Is neoliberalism ubiquitous? by Risto Heiskala


Q: How many Chicago economists are needed to change a light bulb?
A: None; markets take care of the job!

Q: And how many populists are needed to change a light bulb?
A: None; populist do not appreciate enlightenment!

 

What is neoliberalism? The simple answer is that it is market fundamentalism according to which markets are the best organizational solution to all societal needs. Thus public sectors should be made as minimal as possible and even the remaining part should be, according to the New Public Management doctrine, run as it were a private firm. Much of the economic theorizing behind that administrative paradigm made politically influential by the Thatcher and Reagan administrations in late 1970 was developed at the University of Chicago Department of Economics by scholars such as Milton Friedman.

The curios thing with neoliberalism is that it tends to co-exist with very different kind of political currents such as value conservatism as well as Clinton’s reformism in the US, right wing dictatorship in Chile, both Thatcher’s conservatism and Blair’s third-way labour in Britain and socialism-based reform movement in China (Harvey 2005). It has even been claimed one of the defining characteristics of neoliberalism is it being incomplete as a political doctrine which cannot, therefore, exist without such versatile unholy alliances as those mentioned above (Brown 2015). Therefore, it sometimes looks like neoliberalism is everywhere. For a social scientist, however, this is the starting point of analysis. Therefore, in this blog I will provide a contextualised analysis of neoliberalism within  a rudimentary scheme with twelve alternative theoretical modes for political governance.

I will start with Michel Foucault’s analysis of the neoliberalist movement (Foucault 2008). In his lecture of 1978-79, he examines old and new models of liberalism. According to Foucault, the difference is that while classical economic liberalism is always haunted by the question of how to govern enough but not too much, new forms of liberalism are no more afraid of extending public administration to various sectors of society as long as this happens with the purpose of creating and consolidating markets in every new area of society. It is this proactive administrative paradigm that we call neoliberalism.

Perceptive as Foucalt’s early analysis is, it may also be misleading because it lumps all forms of pro-market thinking into the same category. This is how it prevents from understanding an important difference between the US and UK type of market fundamentalist neoliberalism, on the one hand, and the German type of ordoliberalism (https://en.wikipedia.org/wiki/Ordoliberalism), which the EU favours as its political paradigm (Dardot & Laval 2013; Heiskala & Aro 2018. Ordoliberalism and market fundamentalism á la Frederic Hayek share the belief that markets are the best support for freedom, liberty and equal opportunities of individuals and the spread of market structures should therefore be promoted. What they do not share, however, is the neoliberal belief that markets are self-sufficient and the only form of collective coordination actually needed in a society. Instead, the ordoliberals think that markets are vulnerable. Left alone markets often yaw to monopolistic or oligopolistic balances or collapse. Therefore, it is the duty of the public authorities to constantly promote and shepherd the markets, and that is what the EU often understands as its principal political task.

In terms of welfare regimes, ordoliberal political thinking has close relationships to what Gøsta Esping-Andersen (1990) has called the Central European conservative welfare regime. Its core idea is to protect people from the turbulences of the labour market by providing publicly financed monetary resources to take care of the families and local communities, and it often ties such benefits to the labour market position of the breadwinner. This differs  from both the Anglo-American market regime, which is based on private insurance, and the Nordic Social-Democrat regime, in which benefits are universal (available for all citizens irrespective of family and labour market position), relatively generous and largely provided by the public authorities themselves.

If we extend the above model to a more general classification of governance paradigms we get a tripartition to the neoliberalist, ordoliberalist and social market economy-based paradigms. Adding state-centred societies such as the former Soviet Union brings the number of available alternative governance paradigms to four. These four can be understood as a continuum from the extreme end of market fundamentalism (neoliberalism) to the extreme end of state fundamentalism (state-centred societies) with ordoliberalism (the EU) and social market economies (the Nordic welfare states) in between. Yet the relationship of the four paradigms is not a static one. During the past forty or so years a neoliberal wave has affected everywhere: neoliberalism has strengthened its grip on the US and, especially, on the UK societies while almost all Soviet type state -centred regimes have collapsed. At the same time, both ordoliberal and social market economy based societies have adopted several market fundamentalist elements.

If the above four paradigms are cross tabulated with the three predominant forms of political hegemony, i.e., democracies, dictatorships and what could be called illiberal democracies, we get is an ideal-typical 12-field model presented below . The two first terms are probably self-explanatory but the third—illiberal democracy—needs some elaboration. It is something you get when a government, although elected legally and enjoying support of the majority of its citizens, starts to restrict the political rights of some citizens. Curiously enough, today there is an increasing number of such governments including Erdogan’s Turkey before the coup, Putin’s Russia, Orbán’s Hungary, Morawiecki’s Polandand possibly also Trump’s US. Their future prospects vary. They may go down in a coup (Egypt), turn to genuine dictatorships (Turkey) or reproduce their power in yet another election (most probably Hungary) but their anomalous nature remains: they are democracies in the sense that the government has been elected through a democratic process and enjoys the support of the majority of citizens. Yet they are not politically liberal democracies but rather dictatorships in the sense that they cruelly restrict the rights of some citizens.

Administrative paradigms Patterns of political hegemony (right or left wing)
 

Democracies

 

Illiberal democracies

 

Dictatorships

Neoliberalism

 

The US and the UK Russia Pinochet’s Chile
Ordoliberalism

 

The EU Hungary, Poland Turkey
Social market economies Finland and other Nordic countries Fascist Italy Nazi Germany
State-centred societies Utopian socialism Cuba North Korea

I leave it for the reader to connect the rise of this curious intermediate form of political hegemony to the rise of populism, which we have seen to happen everywhere as a powerful as well as tragically misplaced popular reaction to the past forty years of neoliberal wave. Answer the question in my title: No, neoliberalism is not ubiquitous. To understand that, we need more sensitive frameworks for analysis. Yet, it seems to be a fact that the consequences of the neoliberal wave today, indeed, are everywhere!

References

Brown, Wendy (2015) Undoing the Demos. Neoliberalism’s Stealth Revolution. New York: Zed Books.

Dardot Pierre & Christian Laval (2013) The New Way of the World. On Neo-Liberal Society. London and New York: Verso.

Esping-Andersen, Gøsta (1990) The Three Worlds of Welfare Capitalism. Cambridge: Polity.

Foucault, Michel (2008) The Birth of Biopolitics. Lectures at the Collège de France 1978-1979. London: Palgrave Macmillan.

Harvey, David (2005) A Bruief History of Neoliberalism. Oxford: Oxford University Press.

Heiskala, Risto & Aro, Jari (eds) (2018) Policy Design in the European Union. An Empire of Shopkeepers in the Making? London: Palgrave

 

heiskala.jpg  Risto Heiskala is Professor and Director of the Institute for Advanced Social Research (IASR) at the University of Tampere. He completed his PhD at the University of Helsinki in 1997 and has since been Academy Research Fellow at the University of Helsinki, Professor of Public and Social Policy at the University of Jyväskylä and Professor of Sociology at the University of Tampere. He is Member of the Board of the University of Tampere and Member of the Finnish Academy of Science and Letters. In addition to the IASR, he currently leads the Finnish research team in the project Creating Economic Space for Social Innovation (CrESSI, 2014-18, EU Frame Programme 7/Oxford University; see https://www.sbs.ox.ac.uk/faculty-research/research-projects/creating-economic-space-social-innovation-cressi), the project European State Nobility and Fatal Problems (ESN, 2017-21; the Academy of Finland; and chairs the Board of the Research Centre for Knowledge, Science, Technology and Innovation Studies (TaSTI).

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