A Dark History of Neoliberalism

Neoliberalism- Corporations

The Neoliberal Coup d’état, which took place in the late 70’s and early 80’s, has solidified corporate power in the world to an extent beyond imagining

In my upcoming piece about the 1994 Zapatista Uprising in Mexico, I had made, as part of the essay, an attempt to explain the economic ideology that was responsible for sparking of this rebellion.

The ideology is a brutal, austere doctrine that often involves the use of torture and propaganda to coerce populations to accept it’s disastrous programs, which more often than not deal a death-knell to the poor. I soon realized, however, that a few skimming paragraphs wouldn’t do justice to understand the immense power this ideology wields. The only way for people to understand this monster- which is called Neoliberalism- would be to dedicate an entire piece to it.

Neoliberalism- Friedrich Hayek

Friedrich Hayek- considered by many to be the Grandfather of Neoliberalism. His ideas were later transmuted to American Economist Milton Friedman, who won a Nobel Prize for his work.

Originally a fringe intellectual movement that could hardly get enough steam to garner
mainstream academic notoriety, the political doctrine of Neoliberalism was founded by German economist Friedrich Hayek in the steaming wreck of post-war, 1940’s Europe.

Centered around the deregulation of all corporate laws (which were then, as they often are now, perceived as corrupt remnants of FDR’s New Deal interventionism), Neoliberalism views the whims of the market, even with its rollercoaster-like fluctuations, as the highest aspiration of the human spirit. Nothing could interfere with the rhythms of the free market, Hayek argued- not even, or perhaps especially– the government.

Along with his small but zealously devoted coterie of followers, which earlier on had once included philosopher Karl Popper, Hayek founded the Mont Pelerin Society (named after the Swiss hotel where they often convened), the ideas of which would be later transmuted to American economist Milton Friedman, who would become the intellectual guru and public face of Neoliberal Doctrine, even going on to win a Nobel Prize for his work.

Neoliberalism- Mont Pelerin Society

Economics, but especially Neoliberalism, is always enmeshed with stiff, ideological jargon that renders it virtually impossible to be understood by the broader public. So a more down-to-earth way to explain Neoliberalism would be this: it is pure Capitalism, Capitalism on steroids, Capitalism unfettered by any of the vital checks and balances of labor or government.

Neoliberals saw (and still see themselves) as the ideological opposition forces to the then-prevailing school of Keynesian economic thought. Founded by John Maynard Keynes, it rose up from the ruins of World War One and later the Depression, in which it became the ideological architecture of FDR’s New Deal, promoting a three-way system of checks and balances between businesses, labor unions, and government.

It especially gained popularity after World War Two, when millions of the disaffected poor decided that they wanted a bigger share of the economic pie, instead of letting bankers and corporations take the lion share of their wealth, as was orthodoxy in the Gilded Age and the Roaring Twenties (it would become orthodoxy yet again, we will see, after the Neoliberal coup d’état of virtually every country in the world in the late 70’s and early 80’s).

Keynes, who saw the ravaging of Germany’s economy following World War One and the subsequent fascism this economic ravaging vomited up, knew that the whims of corporations, of the free market, had to be kept in check. As such, he promoted price controls, minimum wages, and worker’s protection rights- regulations, in other words, that protected the poor from getting screwed by the rich.

Keynesianism was largely orthodox following the Second World War, and though it was a tenuous three-way relationship, with business and finance powers constantly vying for power, 1950’s America experienced relative economic stability.

Neoliberalism- The Keynesian Opposition

John Maynard Keynes, whose economic philosophy (popular under the New Deal Era) proposed a tripartite balance between government, finance, and labor unions: the intellectual opposite of Neoliberalism, which supported the evisceration of unions and the metamorphosis of the state into a private corporate mercenary army, all in the name of unchecked corporate power

All of this was wrong, according to the Neoliberals. New Dealers during the Depression, according to Hayek and Friedman- perhaps even infected with a tinge of socialist romanticism- had gone awry with the collective decision to give government and unions a bigger voice in the economy.

The economy, in the eyes of Friedman and his colleagues, was a hard-boiled science that could be understood as exactly as physics or geology, and the New Deal was nothing but a disastrous intervention that offset the natural economic balance that flourished therein.

Just as a Taoist (rightfully) believes that we shouldn’t try to change nature through interference, Neoliberals (wrongfully) believe that we should let the economy act itself out without intervention, without interruption- even at the expense of human and environmental suffering.

Ironically, most neoliberals reserved the majority of their venom for regulated Capitalists- the Keynesian sellouts- than for the Communists, in whose strict ideological purity they perhaps saw an intellectually flawed but nonetheless admirable resemblance to themselves.

The fact that Neoliberal thinkers were envisioning a magical nirvana- where the very real problems of environmental destruction, workers rights, and poverty didn’t figure into the picture- seems to have flown over their heads. But to their credit, their ideas seemed crystalline and beautiful to them at the time- even poetic.

Around the same time these intellectual machinations were taking place, the business elites of the Western World were facing an existential crisis of the highest order:

Neoliberalism- 1960's Protest.jpg

The Mass Protests of the 1960’s proved a serious existential threat to corporate power, and were the spark behind the Neoliberal Counterrevolution of the late 70’s and early 80’s

The mass, participatory protests of the 1960’s that called for widespread institutional reform (a movement viewed by many elites as a supposed “excess of democracy”) was the devilish cherry on top of two decades of perceived strangulation of business by Keynesian economics. Following the stagflation crisis of the early 70’s, several socialist parties had gained traction in Europe. And throughout Latin America and the Third World, Developmentalist politics- which advocated taking profits normally funneled off to foreign corporations and using them to develop homegrown infrastructure- was now becoming economic orthodoxy. Che Guevara, though executed at the hands of the CIA in Bolivia, was increasingly seen as a martyr for humanity, having achieved a quasi-sainthood for the millions of impoverished throughout the Global South. Salvador Allende, the first democratically elected Marxist in history, was in power in Chile.

All of these reforms seemed to settle their crosshairs on corporate power- none of which augured well for the survival of a supposedly imperiled business class.

What they needed was a change- a counterrevolution. They wished for a return to the golden days of 19th century, when corporations could act independently, free from government restrictions or taxes. As Lewis Powell wrote in his notorious “Powell Memorandum,” business elites felt they were under attack from all the reformist corners of society: activists, journalists, intellectuals, universities, and- most terrifyingly- the masses of people marching in the street. The business class would have to, Powell said, perform a full frontal assault on society, completely reconfiguring it towards the unfettered whims of business interests.

But they faced a problem: there was no viable way they could tell the reform minded public that they should reduce taxes on the rich and cut social spending for the poor without sounding like power-hungry monsters.

They needed a quasi-philosophical veneer to cloak their agenda, something beautiful and intelligent-sounding to justify their unsavory economic counterrevolution. This, of course, is where Neoliberal ideology comes into play.

Seizing upon the previously overlooked ideas of Hayek and Friedman, business oligarchs in the mid-70’s began pouring money massive right-wing “think tanks” such as the American Enterprise Institute, the Cato Institute, the Hoover Institution, and the Heritage Foundation that openly touted Neoliberal ideas. These ideological powerhouses were soon cranking out economic policy advisors who would, by the early 1980’s, stack almost all political cabinets in the Western World.

Politicians, at the behest of their corporate sponsors, began funding a string of CIA-orchestrated coups, beginning first with Chile and Argentina (Chilean President Salvador Allende was killed in a gun battle with his own military in the capital city of Santiago), that replaced socialist developmentalism with military dictatorships, each of whom imposed Neoliberal economic plans upon their populations through the use of torture, concentration camps, and death squads. In Argentina, 30,000 suspected leftists were killed between 1974 and 1983 in the so-called “Dirty War,” a massive state-run terror campaign which, amongst other tortuous practices, advocated dumping people who questioned Neoliberal Ideology into the ocean from airplanes.

Neoliberalism- Allende Coup

The 1973 Coup of Allende’s government, carried out in the name of destroying the Socialist government and creating a Neoliberal State, is considered by many to be the most violent episode in Chile’s history

Neoliberalism- Argentina Dirty War

30,000 suspected leftists were “Disappeared” by the Junta (in torture centers, thrown out of airplanes, killed in firing squads) during Argentina’s Dirty War, in which the government sought to cleanse Argentinian Society of any dissenting voices against its Neoliberal Agenda

Such a brutal, bloody transition to Neoliberalism was not out of the norm. In the coming years, millions of people throughout the Third World would be forced to undergo a similarly painful metamorphosis.

But making that transition in the First World proved more challenging; whereas in Third World dictatorships, the new economic ideology could be forcibly imposed on the population by simply killing off anyone who questioned the new government’s agenda (read: leftists), doing so was unacceptable in the United States and Europe, where democratic values and freedom of speech were supposedly held dearly. If they couldn’t force the populations to accept these reforms through blatant terror, they would use another tool: propaganda.

Throughout the 1980’s and 90’s the appearance of the very popular 24-hour TV news networks gave rise to what philosopher Noam Chomsky has called “Manufacturing Consent.” Corporate Networks such as CNN capitalized on the immense power of TV to influence public opinion with ideological cant, filling up airtime with only those who would cater to corporate power, exiling any intellectual dissidents, propping up politicians who railed furiously against “Big Government Interventionism” (by now the concept had become a dirty phrase in the public subconscious).

Neoliberalism- Manufacturing Consent

Over time this pattern would become more extreme- we see it playing a large part when corporate networks were abetting and propagating the largest neoliberal project yet, the Western invasion of Iraq in 2003. And the pattern has continued since then.

The coinciding elections of Ronald Reagan and Margaret Thatcher also proved a boon for Neoliberal Economics.

Neoliberalism- Reagan Thatcher

Ronald Reagan, with his inherent charm, eloquence, and actor’s good looks (and a darker, less-charismatic cabinet stacked with extremist followers of Hayek and Friedman) tapped into the reservoir of the American subconscious that values freedom and self-determination above all else, using his soft-spoken, poetic speeches to fuse those values with the values of Neoliberalism, accusing any government regulations directed against corporations as quasi-Communist, anti-American infringements against the freedom of man, insinuating that corporate freedom is no different than individual freedom. “Government is the problem, not the answer,” he used to love saying.

In the U.K., following the nationalistic hysteria of the Falklands War, Thatcher, the slightly less eloquent though equally charismatic counterpart to Reagan (defined by her stolidly austere “Iron Lady” persona), forced through countless deregulation measures in the early 80’s, crushing unions (she would famously destroy the Welsh miner’s unions- Reagan, the aircraft controllers union), and using her rhetoric to push forward the Neoliberal Agenda. She herself was a devout follower of Hayek, and used to idealistically equate her painful economic reforms to the bitter medicine prescribed to a patient by a doctor.

Neoliberalism- No Alternative

Thatcher was fond of suggesting that Neoliberalism was the only path out of Economic Crisis’

As a result of this takeover, both the Democrats and Republicans in the United States, while maintaining many of their social differences, have drifted unilaterally to the Right with regard to their financial policies, supporting large scale deregulations and trade deals.

Neoliberalism-CartoonThe result of the Neoliberal coup d’état, which was completed in the early 80’s and has since been solidifying with increasing strength, has not painted a pleasing panorama upon the world’s canvas. It has led to countless dictatorships in the Third World and a political brainwashing in the First. It is largely culpable for the increasing collapse of the global ecosystem and the growing gap between rich and poor. It was also, as we will see, the reason behind the Zapatista Uprising. If we let it go on much longer, it will likely lead to our own demise.

If we wish to fight these forces and move into a better world, we need to drop any older narratives and be ready to admit the obvious: Neoliberalism is not good for us, and it needs to be replaced with something better.

2 thoughts on “A Dark History of Neoliberalism

  1. Pingback: A Dark History of Neoliberalism | Jared Olson

  2. Pingback: How the Zapatistas Resisted Neoliberalism | Jared Olson

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s