Did “neoliberalism” ever exist?

18 April, 2020

The global minimum rate definitively shuts down Thatcher and Reagan-era ideology
The global minimum rate definitively shuts down Thatcher and Reagan-era ideology

From mass media to dissenting magazines, we are told these days that the Covid health crisis and the recession will end with the “collapse of the neoliberal capitalist system”. The truth is that we never really knew what they meant by “neoliberalism”. Was it a phase of capitalism? A political system? An ideology? All at once?

When we look at the “anti-neoliberal” literature, the term actually seems to be limited to a set of policies of systematic reduction of state social cohesion spending and the ideology that justifies them. For instance:

The neoliberal state guarantees above all the freedom of business and trade, and resists democratic control to correct, for example, human rights or environmental violations. This encourages a trend towards authoritarian regimes, while the border between state and corporate power becomes increasingly porous.

Another significant story:

Since the 1970s, a “neoliberal consensus” has been formed (or imposed) whereby the state is inhibiting its obligations to provide public services in areas as diverse as housing, health, education, transport or public services (drinking water, sewage disposal, energy and even infrastructure), in order to open them up to private accumulation of capital and the primacy of exchange value.

In these two quotations, which are representative of a very wide literature, several things stand out, beyond the observation of the undeniable tendency to “cut back” the provision of the services that guarantee the general conditions of exploitation (health, education, basic supplies, etc.) and the precarizing effects of such cutbacks.

  1. They seem to believe that if water or sanitation are supplied by the state, they will cease to be commodities and will be outside the cycle of capital accumulation.
  2. That in principle there is no intimate interconnection, a merger, between the corporate bourgeoisie and the state; that is why their borders would have become porous and direct state intervention to rescue or support companies would be shocking or new at all.
  3. Based on this belief, they seem to hold the expectation – and therefore the belief in the possibility – of “democratic control” of production under capitalism…
  4. …and therefore they believe that “another capitalism is possible.”

State capitalism

In 1899, the US Senate debated an antitrust law “by the monopolists, of the monopolists and for the monopolists” as the cartoon poster of the time reads.

A century ago, the inherent tendencies of imperialism, generated by the chronic absence of sufficient markets and the resulting over-accumulation of capital, underwent a qualitative leap. The unsolvable competition between large national capitals led to two world wars, while the contradiction between the system and the proletariat it had created rose to the point of the first world wave of workers’ revolutions. From a historical point of view the whole system was clearly passing into its phase of decadence.

The new conditions transformed, as it could not be otherwise, the very form of organization and definition of the bourgeoisie and its relation to the state. The practical meaning of democracy and the forms of the petty bourgeoisie as well, but that is another story.

From the beginnings of imperialism, the bourgeoisie was no longer a class formed fundamentally by individual business owners. First there were the banks: the owners of large factories sold their shares to banks and took shares from them. Banking and industrial capital were thus merging into a new form: finance capital, a form of mutualization of risk within the bourgeoisie in an increasingly difficult era. But the concentration and centralization of capital did not stop there. United by common funds and shareholder groups, competing companies joined together to form monopolies and oligopolies that controlled the entire chain of production (“trusts”) and limited the competition that had been characteristic of the goods and services market during rising capitalism (“cartels”).

In this new historical phase, this tendency to “socialize the bourgeoisie” was accentuated by bringing in the state. Originally as a way of obtaining “tailor-made” regulations, then as part of the trade war, finally as a “logical” form of a war capitalism. The result was the universalization of state capitalism. What is interesting about this transformation is that it radically changes the very structure of the bourgeoisie and the very definition of the individual bourgeoisie:

Nothing could be further from the old liberal bourgeoisie than the present ruling class. Summarizing the result of what we have been able to study:

– There are at least three circuits: the high bureaucracy of the state, the political apparatus and the managers – not founders – of large companies, banks, etc. Each one of them forms a dense network: many advisors “have” several councils or move from one to another, the high bureaucracy is interconnected and even “inherited”, etc.

– Together they form a network that is in turn highly interconnected through personal relationships resulting from proximity or studies, NGOs, foundations, think-tanks, state institutions… and in their direction through the composition of governments and high state institutions.

– The high state bureaucracy is the main connector between the productive-financial and the political apparatus. There is a certain fluidity as well, of course – judges and managers end up in government, the military and politicians in boards of directors – but in the end the role of state bureaucrats is essential to sustain the cohesion of the ruling class.

– The three circuits have the capacity to recruit “talent”… but it is limited, class membership is hereditary and this is reflected even in governments, thanks above all to the socializing role of some private schools and universities.

“To understand state capitalism”, 6/9/2019

The consequences for understanding what “neoliberalism” is are direct:

First of all, it does not mean a transfer of power to a supposedly “entrepreneurial” bourgeoisie longing for “space” to undertake “individual initiative”. There is nothing individual about it. When a public enterprise is privatized, the management of a vehicle of national capital is transferred from one circuit to another, but it does not leave that circuit. When a sector is deregulated or companies from other capitals are invited to “compete,” they are not breaking the monopoly, much less the monopoly of the class running production, they are only diversifying risks in an equally monopolistic model but… with two, three or at most four vehicles (this is what happened with phone companies, electric companies, etc.) that will serve the national bourgeoisie to recapitalize national capital as a whole in exchange for some profit returns going to the countries of origin.

“Understanding State Capitalism”, 6/9/2019

In other words, “privatizations” are, under normal conditions, a way of strengthening national capital by incorporating foreign capital at a cost. Their aim is to increase average productivity in terms of profit and to obtain a greater percentage of the world’s profit distribution via the capital market. Far from denying the concentration and centralization of national capital, they are its direct consequence. It is a natural strategy for those who are being left behind or who want to consolidate advantages in the global distribution of capital.

The “other” state capitalism

Poster for the second stalinist five-year plan.

But let’s go back to the events that defined the 20th century. The most important event of the century is undoubtedly the defeat of the world revolution (1917-37) and the consolidation in Russia of a particular form of state capitalism under the banners of Stalinism and its pretense of being a “socialism in one country”. We won’t go into how this came about now, the fact is that from the late 1940s onwards, the competition between the two main imperialist blocs was to be dressed up ideologically as part of a confrontation between “socialism and capitalism” that was based on idealizing and exaggerating the differences between the respective particular forms of state capitalism.

The “Western” model had at its head a managerial bourgeoisie, a fusion of the old owning classes, which loved to dress up in the “enterprising” clothes of their liberal great-grandparents without for a moment separating itself from the state that guaranteed it power. The stalinist model had created a new managerial bureaucracy with all the attributes of collective property through the state which found it convenient to dress up as an expression of workers’ political power, even though it had razed the structures of workers’ political power (the soviets) many decades earlier and mercilessly exploited the workers by crushing any protest or attempt at organization.

This “competition between models” made perfect sense as part of the war effort. As such it was denounced by the internationalists of the time and as such it became a real propaganda industry worth millions. The “unconditional defense of state capitalism” defined the entire left of the system itself and at its head the stalinist groups of various tendencies and the “stalinized Trotskyism” into which the right wing, which had broken up the Fourth International during the war had been turned into.

Today there is no reformism, they are not selling us that capitalism can become something else, but that a utopian world where capitalism “works” is possible.

When, at the end of the 1980s, the Russian bloc began to disintegrate and finally imploded, all the language of those groups suddenly became obsolete and orphaned. But their identity and their objectives, their defense of national capital, their anti-capitalism limited by the idea that state capitalism and socialism were the same thing… were orphaned and out of place. In a short period of years only the most stubborn kept using terms such as capitalism, bourgeoisie or communism, helping their conversion into taboo words that marked whoever used them as a reactionary mummy.

Their reconstitution and redefinition would come about through a change of lexicon that was paradoxically somewhat more honest. Where previously they said capitalism to refer only to that of the Western bloc, now the term “neoliberalism” was used extensively; where they once said socialism to refer to state capitalism in its bureaucratic version, they now said “alterglobalism” and “democracy”. The nationalist pillars of the old stalinist ideological edifice were maintained and revamped, and on top of them, multicolored layers were added: pacifism, feminism, ecology… even, in the end, a few drops of fascism in its “leftist” Peronist version.

What was “neoliberalism”?

A century of public spending in Britain measured as a percentage of GDP.

If we go back to the 1980s and look at the public spending curves that the first “neoliberal” governments declared they wanted to reduce to make room for “private initiative”, it is difficult to find a break in the trends of the time or even between countries with supposedly different models.

Both the neoliberal governments and their supposed antitheses show no signs of drastic changes in their state spending graphs because in reality “neoliberalism”, as far as spending is concerned, was first and foremost a discourse that justified its reorientation rather than its reduction. The state continued to be, and could not be otherwise, the coordinator of the bourgeoisie as a whole at a time when militarism was essential in the strategy against the Russian bloc.

It also served to transfer to the “business” sectors of the bourgeoisie the management of hitherto state monopolies and above all to push working conditions down a slope of precarization along with a “positive” discourse. But it did not change anything structurally. The same class was still in charge and with the same interests, accentuating the corporative aspects in order to be able to play in wider markets – this is the time when “globalization” is being prepared – and to break the productive chains into “delocalized” pieces that took advantage of the differences in wages and raw material costs in their favor.

State capitalism was not questioned for a second. Despite some anarcho-capitalist excesses and ecstasies of its ideologues, it remained so intact that corruption – an endemic phenomenon stemming from the end of the association between legal ownership and effective direction/management of national capital – multiplied as never before.

“To understand state capitalism”, 6/9/2019

In reality, “neoliberalism” was for the bourgeoisie an ideological exercise with which to dress up and reinforce policies that became widespread in all states to escape the crisis. Policies that at first were a combination of militarism, mechanisms to capture capital and the precarization of the workers and then, from 1992 onwards they turned into a generalized reduction of barriers to the movement of capital and goods… and even more precarization. Even if the corporate sectors of the bourgeoisie were strengthened and the once public companies were handed over to them as private monopolies, nothing changed structurally.

But what was “neoliberalism” for the left? The way to go from representing an alternative bureaucratic model of state capitalism – calling it socialism – to representing the false hope that another capitalism, one not “neoliberal”, not authoritarian, free of corruption, even decommodifying, was possible.

Obviously it was not and never will be. Just because a good, such as health care, becomes publicly available through the state, does not mean that it ceases to be a commodity. It’s still “paying” for itself with surplus labor. A different thing is that under “privatization” there is nothing but a dismantling of protection and an increase in the direct exploitation of all workers and we fight against it as such. Democracy and the representation of social interests, as it could have been in rising capitalism, is a mere utopia in an ultra-concentrated capitalism of monopolies and state capitalism. And the “democratic control” of enterprises, a joke when the trade unions have long been one of the monopolists integrated into the state and its political apparatus.

The insistence on “neoliberalism” was in fact the insistence on the validity of an “alternative capitalism”, reformed and allegedly possible. In other words, it was not even reformist, because reformism intended the possibility of overcoming capitalism through reforms, and these only aspired to make it livable… without managing to be less utopian and therefore reactionary.

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