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How Did We Get Into This Mess?


For the first time, the United Kingdom‘s consumer debt now exceeds our gross national product: a new report shows that we owe £1.35 trillion(1). Inspectors in the United States have discovered that 77,000 road bridges are in the same perilous state as the one which collapsed into the Mississippi(2). Two years after Hurricane Katrina struck, 120,000 people from New Orleans are still living in trailer homes and temporary lodgings(3). As runaway climate change approaches, governments refuse to take the necessary action. Booming inequality threatens to create the most divided societies the world has seen since before the first world war. Now a financial crisis caused by unregulated lending could turf hundreds of thousands out of their homes and trigger a cascade of economic troubles.

These problems appear unrelated, but they all have something in common. They arise in large part from a meeting that took place 60 years ago in a Swiss spa resort. It laid the foundations for a philosophy of government that is responsible for many, perhaps most, of our contemporary crises.

 

When the Mont Pelerin Society first met, in 1947, its political project did not have a name. But it knew where it was going. The society’s founder, Friedrich von Hayek, remarked that the battle for ideas would take a least a generation to win, but he knew that his intellectual army would attract powerful backers. Its philosophy, which later came to be known as neoliberalism, accorded with the interests of the ultra-rich, so the ultra-rich would promote it.

 

Neoliberalism claims that we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm. All other functions are better discharged by private enterprise, which will be prompted by the profit motive to supply essential services. By this means, enterprise is liberated, rational decisions are made and citizens are freed from the dehumanising hand of the state. 

 

This, at any rate, is the theory. But as David Harvey proposes in his book A Brief History of Neoliberalism, wherever the neoliberal programme has been implemented, it has caused a massive shift of wealth not just to the top one percent, but to the top tenth of the top one per cent(4). In the United States, for example, the upper 0.1% has already regained the position it held at the beginning of the 1920s(5). The conditions that neoliberalism demands in order to free human beings from the slavery of state – minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions – just happen to be the conditions required to make the elite even richer, while leaving everyone else to sink or swim. 

 

So the question is this. Given that the crises I have listed are predictable effects of the dismantling of public services and the deregulation of business and financial markets, given that it damages the interests of nearly everyone, how has neoliberalism come to dominate public life?

 

Richard Nixon was once forced to concede that “we are all Keynesians now”: even the Republicans supported the interventionist doctrines of John Maynard Keynes. But we are all neoliberals now. Mrs Thatcher kept telling us that “there is no alternative”, and by implementing her programmes, Clinton, Blair, Brown and the other leaders of what were once progressive parties appear to prove her right.

 

The first great advantage the neoliberals possessed was an unceasing fountain of money. American oligarchs and their foundations – Coors, Olin, Scaife, Pew and others – have poured hundreds of millions into setting up thinktanks, founding business schools and transforming university economics departments into bastions of almost totalitarian neoliberal thinking. The Heritage Foundation, the Hoover Institute, the American Enterprise Institute and many others in the US, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK were all established to promote this project. Their purpose was to develop the ideas and the language which would mask the real intent of the programme – the restoration of the power of the elite – and package it as a proposal for the betterment of humankind.

 

Their project was assisted by ideas which arose in a very different quarter. The revolutionary movements of 1968 also sought greater individual liberties, and many of the soixante-huitards saw the state as their oppressor. As Harvey shows, the neoliberals coopted their language and ideas. Some of the anarchists I know still voice notions almost identical to those of the neoliberals: the intent is different, but the consequences very similar.

 

Hayek’s disciples were also able to make use of economic crises. One of their first experiments took place in New York City, which was hit by budgetary disaster in 1975. Its bankers demanded that the city follow their prescriptions: massive cuts in public services, the smashing of the unions, public subsidies for business(6). In the United Kingdom, stagflation, strikes and budgetary breakdown allowed Margaret Thatcher, whose ideas were framed by her neoliberal adviser Keith Joseph, to come to the rescue. Her programme worked, but created a new set of crises.

 

If these opportunities were insufficient, the neoliberals and their backers would use bribery or force. In the US the Democrats were neutered by new laws on campaign finance. To compete successfully with the Republicans, they would have to give big business what it wanted. The first neoliberal programme of all was implemented in Chile following Pinochet’s coup, with the backing of the US government and economists taught by Milton Friedman, one of the founding members of the Mont Pelerin Society. Drumming up support for the project was a simple matter: if you disagreed, you got shot. The International Monetary Fund and the World Bank used their power over developing nations to demand the same policies.

 

But the most powerful promoter of this programme was the media. Most of it is owned by multi-millionaires who use it to project the ideas that support their interests. Those which threaten their plans are either ignored or ridiculed. It is through the newspapers and television channels that the socially destructive ideas of a small group of extremists have come to look like common sense. The corporations’ tame thinkers sell the project by reframing our political language (for an account of how this happens, see George Lakoff’s book, Don’t Think of an Elephant!(7)). Nowadays I hear even my progressive friends using terms like wealth creators, tax relief, big government, consumer democracy, red tape, compensation culture, job seekers and benefit cheats. These terms, all deliberately invented or promoted by neoliberals, have become so commonplace that they now seem almost neutral.

 

Neoliberalism, if unchecked, will catalyse crisis after crisis, all of which can be solved only by the means it forbids: greater intervention on the part of the state. In confronting it, we must recognise that we will never be able to mobilise the resources its exponents have been given. But as the disasters they have caused develop, the public will need ever less persuading that it has been misled.

 

www.monbiot.com

 

References:

 

1. Larry Elliott, 23rd August 2007. Consumers’ debt overtakes gross domestic product. The Guardian.

 

2. Ed Pilkington, 24th August 2007. Guano theory in bridge collapse. The Guardian.

 

3. Anthony Lane, 27th August 2007. New Orleans: A National Humiliation. The New Statesman.

 

4. David Harvey, 2005. A Brief History of Neoliberalism. Oxford University Press.

 

5. See the graph on p17 of Harvey‘s book.

 

6. David Harvey, ibid.

 

7. George Lakoff, 2004. Don’t Think of an Elephant: Know Your Values and Frame the Debate. Chelsea Green.

 

 

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