Neoliberalism: Not Just A Financial Crisis But A Crisis Of Democracy


Part I: Democracy is not the same as absence of government.

The most clichéd description of democracy is “government of the people, for the people, by the people.”

This and all other concepts of democracy presume ‘government’. Democracy is not the same as absence of government. Any meaningful concept of Democracy implies that by participating in democratic processes of government citizens can significantly influence the conditions under which they and their fellow citizens live.

Neoliberal theory describes all government as necessarily inefficient and collective democratic decision making as inevitably oppressive. The stated aim of Neoliberalism is to maximise ‘freedom’ by reducing the role of government to the absolute minimum; to the functions of defending the nation from external threat and maintaining law and order – by which they primarily mean the protection of property rights.

An absence of government the Neoliberals argue, will make us all free. But this is clearly not a theory of democracy; if anything it is a theory of anarchy.

One might think that as a self-defined anarchist I’d approve wholeheartedly but Neoliberalism is also an ideology that rejects egalitarianism in favour of a particular form entrepreneurial meritocracy. Neoliberals believe in wealthy elites because in the Neoliberal conception of human psychology the competitive acquisition of material wealth is the primary (only significant?) motivating factor of human beings and thus having wealthy elites that the rest of us can ‘aspire’ to join is the crucial motivational mechanism that make the world go round.

So according to this Neoliberal worldview wealthy elites are inevitable because of human psychology, fair because membership of the elite is open to everyone willing to work hard and desirable because they motivate the rest of mankind to vigorously pursue material success which leads to innovation and the efficient management of resources.

Now you might or might not buy into this depending upon your view of human nature and knowledge of the efficacy of markets but either way you cannot seriously claim that this Neoliberal plan for governing the world is any sense democratic.

Neoliberalism wishes to leave all decisions to the abstract notion of ‘market forces’ over which individuals have almost no control – democratic or otherwise. Thus ‘market forces’ are no less tyrannical than governments; indeed they are far, far worse because no one, including trans-national corporations, regulatory bodies or the governments of democratic states, can control them. According to Neoliberal ideology free markets will simply do what they do according to the rules of supply and demand and there is nothing any of us can do about it.

Democracy on the other hand means that if the electorate decide that there should be a minimum wage or that individuals and companies should be taxed to pay for free medical care for children or to build a national road network free at the point of use, then these things will happen because the democratic state will carry out the will of the people and make them happen – if necessary by forcing all citizens within the borders of the democratic state to abide by the democratic decisions of the electorate. In theory at least, the Democratic state is the servant of the electorate not the governors of the population, and is the vehicle through which the population can collectively decide upon the type of society they wish to live in.

By contrast under the tyranny of a Neoliberal free market system, citizens, communities, regions and even nation states are unable to make collective decisions about anything other than defence and law and order. Everything else including wages, working hours, rates of immigration, town planning, transport systems, health care and education would be subject to market forces and the laws of supply and demand and would only be provided if and when a profit could be made from providing it.

Neoliberal market mechanisms are not democratic; they are an alternative to democracy.

Now some Neoliberals might claim that markets themselves are profoundly democratic, that the market success or failure of a product or service depends on whether enough people are willing to pay for it and thus market success represents the results of the most direct form of democratic decision making, i.e. the way we spend the pound in our pockets.

But in fact market success does not reflect popularity or even consumer demand, the success of a product or service under a market system is dependent not on popularity but upon profitability. Every single one of us would want a drug that would cure us of a fatal cancer but under a market system such a drug would only be provided at a price that made it profitable, thus only those who could afford the profitable price would have access to the drug. So demand is contingent on price.

The second problem with the idea of Neoliberal democratic markets is that markets are impervious to public discourse. In the democratic political domain citizens can persuade each other of their differing points of view and thus communities and societies can make collectively informed moral, political and economic decisions. In a system in which ‘market forces’ make all the decisions for us the individual consumer is powerless to influence other consumers not only because of the inherently atomised and individualistic way markets work but also because of the power of corporate advertising; i.e. in real world market situations individual consumers are almost powerless in the face of the collective resources of commercial corporations.

And finally markets fail as instruments of democratic decision making because they operate without moral or ethical concern. Indeed, to many Neoliberals to even discuss collective moral concerns implies oppression. To the real free-marketeer there should be no restriction on child-pornography or drugs and alcohol – after all in a free world if people want these things why should they not have them? Neoliberal ideology logically implies that if a child is willing to act in a pornographic film, paid or unpaid, then no one has the legitimate authority to stop them, and If someone wants to sell heroin to someone else then it is no one else’s business. According to Neoliberal market theory consumers our rational decision makers and should be free to make any choices they wish; if there is a demand it must and will be met. Similarly, if a poor person cannot afford their medicine they may die but who are you or I to force a rich man to pay for that medicine (through taxation). As a free individual the rich man can do as he wishes with his money. He may decide to give some of it to the poor man through acts of charity but that is entirely his business.

So free market ideology ultimately takes away the ability of communities and societies to make collective decisions about what we value and what is and isn’t morally acceptable. In a Neoliberal free market society the only thing that can or indeed should, determine what does and does not happen is whether someone can make a profit from it.

Part II: Winners & Losers

The concept of Democracy is also necessarily an egalitarian concept. The principle of ‘one person, one vote’ necessarily entails the idea that the vote of each member of the electorate is of equal value, that the opinions, experience and values of all members of the electorate are equally important. We would not be describing a democracy if we were to suggest that wealthy people should have more votes than poor people, say an extra vote for every £200,000 of assets, so that a millionaire would have 5 votes, Bill Gates hundreds if not thousands of votes. Such a system would be oligarchical not democratic because implicit in the modern concept of democracy is the idea that simply by being born all human beings have equal moral worth, i.e. are worthy of equal moral consideration and have a right to an equal say in how they are governed and who by.

Neoliberalism on the other hand is profoundly elitist. Its defenders claim that Neoliberalism in it’s purest form is egalitarian because it rests on the notion of equal opportunity; i.e. under a theoretically ideal Neoliberal free market system we would all start from the same place and we would all have an equal opportunity to become successful and the only determinant of success would be hard work and talent.

Even if we set aside the real world fact that we don’t actually all start from the same place and that sheer unadulterated luck is as important to economic success as talent and hard work, Neoliberalism is still profoundly elitist in it’s outcomes because the ideology is based on the idea that individuals competing with each other will inevitably produce winners and losers and that the world should be run by the winners and that the losers are, well, losers, and frankly deserve all the shit that gets thrown at them. In this Neoliberal moral universe ‘a winner’ is not just a fortunate individual, a winner is a morally good person to be admired and valorised whereas ‘a loser’ is at best an embarrassment to be pitied, at worst an example of lazy, talentless humanity to be despised and shamed.

Even if we set aside the biological fact that human beings are first and foremost social creatures and historically it is our ability to collaborate, not compete, that has been the source of our success as a species, and that ‘winners’ never win on their own but only as part of social groups, and that ‘talent’ is largely a matter of genetic accident and that ‘winning’ in the Neoliberal world is very narrowly defined according to a set of materialistic moral criteria that, for example, values making a profit from health care more than saving human lives, even if we set these considerations aside for the sake of the argument, the logic of competition still means that there can only ever be a tiny group of ‘winners’ compared with the vast majority of ‘losers’ and if the world is to be run by these ‘winners’ how on earth can this be said to be democratic?

Part III:  Neoliberal Markets Are Entirely Dependent Upon Governments – And Vice Versa

Finally we come to fact that Neoliberal free markets are not an alternative to government they are in fact the child of government. Neoliberal free markets simply could not exist without the state to establish the legal framework under which they operate.

The free-marketeers tell us that modern capitalist markets are simply a more sophisticated version of the age-old habit of trading between equals that has gone on as long as human beings have been around. ‘Markets’ the argument goes, pre-date the State by many Millennia and are simply an expression of what it is to be a free human being, thus they have a greater legitimacy than the State and are an alternative to it. To put it bluntly this is quite simply, a lie.

Archaeology and Anthropology have established beyond any doubt that for most of our history (250,000 years) human societies were egalitarian with all the results of work shared between the members of a community (tribe). ‘Trade’ only took place between communities and exclusively took the form of formal gift giving rather than commercial transaction. Commercial ‘trade’ as we understand it today only began when human beings started to move into cities about 10,000 years ago. Even then it bore little relation to today’s capitalist markets as production was almost entirely geared towards supplying the needs of priestly elites and/or feudal Lords and Kings and that ‘markets’ that traded goods only developed as a direct result of the State printing money in order to pay troops. (All this is well documented in Debt: The First Five Thousand Years by David Graeber).

What we call capitalism was only created in the 18th and 19th Centuries when the invention of the joint stock corporation, the forerunner of the Limited Company (or Incorporated Company in the US), set a legal framework that separated the ownership of a company from the management of a company. Up until that moment those who ran businesses owned them – there was no other legal framework under which to operate. The joint stock company, which is entirely a legal construct, allowed investors to invest in someone else’s enterprise in exchange for a share of the profit and to limit their liability in a venture to the amount of their investment.

So modern Capitalism bears little relationship to traditional concepts of ‘trade’, which in any event only developed as a direct result of State intervention.

Markets are not an alternative to the State they are entirely interdependent with the State. States cannot exist without markets and vice versa. Thus the hope that rampant free markets would undermine and eventually abolish the totalitarian State to the history books seems untenable. The State is so integral to capitalist markets that what actually happens under a Neoliberal system is that the elite governing class and the elite capitalist class work together in each others interests to such an extent that the lines between the two become entirely blurred and we end up with a capitalist State that prioritises the interests of the capitalist elite over the interests of the democratic citizenship.

Conclusion:

All over the Western world we are witnessing not only an economic crisis but a crisis of democracy.

Democratic citizens in Europe have largely stopped bothering to vote, recognising that who ever they elect it makes little difference. The majority of citizens have disengaged from politics often described as becoming ‘apathetic’, as they perceive the diminished and diminishing arena in which meaningful deliberative and participatory democratic dialogue can take place. Everywhere Neoliberalism undermines the idea of the ‘public good’ and replaces it with market mechanisms that leave all of us atomised and powerless. Even the most basic notion of the ‘public space’ is undermined as more and more of our urban spaces are developed, owned and managed privately for profit. Neoliberal governments think it is more important to gain the approval and support of media moguls than they do their own electorate – in the UK 1 million marched against the Iraq war but arch Neoliberal Tony Blair, had promised Bush and Murdoch that the British would fight and fight we did.

Increasingly democratic governments are restricted in their choices by the tyranny of the stock market. Any move by any government to socialise services, tax the wealthy or regulate the financial sector is met with a market collapse that renders government plans financially unsustainable. Democratic citizens no longer decide the policies of their governments, the ‘markets do, and the ‘markets’, by their nature, only operate in the short-term interests of their investors; democratic governments and their citizens can go hang, the ‘markets’ will look after their own.

Indeed, the current financial crisis has laid a lot of this bare for all to see as the political and corporate elite desperately try maintain their status and wealth by stitching together their broken system at the expense of the rest of us. In Italy an unelected technocrat has been installed as President without any democratic process at all. In Greece ‘the troika’ of the European Commission, the International Monetary Fund and the European Central Bank, none of who are elected by anyone, are attempting to impose (using the police & army) a brutal regime of austerity upon an actively resisting population, in order to maintain the global system of finance capitalism that clearly benefits the 1% at the expense of the 99%.

If on the 17th of June, the Greek people elect a Leftist government who resist the demands of the troika it remains to be seen how much violence the elite will be willing to use to get their way. Remember the most recent right wing military Junta in Greece fell as recently as 1974.

The last three years have clearly demonstrated that Neoliberalism is not an expression of democracy and freedom; it is an elitist, oligarchical alternative to democracy that leaves us all at the mercy of tyrannical, uncontrollable market forces.

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3 responses to “Neoliberalism: Not Just A Financial Crisis But A Crisis Of Democracy

  1. I would say that, ultimately, it’s capitalism that’s the problem and not simply the latest metamorphosis of it, i.e. neoliberal capitalism. Neoliberal capitalism is the ultimate expression of capitalism whereby any constraints to the free market are dismantled and the poor, the weak, the young and the elderly are left to fend for themselves. This is what we are seeing now. The accumulation of capital becomes the be-all and end-all of society.

  2. IANAN, nice book. Have you found a publisher? I must confess that what you say makes sense, almost.

  3. Pingback: Neoliberalism: business as usual « abdelxyz

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