David Harvey on what neoliberalism actually is — and why the concept matters.
Eleven years ago, David Harvey published A Brief History of Neoliberalism, now one of the most cited books on the subject. The years since have seen new economic and financial crises, but also of new waves of resistance, which themselves often target “neoliberalism” in their critique of contemporary society.
Cornel West speaks of the Black Lives Matter movement as “an indictment of neoliberal power”; the late Hugo Chávez called neoliberalism a “path to hell”; and labor leaders are increasingly using the term to describe the larger environment in which workplace struggles occur. The mainstream press has also picked up the term, if only to argue that neoliberalism doesn’t actually exist.
But what, exactly, are we talking about when we talk about neoliberalism? Is it a useful target for socialists? And how has it changed since its genesis in the late twentieth century?
Bjarke Skærlund Risager, a PhD fellow at the Department of Philosophy and History of Ideas at Aarhus University, sat down with David Harvey to discuss the political nature of neoliberalism, how it has transformed modes of resistance, and why the Left still needs to be serious about ending capitalism.
The ideological front amounted to following the advice of a guy named Lewis Powell. He wrote a memo saying that things had gone too far, that capital needed a collective project. The memo helped mobilize the Chamber of Commerce and the Business Roundtable.
Ideas were also important to the ideological front. The judgement at that time was that universities were impossible to organize because the student movement was too strong and the faculty too liberal-minded, so they set up all of these think tanks like the Manhattan Institute, the Heritage Foundation, the Ohlin Foundation. These think tanks brought in the ideas of Freidrich Hayek and Milton Friedman and supply-side economics.
The idea was to have these think tanks do serious research and some of them did — for instance, the National Bureau of Economic Research was a privately funded institution that did extremely good and thorough research. This research would then be published independently and it would influence the press and bit by bit it would surround and infiltrate the universities.
This process took a long time. I think now we’ve reached a point where you don’t need something like the Heritage Foundation anymore. Universities have pretty much been taken over by the neoliberal projects surrounding them.
With respect to labor, the challenge was to make domestic labor competitive with global labor. One way was to open up immigration. In the 1960s, for example, Germans were importing Turkish labor, the French Maghrebian labor, the British colonial labor. But this created a great deal of dissatisfaction and unrest.
Instead they chose the other way — to take capital to where the low-wage labor forces were. But for globalization to work you had to reduce tariffs and empower finance capital |8|, because finance capital is the most mobile form of capital. So finance capital and things like floating currencies became critical to curbing labor.
At the same time, ideological projects to privatize and deregulate created unemployment. So, unemployment at home and offshoring taking the jobs abroad, and a third component: technological change, deindustrialization through automation and robotization. That was the strategy to squash labor.
It was an ideological assault but also an economic assault. To me this is what neoliberalism was about: it was that political project, and I think the bourgeoisie or the corporate capitalist class put it into motion bit by bit.
I don’t think they started out by reading Hayek or anything, I think they just intuitively said, “We gotta crush labor, how do we do it?” And they found that there was a legitimizing theory out there, which would support that.
What’s missing here is the way in which the capitalist class orchestrated its efforts during the 1970s and early 1980s. I think it would be fair to say that at that time — in the English-speaking world anyway — the corporate capitalist class became pretty unified.
They agreed on a lot of things, like the need for a political force to really represent them. So you get the capture of the Republican Party, and an attempt to undermine, to some degree, the Democratic Party.
From the 1970s the Supreme Court made a bunch of decisions that allowed the corporate capitalist class to buy elections more easily than it could in the past.
For example, you see reforms of campaign finance that treated contributions to campaigns as a form of free speech. There’s a long tradition in the United States of corporate capitalists buying elections but now it was legalized rather than being under the table as corruption.
Overall I think this period was defined by a broad movement across many fronts, ideological and political. And the only way you can explain that broad movement is by recognizing the relatively high degree of solidarity in the corporate capitalist class. Capital reorganized its power in a desperate attempt to recover its economic wealth and its influence, which had been seriously eroded from the end of the 1960s into the 1970s.
One of big moves of neoliberalization was throwing out all the Keynesians from the World Bank and the International Monetary Fund in 1982 — a total clean-out of all the economic advisers who held Keynesian views.
They were replaced by neoclassical supply-side theorists and the first thing they did was decide that from then on the IMF should follow a policy of structural adjustment whenever there’s a crisis anywhere.
In 1982, sure enough, there was a debt crisis in Mexico. The IMF said, “We’ll save you.” Actually, what they were doing was saving the New York investment banks and implementing a politics of austerity.
The population of Mexico suffered something like a 25 percent loss of its standard of living in the four years after 1982 as a result of the structural adjustment politics of the IMF.
Since then Mexico has had about four structural adjustments. Many other countries have had more than one. This became standard practice.
What are they doing to Greece now? It’s almost a copy of what they did to Mexico back in 1982, only more savvy. This is also what happened in the United States in 2007–8. They bailed out the banks and made the people pay through a politics of austerity.
The other thing I think is crucial is that the neoliberal push of the 1970s didn’t pass without strong resistance. There was massive resistance from labor, from communist parties in Europe, and so on.
But I would say that by the end of the 1980s the battle was lost. So to the degree that resistance has disappeared, labor doesn’t have the power it once had, solidarity among the ruling class is no longer necessary for it to work.
It doesn’t have to get together and do something about struggle from below because there is no threat anymore. The ruling class is doing extremely well so it doesn’t really have to change anything.
Yet while the capitalist class is doing very well, capitalism is doing rather badly. Profit rates have recovered but reinvestment rates are appallingly low |18|, so a lot of money is not circulating back into production and is flowing into land-grabs and asset-procurement instead.
I think it’s possible that you can make a better capitalism than that which currently exists. But not by much.
The fundamental problems are actually so deep right now that there is no way that we are going to go anywhere without a very strong anticapitalist movement. So I would want to put things in anticapitalist terms rather than putting them in anti-neoliberal terms.
And I think the danger is, when I listen to people talking about anti-neoliberalism, that there is no sense that capitalism is itself, in whatever form, a problem.
Most anti-neoliberalism fails to deal with the macro-problems of endless compound growth — ecological, political, and economic problems. So I would rather be talking about anticapitalism than anti-neoliberalism.
Full interview and references: