Neoliberalism as economic theory was always an absurdity. It had as much validity as past ruling ideologies such as the divine right of kings and fascism's belief in the Übermensch. None of its vaunted promises were even remotely possible. Concentrating wealth in the hands of a global oligarchic elite -- eight families now hold as much wealth as 50 percent of the world's population -- while demolishing government controls and regulations always creates massive income inequality and monopoly power, fuels political extremism and destroys democracy. You do not need to slog through the 577 pages of Thomas Piketty's "Capital in the Twenty-First Century" to figure this out. But economic rationality was never the point. The point was the restoration of class power.
As a ruling ideology, neoliberalism was a brilliant success. Starting in the 1970s, its Keynesian mainstream critics were pushed out of academia, state institutions and financial organizations such as the International Monetary Fund (IMF) and the World Bank and shut out of the media. Compliant courtiers and intellectual poseurs such as Milton Friedman were groomed in places such as the University of Chicago and given prominent platforms and lavish corporate funding. They disseminated the official mantra of fringe, discredited economic theories popularized by Friedrich Hayek and the third-rate writer Ayn Rand. Once we knelt before the dictates of the marketplace and lifted government regulations, slashed taxes for the rich, permitted the flow of money across borders, destroyed unions and signed trade deals that sent jobs to sweatshops in China, the world would be a happier, freer and wealthier place. It was a con. But it worked.
"It's important to recognize the class origins of this project, which occurred in the 1970s when the capitalist class was in a great deal of difficulty, workers were well organized and were beginning to push back," said David Harvey, the author of "A Brief History of Neoliberalism," when we spoke in New York. "Like any ruling class, they needed ruling ideas. So, the ruling ideas were that freedom of the market, privatization, entrepreneurialism of the self, individual liberty and all the rest of it should be the ruling ideas of a new social order, and that was the order that got implemented in the 1980s and 1990s."
"As a political project, it was very savvy," he said. "It got a great deal of popular consent because it was talking about individual liberty and freedom, freedom of choice. When they talked about freedom, it was freedom of the market. The neoliberal project said to the '68 generation, 'OK, you want liberty and freedom? That's what the student movement was about. We're going to give it to you, but it's going to be freedom of the market. The other thing you're after is social justice -- forget it. So, we'll give you individual liberty, but you forget the social justice. Don't organize.' The attempt was to dismantle those institutions, which were those collective institutions of the working class, particularly the unions and bit by bit those political parties that stood for some sort of concern for the well-being of the masses."
"The great thing about freedom of the market is it appears to be egalitarian, but there is nothing more unequal than the equal treatment of unequals," Harvey went on. "It promises equality of treatment, but if you're extremely rich, it means you can get richer. If you're very poor, you're more likely to get poorer. What Marx showed brilliantly in volume one of 'Capital' is that freedom of the market produces greater and greater levels of social inequality."
The dissemination of the ideology of neoliberalism was highly organized by a unified capitalist class. The capitalist elites funded organizations such as the Business Roundtable and the Chamber of Commerce and think tanks such as The Heritage Foundation to sell the ideology to the public. They lavished universities with donations, as long as the universities paid fealty to the ruling ideology. They used their influence and wealth, as well as their ownership of media platforms, to transform the press into their mouthpiece. And they silenced any heretics or made it hard for them to find employment. Soaring stock values rather than production became the new measure of the economy. Everything and everyone were financialized and commodified.
"Value is fixed by whatever price is realized in the market," Harvey said. "So, Hillary Clinton is very valuable because she gave a lecture to Goldman Sachs for $250,000. If I give a lecture to a small group downtown and I get $50 for it, then obviously she is worth much more than me. The valuation of a person, of their content, is valued by how much they can get in the market."
"That is the philosophy that lies behind neoliberalism," he continued. "We have to put a price on things. Even though they're not really things that should be treated as commodities. For instance, health care becomes a commodity. Housing for everybody becomes a commodity. Education becomes a commodity. So, students have to borrow in order to get the education which will get them a job in the future. That's the scam of the thing. It basically says if you're an entrepreneur, if you go out there and train yourself, etc., you will get your just rewards. If you don't get your just rewards, it's because you didn't train yourself right. You took the wrong kind of courses. You took courses in philosophy or classics instead of taking it in management skills of how to exploit labor."
The con of neoliberalism is now widely understood across the political spectrum. It is harder and harder to hide its predatory nature, including its demands for huge public subsidies (Amazon, for example, recently sought and received multibillion-dollar tax breaks from New York and Virginia to set up distribution centers in those states). This has forced the ruling elites to make alliances with right-wing demagogues who use the crude tactics of racism, Islamophobia, homophobia, bigotry and misogyny to channel the public's growing rage and frustration away from the elites and toward the vulnerable. These demagogues accelerate the pillage by the global elites while at the same time promising to protect working men and women. Donald Trump's administration, for example, has abolished numerous regulations, from greenhouse gas emissions to net neutrality, and slashed taxes for the wealthiest individuals and corporations, wiping out an estimated $1.5 trillion in government revenue over the next decade, while embracing authoritarian language and forms of control.
Neoliberalism generates little wealth. Rather, it redistributes it upward into the hands of the ruling elites. Harvey calls this "accumulation by dispossession."
"The main argument of accumulation by dispossession rests on the idea that when people run out of the capacity to make things or provide services, they set up a system that extracts wealth from other people," Harvey said. "That extraction then becomes the center of their activities. One of the ways in which that extraction can occur is by creating new commodity markets where there were none before. For instance, when I was younger, higher education in Europe was essentially a public good. Increasingly [this and other services] have become a private activity. Health service. Many of these areas which you would consider not to be commodities in the ordinary sense become commodities. Housing for the lower-income population was often seen as a social obligation. Now everything has to go through the market. You impose a market logic on areas that shouldn't be open to market."
"When I was a kid, water in Britain was provided as a public good," Harvey said. "Then, of course, it gets privatized. You start to pay water charges. They've privatized transportation [in Britain]. The bus system is chaotic. There's all these private companies running here, there, everywhere. There's no system which you really need. The same thing happens on the railways. One of the things right now, in Britain, is interesting -- the Labour Party says, 'We're going to take all of that back into public ownership because privatization is totally insane and it has insane consequences and it's not working well at all.' The majority of the population now agrees with that."
Under neoliberalism, the process of "accumulation by dispossession" is accompanied by financialization.
"Deregulation allowed the financial system to become one of the main centers of redistributive activity through speculation, predation, fraud, and thievery," Harvey writes in his book, perhaps the best and most concise account of the history of neoliberalism. "Stock promotions, ponzi schemes, structured asset destruction through inflation, asset stripping through mergers and acquisitions, the promotion of levels of debt incumbency that reduce whole populations even in the advanced capitalist countries to debt peonage. To say nothing of corporate fraud, dispossession of assets, the raiding of pension funds, their decimation by stock, and corporate collapses by credit and stock manipulations, all of these became central features of the capitalist financial system."