The essence of neoliberalism

7 Nov, 2019 at 11:32 | Posted in Economics | 11 Comments

800x450The neoliberal utopia evokes powerful belief – the free trade faith – not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it. For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of administrative or political barriers capable of inconveniencing the owners of capital in their individual quest for the maximisation of individual profit, which has been turned into a model of rationality. They want independent central banks. And they preach the subordination of nation-states to the requirements of economic freedom for the masters of the economy, with the suppression of any regulation of any market, beginning with the labour market, the prohibition of deficits and inflation, the general privatisation of public services, and the reduction of public and social expenses.

Economists may not necessarily share the economic and social interests of the true believers and may have a variety of individual psychic states regarding the economic and social effects of the utopia which they cloak with mathematical reason. Nevertheless, they have enough specific interests in the field of economic science to contribute decisively to the production and reproduction of belief in the neoliberal utopia. Separated from the realities of the economic and social world by their existence and above all by their intellectual formation, which is most frequently purely abstract, bookish, and theoretical, they are particularly inclined to confuse the things of logic with the logic of things.

Pierre Bourdieu

11 Comments »

RSS feed for comments on this post. TrackBack URI

  1. I could not agree more, but I must say that I am fed up with the conflation of orthodox economics with all economics. I have been a political economist my whole working life, as have been many others in our profession across the whole world. As such, one important task is to explain the actual economic patterns of capitalist economies, as Smith, Ricardo, Marx and Keynes tried to do. Marx’s economics in particular, on which he worked for decades, has been largely ignored by the Left, leaving us with criticisms of “economists” but no critique. The latter requires a place to stand for the explanation of the very patterns that these great economists addressed: profit, prices, finance, exchange rates, growth, effective demand, etc. This has been the motivation of many of us, including of my own work.

    Anwar Shaikh

    • “they are particularly inclined to confuse the things of logic with the logic of things.”

      This nails it. And this is why mathematical models are not always appropriate.

      And in a far more devastating way than Rodick, he has explained how the economic profession has served capital and neo-liberalism, even if they did not do so intentionally.

    • I do certainly agree with you, Anwar, but I also think most people reading Bourdieu knows that when he talks about “economics,” he has the hegemonic neoclassical/mainstream economics in mind.

      • Lars, I know that, but I do nonetheless urge others not to succumb to the imperialism of orthodox economics, which proclaims itself to be the one and only true god. It is not a lot of work, I would think, to say neoclassical economics when that is what is meant. By the way, my remarks were not directed at Pierre, whom I greatly admire, but rather at a habit among many others too. A recent post made the same point: if you mean all economics, please say so. If you mean neoclassical economics, please say so.

        • A question to Lars and Anwar: But you don’t have any problem with the statement that the support for free trade is based on “faith” rather than sound economic theory, or the claim that all those who support free trade are “neoliberals”?

          If this were true, then one would have to consider Smith, Ricardo and Marx as neoclassical economists and neoliberals, because they all favoured free trade over protection. Isn’t this an absurd line of thought?

          Economists can support the same economic policy for very different reasons and theoretical analysis. There is a classical and a neoclassical case for free trade, based on opposing economic theories. To appreciate the classical case, one has to get rid of the misinterpretations and false claim of continuity made by neoclassical economists. Heterodox economists who opposed free trade are not interested in this distinction.

          • I have long argued that the claims about so-called free trade are wrong. But for me, the point is not merely to say that, but to show how and why trade produces the patterns it does. This is the essence of my general approach to economic theory, which is to show how a systematic alternate approach can explain the existing empirical patterns in relative prices, finance, trade, growth, employment and effective demand — without reliance on perfections or “imperfections” (the latter including monopoly power). I draw on Smith, Ricardo, Marx and Keynes to construct a coherent alternative economic framework out of the underlying logic. This also requires showing where I think they are wrong (e.g. Ricardo and Neoclassical theory on trade). May I ask that you take a look at Chapter 11 of my book, or at the corresponding video lecture? Information about both is available at the book website http://realecon.org. Thanks.

            • Thank you for the reply, Anwar.

              I have read chapter 11 of your book Capitalism: Competition, Conflict, Crises. I have a very different interpretation of Ricardo’s famous numerical example to the common one you present and criticise there. While you state, for example, that Portugal had a lower cost of production in cloth, I argue in the linked paper that the English cloth had to have a lower cost of production than the Portuguese cloth.

              https://dx.doi.org/10.2139/ssrn.3095473

              I would very much appreciate if you could read the paper and let me know your comments.

              Best regards,

              Jorge

        • Point taken, Anwar!

  2. Economists should start by challenging the prohibition on inflation. Real purchasing power can be maintained or even increased along with nominal inflation. Markets themselves hedge away inflation using inflation swaps and Treasury Inflation Protected Securities. The neoliberal prohibition of inflation is important to challenge, because it is so hypocritical: private firms create money willy-nilly, backstopped by the Fed in times of crisis, and the only inflation is redefined as wealth creation.

  3. “they are particularly inclined to confuse the things of logic with the logic of things.”
    .
    It is a good line, and there is definitely a connection between neoclassical economics and neoliberal ideology that ought to be exposed to critical analysis. But, what is that connection? What connects neoclassical orthodoxy to neoliberal faith?
    .
    The logical system of neoclassical economic theory makes a powerful rhetorical engine: the student of neoclassical economics learns to reason and speak confidently about things she may actually know very little about. The logical analysis produces “insight” where the complexity of fact seems to offer only confusion and indecision about is important or what is to be done. The neoliberal is never short of novel ideas about what is to be done, generated from the rhetorical engine of neoclassical logic: the logic of how an efficient market system would work under an assumption of sufficiently perfect and complete information is the core of neoclassical orthodoxy and the vision for faith in the promise of neoliberal utopia.
    .
    The neoliberal ideology, with its elaborate vocabulary and ready rhetoric, is, as Pierre Bourdieu indicates, powerful, precisely because it successfully coordinates the beliefs and behavior of so many apparatchiks. The great model of the decentralized economy that isn’t becomes the means for a decentralized politics dominating all deliberation until “there is no alternative”.
    .
    Neoliberalism works as politics, even as it fails one society after another as economics. It works to secure power and coordinate policy. It fails to deliver an economic utopia for more than a few — but oh those very few! Neoliberalism works as politics precisely because neoclassical economics fails, and fails in favor of winner take all.

  4. Like Frankenstein’s monster, neoclassical economic’s homo economicus marauds the world seeking validation and companionship. Unlike the creator of Frankenstein’s monster, the creators of homo economicus seemingly are not remorseful of having created the “fiend” they have. Unlike Frankenstein’s monster, homo economicus seemingly has no intention of drifting off into the darkness never to be seen again. Homo economicus, unlike Frankenstein’s monster, is vitalized by a powerful ideology which is more monstrous than the neoclassical economic “fiend” itself.


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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s

Blog at WordPress.com.
Entries and comments feeds.