Chris Harman

Thinking it through

What’s in a word?

(October 2003)

From Socialist Review, No.278, October 2003.
Copyright © Socialist Review.
Copied with thanks from the Socialist Review Website.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

Our definition of neoliberalism has profound effects on our solutions

One concept will be much used at the European Social Forum in Paris next month – ‘neoliberalism’. Some will use it as a synonym for the system of international capitalism, some for the present phase of that system (often also referred to as ‘globalisation’), and some for a particular economic arrangement chosen by governments.

Each usage implies a different response from the movement against corporate globalisation. If neoliberalism is a synonym for the capitalist system, the response needs to be a revolutionary one. If it is just a particular economic arrangement chosen by governments, all that is needed is modest reform. So the leader of Attac in France, Bernard Cassen, calls simply for a Tobin tax on financial transactions, while dissident mainstream economists look for a return to Keynesian state intervention. Such people see getting these things as dependent on changing the ideas of opinion formers rather than mass agitation.

In fact neoliberalism is not a clear description of anything. Rather, it is the economic ideology which claims to provide capitalist governments with a set of prescriptions enabling their system to weather crises.

Economic liberalism was a synonym for the free market or laissez faire ideology that was dominant in capitalist thinking before the Great Slump of the 1930s. It preached the most minimal activities for the state.

In reality, however, this only fitted the situation of one major capitalist country – Britain – and then only for a relatively brief period after the ending of the Corn Laws in the late 1840s.

British capitalism had industrialised before its rivals, and free trade provided it with the means to prevent these rivals keeping it out of their markets. Its supposed distrust of the state did not stop it using the military force of the state, to maintain a mighty empire in which British businessmen had inbuilt advantages over such rivals. They in turn departed from the free market approach, relying on protectionist measures and the grabbing of imperial possessions of their own.

And once its domination was under threat the British ruling class turned to further state intervention to bolster its position. The Anglo-Persian Oil company (now BP) was nationalised in 1913 under a Liberal government, and the main airlines and power transmission, under a Conservative government in the 1930s. Although laissez faire remained the official ideology, state monopoly capitalism and its twin, imperialism, were the reality, culminating in the militarisation of the economy.

One, ultimately transient, product of the militarisation of the Second World War and after was full employment and, with it, the need for the capitalist state to buy off discontent among the working class. As Tory politician Quintin Hogg (later Lord Hailsham) put it in the midst of the war: if you do not give the people reform, you get revolution.

In the 1940s and 1950s Keynesian theories centred around state intervention, and capitalist planning displaced the old free market liberalism. But ideology still distorted reality as well as reflecting it. Reformist politicians and academics saw things back to front, ascribing full employment and welfare benefits to the benevolence of the state rather than recognising them as by-products of the militarist barbarity.

The Keynesian interlude lasted barely 30 years. A new phase of crises started in the 1970s that arms spending and state intervention could not ward off. Nationally-based states could not, even with the most barbaric means, exercise control over capitals that increasingly operated across national frontiers.

The ideologues of Keynesianism claimed that with state intervention capitalism would ‘work’ in the interests of all classes. This became an embarrassment to them in the new period of crisis. It encouraged people to demand ever more radical measures in order to ward off the deleterious impact of crisis – and to say that if existing governments could not implement such measures then perhaps workers should create mechanisms for doing so themselves.

There was a rush by ruling class ideologues back to the old free market liberalism, with its claim that state intervention was itself the problem. The new or ‘neo’ liberalism was an ideological project designed to ward off real examination of what had gone wrong.

Dismantling state-run firms and services could have the effect of turning groups of workers against each other, encouraging groups to think that the only way to protect their bits of the system from the crisis was by sacrificing jobs and conditions in order to compete with other groups. And there were immediate material benefits for those favoured capitalists who bought up the old state monopolies. Privatisation was a fire sale, bringing easy joy to certain capitalist interests even as the system as a whole became more crisis prone.

Internationally, the IMF, the World Bank and the WTO ensured that mechanisms once set up to protect the interests of the capitalists of small and medium sized states were torn aside, enabling the world’s most powerful firms to take over markets and buy up industries.

‘Neoliberalism’ told those that resisted that there was no alternative – and, indeed, there was no alternative via the methods that had flourished so long as the system as a whole was free from crisis. As a result, the major capitalist powers prescribed a diet of neoliberalism for the capitalists of the rest of the world – and these usually lapped it up.

Material interests, the drive of capitals to accumulate in competition with each other, pushed them in this direction. And it pushes the biggest capitals to continue to rely on the state despite the ideology. For there is no other force available to fight for their interests worldwide against other capitals and other states.

The dominant group in the Bush administration call themselves neoconservatives, not neoliberals. For the neoliberal gospel of free markets is something to be imposed on others. But it won’t deflect them from using the state to feather nests from which they can prey on everyone else. Hence the resort to steel tariffs, the defence of agricultural subsidies, the use of force to grab the world’s second biggest reserves of oil.

What we are confronting is not a mere ideology, ‘neoliberalism’, but great capitalist and imperialist interests who deploy it in their own interests when it suits them. We will only defeat them if we move from ‘education’ to mass action, or to paraphrase Marx, if the force of argument is replaced by the argument of force.

The neoliberal gospel of free markets is something to be imposed on others

Last updated on 27 December 2009