Saturday 6 October 2012

Are we entering a post-neoliberal age?

I recently came across an interesting but absurd article proclaiming the end of neoliberalism and the beginning of a new era of post-neoliberal politics focused upon "well-being". The article uses the existence of policies such as minimum alcohol price fixing and Workfare mandatory unpaid labour schemes as "evidence" that the Conservative led coalition is moving towards a post-neoliberal economic strategy. Here's a quote from the conclusion of the article:
"Neoliberal ideas moved from the intellectual margins of the 1940s into the policy mainstream of the 1970s and ’80s. They have finally arrived as a form of folk common sense for many people. We now assume that we have the right to lead whatever lifestyle we choose, according to our own tastes. But it is precisely because of this culture that governments are searching for justifications to set limits, to identify bad choices and promote well-being."
The first and most obvious objection is the current economic climate of "austerity" in the UK and across Europe. It should be obvious to anyone familiar with the fundamentals of neoliberal economics that austerity is just the same old defunct neoliberal policies (mass privatisations, attacks on wages and labour rights, destruction of state welfare provisions, tax rises for the poor and ordinary, tax cuts for corporations and the super-rich...) crudely rebranded as "necessary austerity". A post-neoliberal economy based upon promoting well-being certainly wouldn't be implementing a brazen neoliberalisation process with devastating social and economic consequences for the vast majority of people.

Another strong objection to the post-neoliberal theory is the crazy "evidence" presented by the author to support the idea that the government have abandoned self-interest based neoliberalism in order to "promote well-being". Astonishingly the author cites mandatory unpaid Workfare schemes as an example of promoting well-being.
"Welfare claimants and young people are being urged or forced to work for free in order to develop the mindset and motivation to render them employable in the future."
The idea that forcing young people and the unemployed to work for no salary is a somehow a post-neoliberal policy aimed at promoting "well-being" is so backwards it is unreal. Workfare is actually an incredibly brazen example of extreme neoliberal policy in action.

Deliberately maintaining standing armies of unemployed in order to force down wages and working conditions is a classic example of neoliberal economics. However in recent years neoliberal economists have come to realise that maintaining these huge standing armies of unemployed actually represent lost productivity and a large economic cost in welfare support. Their solution to these problems is not the obvious one of moving back towards a full employment economy, because that would be impossible given their open borders EU immigration policy and their ideological obsession with driving down labour costs. Even if the immigration system could be tightened, full or near-full employment would lead to greater competition for workers and the need to pay higher wages, an objectionable situation to any neoliberal.

The imaginative neoliberal solution to these productivity and welfare problems is to attack labour rights and the minimum wage by forcing the unemployed to work for their benefits. This creates fictionalised private sector productivity by transferring corporate labour costs to the state, costs that would be paid anyway to maintain the necessary vast labour reserves to keep wages low.

Mandatory unpaid labour schemes create the fiction that the government is doing something about the unemployment situation (reliant upon a simple justification narrative based upon resentment) whilst actually intensifying the unemployment problem by creating a greater employment deficit. If private sector employers can source their unskilled and low-skilled labour via state funded work placements, it would actually be against their commercial interests to create real paid employment opportunities. It even gives private sector enterprises a perverse incentive to reduce their paid workforce in order to replace them with this supply of free labour provided by the state.

Workfare is clearly not a post-neoliberal policy aimed at promoting "well-being", it is actually one of the most brazen neoliberal experiments in attacking labour rights ever attempted.

The other cited example of "promoting well-being" is the policy of alcohol price fixing. Whilst on the surface this is a policy aimed at reducing alcohol related harms, it is actually a policy based on 19th century style moral puritanism and corporate greed more than any "well-being" concerns. Anyone that has read the completely flawed justification study (designed to tell the Scottish government exactly what it wanted to hear) would know this.

Alcohol price fixing is not evidence that we are entering a post-neoliberal age, it is evidence that neoliberals will completely ignore the fundamentals of their free-market, small-state ideology whenever it suits their perceived best interests. The fact that all of the excess price to be imposed on alcohol purchases will go directly to the breweries and the retail outlets (that are largely responsible for the rise in alcohol related harms), rather than going to support hard pressed services (NHS emergency facilities and ambulances, police services, courts, womens' refuge shelters, rehabilitation facilities...) that deal with the alcohol fallout is highly illustrative that the policy actually has little or nothing to do with promoting well-being and everything to do with scoring political points with knee-jerk reactions and serving the financial interests of breweries and retail outlets.

The fact that neoliberals will hypocritically overlook policies that contradict the libertarian and small-state principles of neoliberalism whenever such principles conflict with their own self-interest is obvious.

A long-standing example of self-interest over-riding neoliberal principles is the Tory stance on EU farm subsidies. Farm subsidies are a vast form of state intervention and a crime against the free-market, yet Tories would never attempt to get rid of them since farmers are extremely loyal Tory voters. This is a clear example of the self-interest of an orthodox neoliberal party causing them to jettison a fundamental neoliberal free-market "principle" in order to protect the interests of their core voters, driven by their own political self-interest. Hence the self-interest based neoliberalism model is doomed to failure precisely because of the self-interest it promotes as a virtue.

Another example of neoliberals simply ignoring neoliberal theory when it conflicts with their own self-interest is the libertarian stance on drugs. The most famous champion of neoliberalism, Milton Friedman advocated the legalisation of drugs and prostitution in order to promote greater economic freedom. After decades of puritanical propaganda against drug use and prostitution, all of the establishment political parties consider any attempt to soften the stance on, let alone legalise drugs or prostitution to be electoral suicide. It doesn't matter that drug prohibition creates significantly more social and economic harms than a well regulated and taxed market in drugs would, or that legalisation would actually stimulate economic growth. The political establishment consider the legalisation and regulation of black economies to be against their own political self-interest, so rational reforms are out of the question, even if they are closely aligned with the libertarian free-market ideology they claim to represent. The drug legalisation issue leads directly back to the Tory policy of alcohol price fixing, which is based on the same kind of irrational moral puritanism and is set to be implemented in a way that provides enormous economic benefit to the breweries, who are also big beneficiaries from the illegal status of many significantly less harmful drugs such as marijuana, magic mushrooms, ecstasy and LSD.

It is clear that the author presents absurd evidence for the coming of the post-neoliberal era. Mandatory unpaid work placements are not an example of post-neoliberalism aimed at promoting well-being, they are actually an example of hyper-neoliberalism, where neoliberal economists have figured out a method of drastically undermining labour rights and even eliminating corporate labour costs entirely using a simplistic justification narrative based upon resentment.

The other absurd piece of evidence is alcohol price fixing, which is more about political point-scoring and protecting corporate interests than it is about promoting "well-being". This kind of policy is not an example of the common good over-riding neoliberal theory, it is an example of one of the glaringly obvious inherent flaws in neoliberalism: That any economic system based upon promoting self-interest as a virtue will always be undermined by people that see their self-interest best served by ignoring the basic principles of the system. Hence instead of creating greater efficiency, financial sector deregulation created a wave of reckless speculation and outright criminality; privatisation has created scores of often incompetent "private sector" companies that base virtually their entire business models upon leeching off the taxpayer (Serco, A4E, Atos, G4S, Capita, Veolia, academies, rail franchises...); and so-called free-market political parties like the Tories that will brazenly ignore the principles they claim to uphold, in order to support anti-free-market policies such as EU landowner subsidies and alcohol price-fixing schemes, when it suits their own best interests.

After the global neoliberal meltdown, years of self-defeating "austerity" and countless private sector corruption and incompetence scandals it is more obvious than ever that neoliberalism is an utterly flawed and inherently contradictory ideology. However neoliberalism has become the unquestionable economic orthodoxy and however bad the failings of the "orthodoxy", the neoliberal establishment will simply come up with another package of neoliberalisation reforms to present as their solution.

See also

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