Neoliberalism’s Dominant Narrative

under the carpet

Use of the term ‘neoliberalism’ is widespread in the social sciences. While debates have raged since the 2008 economic crisis as to whether neoliberalism persists or has faltered, many argue it remains ‘the mode of existence of contemporary capitalism’ (Saad-Filho 2010, 242). Use of the term has, however, often obscured its meaning. For example, many refer to a ‘neoliberal era’, signposting the period after the end of the long post-WWII boom, while others argue it is a theoretical rejection of Keynesianism. Some understand neoliberalism as a necessary economic policy reaction to the crisis of the 1970s, in order to restore stable accumulation, while others focus on the political dimensions that brought it into being. Additionally, a growing number of writers emphasise that ‘actually existing neoliberalism’ is a practical departure from the prescriptions of the (neoclassical) theoreticians who are its supposed authors. Still others posit greater continuity between the neoliberal era and that prior, and reject the term as unhelpful.

Addressing the question of whether the term still has value, Jamie Peck points out there is ‘no point in holding onto the concept of neoliberalism for its own sake. Clearly it has to be doing some work’ (interview with Brogan 2013, 183). While it is clear the term is used in different ways, and in a manner that can obscure rather than clarify, for Peck the ‘work’ the term does ‘is to force you to think through connections across different geographical sites and historical time periods…connections between neoliberal projects in one place and another, their family resemblances and structural features’ (ibid 2013, 183). The connections – be that the global profitability crisis that emerged in the 1970s or the efforts of elites to restrict union power – must be considered concretely in any location. Peck’s position reminds me of Gramsci’s note that  ‘the most essential quality of the critic of ideas and of the historian of social development’ is the effort in ‘[f]inding the real identity underneath the apparent differentiation and contradiction and finding the substantial diversity underneath the apparent identity’ (1975, 128–129, Q1 §43).

My research examines the connections between the Prices and Incomes Accord and neoliberalism in Australia. For me, the question is not only of the debate as to how neoliberalism is understood, but the persistence of a dominant narrative regarding neoliberalism and the problems this creates for examining it in Australia. Critical accounts of neoliberalism have been modelled on paradigmatic cases such as those of the US and UK and have, therefore, privileged a particular narrative as to its origin story. In terms of analysing neoliberalism in Australia, three aspects of this dominant narrative have created confusion as to how the ‘modified Keynesianism’ (Peetz 2013) of the Accord could be related to neoliberalism.

The three aspects of the dominant narrative that relates to my work are as follows. Firstly, that the origin account and seminal neoliberal types are to be found in the experiences in Chile, the UK and the US. Such an account sees the development of neoliberalism as based on its export from those locations to elsewhere, rather than understanding it as a global process from the start. Secondly, that social democratic parties weren’t significant in the introduction of neoliberalism in its vanguard period (late 1970s-mid 1980s), only implementing it in moderated forms and in the wake of the projects of the New Right. Thirdly, that coercive state action has been the key way in which reforms were implemented, such as: direct state coercion by dictatorships, defeat of trade union resistance by the state through set piece confrontations, imposition of structural adjustment in the Global South, and use of shock or crisis to impose neoliberal change. Importantly for my work, the place of social democratic parties and labour movements is demarcated: in the case of the former they become the followers of hegemonic neoliberalism, and in the case of the latter the victims of it.

The dominant narrative is found in much of the literature, including, and most particularly, in the widely read accounts of David Harvey and Naomi Klein. However, even authors such as Neil Brenner, Jamie Peck and Nik Theodore — who are central in emphasising the diversity of neoliberalism across time and space — have an implicit dominant narrative underpinning their account. In this post I will look briefly at these three interpretations.

David Harvey: A Brief History of Neoliberalism

David Harvey’s theory of neoliberalism, which I considered in an earlier post, emphasises the ‘uneven geographical development and…the complex ways in which political forces, historical traditions, and existing institutional arrangements all shaped why and how the process of neoliberalisation actually occurred’ (2005, 13). Nevertheless, Harvey posits the origins of neoliberalism as principally the story of its development in Chile, the New York City fiscal crisis, and the governments of Ronald Reagan and Margaret Thatcher. Those four locations form the cornerstone of his analysis. He states that the ‘first experiment with neoliberal state formation’ in Chile, in the wake of the Pinochet coup on 11 September 1973, was achieved through the US’s central role in overthrowing the Allende government and the influence of ‘the Chicago boys’ when they were ‘summoned to help reconstruct the Chilean economy’ (2005, 8). That Chile and the experience in New York (where neoliberalism defeated the union representing council workers), plus the intellectual influence of the Mont Pèlerin Society and University of Chicago trained economists, guided the Reagan and Thatcher governments in implementing neoliberalism in two of the world’s largest economies. The US and UK governments ‘seized on the clues they had (from Chile and New York City) and placed themselves at the head of a class movement that was determined to restore its power’ (2005, 63) across the globe. Harvey argues that, although a map of neoliberalisation is difficult to construct because of its only partial progress in most countries, nevertheless it was clear that ‘the UK and the US led the way’ (2005, 88).

Harvey draws a distinction between the introduction of neoliberalism by dictatorships, in Chile and Argentina, and its democratic introduction after 1979 by Thatcher and Reagan. He argues the introduction of neoliberalism in those locations was achieved through the construction of consent, and draws on Gramsci’s notion of ‘common-sense’ to argue assent was developed through various ideological and cultural mechanisms constructed on the material basis of the experience of daily life under capitalism in the 1970s (2005, 40–41). Central to his analysis of how consent was constructed, however, are acts of coercion. Harvey sees the disciplining of labour by Thatcher and Reagan through economic policy and the provocation of important industrial disputes as fundamental to their ability to introduce reforms. Inflation and a rising wave of unemployment, in Europe and in the United States, ‘created the conditions for a new discipline of labour’ imposed by the US and UK states (Duménil et al. 2005, 11). The defeat of unions in key confrontations (with air traffic controllers in the US and miners in the UK) also provided a more coercive tool to those governments.

Harvey argues that following the introduction of neoliberalism in these locations, all states have ‘embraced, sometimes voluntarily and in other instances in response to coercive pressures, some version of neoliberal theory and adjusted at least some policies and practices accordingly’ (2005, 3). He assigns, for the most part, a passive role to social democratic parties. Harvey makes limited reference to neoliberal reforms by social democratic parties, but he does not consider locations where the introduction of neoliberalism in the early 1980s was accomplished by such political formations – most particularly the labour governments in Australia (from 1983) and New Zealand (from 1984). Further, if we look to Harvey’s discussion of the Third Way approach of the governments of Tony Blair and Bill Clinton we see further accent on the passivity of social democratic formations and the constraint of such parties in the wake of the implementation of neoliberalism by governments of the Right. Harvey argues that the greatest testimony to the success of neoliberalism in democratic countries is that it resulted in the more progressive governments that followed Reagan and Thatcher finding ‘themselves in a situation where their room for manoeuvre was so limited that they could not help but sustain the process of restoration of class power even against their own better instincts’ (2005, 62–63 my emphasis). That is, for Harvey the ‘genius [of Reagan and Thatcher] was to create a legacy and a tradition that tangled subsequent politicians in a web of constraints from which they could not easily escape. Those who followed, like Clinton and Blair, could do little more than continue the good work of neoliberalisation, whether they liked it or not’ (2005, 63).

Harvey’s inclusion of the rise of neoliberalism in some locations and not others, locates a partial account of neoliberalism’s origins focussed on the New Right and efforts from above. An ‘ideal’ neoliberal trajectory is established as paradigmatic, to which other locations are compared. Further, Harvey’s focus exclusively on the US and UK as examples of the construction of political consent (2005, 39–63) confines our understanding of neoliberalism and its diverse manifestations. It posits social democratic governments as forms of rule unable to manoeuvre outside the constraints of already established neoliberalism once elected, and ignores the role of the Labour parties of New Zealand and Australia – and the active role of the labour movement in the case of the latter.

Naomi Klein: The Shock Doctrine

Naomi Klein’s popular account of neoliberalism in The Shock Doctrine (2007) argues that nation states have used ‘disasters’ of various kinds to transform aspects of society and implement neoliberal policies. She cites Milton Friedman’s argument that ‘only a crisis — actual or perceived — produces real change [and that when] a crisis occurs, the actions that are taken depend on the ideas that are lying around’ (Friedman 1962, xiv; Klein 2007, 140). Klein ‘sees neoliberalism as the manifestation of the inner logic of corporate capitalism and “shock” as the means by which it can be realised’ (Davidson 2010, 16). For Klein, the timing of such shock therapy as related to a political ‘counter-revolution’ against the Keynesianism and social ‘compromise’ of the long boom. She provides an ideas-centred account of neoliberalism (Cahill 2013), where Friedman and those trained in the neoclassical tradition working within governments used political and economic crisis, as well as natural disasters, to impose neoliberal restructuring.

Klein argues the origins of neoliberal ‘shock-therapy’ are to be found in the ‘laissez-faire laboratory’ of the Pinochet coup in Chile in 1973 (2007, 75–87), followed by the Argentinian military dictatorship of 1976-1983 (Klein 2007, 98–115). Similarly to Harvey, she sees the implementation of neoliberalism by Thatcher as a process of its transition to a democratic footing – and argues neoliberalism, ultimately hated by the British public, was ‘saved’ by the manufactured shock of the Falklands War (Klein 2007, 131–141). Klein also examines the rise of ‘disaster capitalism’ through the late 1980s and up to the present through various other shocks, including natural disasters like Hurricane Katrina, the disintegration of the Soviet Union after 1989, and through the invasion and wars in Iraq and Afghanistan. What is prominent in Klein’s account is her observation that neoliberalism does not enjoy common assent and has come about by a process of forcing economic change on populations at moments where social resistance is unlikely to develop. For Klein, neoliberalism is to a significant extent built on secret and hidden processes when the population is distracted by the impact of ‘shocks’.

There are a number of problems with Klein’s approach, some of which result from her acceptance of the dominant narratives as to how neoliberalism is introduced and other which result from her thesis of ‘shock’. Klein places ideas at the centre of her analysis and provides little to substantiate why certain ideas became influential in certain locations (Cahill 2013, 72). In understanding neoliberalism as the ideological defeat of Keynesian ideas (Klein and Smith 2008, 584), she limits her analysis to those locations where New Right governments enacted the political-economic transformation in the 1970s and 1980s. This fails to acknowledge how neoliberalism was introduced by social democratic parties in the vanguard neoliberal era, but also fails to explain examples of crisis after WWII where shocks didn’t happen associated with the introduction of neoliberalism or where shocks did occur but neoliberalism was not implemented (Davidson 2009, 168). In the case of the former she fails to account for why neoliberal restructuring took place in some locations without shocks (such as Australia and New Zealand), and in the case of the latter why greatly different economic policies were followed in various US backed coups (e.g. Indonesia in 1965 and Chile in 1973). While Klein usefully highlights how politics can shift quickly in situations of social crisis, with neoliberal reforms able to be introduced more quickly than at other points, this is more generally true of the history of capitalism and fails to provide specificity to understanding neoliberalism.

Peck, Theodore & Brenner: ‘Neoliberalisation’

That neoliberalism developed on different time scales, in different locations and in varied sequences, is emphasised in the work of critical geographers Jamie Peck, Nik Theodore and Neil Brenner. The authors argue that, given the multifaceted ways in which neoliberalism has concretely developed, there ‘is no paradigmatic ground zero’ (2009a, 104). They adopt the term ‘neoliberalisation’ to emphasise it is a process of ongoing renovation: it is not a process with a fixed endpoint — a utopian vision that capitalism struggles toward — but rather ‘should be conceived as [a] hegemonic restructuring ethos, as a dominant pattern of (incomplete and contradictory) regulatory transformation, and not as a fully coherent system of typological state form. As such, it necessarily operates among its others, in environments of multiplex, heterogeneous, and contradictory governance’ (2009a, 104).

Yet even in arguing this, Peck, Theodore and Brenner posit an origin and transmission thesis for neoliberalism which reflects the dominant narrative in the literature:

…neoliberal doctrines were deployed to justify, inter alia, the deregulation of state control over industry, assaults on organized labor, the reduction of corporate taxes, the downsizing and/or privatization of public services and assets, the dismantling of welfare programs, the enhancement of international capital mobility, and the intensification of interlocality competition.

Pinochet’s Chile represented the first example of neoliberal ‘shock treatment’, while Thatcherism and Reaganism were amongst its defining, vanguard projects. More moderate and muted forms of a neoliberal politics have also been mobilized in traditionally social-democratic or Christian democratic states such as Canada, New Zealand, Germany, the Netherlands, France, and Italy. Furthermore, following the debt crisis of the early 1980s, neoliberal programs of restructuring were extended selectively across the global South through the efforts of US-influenced multilateral agencies to subject peripheral and semi-peripheral states to the discipline of capital markets. (Peck et al 2009b, 50).

In this passage, the authors introduce a number of key elements of the dominant narrative. We are presented with an origins thesis that neoliberalism begins with Pinochet, Thatcher and Reagan. These seminal projects are then followed by, on the one hand, neoliberalism in social democratic states where it appears in a ‘moderate or muted’ form and, on the other, by the transmission of neoliberalism to the Global South. Further in this section of their text, the authors state that neoliberal doctrine was deployed to justify the project’s assault on organised labour – emphasising the trade unions as the object and victims of the political project. (Raewyn Connell and Nour Dados contend a similar point as to prevailing narratives in their work on Southern perspectives of neoliberalism, which I discuss here).

While at the same time emphasising the ‘more than contingent differences’ between ‘the actually existing reform programs found’ internationally (2009a, 104), the authors implicitly accept the UK and the US as ‘ideal’ models that other countries should be measured against. This is clear, for example, in their suggestion that the introduction of neoliberalism in New Zealand was a restrained version of the ‘full’ model in other locations. It is difficult to maintain a view that the vanguard neoliberal experience in New Zealand (dubbed Rogernomics after the Finance Minister Roger Douglas) is a ‘moderate’ or muted version of those that were developing simultaneously in the UK and US. Neoliberalism in New Zealand deregulated the country’s finance sector, undertook significant structural adjustment, significantly recomposed the state and welfare sector, and ensured a significant shift in the distribution of wealth and income away from labour (Roper 2005; Kelsey 2014; Kelsey 1995).

Conclusion

Despite these problems with their account, Peck, Theodore and Brenner also move us forward in the task of destabilising the dominant narrative of neoliberalism when they warn of placing a wall between neoliberalism and its ‘others’. They emphasise that neoliberalism does not stand ‘separate from other social formations and political projects’, and that seeing it as such ‘seriously misconstrues both the character of neoliberalism and the nature of its advance’ (2009a, 103). It is through understanding neoliberalism as advancing amongst and through its ‘others’, and in the case of Australia through the modified corporatism of the Accord, that a richer narrative of neoliberalism’s origins can be located.

I would argue that when an alternative account of the development of neoliberalism is prioritised and examined a new set of issues become central. Primarily from my research, this concerns the consensual role of labour in the production of neoliberalism in the period of the late 1970s and 1980s in Australia. Our understanding of neoliberalism will be enhanced by assessing its development in locations outside those that dominate current accounts, as will reflecting on what commonalities continue to exist within that diversity. As mentioned above, Gramsci points us in the right direction in the opening pages of his Prison Notebooks, when he challenges us to find identity underneath apparent differentiation as well as contradiction and diversity beneath apparent identity. Moreover, the dislodging of dominant narratives then allows us to reassess what has been excluded from the story of neoliberalism’s genesis in places like the US and UK.

References

Brogan, Peter. 2013. “Neoliberalisation and the Matrix of Action: In Conversation with Neil Brenner, Jamie Peck and Nik Theodore.” Alternate Routes: A Journal of Critical Social Research 24: 183–97.

Cahill, Damien. 2013. “Ideas-Centred Explanations of the Rise of Neoliberalism: A Critique.” Australian Journal of Political Science 48 (1): 71–84.

Davidson, Neil. 2009. “Shock and Awe.” International Socialism Journal 124: 159–78.

———. 2010. “What Was Neoliberalism?” In Neoliberal Scotland: Class and Society in a Stateless Nation, edited by Neil Davidson, Patricia McCafferty, and David Miller. Newcastle Upon Tyne: Cambridge Scholars Publishing.

Duménil, Gérard, Dominique Lévy, Alfredo Saad-Filho, and Deborah Johnson. 2005. “The Neoliberal (Counter-)Revolution.” In Neoliberalism: A Critical Reader. London: Pluto Press.

Friedman, Milton. 1962. Capitalism and Freedom. Chicago: University Chicago Press.

Gramsci, Antonio. 1975. Prison Notebooks (Volume 1, Critical English Edition). Edited by Joseph A Buttigieg. Translated by Joseph A Buttigieg and Antonio Callari. New York: Columbia University Press.

Harvey, David. 2005. A Brief History of Neoliberalism. Oxford: Oxford University Press.

Kelsey, Jane. 1995. The New Zealand Experiment: A World Model for Structural Adjustment? Auckland: Auckland University Press.

———. 2014. “The Neoliberal Emperor Has No Clothes: Long Live the Emperor.” In Challenging the Orthodoxy. Reflections on Frank Stilwell’s Contribution to Political Economy, edited by Susan Schroeder and Lynne Chester, 151–72. Berlin: Springer-Verlag.

Klein, Naomi. 2007. The Shock Doctrine. Camberwell: Penguin Books.

Klein, Naomi, and Neil Smith. 2008. “The Shock Doctrine: A Discussion.” Environment and Planning D: Society and Space 26 (4): 582–95.

Peck, Jamie, Nik Theodore, and Neil Brenner. 2009a. “Postneoliberalism and Its Malcontents.” Antipode 41 (S1): 94–116.

———. 2009b. “Neoliberal Urbanism: Models, Moments, Mutations.” SAIS Review of International Affairs 29 (1): 49–66.

Peetz, David. 2013. “The Lessons of the Accord for Modern Times: Think Outside the Box.” The Conversation. https://theconversation.com/the-lessons-of-the-accord-for-modern-times-think-outside-the-box-14985.

Roper, Brian S. 2005. Prosperity for All? Economic , Social and Political Change in New Zealand Since 1935. Southbank Victoria: Thompson.

Saad-Filho, Alfredo. 2010. “Crisis in Neoliberalism or Crisis of Neoliberalism?” Socialist Register 47: 242–59.

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