully. Democracy is reduced to theatre.
Another
paradox of neoliberalism is that universal competition relies upon
universal quantification and comparison. The result is that workers,
job-seekers and public services of every kind are subject to a
pettifogging, stifling regime of assessment and monitoring, designed
to identify the winners and punish the losers. The doctrine that Von
Mises proposed would free us from the bureaucratic nightmare of
central planning has instead created one.
Neoliberalism
was not conceived as a self-serving racket, but it rapidly became
one. Economic growth has been markedly slower in the neoliberal era
(since 1980 in Britain and the US) than it was in the preceding
decades; but not for the very rich. Inequality in the distribution of
both income and wealth, after 60 years of decline, rose rapidly in
this era, due to the smashing of trade unions, tax reductions, rising
rents, privatisation and deregulation.
The
privatisation or marketisation of public services such as energy,
water, trains, health, education, roads and prisons has enabled
corporations to set up tollbooths in front of essential assets and
charge rent, either to citizens or to government, for their use. Rent
is another term for unearned income. When you pay an inflated price
for a train ticket, only part of the fare compensates the operators
for the money they spend on fuel, wages, rolling stock and other
outlays. The rest reflects the fact that they have you over a barrel.
Those who
own and run the UK’s privatised or semi-privatised services make
stupendous fortunes by investing little and charging much. In Russia
and India, oligarchs acquired state assets through firesales. In
Mexico, Carlos Slim was granted control of almost all landline and
mobile phone services and soon became the world’s richest man.
Financialisation,
as Andrew Sayer notes in Why We Can’t Afford the Rich, has had a
similar impact. “Like rent,” he argues, “interest is ...
unearned income that accrues without any effort”. As the poor
become poorer and the rich become richer, the rich acquire increasing
control over another crucial asset: money. Interest payments,
overwhelmingly, are a transfer of money from the poor to the rich. As
property prices and the withdrawal of state funding load people with
debt (think of the switch from student grants to student loans), the
banks and their executives clean up.
Sayer argues
that the past four decades have been characterised by a transfer of
wealth not only from the poor to the rich, but within the ranks of
the wealthy: from those who make their money by producing new goods
or services to those who make their money by controlling existing
assets and harvesting rent, interest or capital gains. Earned income
has been supplanted by unearned income.
Neoliberal
policies are everywhere beset by market failures. Not only are the
banks too big to fail, but so are the corporations now charged with
delivering public services. As Tony Judt pointed out in Ill Fares the
Land, Hayek forgot that vital national services cannot be allowed to
collapse, which means that competition cannot run its course.
Business takes the profits, the state keeps the risk.
The greater
the failure, the more extreme the ideology becomes. Governments use
neoliberal crises as both excuse and opportunity to cut taxes,
privatise remaining public services, rip holes in the social safety
net, deregulate corporations and re-regulate citizens. The
self-hating state now sinks its teeth into every organ of the public
sector.
Perhaps the
most dangerous impact of neoliberalism is not the economic crises it
has caused, but the political crisis. As the domain of the state is
reduced, our ability to change the course of our lives through voting
also contracts. Instead, neoliberal theory asserts, people can
exercise choice through spending. But some have more to spend than
others: in the great consumer or shareholder democracy, votes are not
equally distributed. The result is a disempowerment of the poor and
middle. As parties of the right and former left adopt similar
neoliberal policies, disempowerment turns to disenfranchisement.
Large numbers of people have been shed from politics.
Chris Hedges
remarks that “fascist movements build their base not from the
politically active but the politically inactive, the ‘losers’ who
feel, often correctly, they have no voice or role to play in the
political establishment”. When political debate no longer
speaks to us, people become responsive instead to slogans, symbols
and sensation. To the admirers of Trump, for example, facts and
arguments appear irrelevant.
Judt
explained that when the thick mesh of interactions between people and
the state has been reduced to nothing but authority and obedience,
the only remaining force that binds us is state power. The
totalitarianism Hayek feared is more likely to emerge when
governments, having lost the moral authority that arises from the
delivery of public services, are reduced to “cajoling,
threatening and ultimately coercing people to obey them”.
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