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Iain Boal & Michael Watts, "The Liberal International"

The Liberal International

Iain Boal & Michael Watts

Reviewing David Harvey's A Brief History of Neoliberalism, Oxford UP, 2005

1917–21. 1944–48. 1968–72. Any accounting of the twentieth century worth its salt will hinge around the events — and ultimate defeats — of these pivotal years. No easy task, and one for forensic historians, since the forces of reaction buried the losers and the victims. Buried along with them were anticipations of a different world, glimpsed by the Kronstadt sailors, the council-communist partisans, and the autonomists of Mexico City and Bologna, among many. But whatever the effects of these quadrennial moments on individual human lives — and they greatly depended on accidents of place, family, and generation — we are all living in their long shadow.

As for the aftermath of the sixties, September 11th, 1973 now seems a date pregnant with history. It is clearly time to gauge the enormity of that watershed, when the neoliberal counter-revolution was given its first airing with the assassination of Allende and the delivery of the Chilean economy to the "Chicago boys". It is a foundational moment for David Harvey in A Brief History of Neoliberalism, one of the first sustained efforts to chronicle the new global landscape of capitalism.
In May 1968 a junior lecturer from Bristol, having spent a good part of the decade imagining the modernization of his discipline, turned in a hefty manuscript entitled Explanation in Geography and left on a trip to Australia. The book was an ambitious work of abstraction, which was certain to meet resistance among empirically and historically minded geographers like Berkeley-based Carl Sauer who once said he was "saddened by model builders and system builders and piddlers with formulas for imaginary universals" (Castree and Gregory, David Harvey: A Critical Reader, 2006, p.45). Indeed, the very mention of the word "theory" could still scandalize senior inhabitants of some common rooms, among them, as we personally recall, University College, London and Cambridge, where the young David Harvey, trained in historical geography, had produced a thesis on 19th century Kent as a hop-growing region. Australians can usually muster an interest in hops but what they really wanted at that moment was news of the political convulsions in Europe. Harvey confessed that he had been so involved in theorizing geography as a quantitative science of space (in Kuhnian-revolutionary terms) that he had barely registered events outside his window. By the time of Allende’s death and the appearance of his next book, Social Justice and the City, Harvey was acutely attentive to the politics of the streets.

Harvey's vision of a deductive science of urban and regional planning at the service of the Welfare State did not long survive a voyage across the Atlantic the following year. He went to Baltimore to take up a position at Johns Hopkins University, a conservative institution, but very soon found himself working with the Black Panthers, in neighbourhoods still smouldering from the recent incendiary riots. When Explanation in Geography was published, Harvey responded to one review by saying that he had never read the book and had "no intention of doing so now". What needed explaining in particular was the formation of American ghettoes. Any theory construction to be done, said Harvey, had to be "validated through revolutionary practice" (Castree and Gregory, David Harvey, pp.36-7). If there was required reading in inner Baltimore, it was more likely Mao than von Mises.

At the instigation of a small group of graduate students, Harvey embarked on a close study of Marx. And — no surprise this — he read Marx geographically. So began his grand project of giving Das Kapital a spatial fix, or, to put it the other way, of giving spatial science a Marxist fix. The first fruit of his intense engagement with Marx's work was Social Justice and the City, which appeared in 1973. Since then Harvey has changed the face of academic geography with a series of books exploring the themes of capitalism and the city, space and accumulation, modernity and postmodernity, empire and globalization.

Harvey's baptismal immersion in Marx coincided with developments that we can now see as inaugurating the counter-revolutionary response to the falling rate of profit and the crisis of the 1970s, as well as to popular insurgencies of the sixties — concessions, that is, to pressure from wildcat strikes and widespread sabotage, black power, minority and indigenous movements, feminism, demands for disability rights and for environmental regulation, and the prisoners' movement, not to mention mutinous elements in the army drafted for the imperialist adventurism of the war in Indo-China. At the same time the Bretton Woods system, forged by Keynes and White in 1944 to coordinate international trade and finance in the wake of a global war, went into crisis. A Brief History of Neoliberalism attempts to map the dismantling of the social democratic world in which Harvey grew up – in his case the peculiar British form of national Keynesianism, inflected by the command economy of the Second World War, but whose roots lay earlier in the response of the managers of North Atlantic capitalism to the Depression, and which came in the form of welfare safety nets, income redistribution, domestic industry protection, state-financed public works, and capital controls – embedded liberalism of the Polanyian sort.

Harvey aims to describe and explain how it happened that capital's compromise was supplanted by the regime of neoliberalism, which has "not only restored power to a narrowly defined capitalist class...[but] also produced immense concentrations of corporate power in energy, the media, pharmarceuticals, transportation, and even retailing." Harvey is especially attentive to the differential diffusion and range of the phenomenon, and to the specificities of local conditions. At the outset of the important chapter on "Neoliberalism 'with Chinese Characteristics'" Harvey notes "a conjunctural accident of world-historical significance", namely, the coincidence of Thatcher's ascendancy with Deng's economic reforms of the late 1970s. He tracks the uneven development of neoliberalism, which is defined in ideal-typical terms as an economic regime based on the sanctity of private property rights and dedicated to the unregulated global flows of money and goods, the sale of public assets, and the dismantling of workplace and environmental protections in favour of market-driven solutions.

The results, tabulated in the book, have been strikingly disadvantageous, and even disastrous, for a large majority of the world's population, not to mention planetary ecology. And this despite the promises made by the salesforce of neoliberalism. Harvey returns again and again to the notion of a "contradiction" between neoliberalism as a theory and the actual practice of neoliberalization on the ground, which always seems to fall short of market-utopian, textbook, ideals (as in "rising tide" or "trickle-down"). The chapter "Neoliberalism on Trial" reveals a shabby scorecard even in terms of capital accumulation.

Confronted with neoliberalism's atrocious record, Harvey understandably asks: "How is it, then, that 'the rest of us' have so easily acquiesced in this state of affairs?" Apart from the ancient tactic of "divide-and-rule" (by age, sex, ethnos, nation, etc), and the sheer spatial isolation of the victims of neoliberalization, and, often enough, the persuasive presence of tanks or goon squads, what is there to say about the novelty and power of neoliberalism as a theory?

From evidence internal to Harvey's own account, it is hard to avoid the conclusion that neoliberalism simply does not rise to the level of "theory" in any non-trivial sense. This is not to say that neoliberalism is completely vacuous; however, to presume theoretical consistency and coherence is seriously to mistake the beast. Thus, we agree with George Caffentzis that the neoliberal dream of unrestricted movement of capital and labour power is its own nightmare; in fact, border controls and immigration restrictions turn out to be a pervasive strategy for capital. (As we write, Hillary Clinton sees the wall-building efforts of the Israeli state as the model for the US-Mexico border).

All this suggests that "neoliberalism" should be approached – could this possibly come as a surprise to a Marxist? – as an ideology. Any adequate account of its rise to hegemony should not assume a pure body of neoliberal theory "lurking in the wings" of history, as Harvey has it. Rather it has to begin from the premiss of a contested discursive field among whose keywords are "freedom", "market", "private property". It is perhaps the déformation of a theorist to grant "neoliberalism" the status of theory, yet Harvey is fully aware that the assault on national Keynesianism in the name of the market was hatched and propagated in reactionary political think-tanks funded by oil and armaments fortunes. Just as Harvey, in 1972, looked back to the 19th century for intellectual bearings, the Right, planning its capture of the institutions, also turned to the past.

The year 1944 saw the publication of both Karl Polanyi’s The Great Transformation and Friedrich von Hayek’s The Road to Serfdom. Hayek, a native of Vienna who trained as an economist at the feet of Ludwig von Mises but is forever associated with a largely non-economic corpus produced at the London School of Economics and the universities of Chicago and Freiburg between 1940 and 1980, is widely recognized as the intellectual architect of the neoliberal counter-revolution. It was Margaret Thatcher after all who pronounced, at a Tory Cabinet meeting, “This is what we believe”, slamming a copy of Hayek’s The Constitution of Liberty onto the table at 10 Downing Street. His critique of collectivism – that it destroys morals, personal freedom and responsibility, impedes the production of wealth, and sooner or later leads to totalitarianism – is the ur-text for market utopians. Collectivism was by definition a made rather than a grown order, that is, a ‘taxis’ rather than a ‘cosmos’. Collectivism was, Hayek said, constructivist rather than evolutionary, organized not spontaneous, an economy rather than a ‘catallaxy’, coerced and concrete rather than free and abstract (see Gamble's Hayek: The Iron Cage of Liberty, 1996, pp. 31-32). Its fatal conceit was that socialism (and social democracy for that matter) admitted the “reckless trespass of taxis onto the proper ground of cosmos” (P. Anderson, Spectrum, 2005:16).

The other half of Hayek’s project was an apologia for western civilization, conceived of as liberty, science and the spontaneous orders that co-evolved to form modern society (‘Great Society’ as he termed it). It is a defense of the liberal (unplanned) market order from which the preconditions of civilization – competition and experimentation – had emerged. Hayek, like Weber, saw this modern world as an iron cage constituted by impersonality, a loss of community, individualism and personal responsibility. But contra Weber these structures, properly understood, were the very expressions of liberty. From the vantage point of the 1940s this (classical) liberal project was, as Hayek saw it, under threat. Indeed, what passed for liberalism was a travesty, a distorted body of ideas warped by constructivist rationalism, as opposed to what he called 'evolutionary rationalism'. The distance between 'actually existing' liberalism and Keynesianism was, on the Hayekian account, disastrously slight. What was necessary, as he made clear at the foundation of the Mont Pelerin Society in 1947, was a grand purging, a restoration of true liberalism by way of the removal of ‘accretions’. There was to be no compromise with collectivism; all the ground ceded to creeping socialism had to be regained.

In his writing and his promotion of think-tanks such as the Institute of Economic Affairs in Britain — a brains trust for the likes of Keith Joseph and Margaret Thatcher – Hayek aggressively launched a cold war of ideas. He was one of the quartet of European theorists (Carl Schmitt, Leo Strauss and Michael Oakeshott were the others) whose ideas, while in a tense relationship to one another, have come to shape a large swath of the intellectual landscape of the early 21st century. Hayek was not in any simple sense a conservative or libertarian; nor a voice for laissez-faire (‘false rationalism’ as he saw it). He identified himself in the individualist tradition of Hume, Smith, Burke and Menger and provided a bridge which linked his short-term allies (conservatives and libertarians) to classical liberals in order to make common cause against collectivism. To roll back the incursions of taxis required a redesign of the state. A powerful chamber was to serve as guardian of the rule of law (striking all under the age of 45 off the voting rolls, for example) to protect liberty against popular sovereignty. As Anderson notes, the correct Hayekian formula was “demarchy without democracy”.

Karl Polanyi, from the other end of the empire, was a Hungarian economic historian and socialist who believed that the nineteenth century liberal order had died, never to be revived. By 1940, ‘every vestige’ of the international liberal order had disappeared, the product of the necessary adoption of measures designed to hold off the ravages of the self-regulating market, that is, "market despotism". It was the conflict between the market and the elementary requirements of an organized social life that made some form of collectivism or planning inevitable. The liberal market order was, contra Hayek, not ‘spontaneous’ but a planned development, and its demise was the product of the market order itself. A market order could just as well produce the freedom to exploit as the freedom to associate. The grave danger, in Polanyi’s view, was that liberal utopianism might return in the idea of freedom as nothing more than the advocacy of free enterprise, in which planning is ‘the denial of freedom’, and the justice and liberty offered by regulation or control just ‘a camouflage of slavery’. Liberalism on this account will always degenerate, ultimately compromised by an authoritarianism that will be invoked as a counter-weight to the threat of mass democracy. Modern capitalism contained the famous ‘double-movement’ in which markets were serially and coextensively disembedded from, and re-embedded in, social institutions and relations. In particular the possibility of a counter-hegemony to the self-regulating market resided in the resistance to (and reaction against) the commodification of the three fictitious commodities – land, labor and money – that represented the spontaneous defense of society.

There has been a Polanyi boom lately, not because Polanyi vanquished Hayek or because his hopes for a decommodified world were realized, but precisely the opposite, because his warnings went unheeded and the disembedding of the market intensifies around the globe. It is of course the Hayekian vision that is triumphant; the Liberal International has come to pass. Yet paradoxically there has been a less careful reading of the Hayekian ideas that spawned them.

The Long March from Mont Pelerin to the collapse of the Berlin Wall took about forty years, by way of the Chicago boys in Chile, the IMF/IBRD complex, and the Reagan-Thatcher dispensations. As Gramsci might have put it, there has been a Hayekian ‘passive revolution’ from above. We have witnessed what the Left’s great pessimist Perry Anderson has dubbed a ‘neoliberal grand slam’ . The “fluent vision” of the Right has no equivalent on the Left; embedded liberalism (let alone something called socialism) is now, we are told, as remote as “Arian bishops". Neoliberalism rules undivided across the globe and is the most successful ideology in world history (P. Anderson, “Internationalism: A Breviary”, New Left Review, 14, 5–25, 2002).

The process by which neoliberal hegemony was established, and its relation to forms and modes and sites of resistance, remains a story for which, even with Harvey's synoptic survey at hand, we still have no full genealogy. The cast of characters may be lined up – from the school of Austrian economics to the Reagan-Thatcher-Kohl troika — but this explains very little, or rather it poses more questions than answers. Let us recall too that Hayek believed The Road to Serfdom had ruined his career and marginalized his entire project. By the mid to late 1970’s many of neoliberalism’s intellectual architects claimed that nobody took their idea seriously; it was the inflation of the 1970’s, said Friedman, that revealed the cracks within the Keynesian edifice.

Neoliberalism was a class reaction to the crisis of the 1970s (Harvey talks of a ‘restoration of class power’) ; on that much Milton Freidman, David Harvey, and Robert Brenner are agreed. The TNCs and the Wall Street-Treasury nexus imposed brutal forms of economic discipline – "structural adjustment", in the jargon – to eradicate forever any residue of collectivism in the Third World. The fiscal crisis and bankruptcy of New York City in 1975, Harvey convincingly shows, "pioneered the way for neoliberal practices both domestically under Reagan and internationally through the IMF in the 1980s." But beyond such descriptions, which Harvey lays out clearly enough, we are still left with many paradoxes and puzzles.

Why, for example, did the LSE and Chicago – once the respective centres of Fabianism and a certain version of (American) liberalism under Robert Hutchins – become the forcing houses of neoliberalism? What were the facilitating conditions that fostered the arrival of the maverick Ronald Coase in Chicago, marking a neoliberal turning point? How did the Chicago boys come to occupy the commanding heights in post-Allende Chile and how did they live down the fact that their effects were, to use the language of the World Bank, “disastrous”? How did the World Bank – a bastion of postwar development economics and, it must be said, of statism – become the voice of laissez faire? Harry Johnson, who held chairs at the LSE and Chicago, is a spectral figure in the liberalization of the World Bank, but how can we explain the capture of key sectors of the Bank (often by second rate economists) against a backdrop of robust Keynesianism? How can we grasp the fact that ‘shock therapy’ in eastern Europe was more the product of the enthusiastic Hungarian reformers than of the more reticent American neoliberal apparatchiks?

It is sometimes noted that the 1991 World Development Report (shaped by Lawrence Summers) marked a neoliberal watershed in its refiguring of the role of the state. But was not the foundational moment a decade earlier with the 1980 Berg report on Africa, named after Elliot Berg, a Michigan economist to whom it seems nobody paid much attention for twenty years? It was Africa (not Latin America or eastern Europe) that proved to be the first testing ground of neoliberalism’s assault on the over-extended public sector, on physical capital formation and on the proliferation of market distortions by government.

So the neoliberal grand slam seems to have been preceded by a some pretty mediocre hitting and a good deal of pessimism. Harvey is right to emphasize the unevenness of neoliberalization. Certainly the process by which a measure of consent was manufactured was contested all the way. In general, resistance to neoliberalism – if we are to chart the larger landscape – is heterogeneous and worldwide. The revolts in France, the factory occupations in Argentina, the oil nationalisation in Bolivia, and the insurgencies in Iraq are all symptomatic, even if the national and local dynamics differ greatly. The historical "map of resistance" compiled by Davis, Rowley and Yuen for Confronting Capitalism (Yuen et al., 2004) shows the range and depth of WTO protests dating back to the mid 1980s. Here there is perhaps reason to be less gloomy than Anderson’s prognosis might suggest. The triumphalism of the 1990s is gone; the WTO is now a shambles, and ferocious fights within and between the IMF and the IBRD all suggest that the neoliberal project is itself in crisis. Whether the movement of movements represents (at this moment) a serious Polanyian ‘global double movement’ is an open question. Malcolm Bull's ruminations on the limits of the 'multitude' and the question of political agency show us how complex the issues are. For example, there is a startling observation at the conclusion of Andrew Gamble’s book on Hayek, to the effect that Thatcher's old guru has something to offer anti-capitalists. His own elitism and classical liberal temperament predisposed him to political despotism, yet his analysis of dispersed knowledge, horizontal coordination and spontaneous orders revealed that the most effective forms of social organization were decentralised and democratic. What is beyond question is that current neoliberal policies are producing radical inequalities concentrated in vast new human settlements which are, as Mike Davis puts it, "sociologically UFOs".

A Brief History was doubtless written as a sort of provocation – and indeed it provokes (in a manner that has been characteristic of Harvey’s influential texts such as The Condition of Postmodernity and The New Imperialism.) One central assertion – that the neoliberal project is a restoration of class power – provokes the question: Is neoliberalism in fact at heart ‘restorative’? Surely in many parts of the global south it has been as much about the consolidation of power by crony capitalists or the emergence of an entirely new class that stands awkwardly in relation to the market. Is the extraordinary history of China post-1978 really a case of ‘Chinese neoliberalism’? The road from the New Household Responsibility System to the Township and Village Enterprises to Shenzen seems like a very different trajectory of capitalist development than can be accommodated within the neoliberal counter-revolution. Here systematic comparison of early and late neoliberal reforms (Chile and France, Britain and France) may have much more to offer, in particular, about the way conjunctions of class conflict, the ideological origins of neoliberal ideas, the class basis for reform, and the velocity of the ‘international opening’ shape the forms – the unevennesses – of neoliberalism in practice.

In the years since that epiphany long ago in Baltimore, when the interpretation of ghettoes seized David Harvey's imagination as a pressing priority, the neoliberal counterrevolution and the new enclosures have produced drastic revisions to the gazetteer of the globe. The figures are hard to comprehend; in the final buildout of humanity the new megacities will perhaps contain 20 billion people by the year 2030. These sinks of informal labour, says Mike Davis, constitute the "fastest growing and most unprecedented social class on earth", and he poses the questions: "To what extent does an informal proletariat possess that most potent of Marxist talismans: 'historical agency'?…Or is some new, unexpected historical subject, a la Hardt and Negri, slouching toward the supercity?"

Here surely lies a theoretical task adequate to the times, one grand enough to engage the doyen of radical urbanists. But there are signs at the end of A Brief History of Neoliberalism that Harvey does not relish the prospect of theorizing this new landscape. His somewhat perfunctory roll-call of "the movement of movements" suggests his heart isn't really in it; the "variety of these struggles is simply stunning, so much so that it is hard sometimes to even imagine connections between them." When the old Fabian modeller has finished his conspectus of the world that the Wall Street-IMF-US Treasury nexus had wrought, and looks out over the shambles, he pins hope on a "rejuvenated class politics", which is no sooner invoked than immediately glossed as "alliance politics on the left sympathetic to the recuperation of local powers of self determination." This might seem to be a gesture to the myriad forms of resistance to neoliberalism, but Harvey ultimately falls back into the old lesser-of-two-evils logic — "a strong and powerful social democratic and working-class movement is in a better position to redeem capitalism than is capitalist class power itself", which he frankly acknowledges "sounds [like] a counter-revolutionary conclusion to those on the far left."

As well it might, if the "far left" includes those who have taken direct action in the face of the lethal depredations of the IMF and the WTO. In any case, the worldwide resistance – on the receiving end of neoliberal nostrums administered as often as not by social democrats like Gordon Brown – is hardly going to wait upon the theoretical insights of "histgeomat". Of course, we understand the magnitude of the wager by strategists of horizontalism in the global anti-capitalist coalition who are gambling on changing the world without taking power. One can surely understand Harvey's scepticism, but then he is committed to a wager of his own. That is, there are other Austrian ghosts haunting this book – the left logical positivists in Vienna who gambled that the canons of rationality and scientific inference (and the nomothetic models that inspired the young Harvey), could be a bulwark against the rise of fascism, its mystificators and paralogists. There are no illusions now on that account. It remains, however, to shed remaining illusions about the long, and extreme, history of liberalism. Harvey's immensely generative book helps us in that task.

[This review is published in the current issue of Radical Philosophy, no.140, 2006. Refutations, demurrers, rebuttals, elaborations etc. most welcome. Iain Boal and Michael Watts are associated with Retort, a San Francisco Bay Area group of writers, artisans, artists and teachers. Together with T. J. Clark and Joseph Matthews they wrote Afflicted Powers: Capital and Spectacle in a New Age of War (Verso, 2nd edn with new Afterword, 2006). A recent broadside 'All Quiet on the Eastern Front' forms part of Retort's installation at the Seville Biennial (Oct 2006 – Jan 2007).]