Authoritarian Neoliberalism and the Myth of Free Markets

Far from acting in the name of freedom, neoliberalism has always been about the coercive, non-democratic and unequal reorganization of societies — even more so after 2008.

Since the inauguration of the so-called War on Terror in 2001, but especially since the outbreak of global financial crisis in 2008, there has been much talk of the “return of the state.” At first, this notion was related to the increasing ubiquity of security themes after 2001, and later it was invoked in commentary on the massive bailouts of financial institutions. But while it is clear that state activities did become more visible after the turn of the century, misleading conclusions have been drawn about what this means for how we think about contemporary societies.

Most obviously, “the return of the state” has been invoked to declare a crisis of neoliberalism, with various commentators arguing that it is essentially a broken ideology, intellectually discredited by years of crisis and a permanently higher level of “exceptional” state interventionism. This argument has become increasingly widespread in the last few years, with the rise to power of a range of leaders and parties openly hostile to what are viewed as axioms of neoliberalism, such as free trade globally and free markets domestically. In other words, surely it is only a matter of time before neoliberalism withers away under the pressure of political opposition?

In the Name of Markets

This question is all the more pertinent in the aftermath of Donald Trump’s election victory. Trump appears to be the antithesis of neoliberalism, promising to tear up accords such as the North American Free Trade Agreement, calling for protection of American industries and workers, and indulging in nationalist and at times explicitly racist rhetoric. Moreover, he is just the latest, and most high-profile, example of right-wing populist leaders and parties to have assumed power on the back of such a platform — think of Putin in Russia, Modi in India, Abe in Japan, and Erdogan in Turkey.

Yet it is only possible to consider such leaders opponents of neoliberalism if neoliberalism itself is defined in an unacceptably narrow and misleading manner — as an ideology and political programme characterized by the valorization of free markets. The aura surrounding neoliberalism leads us to assume this to be so, but it is dangerous and foolhardy to buy into this. Otherwise, we perpetuate a key and crippling deficiency in the left’s default mode of thinking about neoliberalism. Currently, the unspoken assumption is that the fight against neoliberalism is synonymous with the fight against free markets. This means that, every time a politician of the right — be it Trump, Putin, you name it — says something critical about free markets, supporters of progressive and radical politics are on the back foot. How else could it be, if everyone seems to be in agreement about the need to limit and constrain markets? What is the point of the left in that case, apart from its asking for a “nicer” form of constraint on the market?

There is a surprisingly simple and liberating way out of this. Instead of tying ourselves in knots about how to oppose free markets when governments of all stripes seem to be doing just that, we could do something quite different. That is, call out neoliberals, both intellectuals and their proselytizers in politics and the media, for the fiction that they uphold. The rhetoric about free markets is just that: rhetoric.

This may surprise some people, but all it takes is to choose a sample of neoliberal intellectuals — Friedman, Hayek, Müller-Armack or whoever — and actually read what they wrote, without preconceptions. And here we find, quite consistently, the invocation of the free market as an abstract principle followed by the clear preference for certain types of markets to prevail in practice. Hence, neoliberalism is about the creation and maintenance of the kinds of markets that it wishes to see, with a central role accorded to the state in this process. Not in a democratic way, to be sure, but in a manner that is consistent with certain types of markets.

This should be only the start of our critique, but unfortunately these observations — which are commonplace among critical scholars and activists — are taken to mean that neoliberalism has simply got lost along the way. Indeed, some on the right agree, with the well-known Adam Smith Institute recently choosing to call itself neoliberal rather than liberal, in an attempt to strengthen the connection between what it calls free market libertarianism with neoliberalism. The problem is that even this stance lets neoliberalism off the hook, as if we cannot let go of the assumption that, even if it all goes wrong in practice, neoliberalism in principle is somehow, deep down, committed to free markets.

So, let’s put this bluntly: neoliberalism has nothing to do with markets as commonly conceived, and everything to do with the orchestration of social relations in the name of markets. As a result, neoliberalism in principle and in practice is fundamentally about the coercive, non-democratic and unequal reorganization of societies along particular lines. And what are those lines? The intensification and extensification of the differences, inequalities, hierarchies and divisions which pervade capitalist society, as delivered by authoritarian states and global corporations. Therefore, we must always keep in mind that neoliberalism, as an ideology and as a set of “real-life” practices, is a way of seeing the world that is carved from the empty words “free” and “markets.”

The Rise of Authoritarian Neoliberalism

What does this mean, then, for what I have termed the rise of authoritarian neoliberalism? Clearly, to add the prefix “authoritarian” to what I have already defined as coercive, non-democratic and unequal in orientation, requires some explanation. The term neoliberalism was coined by the German ordoliberal Alexander Rüstow in 1938 at the Walter Lippmann Colloquium, organized to plan and agitate for the renewal of classical liberal principles such as “free enterprise.” The “neo” part recognized the different conditions in the mid-twentieth century compared to those of the nineteenth, with three factors in particular having grown in importance during the intervening period: trade unions, left political parties and state-provided public services such as social welfare. Hence, neoliberalism’s genesis in these socio-historical conditions meant that the project was, especially in so-called capitalist democracies after World War II, primarily focused on the erosion of substantive rights.

What I mean here is the reversal of social and economic gains made during the twentieth century via the presentation by neoliberals of alternatives at elections and through other forms of political participation, which emphasized themes such as individual liberties, “liberalization” of the economy from the dead hand of the state, and the need to reduce the power of so-called vested interests such as trade unions.

As we moved into the twenty-first century, the scope of neoliberalization began to widen to include formal rights, with alternations of different neoliberal governments as the only choice seemingly on offer. Building on successes in parts of the Global South, where there was greater scope for wrenching, sudden change in countries such as Chile, Indonesia and Uganda (through coups and imposed structural adjustment programs), and in parts of the post-socialist group of countries (such as Poland and Russia), where “shock therapy” was implemented in the early 1990s, growing demands were made of the so-called mature capitalist democracies as well.

Making Authoritarian Neoliberalism Politically Inevitable

The attacks of September 11, 2001 and the collapse of Lehman Brothers on September 15, 2008 were key catalysts for the erosion of formal as well as substantive rights, and these events did not contravene neoliberal principles because of the greater role for the state that they seemed to usher in. This famous quote from Milton Friedman, first articulated in 1982, is more appropriate for understanding what unfolded:

Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

After September 11, 2001, the “politically inevitable” development was the much more visible and extensive intertwining of commercial and security forms of power, leading to considerably greater possibilities for state control over populations. Two key aspects can be drawn out: (1) the explicit promotion of public-private partnerships (PPPs) within areas of the state such as defense and policing that are normally seen as beyond the reach of neoliberalization, at least regarding the role of private companies; and (2) the corporatization of everyday life by these PPPs in the name of security.

PPPs had emerged during the 1980s and especially the 1990s as potential “win-win” solutions to perceived problems connected to renewing existing or investing in new public infrastructure. In essence, national and local states would contract out these tasks to the private sector, which would cover upfront costs (for example, construction of buildings and roads) in return for annual payments from the state over a fixed number of years. In the context of lower levels of economic growth and higher levels of unemployment, it was argued that PPPs would benefit the population through a set of legal obligations that allowed public infrastructure to be less affected by other competing demands on the state budget. On the other hand, private companies would benefit from guaranteed returns on their capital investments and from the credibility accrued from providing a public service.

It is now well known that these idealized projections rarely occur in reality. Much more likely is that private companies enjoy considerable and sustained profits due to the significant gap between the cost of their investments and the total payments that accrue from the state, frequently delivering poor-quality infrastructure in the process. Moreover, in cases where the cost-income differential is lower, PPPs usually make it possible for firms to walk away from their legal obligations, leaving the state to pick up the bill. Another key issue is the relative absence of democratic oversight due to “commercial confidentiality” clauses — hardly something in the public interest.

Yet despite the mountain of evidence to the contrary, PPPs have become a normal part of state activity across the world because of the continued insistence on the likelihood of a “win-win” outcome. At this stage, left commentators often decry the tarnishing of “public” goods by “private” actors, demanding the expulsion of the latter from the provision of the former. However, this implies that all that is needed is for governments to realize the errors of their ways and turn their backs on marketization. Missing from such criticisms is the possibility that a new form of state is being constructed, regardless of efficiency or other similar considerations.

This also means that the explicit promotion of PPPs within defense and policing was already taking place before September 11, 2001. As documented by Naomi Klein, Donald Rumsfeld’s transformational project was underway as soon as he became the American Secretary of State of Defense in January 2001. The internal controversies that this generated were swept aside in the name of the War on Terror, with the waging of war becoming a permanent and necessary part of life — enduring military conflict abroad and the homeland security state at home. Under the mantra that governments (and therefore the general public) would benefit from the efficiency and innovation provided by private enterprise, intervention into other countries and intervention into citizens’ lives became increasingly subject to PPPs: think of companies such as Bechtel and Booz Allen Hamilton.

Klein calls this a market for terrorism, but it should be clear by now that, while it may have looked that way, no such market existed — at least in the common understanding of markets. It was instead the intensification and extensification of the ongoing project to reorganize societies in coercive, non-democratic and unequal ways. More intensive because of the penetration of the state’s repressive apparatus by the project; more extensive because of the increasingly visible and diverse states of control which this penetration made possible.

A key outcome has been the deliberate blurring of the lines between military and security functions in the form of the explosive growth of Private Military and Security Companies (PMSCs), operating across borders and in situations ranging from active involvement in war to routinely preventing public access to public spaces in cities. Of course, the Obama administrations have done nothing to check these developments, let alone reverse them, with the rise of drone warfare and surveillance being only the most obvious example. It is thus not surprising to learn that states worldwide have followed the lead of the US, with PMSCs becoming massive global organizations in the process.

Attacking Democracy to “Protect” It

This last point on preventing public access to public spaces connects the intertwining of commercial and security forms of power with other states of control. Far from being defeated by the eruption of global crisis in 2008, neoliberalism has in some respects become even more firmly entrenched, and in a more intensely and more explicitly anti-democratic form as well. In addition to the above, we have witnessed, across the world, a sustained attempt to erode formal rights in the name of “good capitalism.”

Once the threat of imminent global collapse had receded by the end of 2008, neoliberal intellectuals and proselytizers quickly moved to relocate responsibility for the crisis away from financial institutions, meaning that the key challenge was not to reform capitalism, or even finance, but states.  The inability to regulate appropriately either consumers or financial institutions resulted in the “immoralization” of finance and consequently states’ own budget deficits because of the bailouts of the banks.

Hence, states were declared guilty of permitting the massive excesses in the finance sector, meaning that the only way to prevent this from happening again was to impose self-binding constraints on states in the name of economic “necessity.” Since 2008, a whole raft of constitutional and legal changes has been introduced, explicitly seeking to subordinate the state to rules and procedures that constitutionalize austerity and normalize the ongoing degradation of public provision as a “neutral” objective. The best-known examples can be found in the European Union, where the rush to self-flagellate has led to the imposition of drastic forms of restructuring, especially on Greece — all in the name of the European social model. But it is a common theme across the world.

What this all means is that it is difficult for the population to overturn such constitutional and legal mechanisms, because of the super-majorities needed in parliament to do so. While constitutions are often associated with political and social rights, one always has to ask “what kind of constitution?” Otherwise, these deliberate acts of self-disempowerment form the basis for further rounds of de-democratization. This is especially the case when protests emerge in response to, for instance, the constitutionalization of austerity, which are then met with violent policing tactics in the name of democracy.

Take, for instance, the so-called “gag” laws introduced in Spain in the summer of 2015, which significantly restrict and to a degree criminalize the freedom of assembly and protest. This includes being disrespectful to police officers and trying to prevent an eviction from taking place — activities far removed from more traditional notions of “public disorder”. For a similar set of legal provisions and restrictions, consider Canada’s C51 Bill, passed in 2015.

We could also reflect on the routine practices of police violence and the illegal mobilizations of juridical power across the globe, be it the repression of the Occupy movement in the US in 2011, the massacre of striking miners in South Africa in 2012, the violent crackdown on the Gezi Park protests in Turkey in 2013, or the kidnap and mass killing of students in Mexico in 2014. Consider, too, how the protests, strikes and resistance movements have been framed: as an “extremist” attack on “democracy,” thus justifying or at least explaining away the coercive reaction.

The Mask Slips

This all paints a bleak picture: an ideology that actively promotes the coercive, non-democratic and unequal reorganization of society seems to have had repeated successes in eroding substantive and formal political and social rights. Since 2001, this process has been driven by the much more visible and extensive intertwining of commercial and security forms of power. Since 2008, these developments have been aligned with constitutional and legal changes that explicitly seek to restrict democratic rights in the name of economic necessity, meaning that protests against such restrictions can be labeled as “extreme” and therefore “justifiably” responded to in coercive fashions in the defense of democracy. Central to both has been the continued extension of PPPs into hitherto unexplored parts of the state and the ongoing corporatization of everyday life in the name of security by PMSCs.

Nevertheless, these processes and developments are highly contradictory. The increasingly naked assault on substantive and formal rights, the ever-clearer sense that rhetoric about security and liberty means the corporatization of life, the growing recognition that talk of the “free market” no longer masks the centrality of governments to the (re)production of massive inequalities, all indicate that the state — for so long assumed to embody the will of the people in democratic and non-democratic societies alike — is part of the problem and needs to be challenged rather than relied upon to deliver the public or social goods.

Neoliberalism has always been about the reconceptualization and not the amputation of the state, according it a central role in producing the kind of society that neoliberals wish to see. However, it is less possible nowadays to mask this with the empty words “free” and “markets,” meaning that as the state becomes seemingly stronger and more authoritarian, it simultaneously evolves into a more fragile and delegitimized entity.

The strengthening/weakening of capitalist states in times of authoritarian neoliberalism makes them an increasingly direct target of a range of popular struggles, demands and expressions of discontent by way of the pressures emanating from this contradictory process. The problem for the politics of the left is that such developments are multi-form, ranging from radical right-wing populism to those favoring a return to classical social democracy and again to autonomous movements seeking to prefigure a better world.

Furthermore, the first of these, right-wing populism, is more than capable of allying with more mainstream forms of authoritarian neoliberalism (see Trump in the US and various governing coalitions in Europe); the second, classical social democracy, is discredited in the eyes of many for its compromises since the 1980s; and the third, autonomous movements, have yet to reckon fully with the increasingly visible and diverse states of control discussed in this article (additional examples here include Genoa in 2001, Zuccotti Park in 2011, and the 2016 coup in Brazil).

Nevertheless, there are new opportunities for resistance, alliance and prefigurative self-organization, and there are already plenty of examples that explicitly recognize what the state of play is. These point us towards a more equitable world in which states and societies are transformed in the name of values such as equality, justice, dignity and solidarity. But, as noted earlier, a formidable obstacle stands in the way: the continued, instinctive equation of neoliberalism with free markets. Given that many commentators view neoliberalism as a “living dead” worldview that is intellectually discredited yet still dominant, the question has to be asked: how do we stop viewing neoliberalism and “free markets” as synonymous?

To answer that question, it is essential that we remove our preconceptions and call out neoliberal intellectuals and proselytizers for what they are: disseminators of fiction about freedom and markets who actually value, above all else, coercion, de-democratization and grotesque inequalities, central to which are global corporations and authoritarian states. Rather than allow others to carve a vision out of empty words, we ought to drag ourselves onto our own path.

This post originally appeared in ROAR Magazine, Issue #4 – an independent journal of the radical imagination providing grassroots perspectives from the front-lines of the global struggle for real democracy – and is re-posted here as a result of their Creative Commons licence.