Neoliberalism and English: is there a necessary link?

[Harold Schiffman]

Neoliberalism inadequately defined?

The definition of neoliberalism presented here is more abstract than
usual - but it also suggests that neoliberalism has been
underestimated. A widely quoted example of those 'usual definitions'
is What is "Neo-Liberalism"? by Elizabeth Martinez and Arnoldo García:

Neo-liberalism is a set of economic policies that have become
widespread during the last 25 years or so. Although the word is rarely
heard in the United States, you can clearly see the effects of
neo-liberalism here as the rich grow richer and the poor grow
poorer….Around the world, neo-liberalism has been imposed by powerful
financial institutions like the International Monetary Fund (IMF), the
World Bank and the Inter- American Development Bank….the capitalist
crisis over the last 25 years, with its shrinking profit rates,
inspired the corporate elite to revive economic liberalism. That's
what makes it 'neo' or new.

This sense of the word 'neoliberalism' is widely used in Latin
America. However, neoliberalism is more a phenomenon of the rich
western market democracies, than of poor regions. That is why I
emphasise the historical development of liberalism, in those western
market democracies. The IMF and the World Bank are not the right
places to look, to see the essence of neoliberalism. And the WTO
ideology - free trade and 'competitive advantage' - is 200 years old.
There is nothing 'neo' in their liberalism.

Seattle and Genoa?

The image of 'neoliberalism' has been heavily influenced by the
protests against it: people think of the violent protests at Seattle
and Genoa, and the associated social movements. If you only thought
about that, then neoliberalism would be an ideology of the riot
police, and that's not accurate.

It's true that the Genoa G8 summit was intended as a show of force.
The organisers knew that violent demonstrations were probable in an
Italian city, but chose to confront them.

Democratically elected leaders "should not run from demonstrators",
said Tony Blair. (However, when it was Britain's turn to organise the
G8 summit, the hypocrite choose the isolated Gleneagles hotel in
Scotland). 20 000 police and soldiers were deployed at the Genoa G8
summit - NATO used 42 500 troops to occupy Kosovo. This show of force
was out of all proportion to the political strength of anti-market
forces, but it emphasised the legitimacy of the market-democratic
states.

It is possible for 'the state' to suppress 'the market', but also to
promote it. In fact, the free market emerged in Europe under the
protection of the state, and the market needs the state, more than the
other way around. The market needs internal regulation, in order to
function: the state, in the form of the legal system, ensures
contracts are enforced. In the form of the police, it prevents theft
and fraud. It establishes uniform systems of weights and measures, and
a uniform currency. Without these things there would be no free
market, no market forces, and no resulting market society. Bill Gates
disputes the US Government's authority over his business - but if
there was no government at all, the poor would soon steal his wealth.
The attack on the World Trade Center provided some images of this
dependency - the reopening of the New York Stock Exchange by police
and firefighters, for instance. (In turn, at least in the United
States, the market is integrated in the national identity: the NYSE
reopening was seen as an act of national defiance).

The free market is itself a form of social organisation: it is neither
spontaneous nor endemic to humans. If no-one ever promoted or enforced
it, there would be no free market on this planet. For thousands of
years, there was none. The modern free market came into existence
primarily because liberalism demanded its existence. This demand was a
a political demand, and it was enforced through the state.

The general functionalist starting premise is only modified to the
extent that the "system" is comprehended as capitalist, in a specific
way "form-determined". The state and the political system function as
a form of an 'ideal all-around capitalist', who must uphold not just
the society as such, but the 'capitalist element'. The different forms
of state interventionism are explained both as an expression of
functional needs of the accumulation and reproduction process of
capital. The general requirements of capital accumulation such as
basic infrastructure, functioning law systems and legitimization
mechanisms are tasks that cannot be carried out by individual
capitalists due to the competition relations, but instead systemically
require a "fictive all-around-capitalist". This "capitalist referee"
must guarantee the fulfilment of these tasks in the interest of
maintaining the system of capitalist society.

Business and the State: Mapping the Theoretical Landscape
Volker Schneider and Marc Tenbuecken, 2002.

If everyone on this planet was a liberal, an enthusiastic supporter of
the free market, then that would be the end of the matter. But of
course some people oppose the market, and its effects - especially the
resulting inequality. The market is a political and social regime, and
like any other regime, it must be enforced against opposition. That is
true even of democracies: democrats overthrow dictators, and dictators
overthrow democracies. If either side wants to avoid their own
overthrow, they must use force. Democrats do use democratic force, and
do fight democratic wars, as they know in Iraq.

The relationship between supporters and opponents of the free market,
is similar to that between democrats and anti-democrats. They are
enemies, inherently. On the very existence of the market, no
compromise is possible. The free market either exists, or it does not
exist. It can disappear by consent - which is absurdly unlikely - or
without consent. Any attempt to end the free market is, by definition,
an attempt to overthrow a fundamental social structure. Certainly, in
the long-established western market democracies, it would mean a
collapse of the existing social structures. The effect would be
dramatic - comparable to occupation by a foreign power.

So it is not surprising that force is used in the face of a threat,
and it is not surprising that it is the force of the state. That is
after all, a typical task of the state - the preservation of the
regime itself, the preservation of the nature of the state. Anarchist
propaganda speaks of "the State", as if all states were
interchangeable, but they are not. A market democracy is not
interchangeable with a Bolshevik regime, simply because they both have
a government, an army, and a police force. A market democracy will use
force, state force, against an attempt to overthrow either democracy
or the market. That is what the riot police did: defend the state, and
defend the market - without contradiction between them.

In historical perspective 'Genoa' was an absurd over-reaction. The
western market democracies are the most stable and successful
societies in history. The principle of the free market is accepted by
well over 90% of their population, probably closer to 99% in western
Europe. The tensions can be explained by the underlying sense of
threat, but they are not specifically related to neoliberalism, and
they certainly do not explain it. For that, a long-term and
ideological perspective is necessary.

Liberalism

Liberalism as a coherent social philosophy dates from the late 18th
century. At first there was no distinction between political and
economic liberalism (economics was not considered a separate
discipline until about 1850). Classic liberal political philosophy has
continued to develop - after 1900 as a purely conservative philosophy.
The basic principles of all liberal philosophy are:

Liberals believe that the form of society should be the outcome of
processes. These processes should be interactive and involve all
members of society. The market is an example, probably the best
example, of what liberals mean by process. Liberals are generally
hostile to any 'interference with process'. Specifically, liberals
claim that the distribution of wealth as a result of the market is, in
itself, just. Liberals reject the idea of redistribution of wealth as
a goal in itself.

Liberals therefore reject any design or plan for society - religious,
utopian, or ethical. Liberals feel that society and state should not
have fixed goals, but that 'process should determine outcome'. This
anti-utopianism became increasingly important in liberal philosophy,
in reaction to the Communist centrally-planned economies: it
anticipated the extreme deregulation-ism of later neoliberalism.

Liberalism is therefore inherently hostile to competing non-liberal
societies - which it sees not simply as different, but as wrong. In
the last 10 years, Islamic society has replaced the Communist state,
as the perceived 'opposite' to a liberal society.

Nevertheless liberalism has compromised with one specific form of
non-liberal ideology: nationalism, in the ethno-national form which
underlies most present nation states. A political community based on
common origin, history and language is not liberal, but liberals never
tried to form the voluntarist, contractual, non-historical state -
which liberalism would logically imply. The nation state was simply
taken for granted, as the political and economic arena for liberal
process.

Liberals define liberalism itself as 'freedom', so they rarely think
consent is required for the imposition of a liberal society. In fact,
most would say it can not be imposed, inherently. After the Cold War
this belief has acquired a geostrategic significance: many western
liberal-democrats now believe, that a war to impose a
liberal-democratic society is inherently just. This belief influences
interventionist policy, but as yet no war for the sole purpose of
liberalisation has been fought.

Classic political liberals reject the idea that there are any external
moral values: they say that there are only opinions. They feel that
these opinions should be 'expressed' in public, and that in some way
this 'market of opinions' will favour the truth. (The idea that truth
can be revealed by discourse is much older than liberalism).

The liberal rejection of external moral values is formally expressed
in the liberal idea of human rights: both good and evil humans have
equal rights, which apply equally when they facilitate good or evil
actions. Classic liberal philosophy advocated 'liberty' as a value,
even if they did not call it a value. In effect it places liberty as a
value above good (and evil).

Liberals believe in formal equality among participants in a liberal
society, but almost all liberals also believe in inequality of talent.
Many liberals were therefore sympathetic to biological theories of
inequality. (Theories of hereditary racial differences in intelligence
are now popular among US neoliberals).

Liberalism is a universal ideology, and in principle liberals seek to
apply it to the entire planet, and the entire human population. Most
liberals have supported the expansion of liberal society, although in
the 19th century that meant among the 'civilised nations'. For a long
time the free market was considered the only cross-cultural and
'exportable' element of liberalism. Only recently have liberals
advocated, that African and Asian societies should become 100%
liberal-democratic societies. 'Liberal missionaries', such as George
Soros, were unknown or marginal in the 19th century.

Market liberalism

The free market is not simply 'exchange' or 'trade'. Two people who
exchange products can not form a free market in the liberal sense,
even if their transactions are monetarised. The element of competition
is missing in this two-person society.

A minimal liberal free market needs at least three parties, with two
of them in competition - for instance, two competing sellers and one
buyer. The resultant pressure on the two sellers to lower prices, is
the simplest type of 'market force'. Such a force comes into existence
without any conscious action on the part of the three parties. In
modern markets there are millions of parties, and complex market
forces. Market-liberals value this characteristic of the market. Their
belief in the moral necessity of market forces in the economy, is
probably the first defining feature of market liberalism. The second
is the belief in entrepreneurs themselves, as a good and necessary
social group. To summarise:

For all liberals, interactive process legitimises outcome: in market
liberalism, the market is the primary process, and market transactions
are the interaction.

Market liberals believe that economic transactions should take place
in a framework which maximises the effect of each transaction on every
other transaction. (That is an abstract definition of the free market,
but it makes the later transition from liberalism to neoliberalism
easier to understand).

Liberals see the market as good, and often as semi-sacred. They want
the market to be as large as possible, involving all of society. In
modern liberal-democratic states almost all adults participate in the
market. A private club in a Communist state, where members can hold a
closed free market, would satisfy no liberal.

Liberals are hostile to economic self-sufficiency - so strongly, that
they believed in war to 'open up markets'. The most famous example is
the Opium War, when Britain forced the Chinese Empire to allow the
import of opium. This liberal belief in market expansionism has
revived after the end of the Cold War.

Market liberals are hostile to trade barriers: "free trade" is a
classic slogan of market liberalism. That meant traditionally, the
free flow of goods and capital: neoliberalism later developed a more
diffuse version, where 'flow' and 'interaction' are treated as
quasi-ethical values.

Market liberals believe that important aspects of society should be
determined by the market, certainly the distribution of income and
wealth. Neoliberalism later extended this belief, claiming that all
social life should be determined by the market.

All market liberals are hostile to interference in the market, by
church, state or others - although since the 19th century only the
state has sufficient power to interfere. Market liberals are clearly
anti-utopian, in the sense of opposing economic planning, especially
centralised state control of the entire economy. They believe that the
market produces the best 'design for society', and that is is wrong to
substitute any other design.

However, market liberalism is itself a utopia, despite its
anti-utopianism. In the 'ideal world' of market liberalism, no goods
or services exist which are not the product of market forces, but all
goods or services which are market-responsive do exist. This is in
itself a utopian project, implying a total structuring of society.
Neoliberalism goes even further - extending the market principle
beyond the production of goods and services.

The social institution of the entrepreneur is central to market
liberalism. An entrepreneur is a person whose profession is, to
respond to market forces. In the 19th century most entrepreneurs were
still private individuals, later the business firm took over this
function. The enterprise/firm is a permanent organisation, structured
to respond to market forces. An entrepreneur is not a farmer, or a
manufacturer, or a consultant: in theory an entrepreneur changes
activities in accordance with the market. In reality most
entrepreneurs retained a specialisation for some specific products or
services: but neoliberalism now demands, that the theoretical
flexibility should become standard practice.

Without the entrepreneur there is no free market, therefore market
liberals demand a privileged social status for the entrepreneur. The
early liberal theorists were hostile to the urban guild economy of
mediaeval Europe: they saw it, in effect, as a conspiracy not to
compete. In their historical vision, the entrepreneur rescued Europe
from the poverty of the Middle Ages. (This vision was shared by Karl
Marx, who admired the cultural dynamism of the free market). Not just
mediaeval Europe, but all societies without an entrepreneurial caste,
were seen as failures.

A central but rarely explicit political demand of market liberals is
therefore, that entrepreneurs should have control of the economy. This
has not only been accepted, but has become so incorporated into the
culture of western liberal-democratic societies, that few people ever
think about it. But it would not be any less logical, to hand the
economy to engineers, or priests - or not to privilege any one group.
The choice depends on underlying values, and liberals value the
entrepreneur. This value preference of liberals, and its widespread
acceptance, has created what in the US is called 'the business
community'. That is a real and identifiable social elite - with
specific cultural preferences, specific clothing, and often a specific
form of language (sociolect). It does in fact control the economy, in
liberal-democratic states. Although this was probably not foreseen by
early liberals, market liberalism has become an ideology in support of
this elite. Their culture, attitudes, and ethics have greatly
influenced neoliberalism.

Neoliberalism

If Adam Smith returned and saw the more extreme aspects of
neoliberalism, he would probably find them bizarre. Nevertheless, they
derive from the ideas of early liberalism. The belief in the market,
in market forces, has separated from the factual production of goods
and services. It has become an end in itself, and this is one reason
to speak of neoliberalism and not of liberalism.

A general characteristic of neoliberalism is the desire to intensify
and expand the market, by increasing the number, frequency,
repeatability, and formalisation of transactions. The ultimate
(unreachable) goal of neoliberalism is a universe where every action
of every being is a market transaction, conducted in competition with
every other being and influencing every other transaction, with
transactions occurring in an infinitely short time, and repeated at an
infinitely fast rate. It is no surprise that extreme forms of
neoliberalism, and especially cyberliberalism, overlap with
semi-religious beliefs in the interconnectedness of the cosmos.

Some specific aspects of neoliberalism are:

A new expansion in time and space of the market: although there has
been a global-scale market economy for centuries, neoliberals find new
areas of marketisation. This illustrates how neoliberalism differs
from classic market liberalism. Adam Smith would not have believed
that a free market was less of a free market, because the shops are
closed in the middle of the night: expansion of trading hours is a
typically neoliberal policy. For neoliberals a 23-hours economy is
already unjustifiable: nothing less than 24-hours economy will satisfy
them. They constantly expand the market at its margins.

The emphasis on property, in classic and market liberalism, has been
replaced by an emphasis on contract. In the time of Adam Smith,
property conferred status in itself: he would find it strange that
entrepreneurs sometimes own no fixed assets, and lease the means of
production.

Contract maximalisation is typically neoliberal: the privatisation of
the British railway network, formerly run by one state-owned company,
led to 30 000 new contracts. Most of these were probably generated by
splitting services, which could have been included in block contracts.
(A fanatic neoliberal would prefer not to buy a cup of coffee, but
negotiate separately for each microlitre).

The contract period is reduced, especially on the labour market, and
so the frequency of contract is increased. A service contract, for
instance for office cleaning, might be reduced from a one-year to a
three-month contract, then to a one-month contract. Contracts of
employment are shorter and shorter, in effect forcing the employee to
re-apply for the job. This flexibilisation means a qualitatively
different working life: many more job applications, spread throughout
the working life. This was historically the norm in agriculture - day
labour - but long-term labour contracts became standard after
industrialisation.

Market forces are also intensified by intensifying assessment, a
development especially visible on the labour market. Even within a
contract period, an employee will be subject to continuous assessment.
The use of specialised software in call centres has provided some
extreme examples: the time employees spend at the toilet is measured
in seconds: this information is used to pressure the employee to spend
less time away from the terminal. Firms with contracts are also
increasingly subject to continuous assessment procedures, made
possible by information technology. For instance, courier services use
tracking software and GPS technology, to allow customers to locate
their packages in transit. This is a typical example of the new
hyper-provision of business information, in neoliberal economies.

New transaction-intensive markets are created on the model of the
stock exchanges - electricity exchanges, telephone-minute exchanges.
Typical for neoliberalism: there is no relationship between the growth
in the number of transactions, and the underlying production.

New forms of auction are another method of creating
transaction-intensive markets. Radio frequency auctions, such as those
for UMTS frequencies, are an example. They replaced previous methods
of allocation, especially licensing - a traditional method of
allocating access to scarce goods with no clear private owner. The
complex forms of frequency spectrum auctions have only been developed
in the last few years. Neoliberals now see them as the only valid
method of making such allocations: they dismiss all other methods as
'beauty contests'.

Artificial transactions are created, to increase the number and
intensity of transactions. Large-scale derivative trading is a
typically neoliberal phenomenon, although financial derivatives have
existed for centuries. It is possible to trade options on shares: but
it is also possible to create options on these options. This
accumulation of transaction on transaction, is characteristic of
neoliberalism. New derivatives are created, to be traded on the new
exchanges - such as 'electricity futures'. There is no limit to this
expansion, except computer power, which grows rapidly anyway.

Automated trading, and the creation of virtual market-like structures,
are neoliberal in the sense that they are an intensification of
"transaction for transaction's sake". However, a world in which all
entrepreneurial activity was automated would not be neoliberal, or
liberal.

This expansion of interactivity means that neoliberal societies are
network societies, rather than the 'open societies', of classic
liberals. Formal equality and 'access' are not enough for neoliberals:
they must be used to create links to other members of the society.
This attitude has been accurately labelled 'connectionist'.

Because of contract expansionism, transaction costs play an increasing
role in the neoliberal economy. All those 30 000 contracts at British
Rail had to be drafted by lawyers, all the assessments have to be done
by assessors. There is always some cost of competition, which
increases as the intensity of transactions increases. Neoliberalism
has reached the point where these costs threaten to overwhelm the
existing economy, destroying any economic gains from technological
change.

The growth of the financial services sector is related to these
neoliberal characteristics, rather than to any inherent shift to
service economies. The entire sector is itself a transaction cost: it
was almost non-existent in the centrally planned economies. In turn,
it has created a huge demand for office space in the world's financial
centres. The expansion of the sector and its office employment are in
direct contradiction of propaganda about 'more efficiency and less
bureaucracy' in the free market.

The speed of trading is increased. Online market data is expensive,
yet it is now available free with a 15-minute delay. The markets move
so fast, that the data is worthless after 15 minutes: the companies
can then give it away, as a form of advertising. Day-traders buy and
sell shares in minutes. Automated trading programmes, where the
computer is linked direct to the stock exchange system, do it in
seconds, or less. It is this increased speed which has led to the huge
nominal trading volumes on the international currency markets, many
times the Gross World Product on a yearly basis.

Certain functions arise which only exist inside a neoliberal free
market - 'derivative professions'. A good example is the profession of
psychological-test coach. The intensity of assessment has increased,
and firms now regularly use psychological tests to select candidates,
even for intermediate level jobs. So ambitious candidates pay for
training, in how to pass these psychological tests. Competition in the
neoliberal labour market itself creates the market for this service.

The creation of sub-markets, typically within an enterprise.
Sub-contracting is itself an old market practice, but was usually
outside the firm. It is now standard practice for large companies to
create competition among their constituent units. This practice is
also capable of quasi-infinite extension, and its promotion is
characteristic of neoliberalism. A few companies even required each
individual employee to register as a business, and to compete with
each other at the place of work. A large company can form literally
millions of holdings, alliances and joint ventures, using such
one-person firms as building blocks.

Supplier maximalisation: this extends the range of enterprises that
compete for each contract. The ideal would be that every enterprise
competes for every contract offered, maximising competition and market
forces. In the case of the labour market, the neoliberal ideal is the
absolutely flexible and employable employee, who can (and does apply)
for every vacancy. In reality, an individual can not perform every
kind of work - but there is a real development towards non-specialised
enterprises, especially in the producer services sector. In
neoliberalism, instead of the traditional 'steel tycoon' or 'newspaper
baron' there are enterprises which "globally link people and
knowledge, and cultures" or "advise and implement solutions to
management issues". (In fact these are quotes from the accountants
Price Waterhouse, but you can not guess this from the descriptions).

Neoliberalism is not simply an economic structure, it is a philosophy.
This is most visible in attitudes to society, the individual and
employment. Neo-liberals tend to see the world in term of market
metaphors. Referring to nations as companies is typically neoliberal,
rather than liberal. In such a view Deutschland GmbH competes with
Great Britain Ltd, BV Nederland, and USA Inc. However, when this is a
view of nation states, it is as much a form of neo-nationalism as
neoliberalism. It also looks back to the pre-liberal economic theory -
mercantilism - which saw the countries of Europe as competing units.
The mercantilists treated those kingdoms as large-scale versions of a
private household, rather than as firms. Nevertheless, their view of
world trade as a competition between nation-sized units, would be
acceptable to modern neoliberals.

Competition for inward investment, on the other hand, was generally
unknown until the late 19th century. This competition is often seen by
activists as the core doctrine of neoliberalism, especially since the
neo-mercantilist policies are easy to understand and very unpopular:
wage cuts, less money for public services, less tax on the rich. The
neo-mercantilist nation, in other words, behaves like a caricaturally
mean and nasty capitalist. It is not relevant either for these
policies, or for opposition to them, whether they have any effect at
all. Perhaps investment decisions are not made on this basis, perhaps
there is no real mobility of capital, perhaps no investor is
interested in Argentina, for instance. But so long as the Argentine
government believes that it should pursue certain polices to attract
investors, then it will do so. So long as it believes that the 'SA
Argentina' is a business firm, then it will run Argentina accordingly.

The market metaphor is not only applied among nations, but among
cities and regions as well. In neoliberal regional policy, cities are
selling themselves in a national and global marketplace of cities.
They are considered equivalent to an entrepreneur selling a product,
but the product is the city (or region) as a location for
entrepreneurs. The successful 'sale' of the product is the decision of
an entrepreneur to locate there, not simply the sale of land or
factories. This view of cities as sub-firms within the fictive
'national firm' parallels the creation of sub-markets within real
firms. The difference is, that those sub-markets really exist -
neoliberal city governments, on the other hand, act primarily on a
belief in a metaphor. Again, there is no hard evidence that the global
marketplace of cities exists: for most economic sectors complete
mobility of plant and labour is an illusion. Most firms can not simply
move from city to city, across continents and ignoring language and
cultural barriers, in pursuit of locational advantage. Here too, the
neoliberalism is a philosophy, an attitude - rather than an economic
reality. It has influenced European politics - the fear of this
neoliberalism dominated the French campaign against the European
Constitution. There is certainly a neoliberal lobby within the EU,
represented by the Lisbon Council, although it sees the world in terms
of competing trade blocks rather than competing cities or regions.
However, it is not clear how a continent could be run as a business
firm - even its inhabitants wanted that. (More on neoliberal economic
geography below).

A good example of the underlying attitudes is the basic policy
document of the city of Düsseldorf - the Leitbild, equivalent to a
'mission statement' in English. It was adopted in 1997, and is no
longer online at the city website, but parts are quoted at St at ttbuch
Düsseldorf…

Düsseldorf bekennt sich zum Prinzip des Wettbewerbs. Der Erfolg von
Städten entscheidet sich im Wettbewerb nach innen und aussen.
Düsseldorf will besser sein.

Wettbewerb ist treibende Kraft unseres gesellschaftlichen Systems. Im
zusammenwachsenden Europa gilt dies in hohem Masse auch für die
Beziehungen zwischen den Regionen, die als Wirtschaftsstandort, als
Lebensraum für die Bürgerinnen und Bürger und als Kulturstandort
miteinander konkurrieren. Sich hierzu bekennen heisst, den Wettbewerb
aufnehmen und aktiv gestalten zu wollen.

Im Wettbewerb besteht nur, wer gut ist. Düsseldorf will Wettbewerb. Im
Interesse der vielen Millionen Menschen des Lebens- und
Wirtschaftsraums: Düsseldorf will besser sein.
…
Düsseldorf is committed to the principle of competition. The success
of cities is decided by competition, internal and external. Düsseldorf
wants to be better. Competition is the driving force of our social
system. In a Europe which is becoming more integrated, this applies
increasingly to the relations between regions. They compete with each
other as investment location, as residential choice for the citizens,
and in cultural activity. Our commitment means that we will actively
and structurally enter into this competition. In a competitive world,
only the good can survive. Düsseldorf wants to compete! In the name of
the millions of people in our economic and residential region:
Düsseldorf wants to be the best!

The neoliberal urban vision was adopted, without debate, by many city
governments in the 1990's. At some point, a belief in 'competition by
population structure' was incorporated - the idea that a successful
city is inhabited only by successful people. This belief, nonsensical
or not, has had an effect in a negative sense: some cities now pursue
active policies aimed at relocating low-income households outside the
city. In the Netherlands, a new law allows large cities to legally ban
poor people, from certain areas, or from the entire city..

As you would expect from a complete philosophy, neoliberalism has
answers to stereotypical philosophical questions such as "Why are we
here" and "What should I do?". We are here for the market, and you
should compete. Neo-liberals tend to believe that humans exist for the
market, and not the other way around: certainly in the sense that it
is good to participate in the market, and that those who do not
participate have failed in some way. In personal ethics, the general
neoliberal vision is that every human being is an entrepreneur
managing their own life, and should act as such. Moral philosophers
call this is a virtue ethic, where human beings compare their actions
to the way an ideal type would act - in this case the ideal
entrepreneur. Individuals who choose their friends, hobbies, sports,
and partners, to maximise their status with future employers, are
ethically neoliberal. This attitude - not unusual among ambitious
students - is unknown in any pre-existing moral philosophy, and is
absent from early liberalism. Such social actions are not necessarily
monetarised, but they represent an extension of the market principle
into non-economic area of life - again typical for neoliberalism.

The idea of employability is characteristically neoliberal. It means
that neoliberals see it as a moral duty of human beings, to arrange
their lives to maximise their advantage on the labour market. Paying
for plastic surgery to improve employability (almost entirely by
women) is a typical neoliberal phenomenon - one of those which would
surprise Adam Smith.

Eileen Bradbury, a psychologist who advises surgeons at the Alexandra
Hospital in Cheadle, Cheshire, said she was particularly worried that
Jenna wanted the operation so that she could be successful. "That is a
very disturbing belief for a 15-year-old girl to have, and also a
false one," she said. "I have seen women coming for surgery who work
in television and they say they have to have it done or they won't get
the work. I usually go along with that because it is probably true".

Guardian: Parents defend breast implants for girl, 15.

In practice many 'workfare neoliberals' also believe that there is a
separate category of people, who can not participate fully in the
market. Workfare ideologies condemn this underclass to a service
function for those who are fully market-compatible. Note however, that
by recognising a non-market underclass, neoliberals undermine their
own claims about the universal applicability of market principles.

The general ethical precept of neoliberalism can be summarised approximately as:

"act in conformity with market forces"

"within this limit, act also to maximise the opportunity for others to
conform to the market forces generated by your action"

"hold no other goals"

If everyone lives by such entrepreneurial precepts, then a world will
come into existence in which not just goods and services, but all
human and social life, is the product of conformity to market forces.

More than traditional market liberals, neoliberals therefore have a
quasi-heroic attitude to the entrepreneur, and to engagement in the
market. A 1998 speech by German entrepreneur Jost Stollmann is
typical: his neoliberal ideas played a prominent role in the national
elections in Germany in that year. Stollmann includes his personal
moral philosophy, such as it is…

Ich möchte die Lust und Bewunderung unternehmerischen Erfolgs in den
Augen der jungen Menschen sehen. Ich möchte den Stolz und den Zuspruch
der Eltern spüren, wenn sich Sohn oder Tochter tatenvoll in das
Abenteuer Selbständigkeit stürzen.

….so gut sein, wie wir nur können - getreu der bewährten Formel, die
ich während meiner Zeit in Amerika verstehen gelernt habe: 'BE THE
BEST YOU CAN BE'

Jost Stollmann

The idea that everyone should be an entrepreneur is distinctly
neoliberal. Early liberals never expected the majority of the
population to own property, let alone run a business. (The
participation of the poor in the market was limited to accepting any
work they were offered). The practices on the flexibilised labour
market would seem strange to the early liberals. For instance,
individuals set up a one-person employment agency with one person on
the books, themselves - partly for tax reasons, but also to meet the
ideal of the entrepreneur. Policy to increase the number of
entrepreneurs is typically neoliberal, although ironically it must be
implemented by the State. A classic market-liberal would not say that
a free market is less of a free market, because only 10% of the
population are entrepreneurs. For neoliberals it is not sufficient
that there is a market: there must be nothing which is not market.

The neoliberalism joke

Marxist: "The workers have nothing to sell but their labour power."

Neoliberal: "I offer courses on How to Sell Your Labour Power Like A Shark."

There is therefore no distinction between a market economy and a
market society in neoliberalism. With the attitudes and ethics set out
above, there is only market: market society, market culture, market
values, market persons marketing themselves to other market persons.
In a sense neoliberalism has returned to the position of early
liberalism - which also combined culture, values and ethics with
economics. But neoliberalism brings a far more intensive 'market' -
replacing not only traditional social forms, but also the concept of
private life. At the same time this 'market' is increasingly remote
from the necessity of production, which was so real for the early
liberals - when there were still regular famines in Europe. In fact it
is so remote from the existing cultural perception of a 'market', that
it would perhaps be better to use some other word.

Finally, neoliberalism has become associated with specific cultures
(especially US culture) and a specific language (English). This is not
surprising: Anglo-American liberalism had the most influence on
neoliberalism. Neoliberalism as ideology is not tied to any culture or
language. It is true that a single global language would facilitate
free trade - but that could be Esperanto, as well as English. In
practice, the promotion of the English language, neoliberal policies,
and pro-American foreign policy, usually go together: this was
especially true in Central and Eastern Europe.

Globalisation and neoliberalism

Often the terms 'globalisation' and 'neoliberalism' are used as if
they were interchangeable. That is only correct in a limited sense,
for the neo-mercantilist aspects of the neoliberal ideology. I will
try to clarify the perceived and actual relationship between the two -
especially for the South American use of the term 'neoliberalism'.

The neoliberal ideology sees the nation primarily as a business firm,
as explained above. The nation-firm is selling itself as an investment
location, rather than simply selling export goods. If no-one in
government believes in this ideology, it will have no consequences. If
however, a neoliberal government is in power, it will pursue policies
designed to make the nation more attractive as an investment location.
These policies are generally pro-business, and are perceived as such
by the opponents of the policies.

But remember that the ideology is neo-mercantilist: the policies are
national policies, directed ultimately at the welfare of the nation
and not of the market. Paradoxically, they are a form of
protectionism: if there is a global market of investment locations,
then it is 'unfair competition' for governments to artificially
increase the attractiveness of their own country. Such governments
are, strictly speaking, not good market liberals. Hard-line classic
market liberals would shrug their shoulders at the election of an
anti-business government. "Business will go elsewhere, the country
will become poor, that's the way the global market works, leave the
market alone", they would say. They would not waste their time trying
to get a pro-business government elected there. In reality few
liberals are so consistent, neoliberals certainly are not. But their
rhetoric of 'national competitiveness' is a form of economic
nationalism: it is a modern version of the old nationalist insistence,
that the whole nation should work together. It revitalises jingoism,
chauvinism, flag-waving and foreigner-bashing: Tony Blair is probably
the best example.

Don't tell me that a country with our history and heritage, that today
boasts six of the top ten businesses in the whole of Europe, with
London the top business city in Europe, that is a world leader in
technology and communication and the businesses of the future, that
under us has overtaken France and Italy to become the fourth largest
economy in the world, that has the language of the new economy, more
brilliant artists, actors and directors than any comparable country in
the world, some of the best scientists and inventors in the world, the
best armed forces in the world, the best teachers and doctors and
nurses, the best people any nation could wish for. Don't tell me with
all that going for us that we do not have the spirit to meet all the
challenges before us.

Blair conference speech, 26 September 2000

Now, a neoliberal government will almost certainly appeal to
'globalisation' as a justification and legitimisation of its policies
- Tony Blair certainly does. By globalisation they mean, more or less,
that the global market of investment locations now exists, and that it
is an inevitable historical development. The opponents of the
neoliberal government will, in turn, oppose this 'globalisation'.
However, that does not mean that the global market of nations actually
exists. The existence of neoliberal governments, pursuing neoliberal
policies justified by an appeal to globalisation, does not mean that a
new global order has superseded the order of nation states. The very
fact, that it is still primarily the nation state which is being
'marketed' in this way, shows that the nation has not disappeared.

Before considering the reality of the global order, it is also
necessary to consider the beliefs of the opponents of such a
neoliberal government. Again paradoxically, many of them accept
without question the neoliberal claim that there is a long-term
historical process of 'globalisation', transforming the nation into a
business firm on a global market of nation-firms. Worse, if the nation
is a business then it is often clearly weak - everyone can see that
Argentina is economically worse off than the United States. A
neoliberal government will therefore try to convert a nation such as
Argentina into a 'strong player', which means worsening the living
conditions of much of the population. Now here is the next paradox:
the response of the opponents is also an economic nationalism, this
time with the emphasis on protectionism. The opposition perception of
globalisation differs in one respect: for them it is a historical but
not spontaneous development. For them it is a policy imposed by a
non-national global elite, directed against the individual nations.

In their view, the international financial institutions are equivalent
to an imperial power, which has de facto colonised countries such as
Argentina. In caricatural form: they believe that a new and powerful
empire has come into existence, the Empire of IMF-ia, at an
indeterminate location. The neoliberal government, in this view, is a
traitorous elite acting as a colonial Viceroy for the IMF-ian Empire.
The opposition wants to replace it with a government which will
'liberate' the nation from the global market, from its colonial
status. That 'liberation' is generally understood as: withdrawal of
the nation-firm from the global market of nation-firms, protectionism,
economic nationalism, and self-sufficiency instead of trade. Here too
there is a paradox: the oppositional movements are not anti-business:
they generally see national business as a victim of global business.
(Local business in South America is in the comfortable position, that
both neoliberals and anti-neoliberals want to help it, for different
reasons).

The 'IMF-ia model' is partly correct: the global financial
institutions are indeed a bastion of neoliberal ideology, and they can
bully some poor countries into adopting neoliberal policies. But they
can't do that to the rich western powers, in fact they would not exist
without the support of these powers. They are not a force outside
nations, they are not an imperial power. The global financial
institutions are, in the simplest terms, an instrument of US policy -
and if there is a quasi-imperial power, it is the United States.

The point is, once again, that the truth of beliefs about
globalisation is itself irrelevant. If the government and people all
believe that a country is being attacked by fire-breathing dragons,
then the government might distribute asbestos suits to the population,
and the opposition might complain that there were not enough of them.
Ideologies and politics can operate on a completely fictive basis.
Millions of Europeans died to 'resolve' theological issues such as the
Virgin Birth of Mary, Mother of God.

So the perceptions have themselves generated a political reality: on
the basis of a belief in 'globalisation' some governments pursue
neoliberal policies, which are neo-mercantilist in their logic and
aims. In such circumstances opposition to globalisation and
neoliberalism coincides, rather than neoliberalism being identical or
synonymous with globalisation. Both sides share a common fallacy: that
trade and sovereignty are opposites, a zero-sum pair. The neoliberals
believe that national success - "in today's global market" - requires
the abandonment of national economic autonomy and sovereignty. Their
opponents believe that national welfare requires minimisation of trade
and external links: they believe that trade and invasion are
equivalent, although no-one will say that outright. Once again, the
equivalences and perceptions on both sides are false. Most of the
Gross Global Product is tied to individual nation states for
technical, climatic, logistical, and cultural reasons. For most
investment decisions, there is no global market of locations. And
sovereignty is not necessarily inverse to trade volume and trade
regime. A powerful country such as the United States can have a high
trade volume relative to GNP. Many colonies - by definition not
sovereign - had a low trade volume relative to GNP, because the bulk
of 'GNP' consisted of peasant agriculture. But even a fallacious
belief can apparently support not just one, but two competing forms of
economic nationalism.

So what is the reality behind the perceived globalisation? One reality
is that nation states still dominate global social and economic
structures. However these nation states themselves form a specific
arrangement of a specific type of state. Globalisation claims appear
logical if you see nation states as isolated islands, but that is not
the historical reality. The very existence of a world of nation
states, indicates some form of global order of nation states. What
these nation states do - trade or no trade, capital flows or no
capital flows - is irrelevant to that issue. What is already global
can not logically be globalised: therefore there is no globalisation,
in the widely used sense. There is no transition underway, or recently
completed, to a fundamentally different global structure. Because the
existing order of nation states is already global, intensification of
global flows, or global trade, or global communication does not
undermine it, or fundamentally alter it. If some part of the world
were to break with this global order - for instance a future autarkic
caliphate - that would be a radical change. When nations trade with
each other, that simply indicates that the global order of nations is
functioning as expected.

The false premise in the globalisation thesis is in fact the standard
nationalist claim, that each nation is a separate and particular
entity. In reality nations collectively are a global and universalist
structure: the functional equivalent of a nationalist world state. The
world functions as if a nationalist world government had seized power
in the 19th century, led by Mazzini and Garibaldi and friends. Most
existing states were indeed established by nationalist groups.
Nationalists co-operate to maintain one (nationalist) world order and
exclude others. The nation state is not a particularity, existing by
itself in isolation, but part of a global design. Supporters of the
globalisation thesis claim, that a world of isolated nation states
existed in the recent past - before 1989, or more approximately before
1950. They claim that these isolated nation states are now being
eroded in a global process: it includes the formation of the
neoliberals claimed 'market of nations'.

Economic globalization represents a major transformation in the
territorial organization of economic activity and politico-economic
power….The sovereignty of the modern state was concentrated in
mutually exclusive territories and the concentration of sovereignty in
nations…economic globalization has contributed to a denationalizing of
national territory…

Saskia Sassen. Losing Control: Sovereignty in an Age of globalization (1996).

But is the global order of nation states disappearing, anywhere? In
reality, there is no collapse of the nation state to be seen. Nation
states have not suffered anything comparable to the dissolution of the
Austro-Hungarian or Ottoman empires. All that remains of those empires
are oversized palaces in Vienna and Istanbul. The rest of their
institutions have completely disappeared: there is not a square metre
of Habsburg or Ottoman territory left in Europe. There is no longer an
Austro-Hungarian imperial army, or police, or courts, or parliament.
The nation states succeeded the multi-ethnic empires, seized all their
territory, and remodelled all society on that territory. The
replacement was total. Where is the equivalent 'collapse' of the
nation state? There are few places on earth without the institutions
of a nation state - perhaps Somalia, but that is not the result of
globalisation. If the world was truly 'globalised' then it would be
full of disused national parliament buildings - and not a national
army in sight. The world is not like that, and will not be like that
in the immediate future.

In other words, 'globalisation' remains a belief rather than a
reality. It is an instrumental belief with great political influence
and effect. It is appealed to by both neo-mercantilist neoliberals and
their economic-nationalist opponents. Nationalists have a tradition of
appealing to external threats to enforce national unity. The nation
must unite and work together, they said - to defeat the Hun, or the
Bolshevik threat, or the Yellow Peril, or the enemy within the gates,
or Osama bin Ladin. The instrumental use of 'globalisation' is in the
same dishonourable category.

Summarising neoliberalism

To conclude, here are summaries of neoliberalism in two forms. First a
list of key points in neoliberalism:

transaction maximalisation
maximalisation of volume of transactions ('global flows')
contract maximalisation
supplier/contractor maximalisation
conversion of most social acts into market transactions
artificial maximalisation of competition and stress
creation of quasi-markets
reduction of inter-transaction interval
maximalisation of parties to each transaction
maximalisation of reach and effect of each transaction
maximalisation of hire/fire transactions in the labour market (nominal turnover)
maximalisation of assessment factors, by which compliance with a
contract is measured
reduction of the inter-assessment interval
creation of exaggerated or artificial assessment norms ('audit society')

A final summary definition of neoliberalism as a philosophy is this:

Neoliberalism is a philosophy in which the existence and operation of
a market are valued in themselves, separately from any previous
relationship with the production of goods and services, and without
any attempt to justify them in terms of their effect on the production
of goods and services; and where the operation of a market or
market-like structure is seen as an ethic in itself, capable of acting
as a guide for all human action, and substituting for all previously
existing ethical beliefs.

http://dandelionsalad.wordpress.com/2007/12/01/neoliberalism-the-economic-model-origins-theory-definition-2005/

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