Published January 2007

Neoliberalism – the doctrine that market exchange is an ethic in itself, capable of acting as a guide for all human action – has become dominant in both thought and practice throughout much of the world since 1970 or so.

Its spread has depended upon a reconstitution of state powers such that privatisation, finance, and market processes are emphasised. State interventions in the economy are minimised, while the obligations of the state to provide for the welfare of its citizens are diminished. David Harvey, tells the political-economic story of where neoliberalisation came from and how it proliferated on the world stage. While Thatcher and Reagan are often cited as primary authors of this neoliberal turn, Harvey shows how a complex of forces, from Chile to China and from New York City to Mexico City, have also played their part. In addition he explores the continuities and contrasts between neoliberalism of the Clinton sort and the recent turn towards neoconservative imperialism of George W. Bush.

The deepening recession has thrown free-market fundamentalism, otherwise known as neoliberalism, into a profound crisis. Before the crisis, David Harvey submitted the doctrine to a withering critique in A Brief History of Neoliberalism. Neoliberalism rose to dominance out of the crisis the world capitalist system entered in the 1970s. Up until then, the capitalist class had struck a class compromise, in Harvey’ words, of “embedded liberalism.” Capitalist classes believed that Keynesian economic policies, including redistribution of wealth within the system, guaranteed strong and sustained growth.

By the 1970s, when high inflation and economic stagnation engulfed the system, the ruling classes opted to abandon the compromise and to shift to an open class war on labor—in order to restructure the system to restore capital accumulation.

Over the course of the 1970s, they turned to a group of anti-Keynesian intellectuals to supply a new set of ideas. From the University of Chicago, future Nobel laureate Milton Friedman had laid the foundations of what would become neoliberalism. Friedman advocated the liberation of the market from the state as the best way to ensure both freedom and economic growth. They pushed for privatisation, deregulation, and the battering down of barriers to international trade. By the 1990s, such ideas had become the so-called “Washington Consensus” that dominated bourgeois economic policy. Harvey argues that neoliberalism certainly transferred enormous wealth to the capitalist class from workers and peasants, but it did not bring about a new age of economic growth. According to Harvey, neoliberalism failed to accomplish the “expanded reproduction” of the system through greater investment in plant and machinery, Instead neoliberalism concentrated wealth through what he calls “accumulation through dispossession,” a concept modelled on Karl Marx’s description of capitalism’s “primitive [initial] accumulation of capital”—a process that involved throwing European peasants off the land, enslaving Africans, and looting the Americas. Harvey argues that “accumulation through dispossession” has continued since then in various ways. Its new forms in the neoliberal period include structural adjustment programs imposed by the IMF. Importantly, he argues that while the U.S. capitalist class pioneered such practices at home, it did not simply force them on the rest of the world. The U.S. found capitalist classes that were very happy to enrich themselves at the cost of their own populations.

Dispossession = deprive (someone) of land, property, or other possessions

Harvey shows the impact of neoliberalism in case studies of a wide variety of countries from the U.S. to Britain, Sweden, Mexico, Argentina, South Korea, and China. In every case capitalists restored their power, concentrated wealth in their hands through dispossession, and economically impoverished their populations. but: failed to sustain high growth rates comparable to the period of “embedded capitalism.” Instead: much of the growth came at the expense of competitors.

Harvey also draws on radical economist Karl Polanyi to show how neoliberalism produces contradictions between its stated ideas and practices—restricting freedom and democracy in order to restore class power. “The neoliberal state, will resort to coercive legislation and policing tactics (anti-picketing rules, for example) to disperse or repress collective forms of opposition to corporate power.” Most dramatically, the Chilean dictator Augusto Pinochet came to power through a coup against a democratically elected leader and imposed the Friedman/ Chicago School’s ideas at gunpoint.

While the Chilean example is extreme, other countries also illustrate the point: Major economic decisions are made by unelected and unaccountable bureaucrats like the U.S. treasury secretary; Privatisation of government-controlled programs and institutions robs people of democratic accountability illusion; The IMF and World Bank have imposed structural adjustment programs on entire nations against people’s will.

There is no doubt that the advanced capitalist economies—and an assortment of developing countries, especially Brazil, Russia, India, and China—experienced substantial booms, achieving, in Marxist terms, “expanded reproduction.” Harvey wrongly reduces this expansion to accumulation through dispossession. While he has certainly identified one of the key dynamics of the neoliberal boom, what some call “the destruction of the commons” through privatisation of things like public lands and state programs, there are a few problems with this concept. First, the term is too broad. He lists 4 features of accumulation through dispossession: privatisation and commodification; financialisation; manipulation of crises; and state redistribution to the rich. The concept is so broad that it loses its specificity. For example, commodification—the transformation of the Earth into things for sale—is a permanent feature of capitalism, not something specific to the neoliberal era.

Secondly, he argues that these mechanisms form a central pillar of growth in the neoliberal period, essentially through plunder of the workers—especially workers and peasants in the developing world. He repeatedly characterises this as a “tribute” from the Third World to the First World. This is a distortion. As Paul Hirst and Grahame Thompson show in Globalisation in Question, the primary expansion of the system has come through trade and investment within the so-called triad—the U.S., Europe, Japan/China, and the countries grouped around each of them. If anything, whole sections of the Third World have been cut out of the circuits of capital.

Thirdly, he draws overblown conclusions about a practical program for the left. Harvey argues that accumulation through dispossession produces different conditions for struggle than expanded reproduction does, and claims that the proletariat can no longer play the role that Marxists have ascribed to it as the leading revolutionary class.

Capitalism is still dependent on working class labor for its profits. This class is larger, more globally interconnected than ever before, with the interest and power to overthrow capitalism and build socialism. As Marxists have long argued, the working class must take up all the demands of all oppressed groups and classes, including those impacted by accumulation through dispossession, in order to weld together a mass movement for socialism.

Click here to read an Interview with David Harvey on neoliberalism [by Sasha Lilley]

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