"A Brief History of Neoliberalism," Chapter 1

As I mentioned in the prefatory remarks for our reading of A Brief History of Neoliberalism, David Harvey sets out to analyze a central contradiction of neoliberalism, between the theoretical project to reorganize capitalism around and extension and intensification of property rights, free markets (especially in the financial sector) and free trade, and a political project to re-establish conducive conditions for capital accumulation and for re-entrenching elite economic power (p. 19).

Harvey argues that the theoretical side of neoliberalism primarily functions as a justification of the larger project. In fact, he calls it a "utopian" project because it is never perfectly realized (as its own proponents often say whenever a neoliberal state runs into economic trouble), but rather implemented through "a very complex process entailing multiple determinations and not a little chaos and confusion" (p. 9). Nevertheless, he argues that the redistribution of wealth to the upper classes of a given country is a consistent structural feature neoliberalism. 

The first chapter introduces both the history of the theoretical project and the political project.* As a theoretical project, neoliberalism emerged after nearly three decades on the ideological fringes as a solution to the crisis of embedded liberalism in the 1970s. Embedded liberalism-- usually called Keynsianism-- was the result of a class compromise between a strong working class and the bourgeois state, and was designed to stave off crises the crises that beset 1930s capitalism. To maintain this compromise the domestic policy of a liberal state aimed for full employment, social welfare (in health care, education, etc.) and economic growth (Harvey does not here discuss how the foreign policies of these same states sometimes involved hyper-exploitation of  the populations of colonial, post-colonial, clientele and/or lesser developed locales). Through the 1950s and 1960s embedded liberalism produced high levels of economic growth, but it was unable to resolve the crises of stagflation in the 1970s, compounded by the war in Vietnam and the OPEC oil embargo.

Neoliberalism, historically speaking and not because its era is over, was, when not implemented by military means (as in Chile or Argentina), proposed as one solution to this crisis. It had "long been lurking in the wings of public policy" (p. 19), and can be traced back to the formation of the Mont Pelerin Society in 1947, a group that seemed to view any hint of solidarity beyond meeting in exclusive clubs to be a dire threat to civilization itself. The proponents of neoliberalism did, however, possess a sense of purpose, gradually integrating the financial resources of the elite with their intellectual resources, creating think tanks, promoting their work in academia, and networking. By 1976, two neoliberal theorists-- Friedrich von Hayek and Milton Friedman-- had won Nobel prizes in economics, and by 1980 its proponents had found the sympathetic ears of Ronald Reagan and Margaret Thatcher.

Neoliberalism secured its place in public policy through an ideological process, but Harvey does not define it through its own credo. Instead, he analyzes the policy transformations that came were implemented by its proponents. I won't be rehearsing many of the details, but there are several features that define the turn to neoliberalism. First: a monetary policy "designed to quell inflation no matter what the consequences might be for employment" (p. 23). However, as Harvey argues, monetarism is a necessary but not a sufficient condition for neoliberalism (p. 24). The implementation of neoliberalism took place--takes place-- in other areas of government policy, such as  privatization and deregulation (forcing new markets open...), shifting the tax burden from the rich to the general populace, and the use of austerity measures to break down the power of social solidarity and union organization. And, most importantly, neoliberalization "has meant... the financialization of everything" (p. 33).

Where financialization has led, I've discussed before in a review of Paul Mason's Meltdown (although the review doesn't cover the 'efforts' of the IMF and WTO in enforcing austerity measures while protecting financial instruments).

Harvey;s account of financialization, unlike Mason, has a much stronger class character. I've used, like Harvey, references to the "upper class" or the "elite" instead of the classic term "bourgeoisie" because one of the features of neoliberalism is the reconfiguration of ruling class power. Along with the usual state-corporate clientelism, the rise of information technology and biotechnology, finance is at the forefront of neoliberalism. The 'financialization of everything' has transformed many Western companies from industrial producers to financial operations (like General Motors...). Harvey writes that

One substantial core of rising class power under neoliberalism lies...with the CEOs, the key operators on corporate boards, and the leaders in the financial, legal, and technical apparatuses that surround this inner sanctum of capitalist activity (p. 33).

In addition, Harvey views financialization as integral to the process and not, as many traditional and Marxists economists view it, as parasitical on real (i.e. industrial) production.

Regarding the working class, however, we largely see (described in Chapter 2) the decomposition of working class power, and disarray in the recomposition of organized resistance to neoliberalism on an international scale. This being said, not all is lost; we do know that there are consistent and local attempts to resist and refuse the exploitation of neoliberalism. The final chapter of A Brief History of Neoliberalism closes with a  general discussion of "Freedom's Prospect."

We've got several chapters to read before getting there. Over the next two chapters we will see how neoliberalism captured hegemony in intellectual, cultural, and political discourses, and how it captures and transforms the state. Through the transformation of state structures neoliberalism could establish its 'inevitability' both ideologically and structurally, "to create a legacy and a tradition that tangled subsequent politicians in a web of constraints from which they could not easily escape" (p. 63).

Later this week: Matt reading Chapter 2, and I will read Chapter 3.

*The usual caveats apply here about the distinction of theory and practice being an analytic tool, etc.