Friedrich Hayek
Review of Philip Mirowski: Never let a serious crisis go to waste: how neoliberalism survived the financial meltdown (Verso, 2013)
Philip Mirowski addresses the left, very broadly defined — “people who have taken it as a fundamental premise that current market structures can and should be subordinate to political projects for human improvement” — but with “a simple message: Know Your Enemy before you start daydreaming of a better world”.
He dismisses most already-circulating “better world” schemes as helpless against the dominance of neoliberalism.
He quotes Paul Krugman — “I am quite fanatical about defending the relevance of standard economic models” — Joseph Stiglitz — “fortunately we don’t need to rewrite the textbooks” — and Krugman again — saying that “basic, sensible macro” is fine — to argue that the apparent mainstream left critics of neoliberalism are really well within its ambit. Leftish writers like Kenneth Arrow, Amartya Sen, and John Rawls are “virtually as neoliberal” as the hard-nut contract-everything-out “zealous advocate of the market order” James Buchanan.
When Mirowski dismisses “those benighted few, these Revenants of the Economic Rapture, who were certain that only complete and utter breakdown of capitalism would pave the way for a transition to the political ascendancy of the proletariat”, or the “thin and insubstantial” character of the case for a “return to Marx”, I think he means to talk about us, in caricature.
His critique of the Occupy movement is acute, though sneering in tone. He indicts the “absence of any sort of theoretical guidance and hierarchical organisation of short to longer-term goals”; the “disdain of close ties to trade unions”; the “mimicry of media technologies as opposed to concerted political mobilisation”; the acting as if “their primary role in life was to express themselves, especially with cameras nearby, rather than to work patiently for a thought-out political project”.
Neoliberalism, he says, ranges much wider than neoclassical economics. I see three strands in his depiction of neoliberal hegemony.
First (and this is an idea often discussed on the left of late), “neoliberalism as world view has sunk its roots deep into everyday life, almost to the point of passing as the ‘ideology of no ideology’.” It has come to dominate “everyday life in the first few decades of the new millennium”, with “the story of an entrepreneurial self equipped with promiscuous notions of identity and selfhood, surrounded by simulacra of other such selves.”
It has “so addled the populace that they end up believing that adoption of neoliberal notions constitutes wicked rebellion against the powers that be”.
Everyday neoliberalism had so “taken root in the culture” by 2008 that it “provided a bulwark until the active mobilisation of the Neoliberal Thought Collective could mount further responses” to the financial crash.
Second, that sociologically the neo-liberal cadre is deeply embedded in established structures of power, so much so that “when and if the crunch comes, [the neoliberals] end up controlling ‘both sides’ of any momentous debate”.
Economics professors in US universities now get paid 41% more than professors of English literature, a greater premium than any other subject except law. They are highly-valued by university bosses because they bring in the outside dollars more than almost anyone else. Almost all of them combine their academic careers with well-paid positions with banks and hedge funds, or in or around government and the Fed.
This explains well why few economists have wanted to propose discomforting the bankers since 2008, why different variants of neoliberalism have been able to command the terrain of public debate, and why economic thought is systematically homogenised towards what will bring in the outside dollars and connections to universities.
The third dimension to neoliberal hegemony in Mirowski’s one is a more “Gramscian” one, though Mirowski, I assume deliberately, does not use the word hegemony or anywhere refer to Gramsci.
In Gramsci’s account, hegemony is not so much a state of affairs as an activity, an active relation with wider sections of the population by a particular cadre of what he calls (equivalently, and, I think, wanting us to learn something from the odd-at-first-sight equivalence) intellectuals and organisers. They may be activists of a working-class revolutionary party, or the rural-origin officials and lawyers who mediated for fascism, or the local worthies and journalists who transmitted the leadership of the bourgeois “Moderates” of late 19th century Italy, but they are a “hegemonic apparatus”, a more or less cohesive network.
Mirowski writes not of a “hegemonic apparatus”, but of “the Neoliberal Thought Collective”. He identifies that with the Mont Pèlerin Society.
MPS is an international discussion club of a few hundred members. Friedrich Hayek started it in 1947, with a few dozen members, and remained its president until 1961. Other prominent figures have included Milton Friedman, Ralph Harris of the Institute of Economic Affairs in Britain, and Eamonn Butler of the Adam Smith Institute, who is also its current secretary.
Through the work of Antony Fisher, a British businessman who made a fortune from battery chickens, the MPS has had a link to the setting-up of think-tanks like the IEA and the Adam Smith Institute in many countries. Fisher’s grand-daughter, Rachel Whetstone, has worked for the Tories and is married to David Cameron’s aide Steve Hilton.
Mirowski’s picture of the Neoliberal Thought Collective as all-pervasive rests on sliding to and fro between two definitions of neoliberalism. In one definition, Krugman, Stiglitz, Rawls and the like are as neoliberal as it comes; in another, neoliberalism is identified with the full-on markets-for-everything types, the Mont Pèlerin core.
Thomas Sargent, one of the main figures of hard-line neoliberal economics, responded to the crash by saying that models based on his sort of theory are just “designed to describe aggregate economic fluctuations during normal times... they are not designed to be theories of financial crisis”. His comrade Robert Lucas said: “We are not going to have, now or ever... a set of models that forecasts sudden falls in the value of financial assets”. Eugene Fama: “We don’t know what causes recessions... We’ve never known”.
The neoliberals were diverse and vague in their quick responses to the crash not because of clever coordination by a wizard behind the curtain, but because they didn’t know. The “hard” neoliberals are not as solid a “hegemonic apparatus” as they seem now; and they were not as isolated in 1947, when the Mont Pèlerin Society was founded, as their self-serving narrative had it.
Hayek had been a professor in Lionel Robbins’s LSE economics department since 1931, and Robbins accompanied him to Mont Pèlerin. Hayek’s The Road to Serfdom had been a best-seller, further popularised by Reader’s Digest putting out a condensed version which General Motors then distributed for free as a pamphlet. The Tories wanted to do a new print-run of The Road for mass circulation in the 1945 general election, and failed only because they could not organise it in time.
Walter Eucken, the prime theorist of ordoliberalism, the version of neoliberalism which dominates in Germany to this day, was also at Mont Pèlerin. Ludwig Erhard, economics minister or Chancellor in West Germany continuously from 1949 to 1966, was a Mont Pèlerin member. Arguably, he, a figure from long before modern neoliberalism, represented the closest the Mont Pèlerin hard core have ever come to the centres of power.
Erhard’s “social market economy” did not look much like modern neoliberalism, and nor did the regime of the Hayek-enthusiast Tories when they returned to office in 1951. Why? Because canny bourgeois politicians then reckoned that the labour movement was too powerful for them to risk putting the harsher implications of the theory into action; and high growth rates and prosperity meant they had no need to take that risk.
By 1979-80 the capitalist world had moved on so that politicians like Thatcher and Reagan represented a large body of bourgeois opinion who thought that the labour movement was fragile enough that they could take the risk of confronting it, and capitalism was disarrayed enough that they must take that risk.
The “wizard behind the curtain” has not really been pulling all the strings of bourgeois politics; rather, the shift in bourgeois politics has let a number of wizards come more to the front of the stage.
Categorising all mass politics as mere play-debates within neoliberalism also dissolves specifics too much. If the “mainstream” debate on economic policy in the USA were between Paul Krugman and Ben Bernanke, rather than between Ben Bernanke (who, as Mirowski accurately says, is a thoroughly orthodox follower of Milton Friedman) and those who find him not right-wing enough, it would still in a general way be “within” neoliberalism, but the openings and opportunities for socialists to get a hearing would be greater. Or if the “mainstream” debate in the UK were between the Tories’ cuts and even mild “fiscal stimulus”.
The facts suggest a beaten-down, atomised sensibility, not Mirowski’s archetypal “entrepreneurial self”. The carriers of neoliberalism are far short of a Mont Pèlerin cadre.
For now people see few feasible ways of rebelling against the rules of the market; but plenty of them are open to rebellion if we, the left, can initiate and organise it well enough. And once they rebel, even with lots of neoliberal ideas in their thinking, ideas start fermenting.
Far-right groups like UKIP and the French Front National, which have gained support recently, fundamentally conform to neoliberalism, and offer surprisingly little social demagogy. But they do not appeal to the ultra-flexible neoliberal “entrepreneurial self” depicted by Mirowski, but rather to a backward-looking and reactive search for a more stable collective “self”.
To some degree we have been drawn into constructing neoliberalism, through some of our everyday transactions, rather than just submitting to it; but the wizards of neoliberalism lack a hegemonic apparatus, equipped with an elaborated world-view, able to reach down so far that neoliberalism will seem to us to come from the inside.
We on the left also lack that collective enterprise, for now. But we can start building it and operating it now, so long as we do not let ourselves be overwhelmed by the feeling that neoliberalism surrounds us so much, on all sides, that it is unbreachable.
• A significantly longer version of this article here
