How Neoliberalism Failed to Keep Fascism at Bay
![imageedit_2_4959804318.jpg](https://steemitimages.com/640x0/https://cdn.steemitimages.com/DQmXGprjNpAmeedzDzWMWhv3oYQtDXi2o22Jd5H2FXJGJo4/imageedit_2_4959804318.jpg)
A spectre is haunting America--the spectre of fascism. All the powers of neoliberal political economy have entered into a holy alliance to exorcise this spectre. Instead, however, they have inadvertently nurtured its ghost and laid the groundwork for its resurrection.
In his text The Birth of Biopolitics (the numbers in parentheses throughout this entry refer to page numbers from Foucault’s text), Michel Foucault discusses, among other topics, the development of neoliberalism. Neoliberalism itself is something of a contested term (and that argument goes on longer than I have space for here). What I’m interested in discussing is the development of an economic system, originating in liberalism, and growing into a form of political economy still in operation today--one characterized by a radical laissez-faire capitalism and a commitment to frugality and efficiency in the exercise of government.
You’re all familiar with neoliberalism: the free market reigns supreme; it’s never wrong, and by the way, we don’t have room in the budget for whatever it is you’re requesting because it’s simply too expensive. Be rational, please. Be more frugal, but also be more productive while being more frugal. Be neoliberal.
Neoliberalism developed in post-World War II Europe. Among its primary objectives were transitioning Germany from a war economy back to a peace economy (79) and preventing the revival of Nazism in Europe (80). These were absolutely essential requirements for governing post-war economic policies.
Nazism, the German neoliberals (ordoliberals) decided, was “Essentially and above all… the unlimited growth of state power” (111). The ordoliberals determined that, in fact, Nazism revealed that all the defects that had been attributed to the market economy were in actuality defects of the state (116). The solution was clear.
On April 28th, 1948, Ludwig Erhard (economic advisor, future Minister of Economic Affairs, and eventual German Chancellor) delivered a report explaining how to temper the defects of the state without abandoning the state altogether. In order for the state to shake off and remain disentangled from fascism and its firm grip on the economy, Erhard explained, “We must free the economy from state controls” (80-81). The economy, in other words, ought to function according to the “natural” and “spontaneous” mechanisms of the free and deregulated market. That deregulation, they argued, was the most effective means for ensuring security and also justice.
But the market is not and has never been a neutral site of justice.
In the Middle Ages, the market was controlled by what Foucault often refers to as “royal power.” Prices were fixed such that they balanced the needs of producers, merchants, and consumers. In this way, the market really was considered as “a site of distributive justice” because it ensured that “if not all, then at least some of the poorest could buy” basic necessities (30). Furthermore, the market was controlled in such a manner that protected the buyer from fraud. Of utmost importance was the protection of the consumer.
In the middle of the 18th century, however, views on the function of the market took a turn. Thinkers like Adam Smith began to argue that, rather than allowing the government to fix fair market prices, the market must obey “natural” mechanisms. Rather than the monarch setting prices, now Smith’s famous “invisible hand” of the market would ensure the “just” price. Any attempt to intervene in these spontaneous market mechanisms would, Smith et al. argued, only mangle the market’s already perfectly fine spontaneous operations.
In a way, this shift in thinking about the market feels like a religious movement: human intervention in the market will only result in anguish and woe, whereas the divine intervention of the market’s “invisible hand” will fairly tend to the economic needs of one and all.
Of course, the “natural” or “just” price that the free market determines is now completely stripped of any of old medieval “connotations of justice” (31). What we’re left with is a mere number, “a certain price that fluctuates around the value of the product” (31). The “just” price is determined by the internal mechanisms of the market as it reaches an equilibrium price point.
So, what we discover in this price-value relationship is that the market can reveal the truth of something’s value and can even spit out a number telling you exactly what that value is. We can apply this logic to any service or commodity. Furthermore, thinking in terms of political economy, we can even apply this judgment of the market to governance itself.
What is revealed is that through natural mechanisms, the market “enables us to falsify and verify governmental practice” (32). Yes, “inasmuch as it enables production, need, supply, demand, value, and price, etcetera, to be linked together through exchange, the market constitutes a site of veridiction… a site of verification-falsification for governmental practices” (32). That’s right, folks: the market will tell us the truth of governmental practice, and because of the way that market logic has evolved, we are no longer talking about justice in the sense of justice for all..
Quite simply, we are using the market to justify government action.
Under neoliberalism, this practice of market veridiction of government practice has taken quite the nefarious turn.
We have placed our faith in the infallible mechanism that is the deregulated market. This economic determinant of “right” and “just” can provide simple answers to the difficult questions of human existence and interrelation. It was only a matter of time before we simplified the equation even further.
It turns out that comprehending the market is a rather complex task. We needed simpler metrics or, failing that, better soothsayers. For example, if the Federal Reserve is raising interest rates, what prophet will emerge to explain how I might best profit? Or, on the other hand, can anyone explain to me how raising interest rates is bad for the average citizen? Is it actually good? Under what circumstances can I interpret these straightforward data differently? It seems that the “just” price, simple as that concept was, was not the best indicator of the “truth” that the market purports to reveal. Even the market’s simple numeric answers have always required interpretation.
So, rather than considering the entirety of the market, what about just the stock market? No? Still too complex? Let’s take the Dow Jones and maybe the S&P. Those should provide simple enough answers, right? They should tell me if what the government is doing is in fact justified. Let’s look for some recent, real-life examples to elaborate on all this. Let’s look at Trump.
Donald Trump has frequently taken credit for the stock market’s performance. He has frequently pointed to both the rising Dow Jones and the shrinking unemployment numbers as proof, as verification, that his brand of political action is justified. He doesn’t stop there, of course. He also likes to tout the power of his tax cuts and to harp on trade deficits and tariffs. He doesn’t talk about budgetary deficits, though. He and his fellow conservatives have continued to balloon the budget while cutting out revenue sources (taxes). Now he’s (falsely) promising even more tax cuts to middle class Americans. During Obama’s presidency, I couldn’t talk to a conservative about even the weather for five minutes before they started lambasting the Democrats for exploding our budget and racking up a deficit. These days, though, not a peep from them. They no longer care now that it’s a Republican blowing up the budget. It’s like the market metrics are all up to interpretations and they never really revealed an immutable truth about value in the first place.
But we still pretend these numbers, these arbitrary abstractions, matter. And we interpret them in whatever way suits us in the political moment. The truth remains, as always, up for interpretation.
So what happens if we inject a little nationalism into our politics, but the stock market rallies anyway? What if we amp up the white nationalism, and the stock market continues to rise? Well, why stop there? What if we call foreigners scum and criminals and rapists, but still the stock market doesn’t mind our rhetoric at all and keeps on skyrocketing? What if we start the killings at the southern border? What if we build out concentration camps? What if we engage in genocide? Nice, orderly, scientific, rational, and above all frugal genocide? And what if, despite all that, still the markets rise?
Well, then we have our truth, don’t we? The market has spoken; our cause is just. All hail fascist USA.
An edit upon further reflection:
My basic argument boils down to three key components:
The "truth" the market reveals was never in actuality some eternal, given fact. The market was never a neutral arbiter of truth, so the "truth" it reveals about government practice has always required interpretation. It turns out that dollars and cents just aren't as clear-cut metrics as we might like to pretend. That necessity for interpretation means any kind of government action is justifiable so long as the government can spin it. If the stock market doesn't supply a favorable "truth," look to unemployment numbers or deficits or trade deficits or anything that seems vaguely related to economic metrics. Keep going until you land on an acceptable truth to justify any current government practice.
Even if the "truth" of the market were as simple as a revealed truth about government practice (and interpretation wasn't necessary), neoliberalism was a faulty mechanism for staving off fascism in the first place. It's entirely possible for the market to respond positively even as the state approaches fascism. The "truth" such an outcome would reveal would be that fascism is a perfectly fine exercise of government.
Capitalism cannot be rehabilitated. It will not save us from totalitarianism or genocide. Capital can absorb any product, service, or practice (including government practice) into itself and then reproduce itself. It is always primed for, always flirting with, the spectre of fascism.
I never read Foucault so this was quite interesting. I'm not sure I agree that ordoliberalism is neoliberal. In my understanding, ordoliberalism is much closer to Keynesian economics or social liberalism (ie. the state should regulate and ensure social safety net). Neoliberalism was a later development, in the late 70s/early 80s.
Another interesting thing (that Chomsky loves to bring up when we mention Adam Smith) is that the "invisible hand" did not mean that we should worship the markets come hell or high water, but Smith meant that it would be as if the owner class are "led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society." Yeah, he couldn't have been more wrong.
I added a bit more in an edit at the end because while the post ended quite dramatically, I wasn't satisfied with its clarity.
To address your points, you are correct that ordoliberalism (German neoliberalism) is much closer to Keynesian economics. The discussion I didn't want to get distracted by in the post (but am happy to here) is that neoliberalism had its roots there. Later, of course, around the time of the rise of the Zapatistas, we began speaking of neoliberalism differently, in the way that we still do today. Under this model, Ronald Reagan and Margaret Thatcher would be eminent neoliberals.
However, I still want to start at the historical roots of contemporary neoliberalism. The neoliberals agree with the essential findings of their ordoliberal predecessors. They want deregulation, the disentanglement of government control from the market, a justification for any practice to be found in the truth revealed by the market, etc.
There are certainly differences. I think the big distinction is that contemporary neoliberals take the above arguments to a more radical extreme. Foucault, in fact, flat out calls the American variant of contemporary neoliberalism "anarcho-capitalism" (104).
As for the deification of the invisible hand, I think it was to be expected. That sort of deification of the market is typical of human behavior and, in fact, to me indicates one of the flaws of historical materialism. Marx would argue that religion is merely the opiate of the masses and somehow tangential to human thought and behavior.
I, however, would steal the term "homo religiosus" from Mircea Eliade. He doesn't quite use it in this way, but I think there's some sort of spiritual pining in the human consciousness. Actually...let's go to an earlier thinker's pithy wisdom on the topic:
"If God did not exist, it would be necessary to invent him." ~ Voltaire
Fantastic read, superbly written. Upvoted and resteemed.
The neoliberalism of Thatcherism and that of her prodigy, the faux socialist, Tony Blair, much like Reaganomics, never actually deregulated the market. It was 'selective deregulation' based upon the interests of global capital. There was nothing 'free market' about it.
This was demonstrated by the 2008 collapse. Had we a truly free market the financial institutions would have folded. Their business model completely failed. Death in a free market. The ‘neoliberal’ response was the antithesis of the economic theory they supposedly espoused. Rendering their pretentions meaningless in my view.
I am not disputing your interpretation of neoliberalism at all but rather suggest it was never put into practice. I wholeheartedly agree that the market can never deliver justice and has virtually nothing to say on the issue. It is simply a reflection of the flow of capital and there's nothing 'just' about that.
A truly 'free market' could well stimulate innovation, production and competitiveness, potentially reducing costs (and consumer prices.) However it remains theoretical. Regardless of the theory, the practice of claimed neoliberlism was (is) nothing like a free market.
Aside from the fundamental flaw in neoliberal thinking, that the market has anything at all to say about social justice, it assumes the existence of underlying market forces which don’t exist in reality. Modern global capitalism is essentially protectionist and is inextricably intertwined with a deeply flawed monetary system.
In this context the application of neoliberalism (by Reagan, Thatcher, Blair etc) was nothing more than a tool to promote the worst excesses of monopolistic crony capitalism. The last thing they wanted was an actual free market. Neoliberalism was merely the veneer to cover their crimes and sell deregulation to an unsuspecting populace.
As soon as the whole house of cards started to collapse the self-proclaimed ‘neoliberals’ didn’t hesitate to nationalise the banks. The application of socialist central economic planning. Of course they didn’t deliver any of the benefits of socialism to the people but rather continued along their merry, Machiavellian way to transfer yet more wealth from the people to their utterly moribund banking and monetary system.
Given the current ridiculous size of the derivatives market it seems nothing has changed at all. Around and around we go until we encounter the next, inevitable collapse of the markets under the lunacy of people who say they value the free market but only while it serves their protection racket.