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Neoliberalism as a Social Movement from Above

by Alf Nilsen on April 6, 2015
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In the first post of this series of three, Laurence Cox focused broadly on social movements and Marxism in ‘Thinking Marxism and Social Movements’. This second in the series aims to highlight and detail how we try, in our book We Make Our Own History, to offer a substantial analysis of how different phases of capitalist development derive their distinct political economies from cycles of struggle between social movements from above and social movements from below in the context of systemic crises. This approach follows from our insistence on understanding social movements in terms of the structured agency through which history is made and aims at a politically enabling reading of accumulation strategies and forms of state as contested and contingent products rather than systemic givens.

Now, whereas our book outlines a long view of how capitalism has been shaped by cycles of struggle from its historical emergence through processes of primitive accumulation, colonialism and bourgeois revolution onwards, we focus here on how neoliberalism can be understood as a social movement from above and discuss some of the key features of its current crisis—a crisis which we refer to as the twilight of neoliberalism.

The neoliberal project originates in the collapse of the state-centred form of capitalist development that was hegemonic across the North-South axis from the post-war years until the early 1970s, and which was shaped in very fundamental ways by reforms that had been won by the social movements of working classes and colonised peoples in the first half of the twentieth century. Crucially, this unravelling took the form of a crisis that was simultaneously economic and political: the economies of the global North stagnated while those of the global South witnessed the accumulation of vast debts, and elites across the North-South axis found themselves confronted with new waves of labour militancy and radical popular movements that destabilised their hegemonic positions. In our analysis, neoliberalism is best understood as a collective response to this situation, predicated above all on restoring the power of capital over labour by reversing many of the victories that had been won by social movements from below, and in doing so disembedding capitalist accumulation from the institutionalised regulations that had circumscribed commodification in the post-war years.

How do we make sense of this response in terms of collective agency from above? In We Make Our Own History, we focus on the confluence of a series of processes with different gestation periods. Firstly, the emergence of what Daniel Stedman Jones refers to as “the intellectual infrastructure of neoliberalism” is of crucial importance. This process, which originated as far back as the interwar period, revolved around the building of a transatlantic network of think-tanks that created and synthesized a neoliberal policy agenda as an alternative to the Keynesian orthodoxy that prevailed in the postwar era.

The making and the operations of this network—comprising, inter alia, the Mont Pelerin Society, the American Enterprise Institute, and the Centre for Policy Studies—were in turn closely linked to a second key process, namely the rise of a significant fraction of corporate capital that sought to break with the regulatory regimes of postwar capitalism and their grounding in the nation state. During the 1960s and 1970s, this fraction—which we refer to as transnational capital—became increasingly organised and increasingly systematic in their advocacy of neoliberal policy prescriptions. Thirdly, the political breakthrough of the neoliberal project in the global North was ensured by the construction of links between think-tanks, transnational capital and forces in British and American politics that promulgated new policy regimes which fused sociocultural conservatism with a market-oriented critique of Keynesian economics.

leadersWhereas the breakthrough of the neoliberal project in the global North was heralded by the electoral victories of Thatcher and Reagan, its global extension was achieved through the response of leading international financial institutions such as the World Bank and the IMF to the outbreak of a crippling debt crisis in the global South in the first half of the 1980s. Expressing how neoliberal ideas had come to define the policy agenda of these institutions, the crisis was met with Structural Adjustment Programmes that enforced thoroughgoing restructuring through financial austerity and economic liberalisation. This process, however, was not one in which Northern institutions simply imposed a policy agenda on states in the South. Rather, the process was driven in equal measure by the agency of elite groups in the global South who sought to break with the state-led developmentalism that had prevailed across Asia, Africa and Latin America since the post-war years. Indeed, the authoritarian regimes that were installed in Chile and Argentina in the 1970s provided a vital arena for dress rehearsals that foreshadowed the neoliberal turn that followed in subsequent decades.

The 1990s witnessed some key changes in the form of the neoliberal project, for example, the New Right gave way to New Labour and “poverty reduction” came to substitute for structural adjustment, in a turn which emphasized technocratic institution-building to secure the long-term consolidation of the project’s key achievement—the disembedding of the market and the restoration of the power of capital over labour.

If we take a step back and consider neoliberalism as a whole, we see these achievements inscribed in its political economy.

In terms of economic restructuring, the neoliberal project was oriented towards restoring profitability for corporate capital, and this has been achieved by breaking the power of organised capital and reversing the processes of decommodification that characterised state-centred capitalism (in various ways and to different degrees) after 1945. The power of organised labour was undermined through the construction of a new geography of production: the large-scale relocation of manufacturing from North to South enabled capital, on one hand, to break free from the compromises that had been struck with working-class movements in the post-war era, and, on the other hand, to benefit from the availability of massive pools of cheap labour in Asia and Latin America in particular. Decommodification has been reversed through a range of practices that David Harvey refers to as “accumulation by dispossession” – basically, the conversion of public goods and services, elements of the social wage, and common property resources into capital through state-orchestrated processes of privatisation and financialisation.

If judged in terms of its ability to restore profitability, the neoliberal project has been a success: in contrast to the stagnation of the 1970s, the neoliberal decades have witnessed profits at 60 to 75 per cent of the record levels of the 1950s and 1960s. However, the restoration of profits has gone hand in hand with an ever-growing gap between productivity and wages. As production has been reorganised in the North and the exploitation of cheap labour in the South has increased, the wealth created by the global working classes has accrued largely to capital. The manifestation of this lop-sided trajectory can be found in the staggering level of inequality that characterises the world economy: according to recent estimates, the richest 1 per cent of the world’s population will control more than 50 per cent of global wealth by 2016. In the OECD countries, inequalities increased steadily between 1978 and 2007, and this trend has been exacerbated further by the impact of economic crisis over the past six years. And in the emerging markets in the global South – India, China, and South Africa being cases in point – economic growth has coincided with dramatic increases in inequality between ascendant elites and the mass of the population.

percentAs a social movement from above, the neoliberal project has been fundamentally concerned with first seizing and then transforming the state in some very important respects. This is evident in the way that the modus operandi of the state has increasingly come to centre in part on facilitating the disembedding of accumulation across space and in part on governing social insecurity through workfare and punitive containment. The disembedding of accumulation is propelled by the various ways in which states introduce policies that are geared towards securing property rights, liberalising national investment regimes, granting access to transnational capital, imposing fiscal restraint, and creating flexible labour markets. Significantly, much of this activity is closely related through imposition of binding constraints on macro-economic policy-making through agreements administered by international financial institutions and transnational inter-governmental bodies.

The new forms of social insecurity thrown up by neoliberal restructuring is increasingly governed through workfare regimes seeking to regulate an ever-growing population of unemployed and underemployed in relation to precarious labour markets by making access to benefits and assistance conditional upon participation in work-enforcing programmes. Whereas workfare can be understood as a way of imposing market discipline on individual bodies and everyday routines, the increasing orientation towards social control is also plain to see in the considerable growth of the scope and intensity of punishment that has unfolded in the neoliberal era. This is arguably most pronounced in the US context, where the racial and social profile of a prison population that has grown by some 450 per cent since the early 1980s mirrors – as Ruth Wilson Gilmore shows in her seminal study Golden Gulag – that of the country’s working or workless poor. However, punitive containment has also made inroads in Europe via transnational policy networks, and is particularly evident in the aggressive policing of the border zones between North and South. And in the global South, the trend is manifest in the increasingly militarised policing of the urban environments that are home to the region’s vast informal working classes.

Now, a key part of the argument that we put forward in We Make Our Own History is the claim that the crisis that erupted in 2008—contrary to much of the pessimism that pervades both journalistic and academic portraits of the current conjuncture—heralds the onset of the twilight of neoliberalism, that is, the current crisis may also be a terminal crisis. The story of this crisis is well known and need not be rehearsed here, other than to note that it was the very same accumulation strategies that were at the heart of the restoration of class power authored by the neoliberal project which fomented the collapse in world financial markets and subsequent debt crises and recessions for which austerity is being touted as a solution.

solution

What we want to highlight here is rather the fact that the current crisis—both in terms of its economic origins and in terms of its social consequences—have done much to erode the legitimacy of one the central ideological tropes of the neoliberal project, namely the claim that individuals who act as entrepreneurial financial subjects will stand and maximise their well-being through prudent investments in the marketplace. Crucially, this has eroded support for neoliberalism, especially, perhaps, among middle classes who banked on promises of material benefits and social mobility. In this context, the widespread application of austerity is not necessarily a sign of strength on the part of economic and political elites. Rather, it signals that social movements from below are confronted with elites who have no plan B, and who more often than not prefer coercion over consent in their encounters with the discontent of subaltern groups.

Adding to this scenario is the fact that the crisis of neoliberalism is deeply entwined with the unravelling of US hegemony in the world-system. This unravelling not only encompasses the waning of American economic supremacy since the 1970s, but, as evidenced in, for example, the erosion of support for the War on Terror, the new-found capacity of Latin American states to distance themselves from US tutelage, and the failure to garner support for military interventions in Georgia, Syria and the Ukraine, also indicates clear tendencies towards the weakening of Washington’s geopolitical clout.

troikaThis, then, is the twilight of neoliberalism: a moment in which political and economic elites are evidently incapable of solving fundamental contradictions through new hegemonic projects. And this is the terrain upon which movements from below mobilise to make their own history after the twilight of neoliberalism fades to black. It is these movements and the strategic challenges that they face that are the focus of the third and final instalment in this series of blog-posts, the next one by Laurence Cox.

Alf Nilsen

Alf Gunvald Nilsen is Associate Professor at the Department of Global Development Studies and Planning at the University of Agder and Research Associate at the Society, Work and Development Institute at the University of the Witwatersrand.

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