it with the whole adventure of human progress. Without it, they believe, stagnation would ensue. One business school (the Rotman School at the University of Toronto) has even set up a Creative Destruction Lab to push the process along.5 Creative destruction and its twin of heavy-handed primitive accumulation strategies tend to surface particularly when old avenues for extracting economic surplus begin to stagnate. A recent example was the situation when the post-World War Two consensus between workers, capital and government began to unravel in the 1980s. A period of relative prosperous stability based on decent wages and welfare provision for the sick, old and poor came under increasing pressure from corporations dissatisfied with their share of the economic pie. They advocated and funded a political program based on cutbacks, privatization, deregulation and other means of transferring wealth from labor to capital. This ran its course and these days the restless search for profit has shifted to the rather arcane region of the economy known as ‘financialization’. The production of real goods and services now takes second place to speculative activity involving paper values and the rise and fall of stock and bond markets. Today, the value of the global derivatives market (bets on the future value of almost anything you can think of) is estimated at $1,200 trillion, which, it is generally agreed, is some 20 times the value of world economy.6 This has been a fantastic source of profit for the small group of banks and related investment industries that dominate the global finance sector.
Needless to say, this can and does have a destabilizing effect on the overall economy. The speculative paper economy is in effect ‘creatively destroying’ people’s livelihoods, forcing them to adapt to the brave new world of casino capitalism. The immediate losers here may be from the financial sector – although many of the top executives have a range of ‘nest egg’ strategies (tax shelters, niche real estate) that are available to all those with wealth. But the most profound impact is on the jobs and livelihoods of those who have no such means of protecting themselves. Even in the real economy, strategies of primitive accumulation can be destabilizing. Under globalization, for example, which is characterized by its proponents in the most glowing modernist language, economies previously based on industrial employment are being hollowed out as such work shifts to countries with cheaper labor. Youth unemployment and underemployment are soaring in the industrial world while wages and working conditions in the new industrial periphery resemble those in the early industrial revolution. Current primitive accumulation strategies have provoked a demand crisis, where stagnating incomes, combined with tight credit, are leading to long-term stagnation.
Neoliberalism
This current phase of capitalism is most frequently referred to as ‘neoliberal’. This term has a wide variety of definitions and is used less frequently by its proponents (who prefer to speak of its component parts, such as free trade, privatization, deregulation and investors’ rights) than by its critics on the Left, who see it as a package of inter-related policies. If ‘neoliberalism’ is to mean something beyond a mere political swearword (reminding us of George Orwell’s accusation that the epithet ‘Fascist’ was used too loosely back in the 1930s), it needs some more precise thinking. The notion of neoliberalism implies a return to the fundamental principles and philosophies that underpinned emergent capitalism. It implies rolling back the state, which is believed to be smothering initiative through a culture of dependence, and refocusing all policy initiatives according to market logic. But it involves far more than reducing state interference in the market to the levels of the pre-welfare-state 1920s. Embedded in it is a dangerously limited notion of the human that reduces us to mere calculators of individual economic costs and benefits. As one perceptive critic sees it:
‘Neoliberalism... constructs individuals as entrepreneurial actors in every sphere of life. It figures individuals as rational, calculating creatures whose moral autonomy is measured by their capacity for “self-care”– the ability to provide for their own needs and service their own ambitions. In making the individual fully responsible for her- or himself, neoliberalism equates moral responsibility with rational action; it erases the discrepancy between economic and moral behavior by configuring morality entirely as a matter of rational deliberation about costs, benefits, and consequences. But, in so doing, it carries responsibility for the self to new heights: the rationally calculating individual bears full responsibility for the consequences of his or her action, no matter how severe the constraints on this action – for example, lack of skills, education and child care in a period of high unemployment and limited welfare benefits.’ 7
Neoliberalism in this reading, then, is about far more than just re-installing the market at the center of the economy. It is a project that reduces all human activities to ‘homo economicus’ and takes in almost every sphere of life from criminal justice to immigration. Social policy is shaped to condition prudent behavior: workfare, pension reform to keep old people in the workforce, punishment of single-parent families, minimum sentences and other harsh criminal-justice measures. If you succeed, it is entirely down to your own efforts and your rewards should be bountiful and minimally taxed. You are a high-achieving ‘rugged individualist’ and don’t owe anything to anybody. It is easy to see the appeal of this to CEOs with eight-figure pay cheques and the rest of the one per cent. If you fail, the responsibility also lies entirely on your shoulders for having ‘mismanaged’ your own life by making bad choices. You pathetic creature. No bailout for you. Government may help keep you alive if it doesn’t cost too much but don’t come crying for more than the bare minimum. You’re lucky to get that. The underlying myth here is that all of us as citizens have an equal opportunity on a level playing field – so those that don’t make it (an increasing number) must live with the consequences of their failures. Forget about class differences, inherited wealth, unequal educational opportunities, health handicaps and a profusion of other social factors.
Neoliberalism has become a sort of moral-rearmament political doctrine to accompany the market fundamentalism of economic policy. In these highly individualized economic circumstances, it is not surprising that the slogan that has become most popular with panicky voters during repeated election cycles is: ‘It’s the economy, stupid’. This captures the limits of government possibility as seen through neoliberal eyes – no room for compassion, intergenerational consideration, concern about the planet, international responsibility or democracy beyond the narrow confines of elections. There is simply no meaning outside the cold calculus of the market. This is also starting to undermine the institutions with which the establishment has traditionally been identified – the legal system, the police, parliament, local government. Under earlier forms of liberal democracy these could be counted on to play a moderately autonomous role in tempering capitalism. Under neoliberalism they are increasingly shaped so that they will not be obstacles to market priorities. Neoliberalism redefines democracy as market rationality – and the only criterion by which its political class can be judged is not principle but expediency.
Politically agnostic capitalism
The champions of the rule of capital (which they present as the rule of the market) hold forth that it is only capitalism that can deliver freedom. Market freedom is a precondition for all other kinds of freedom. Yet capitalism, with its market made up of a few winners and many losers, exists under all kinds of political arrangements – classical fascism (the Germany and Italy of the 1930s and 1940s), military dictatorship (the Latin American regimes of the 1970s and 1980s, along with so many others), feudal monarchy (Saudi Arabia), and now the state communism of China and Vietnam. The proponents of the ‘capitalism equals freedom’ point of view will hold that ‘in the long run’ the market will corrode such authoritarianism and freedom will flower. But, as John Maynard Keynes liked to say, ‘in the long run we are all dead’, and for the Saudi democrat the relationship between the House of Saud monarchy and petro-capitalism is all they can remember or even imagine. In Latin America, the overthrow of dictatorship led not to a capitalist renaissance but ultimately to various forms of populist socialism that are deeply suspicious of market forces.
Of course, to some degree it depends what you mean by freedom. The capitalist notion of freedom is all about opportunity. For the most part this means the opportunity (indeed the right, or even the obligation)
