State neoliberalism

Carlos Zilio, ESTUDO, 1970, felt-tip pen on paper, 47x32,5 (5)


Hayek said "to prefer a liberal dictator to a democratic government that lacks liberalism"

Nothing better shows what neoliberalism is than the attitude of one of its most famous intellectuals to the bloodthirsty dictatorship of Augusto Pinochet in Chile. Referring to the embattled despot, Hayek said "I prefer a liberal dictator to a democratic government lacking in liberalism." What is implied in this cynical assertion, which disconnects liberalism from democracy and circumstantially reconnects it to dictatorship even in its most brutal and violent form? An uncompromising defense of capitalism, of the rights of capital, certainly. But to understand it better, it is necessary to go beyond its ideological appearance, thus going through its libertarian envelope to reach its core, which is very totalitarian.

If for Adam Smith, a classical liberal, the economic system is a natural order, for Friedrich Hayek, a hero of neoliberalism, this system consists of a moral order that needs to be preserved because, according to him, it subsists as the first source of civilization and of freedom.1 This second author therefore considers that the market process is existentially fragile and that it is always in danger; behold, he can even be mortally wounded by forces that thrive spontaneously in society itself. For it is constantly threatened either by demands for social justice – which originate from workers in general – or by nationalist pretensions – which thrive among the least capable capitalists of a given nation.

It must be seen that Hayek understood socialism in a very broad way: behold, it results from all political positions that seek to achieve social justice through the State. Faced with such aspirations, he argued that it was necessary to reconfigure the State itself in order to make it inaccessible or even opposed to all particularist demands. Here, national states must be protected from these two aspirations if they are to become guarantors of the general, non-discretionary conditions within which markets can thrive. And he made this very clear in his writings: “A true market economy – he wrote in Law, Legislation and Liberty – presupposes that government, the social apparatus of compulsion and coercion, strives to preserve the functioning of the market system, refrains from obstructing it, and protects it against undue intrusion. from anyone who wants to contradict him”.

It should already be noted at this point in the exposition that the “market economy” is the ideological denomination of the “logic of capital”, that is, of the feedback process through which capital is transformed into more capital in the production of goods, through the exploitation of wage labor. Neoliberalism is thus configured as a defense of capital accumulation without the obstacles that may arise from the demands of social forces that appeal to the State – not because neoliberals despise these demands as such, but because they judge that they distort the results. of the market process, of the competition of capitals, thus weakening the impetus of capitalism.

It is therefore a very common mistake to think that neoliberalism in general defends the laissez-faire, the deregulation of markets, in short, their free operation. It is also a mistake to believe that he advocates a minimal State or a State that is absent to allow the unimpeded evolution of the forces of supply and demand that are born from the competition of producers and consumers. It is still not true that neoliberalism is based on utilitarian anthropology, assuming that man is a unidimensional being centered on his self-interest and that he acts in society following a principle of maximization. All this fails to understand that neoliberalism is an ideology of capital, not of the rise or peak, but of the sunset of capitalism.

To criticize this type of understanding and to present a more faithful portrait of this current of economic and political thought, Quinn Slobodian wrote the three hundred pages of a book whose title, translated, would read like this: Globalists – The End of Empire and the Birth of Neoliberalism.2 Here is how he himself saw his task as a historian of ideas who devoted himself with talent and effort to developing a critical presentation of this current of thought:

My narrative corrects this plot. It shows that neoliberals as such do not believe that markets are self-regulating and autonomous entities. They do not see capitalism and democracy as synonymous. They do not see humans as beings moved only by economic rationality. They seek neither the disappearance of the State nor the elimination of national borders. Don't see the world only through the lens of the maximizing individual.

Unexpectedly for many, Slobodian intends to show in this book that neoliberalism is founded on a perception that is common to John Maynard Keynes and Karl Polanyi. According to this more general understanding, markets are embedded in a network of institutions on which they depend to function and develop. However, neoliberalism disagrees with these two authors about what the system of norms must shelter so that capitalism can prosper without being challenged: not workers, nor individual capitalists, but the markets themselves, that is, the competition of capitals. Its objective does not consist in isolating the economic system, but in building an institutional superstructure that defends it from all those who want – in its reading – to progress through the protection of the State.

Considering Keynes and Polanyi as authors associated with social democracy and, as such, supposedly friendly enemies of capitalism, since they would like it to be more egalitarian and more welcoming, neoliberals strive to think and elaborate institutions that actually guarantee the subsistence of this economic system in the evolution of contemporary history. Instead of the free market, they advocate the creation of a formal and informal normative system of rules that enclose, fit and cover the markets, in such a way as to preserve them from the particularist tendencies allowed by the exercise of formal democracy. These come either from the search for better income distribution or from the demand for restrictions on foreign capital placed, respectively, by social movements and economic nationalism.

To this end, neoliberals in general also want to shape the subjectivity of all social subjects in order to make them competitive people who take responsibility for themselves as such. For them, human beings must see themselves above all as human capital or as a company. At first glance, they seem to defend freedom, but what they really defend is the subordination of human beings to the logic of reproduction of capital.

All this figures in Slobodian's text. Better circumscribing his object of study, he will focus in this book on the School of Geneva of Friedrich Hayek, but also of Ludwig Mises, Wilhelm Röpke, Lionel Robbins and Gottfried Haberler, among others.3 Behold, this current rises as the most coherent and thus offers itself for a radiographic study of neoliberalism. And this one will come across as intrinsically globalist.

These authors thought of man in an abstract way, not as a worker or capitalist, but also not as a homo economicus. This abstraction figures in the utilitarian tradition that dominates the field of political economy transformed, through an ideological operation, since the last quarter of the XNUMXth century, into positive science. According to Slobodian, neoliberalism thinks of man as homoregularis, that is, as a being that has needs, that follows rules of survival and that uses the signals provided by the markets to make decisions. According to Hayek, these practical rules evolved, were created, transmitted and selected, spontaneously, in the development of society.

Prices, in this sense, appear as clues to a discovery process that evolves and that has no time to end. Behold, for Hayek, for example, man does not maximize utility or pecuniary gain, but his chance of survival in the social environment, which is uncertain and capricious. In this perspective, the market in general is reified as an informational or cybernetic machine, more intelligent than man himself in the ability to allocate scarce resources between alternative ends; human beings, consequently, must use it to achieve their goals, without harming it or even sabotaging its functioning.

In the words of the author of the review reviewed here, the neoliberals of the School of Geneva see the market entity as a sublime institution. Consequently, they demote man to a mere profiteer of this gift of the spontaneous development of society, the complex adaptive system that they also call “great society”. They do not say that social justice is not desirable, they just say that it is a mirage. For them, the economic system of capital cannot be modified to achieve this objective because, in the last analysis, it is unknowable in its details and in its anarchic functioning. Despite this, according to them, this system is capable of virtuous self-organization. It generates order through disorder, through a teleonomy ungraspable as such by human reason. Through this argument, it is obvious, they obstruct any limitation to the insatiable logic of the capital relation.

Many authors consider that this current originated in the Walter Lippmann Colloquium, which, in 1938, brought together in Paris a wide range of economists, sociologists, capitalist entrepreneurs, etc. with the aim of renewing liberalism. Others prefer to point to the creation, in 1947, of the Mont Pelerin Society as the starting point for the constitution of neoliberal ideology as a more or less coherent body of ideas. Slobodian, in a different way, believes that it emerges as a reaction, already in the 1920s, to the decolonization process that took place after the end of the First World War.

As is known, new independent nations were born that wanted their own development and, for that, they intended to use the State as an inducer of industrialization and material progress. Since then, its deepest purpose has always been to create a global governance that would replace collapsing empires and recreate new forms of governance, now through the generalization of social practices inherent to markets.

Thus, the most important current of neoliberalism never intended, as judged by those who start from Karl Polanyi's theses in the great transformation, freeing businesses from State regulation, establishing a regime of free markets in which they self-regulate. On the contrary, they advocated the formulation and construction of national and international institutions in which the markets would be well embedded and sheltered from interventions that intended to shape them to achieve national or redistributive objectives.

The neoliberal position in the world context always intended to contradict the principle of self-determination of peoples, which had become central with the decline of colonialism. To nationalism, he opposed a mercantile internationalism that was to be enforced through legislation and appropriate transnational organizations: the invisible hand of the market was to be ordered and guided by the visible arm of properly established institutions.

Slobodian shows in his text that there is an important theoretical key to understanding globalist neoliberalism. And that this key is found in the work of the Nazi jurist Carl Schmitt. This author proposed that the understanding of the constitutive order of modern society had to be divided into imperium domain. By the first of these two Roman terms, he understood national states, territorially limited, in which constituted authorities governed and commanded the lives of peoples. By the second, he apprehended the distribution of the world through private property, an area in which merchandise, money and capital dominated.

Contrary to an integrative vision, it was convenient that these two orders did not coincide and did not always converge towards the same objectives. Economic activities, investments in production and investments of financial capital constantly tend to go beyond the purposes of the Nation-State. If the order of imperium firm when turning inwards, the order of the domain, on the contrary, creates a transnational sphere that negates states to a certain extent and brings into existence a globalized economic system. This duality, therefore, creates a permanent tension for governments and even for citizens within national states.

Schmitt, according to Slobodian, for this very reason, saw this duplicity as problematic since the order formed by the domain prevented the full exercise of sovereignty within nations. Globalist neoliberals, on the other hand, saw it as virtuous because they believed that world markets could limit state power within countries, and should even be seen as the matrix of a liberal order that encompasses all nations.

The limitation of national sovereignty was thus well regarded by such theorists; but they also believed that it would be necessary to institute a constitutional order in the nations themselves that would clearly and firmly demarcate the public expectation from the private sphere. Thus, part of the sovereignty abdicated by national states would be allocated to a higher political sphere that would transcend the geographic units of independent nations. These theorists not only elaborated abstract doctrines, but also, as Slobodian shows, engaged in institutional practice to mold international organizations according to such principles, such as the UN, the WTO, etc.

As was implied in the first paragraph of this note, neoliberalism – which should now be described as globalist – prefers democracy to dictatorship, as long as the former does not impede the proper functioning of capitalism. Here, he sees fascist or extremist dictatorships as possible threats because, for reasons associated with the legitimation of discretionary power, they can also undermine the institutional conditions – the non-particularist general norms – for the free functioning of markets. They see them as populisms that end up promoting a delusional patriotism that separates friends from enemies, internal and external, regardless of the merit obtained in the competition process. As has already been said, for them, the mercantile economic system is a master to which human beings have to submit and learn from him.

Faced with this dilemma – democracy is convenient, but it can weaken the mercantile order – globalist neoliberals prefer a constrained democracy that is impotent as a means of obtaining better living conditions and social protection for wage earners, formal or precarious. Thus, they hope that the order established by capital will gain legitimacy through competitive success and economic growth. It is therefore quite clear that neoliberalism in general does not consider democracy as a value in itself, a superior value; on the contrary, they always see it as capable of supporting non-discretionary power and, at the same time, as an instrument for legitimizing capitalist domination.

However, if robust economic growth does not come – and it has been falling decade after decade in central and peripheral capitalist countries (with some exceptions) –, neoliberal currents begin to flirt with authoritarianism and even with open dictatorship. Behold, the lack of growth aggravates social tensions, incites class struggles, promotes the pursuit of particularist interests. That is why an anti-globalist version of neoliberalism has emerged in various parts of the world, particularly in Brazil. It defends a xenophobic nationalism, protectionism and bilateralism in foreign trade. Internally, it intends to combine an authoritarian moral and social conservatism with competitive conduct within the markets, as cynically defended by certain corrupt bishops and the theology of prosperity.

This opportunistic version of neoliberalism further radicalizes liberalizing reforms in search of growth that refuses to appear. As a result, within nations, emerging social tensions need to be contained by more compelling means. Well, the rulers then have to manage increasing conflicts because the economic process is almost or completely stagnant. After the 2008 crisis and now, with the 2020 crisis, it has become evident that globalist neoliberalism has failed; he did not and will not deliver what he had promised within the logic of capitalism itself. But the anti-globalist neoliberalism that now intends to replace it as a form of governance also tends to fail – in fact, as is already becoming clear.

The legitimation of capitalist domination thus tends to fade away; instead of an expansion of consumerism and merely material progress, its stagnation and the worsening of the living conditions of large portions of the population supervene. In the face of its failure to create a dynamic capitalism in which many can win, the course of history can fork: either it moves towards social degradation under dictatorial conditions or a new form of sociability emerges in the course of social struggles. In any case, the very course of contemporary history is criticizing the libertarian appearance of neoliberalism, thus exposing its totalitarian character, a character that it prefers to hide under the cover of liberal democracy.

Now, there is still the question of whether neoliberalism is compatible with neofascism as it currently aligns with it in various parts of the world. The origin of neo-fascism – it is believed here – is the social disintegration that the exhaustion of capitalism is engendering micro and macro socially. As many have already said, this system now faces a structural crisis because it will not be able to overcome certain external limits associated with nature and the workforce.

As the Chilean case mentioned at the beginning of this note shows, neoliberalism is very convergent with dictatorship when it presents itself as economically liberal. Now, neo-fascism is not liberal, but, on the contrary, tends to be populist, voluntarist and interventionist. Therefore, in a preliminary hypothesis, which may indeed be refuted, it seems necessary to deny that neoliberalism and neofascism are compatible, even if they converge in the character of anti-humanism. It should be noted, however, that it is quite possible for the first to intervene in the second if the conditions of barbarism in social life are aggravated. Now, all this needs to be taken into account by a left that wants to avoid failure.

*Eleutério FS Prado is ptitular and senior professor at the Department of Economics at FEA/USP. Author, among other books, of Value excess: critique of post-big industry (Shaman)

Originally published on the website Other words


[1] See Prado, Eleutério FS – (Neo) Liberalism: from the natural order to the moral order. In: October, nº 18, 2009, p. 149-174.

[2] Slobodian, Quinn. Globalists – the end of empire and the birth of neoliberalism. HarvardUniversityPress, 2018.

[3] One can distinguish, according to them, three other schools in the field of neoliberalism: Milton Friedman's Chicago, Ordoliberalism's Freiburg, Ludwing Müller-Armack's Cologne.




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