‘Neoliberalism’ – The ideology of pragmatism

At Larvatus Prodeo, Kim writes about The great American neoliberal liberal blog kerfuffle where blogger Freddie deBoer claims that "almost anything resembling an actual left wing has been systematically written out of the conversation within the political blogosphere".

According to deBoer "the nominal left of the blogosphere is almost exclusively neoliberal". But Australian readers shouldn’t assume they know what this means. The term ‘neoliberal’ has a peculiar history in the United States where it often refers to a precursor to the Third Way.

The liberalism that’s being reinvented by this neoliberalism is not the classical liberalism of Adam Smith and John Locke as revived and reinterpreted by thinkers like Friedrich Hayek and Milton Friedman. Instead it’s the American liberalism of Franklin D Roosevelt and Lyndon B Johnson subjected to an extreme make-over by journalists at the Washington Monthly and the New Republic.

Here’s how the Washington Monthly‘s Charles Peters described the movement in 1983:

If neoconservatives are liberals who took a critical look at liberalism and decided to become conservatives, we are liberals who took the same look and decided to retain our goals but abandon some of our prejudices. We still believe in liberty and justice and a fair chance for all, in mercy for the afflicted and help for the down and out. But we no longer automatically favor unions and big government or oppose the military and big business. Indeed, in our search for solutions that work, we have come to distrust all automatic responses, liberal or conservative.

As Ezra Klein notes, neoliberalism often looks more like a positioning device than an honest critique of American liberalism. When Ronald Reagan came to office in 1981, liberalism had become a dirty word. So the neoliberals tried to strip away the most objectionable features of post 1960s liberalism — the perception that it was soft on crime, welfare dependency and national security. And they went on to attack what they saw as the Reaganites’ Achilles heel — the ideological claim that every problem could be solved by cutting taxes and reducing the size and scope of government.

As Nicholas Lenmann put it, neoliberals needed to remind voters that government wasn’t meeting its most basic obligations : "It doesn’t provide every child with a decent free education. It doesn’t adequately protect the environment. It doesn’t keep cities free of crime. It doesn’t maintain the roads and keep the military in a state of readiness."

Neoliberals marketed themselves as post-ideological problem solvers. The movement’s was style was a kind of non-nonsense wonkishness. If public opinion constrained policy choices then this was just another aspect of reality that needed to be dealt with. If privatisation and competition produced better outcomes than state ownership and control then public sector unions needed to be dealt with. In the end, it wasn’t about left versus right, it was about what worked and what didn’t.

By the early 1990s, the neoliberal style had become mainstream. With the economy mired in recession, George Bush struggled in the polls — not even victory against Iraq could save him. Bill Clinton swept into office and the Reagan/Bush era was over. In a 2005 piece for the American Prospect, Matt Yglesias summed up the difference between liberals and conservatives:

The New Republic‘s Jonathan Chait had an interesting proposal: Liberals don’t really need philosophy. That’s because we’re pragmatic empiricists who want to know what works. There’s some truth to that, and I think it does a lot to explain why conservatives tend, broadly speaking, to be more philosophical. On economic matters, in particular, conservative policies are drawn together by a broad principle: Small government is good, regulation should be light, and taxes should be low. Liberals don’t really accept the reverse of those propositions. While the right thinks taxes should be as low as possible, liberals don’t think they should be as high as possible. We think that should be high enough. But high enough for what? High enough to pay for spending on programs that work well.

But Yglesias went on to ask what "working well" meant. What were liberals trying to achieve? And that’s where the post-ideological image breaks down. Some on the left see the rising tide of materialism as the problem while Yglesias favours Depression-era Congressman Maury Maverick’s definition of liberalism as "freedom plus groceries." Yglesias favours the liberal idea that it’s up to each individual to decide what kind of life they want to live while the anti-materialists worry that the system makes people want the wrong kinds of lives.

But deBoer’s problem isn’t just that he disagrees with mainstream liberal bloggers about ends — he disagrees about means. Most liberals today believe that the tools of socialism have failed to achieve socialist ends. And more than anything, the heirs of neoliberalism don’t want to give their conservative opponents an excuse to label them moderate communists. DeBoer, on the other hand, maintains his faith in socialism and the idea of a workers’ movement. He believes they can work.

Meanwhile, Mike Konczal at Rortybomb suggests that "neoliberal governance techniques can be divorced from their current distributional mechanisms and turned towards progressive policy ends". And that’s an interesting idea. But when Konczal talks about moving to a ‘Foucauldian politics’ all separate senses of the term neoliberalism blend into one. So maybe nobody should ever assume they know what neoliberalism means.

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14 Responses to ‘Neoliberalism’ – The ideology of pragmatism

  1. And we could say much the same thing about really-existing ‘neoliberalism’ in Australia. It was mostly a pragmatic fix to widely-acknowledged problems.

  2. Paul Bamford says:

    Thanks for the inspiration. David harvey is quite a find (for me).

  3. Rafe says:

    Neoliberalism, like liberalism, means different things to different people and so there is no point in trying to work out what it “really” means, you need to use a few more words and explain whatever point you want to make, preferably without using the terms liberalism or neoliberalism at all.

    In other words, talk about problems, policies and outcomes rather than terminology.

  4. Andrew Norton says:

    I saw Harvey’s book in a shop. My references and index check indicated that (as is almost invariably the case in this literature) actual possible ‘neoliberals’ barely get a look in, and it is all about what other people have said about them, plus with Harvey a good dose of Marx. I did not buy it.

  5. Don Arthur says:

    I’ve found Harvey’s book useful. Unlike many critics of ‘neoliberalism’ he offers a coherent definition:

    Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets. Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture. State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit.

    I don’t buy into Harvey’s Marxist theoretical approach, but I think his book is extremely useful for understanding the debate over neoliberalism.

    If you don’t like reading then you can watch a video. Here he is explaining the global financial crisis with the help of a cartoonist.

  6. John Quiggin says:

    The ambiguity of “neoliberalism” is more than the generic vagueness of language. In discussions outside the US, it means something quite different, corresponding fairly closely to “economic rationalism” in Australian usage. I discussed this kind of neoliberalism here
    http://www.johnquiggin.com/archives/000323.html
    before I was aware of the US usage, which is much closer to what used to be called “Third Way” politics.

    If you wanted to be paradoxical about it, you could say that (US)neoliberalism was an attempt by (US)liberals to respond to the successes of (global)neoliberalism.

    Note that neoliberalism differs from classical liberalism in being authoritarian and statist (or at best indifferent to liberal concerns) in all fields except economic policy – Thatcher and (to take an extreme case) Pinochet are prime examples.

    @4 In my book, I used the term “market liberalism” and I did try to explain the market liberal ideas as fairly as I could before saying why I thought they were wrong.

  7. Don Arthur says:

    John – I think one of the ambiguities is that some critics use ‘neoliberalism’ to refer to a process while others use it to refer to a set of ideas.

    Marxists like Harvery have no trouble talking about China’s involvement in a neoliberalisation process. It’s about what the government does and how the economy works. It doesn’t matter whether or not Chinese leaders are inspired by Chicago economists.

    For Marx-inspired critics, the political and economic theory free-market supporters use to justify ‘neoliberalising’ reforms are just ‘ideology’ (meaning: false ideas that conceal what’s really going on). They see chatter about what Chicago economists actually say as a distraction from serious analysis (in much the same way that free market reformers see union leaders’ social justice arguments as a distraction from their hard-headed analysis of rent seeking behaviour).

    So the fact that particular free market economists might, for example, oppose the war in Iraq doesn’t bother these critics. They’re happy to refer to neoconservatism as the “armed wing of neoliberalism” and portray the war as an example of governments serving the interests of corporations. The fact that neoconservative thinkers and neoliberal economists say very different things is just an illustration of how little their natterings matter.

  8. I always had some sympathy for the term ‘economic rationalism’ as I thought in Australia it could be used to describe what was best characterised as an issue movement rather than an ideology. Like other issue movements (feminism, environmentalism, etc) it was united by subject matter and some broad directions it wanted policy to head in, but not by agreement on deep ideological principles.

    We can certainly criticise markets without reference to thinkers – markets as practice predate market theory, and they are created where they don’t exist for very different reasons.

    But in criticising ideological movements, we need to pay careful attention to what their supporters actually say and think. That this does not occur is why I deem so much criticism of right-wing ideologies as intellectually worthless.

  9. Paul Bamford says:

    … in criticising ideological movements, we need to pay careful attention to what their supporters actually say and think. That this does not occur is why I deem so much criticism of right-wing ideologies as intellectually worthless.

    For me this raises two intriguing questions (and I’m not being facetious here).

    Question One: What’s a right-wing ideology (a single example will suffice)?

    Question Two: Which criticisms of right-wing ideology would you consider worthwhile (once again, a single example will suffice)?

    My hidden agenda here is that I’m looking at the idea of restocking my library, now that it’s been thoroughly culled.

  10. murph the surf. says:

    In the stated spirit of non-facetiousness I’ll offer the following-

    Question One: What’s a right-wing ideology (a single example will suffice)?
    .
    Positive non-interventionism.
    .
    Question Two: Which criticisms of right-wing ideology would you consider worthwhile (once again, a single example will suffice)?
    .
    Inadequte provision of welfare( all forms ) when the state can well afford it and it would only minimally distort efficiency or prices.

  11. Paul Bamford says:

    Thanks murph – now I’ve checked out positive non-interventionism at the usual authoritative internet source I see that you’ve answered both my questions. Haven’t satisfied the hidden agenda, but a boy can’t have everything.

  12. Liberalism and conservatism are the main right-wing ideologies in the contemporary West, with of course many variations on each.

    There are many potential criticisms of each that are worth debating. Their values are mistaken, their assumptions flawed, their consequences negative, or just that all things considered there are better alternatives.

    But there is little point attacking straw men. Waleed Aly’s Quarterly Essay from last year is one recent example.

  13. Don Arthur says:

    Andrew @8 – One of the things I liked about the term ‘economic rationalism’ was the implied contrast with empiricism. To me the term implied that economic rationalists had an apriori approach to policy grounded in a single discipline.

  14. Don – I think the name was unfortunate from that perspective; indeed I can recall when I tried to research its origins that overseas it has been used to mean the belief that an economy could be centrally planned, which was obviously quite different to its general usage in Australia.

    I take a fairly broad view of what economic rationalism was about: improved macroeconomic stability, controlling government expenditure (though not necessarily cutting it across the board – I take that as a point of internal as well as external debate), and microeconomic reforms.

    It was an issue alliance that at the political level was actually dominated by social democrats and conservatives, not the classical liberals or libertarians with whom it is associated intellectually.

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