Problems of Neoliberalism
[This ZNet commentary is part of our Classics series. Three times a week we will re-post an article that we think is of timeless importance. This one was first published September 20, 2000. Note on the author: Edward Said died September 25, 2003.]
In the decade after the fall of the Soviet Union, most of the world is in the grip of an ideology whose most dramatic embodiment is currently to be found in the race between the two main candidates for the American presidency. Without wishing to list the various issues that divide them, I should like very quickly therefore to note what it is that unites them and in many ways makes them mirror images of each other. As I said in my last article (Al-Ahram Weekly, 24-30 August), both are passionate, indeed unquestioning believers in the corporate free market system. Both advocate what they call less government, oppose "big" government, and together continue the campaign against the welfare state that was inaugurated two decades ago by Margaret Thatcher and Ronald Reagan. It is this 20-year continuity that I would like to describe in view of what has been the emergence and hegemony of neo-liberalism, a doctrine that has almost totally transformed the British Labour Party (now called New Labour) and the American Democratic Party under Clinton and Gore. The dilemma we all face as citizens is that, with few exceptions here and there (most of them desperately isolated economic disasters, like North Korea and Cuba, or alternatives that are useless as models for others to follow), neoliberalism has swallowed up the world in its clutches, with grave consequences for democracy and the physical environment that can be neither underestimated nor dismissed.
As practiced in Eastern Europe, China and a few other countries in Africa and Asia, state socialism was unable to compete with the energy and inventiveness of globalised finance capital, which captured more markets, promised rapid prosperity, and appealed to vast numbers of people for whom state control meant underdevelopment, bureaucracy and the repressive supervision of everyday life. Then the Soviet Union and East Europe switched to capitalism, and a new world was born. But when the doctrines of the free market were turned on social security systems like those that had sustained Britain in the post-war period, and the United States since Franklin Delano Roosevelt's New Deal, a massive social transformation was to ensue. I will come to that in a moment. But one must make an effort to remember those genuinely progressive policies had once produced a relatively new condition of widespread democratic equality and social benefits, all of them administered and financed by the central state. They were what gave strength to post-war Britain and the United States in the 1940s and 1950s. Taxes were therefore quite high for the wealthy, although the middle and working classes also had to pay for the benefits that accrued to them (mainly education, health and social security). Many of these benefits were the result of an aggressive and well-organised labour union system, but there was also a prevailing idea that the large costs of health and education, for example, which the individual citizen could not afford to pay alone, should be subsidised by the corporate body of the welfare state. By the beginning of the '90s all this was not only under attack but had started to disappear.
First the labour unions were dissolved or broken (the British miners, and the American air traffic controllers). Privatisation of major services like transportation, utilities, education and heavy industry followed, mainly in Europe. In the US (where except for utilities, most industries were already in private hands, but prices were controlled by the government in the basic services sector), deregulation was the order of the day. This meant that the government would no longer play a role in making sure that the price of travel, basic commodities, health, education, as well as utilities such as gas and electricity, should stay within certain bounds. The market was to be the new regulator, which meant that costs and profits of individual airlines, hospitals, telephone companies, and later gas, electricity, and water were left to the private companies to set, frequently at considerable financial pain to the individual consumer. Soon even the postal service and a major part of the prison system were also privatised and deregulated. In Britain, Thatcherism virtually destroyed the university system, since it viewed each institution university as a supplier of learning, and hence like a business that in terms of profit and loss tended to be a loser, rather than a maker, of money. Many teaching positions were slashed, with an extraordinary loss in morale and productivity, as thousands of professors and teachers looked for positions abroad.
With the collapse of socialism everywhere and the triumph of aggressive right-wing parties and policies such as those headed by Reagan and Thatcher, the old liberal left in British Labour and the US Democratic party had two alternatives. One was to move closer to the successful policies of the right. The other alternative was to choose an approach that would protect the old services but make them more efficient. Both the British New Labourites under Tony Blair and the American Democrats under Bill Clinton chose the former course (moving towards the right), but skilfully kept some of the rhetoric of the past, pretending that many of the welfare services the state used to provide were there, albeit packaged differently.
That was simply false. Deregulation and privatisation continued, with the result that the profit motive took over the public sector completely. Budgets for social welfare, health for the poor and aged, and schools were slashed; defence, law and order (i.e. police and prisons) were fed more state money and/or privatised. The major loss has been in democracy and social practices. For when the country is ruled by the market (in the US a period of great prosperity for the top half of the country, poverty for the bottom) and with the state in fact given over to the most powerful corporations and stock market businesses (symbolised by the tremendous growth in electronic business), there is less and less incentive for the individual citizen to participate in a system perceived as basically out of control so far as the ordinary population is concerned. The price of this neoliberal system has been paid by the individual citizen who feels left out, powerless, alienated from a market place ruled by greed, immense transnational corporations, and a government at the mercy of the highest bidder. Thus elections are controlled not by the individual voter but by the major contributors, the media (who have an interest in maintaining the system), and the corporate sector.
What is most discouraging is the sense most people have that not only is there no other alternative, but that this is the best system ever imagined, the triumph of the middle-class ideal, a liberal and humane democracy -- or, as Francis Fukuyama called it, the end of history. Inequities are simply swept out of sight. The degradation of the environment and the pauperisation of huge patches of Asia, Africa and Latin America -- the so-called South -- are all secondary to corporate profits. Worst of all is the loss of initiative that could bring significant change. There is hardly anyone left to challenge the idea that schools, for instance, should be run as profit-making enterprises, and that hospitals should offer service only to those who can pay prices set by pharmaceutical companies and hospital accountants. The disappearance of the welfare state means that no public agency exists to safeguard personal well-being for the weak, the disadvantaged, impoverished families, children, the handicapped, and the aged. New liberalism speaks about opportunities as "free" and "equal" whereas if for some reason you are not capable of staying ahead, you will sink.What has disappeared is the sense citizens need to have of entitlement -- the right, guaranteed by the state, to health, education, shelter, and democratic freedoms. If all those become the prey of the globalised market, the future is deeply insecure for the large majority of people, despite the reassuring (but profoundly misleading) rhetoric of care and kindness spun out by the media managers and public relations experts who rule over public discourse.
The question now is how long neo-liberalism will last. For if the global system starts to break down, if more and more people suffer the consequences of a dearth of social services, if more and more powerlessness characterises the political system, then crises will begin to emerge. At that point, alternatives will be a necessity, even if for the time being we are being told "you never had it so good!" How much social suffering is tolerable before the need for change actually causes change? This is the major political question of our time.