The Faith that does not Speak its Name- Signs of the Time#15

Neoliberalism – the ideology at the root of all our problems

Financial meltdown, environmental disaster and even the rise of Donald Trump – neoliberalism has played its part in them all. Why has the left failed to come up with an alternative?

By George Monbiot, THE GUARDIAN

Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you’ll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is?

Its anonymity is both a symptom and cause of its power. It has played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring of wealth and power, of which the Panama Papers offer us merely a glimpse, the slow collapse of public health and education, resurgent child poverty, the epidemic of loneliness, the collapse of ecosystems, the rise of Donald Trump. But we respond to these crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has – or had – a name. What greater power can there be than to operate namelessly?

Inequality is recast as virtuous. The market ensures that everyone gets what they deserve.

So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. But the philosophy arose as a conscious attempt to reshape human life and shift the locus of power.

Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.

Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve.

We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances.

Never mind structural unemployment: if you don’t have a job it’s because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you’re feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it’s your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.

Among the results, as Paul Verhaeghe documents in his book What About Me? are epidemics of self-harm, eating disorders, depression, loneliness, performance anxiety and social phobia. Perhaps it’s unsurprising that Britain, in which neoliberal ideology has been most rigorously applied, is the loneliness capital of Europe. We are all neoliberals now.


The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.

With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way – among American apostles such as Milton Friedman – to the belief that monopoly power could be seen as a reward for efficiency.

Something else happened during this transition: the movement lost its name. In 1951, Friedman was happy to describe himself as a neoliberal. But soon after that, the term began to disappear. Stranger still, even as the ideology became crisper and the movement more coherent, the lost name was not replaced by any common alternative.

At first, despite its lavish funding, neoliberalism remained at the margins. The postwar consensus was almost universal: John Maynard Keynes’s economic prescriptions were widely applied, full employment and the relief of poverty were common goals in the US and much of western Europe, top rates of tax were high and governments sought social outcomes without embarrassment, developing new public services and safety nets.

But in the 1970s, when Keynesian policies began to fall apart and economic crises struck on both sides of the Atlantic, neoliberal ideas began to enter the mainstream. As Friedman remarked, “when the time came that you had to change … there was an alternative ready there to be picked up”. With the help of sympathetic journalists and political advisers, elements of neoliberalism, especially its prescriptions for monetary policy, were adopted by Jimmy Carter’s administration in the US and Jim Callaghan’s government in Britain.

It may seem strange that a doctrine promising choice should have been promoted with the slogan ‘there is no alternative’

After Margaret Thatcher and Ronald Reagan took power, the rest of the package soon followed: massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies were imposed – often without democratic consent – on much of the world. Most remarkable was its adoption among parties that once belonged to the left: Labour and the Democrats, for example. As Stedman Jones notes, “it is hard to think of another utopia to have been as fully realised.”


It may seem strange that a doctrine promising choice and freedom should have been promoted with the slogan “there is no alternative”. But, as Hayek remarked on a visit to Pinochet’s Chile – one of the first nations in which the programme was comprehensively applied – “my personal preference leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism”. The freedom that neoliberalism offers, which sounds so beguiling when expressed in general terms, turns out to mean freedom for the pike, not for the minnows.

Freedom from trade unions and collective bargaining means the freedom to suppress wages. Freedom from regulation means the freedom to poison rivers, endanger workers, charge iniquitous rates of interest and design exotic financial instruments. Freedom from tax means freedom from the distribution of wealth that lifts people out of poverty.

As Naomi Klein documents in The Shock Doctrine, neoliberal theorists advocated the use of crises to impose unpopular policies while people were distracted: for example, in the aftermath of Pinochet’s coup, the Iraq war and Hurricane Katrina, which Friedman described as “an opportunity to radically reform the educational system” in New Orleans.

Where neoliberal policies cannot be imposed domestically, they are imposed internationally, through trade treaties incorporating “investor-state dispute settlement”: offshore tribunals in which corporations can press for the removal of social and environmental protections. When parliaments have voted to restrict sales of cigarettes, protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical firms from ripping off the state, corporations have sued, often successfully. Democracy is reduced to theatre.

Neoliberalism was not conceived as a self-serving racket, but it rapidly became one

Another paradox of neoliberalism is that universal competition relies upon universal quantification and comparison. The result is that workers, job-seekers and public services of every kind are subject to a pettifogging, stifling regime of assessment and monitoring, designed to identify the winners and punish the losers. The doctrine that Von Mises proposed would free us from the bureaucratic nightmare of central planning has instead created one.

Neoliberalism was not conceived as a self-serving racket, but it rapidly became one. Economic growth has been markedly slower in the neoliberal era (since 1980 in Britain and the US) than it was in the preceding decades; but not for the very rich. Inequality in the distribution of both income and wealth, after 60 years of decline, rose rapidly in this era, due to the smashing of trade unions, tax reductions, rising rents, privatisation and deregulation.

The privatisation or marketisation of public services such as energy, water, trains, health, education, roads and prisons has enabled corporations to set up tollbooths in front of essential assets and charge rent, either to citizens or to government, for their use. Rent is another term for unearned income. When you pay an inflated price for a train ticket, only part of the fare compensates the operators for the money they spend on fuel, wages, rolling stock and other outlays. The rest reflects the fact that they have you over a barrel.

Those who own and run the UK’s privatised or semi-privatised services make stupendous fortunes by investing little and charging much. In Russia and India, oligarchs acquired state assets through firesales. In Mexico, Carlos Slim was granted control of almost all landline and mobile phone services and soon became the world’s richest man.

Financialisation, as Andrew Sayer notes in Why We Can’t Afford the Rich, has had a similar impact. “Like rent,” he argues, “interest is … unearned income that accrues without any effort”. As the poor become poorer and the rich become richer, the rich acquire increasing control over another crucial asset: money. Interest payments, overwhelmingly, are a transfer of money from the poor to the rich. As property prices and the withdrawal of state funding load people with debt (think of the switch from student grants to student loans), the banks and their executives clean up.

Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income.

Neoliberal policies are everywhere beset by market failures. Not only are the banks too big to fail, but so are the corporations now charged with delivering public services. As Tony Judt pointed out in Ill Fares the Land, Hayek forgot that vital national services cannot be allowed to collapse, which means that competition cannot run its course. Business takes the profits, the state keeps the risk.

The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public sector.

Perhaps the most dangerous impact of neoliberalism is not the economic crises it has caused, but the political crisis. As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending. But some have more to spend than others: in the great consumer or shareholder democracy, votes are not equally distributed. The result is a disempowerment of the poor and middle. As parties of the right and former left adopt similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of people have been shed from politics.

Chris Hedges remarks that “fascist movements build their base not from the politically active but the politically inactive, the ‘losers’ who feel, often correctly, they have no voice or role to play in the political establishment”. When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation. To the admirers of Trump, for example, facts and arguments appear irrelevant.

Judt explained that when the thick mesh of interactions between people and the state has been reduced to nothing but authority and obedience, the only remaining force that binds us is state power. The totalitarianism Hayek feared is more likely to emerge when governments, having lost the moral authority that arises from the delivery of public services, are reduced to “cajoling, threatening and ultimately coercing people to obey them”.


Like communism, neoliberalism is the God that failed. But the zombie doctrine staggers on, and one of the reasons is its anonymity. Or rather, a cluster of anonymities.

The invisible doctrine of the invisible hand is promoted by invisible backers. Slowly, very slowly, we have begun to discover the names of a few of them. We find that the Institute of Economic Affairs, which has argued forcefully in the media against the further regulation of the tobacco industry, has been secretly funded by British American Tobacco since 1963. We discover that Charles and David Koch, two of the richest men in the world, founded the institute that set up the Tea Party movement. We find that Charles Koch, in establishing one of his thinktanks, noted that “in order to avoid undesirable criticism, how the organisation is controlled and directed should not be widely advertised”.

The nouveau riche were once disparaged by those who had inherited their money. Today, the relationship has been reversed

The words used by neoliberalism often conceal more than they elucidate. “The market” sounds like a natural system that might bear upon us equally, like gravity or atmospheric pressure. But it is fraught with power relations. What “the market wants” tends to mean what corporations and their bosses want. “Investment”, as Sayer notes, means two quite different things. One is the funding of productive and socially useful activities, the other is the purchase of existing assets to milk them for rent, interest, dividends and capital gains. Using the same word for different activities “camouflages the sources of wealth”, leading us to confuse wealth extraction with wealth creation.

A century ago, the nouveau riche were disparaged by those who had inherited their money. Entrepreneurs sought social acceptance by passing themselves off as rentiers. Today, the relationship has been reversed: the rentiers and inheritors style themselves entre preneurs. They claim to have earned their unearned income.

These anonymities and confusions mesh with the namelessness and placelessness of modern capitalism: the franchise model which ensures that workers do not know for whom they toil; the companies registered through a network of offshore secrecy regimes so complex that even the police cannot discover the beneficial owners; the tax arrangements that bamboozle governments; the financial products no one understands.

The anonymity of neoliberalism is fiercely guarded. Those who are influenced by Hayek, Mises and Friedman tend to reject the term, maintaining – with some justice – that it is used today only pejoratively. But they offer us no substitute. Some describe themselves as classical liberals or libertarians, but these descriptions are both misleading and curiously self-effacing, as they suggest that there is nothing novel about The Road to Serfdom, Bureaucracy or Friedman’s classic work, Capitalism and Freedom.


For all that, there is something admirable about the neoliberal project, at least in its early stages. It was a distinctive, innovative philosophy promoted by a coherent network of thinkers and activists with a clear plan of action. It was patient and persistent. The Road to Serfdom became the path to power.

Neoliberalism’s triumph also reflects the failure of the left. When laissez-faire economics led to catastrophe in 1929, Keynes devised a comprehensive economic theory to replace it. When Keynesian demand management hit the buffers in the 70s, there was an alternative ready. But when neoliberalism fell apart in 2008 there was … nothing. This is why the zombie walks. The left and centre have produced no new general framework of economic thought for 80 years.

Every invocation of Lord Keynes is an admission of failure. To propose Keynesian solutions to the crises of the 21st century is to ignore three obvious problems. It is hard to mobilise people around old ideas; the flaws exposed in the 70s have not gone away; and, most importantly, they have nothing to say about our gravest predicament: the environmental crisis. Keynesianism works by stimulating consumer demand to promote economic growth. Consumer demand and economic growth are the motors of environmental destruction.

What the history of both Keynesianism and neoliberalism show is that it’s not enough to oppose a broken system. A coherent alternative has to be proposed. For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.

34 thoughts on “The Faith that does not Speak its Name- Signs of the Time#15

  1. Monbiot usually writes pretty powerful and incisive stuff. Good summary of a century of economic uncertainty that has brought the planet to the edge of either genocide or ecocide. I say that because, as the article concludes, there is nothing being presented to replace the walking zombie that is eating up both man and his world.

      • A good and pertinent question, but it seems everybody has to have an agenda; covers for one side at the expense of the other side. Monbiot, Jon Rappoport, some of the best on Word Press, (Oh, and “TomGram stuff) and yet, all to be taken with a large dose of salt. It’s up to the individual to sift through, keep the wheat, scatter the chaff.

      • It appears though, if you consider the proliferation of grassroots, self help political movements, and, on a global scale, organisations like Wikileaks, Anonymous, Greenpeace, anti-Globalism movements, they are motivated to resist but unable or unwilling to try to take control or offer an alternative. Ok, that might be a simplistic analysis but suppose I put it this way, the dispossessed once had hope in the belief they might have a hand in effecting change that might benefit them but that’s gone, just like the power of trade unions. Instead, that grassroots movement has its roots in anarchism and a belief that change can be affected not within but without and ignoring the existing political order.?

      • I’m afraid this dialogue is going to go way off over my head here, but if I understand the question, and if there is an answer, what I’ve seen of recent “rebel” movements is people protesting the INCREASE theft of labour and resources by the elites, not the theft itself. Take us back to the 80’s, they seem to say, or to some good old recent times when you could attend university at low cost, wages were guaranteed by union contracts; there was government medical insurance that cost nothing, or practically nothing, and so on. It was a set up. The “people” were being drugged insensitive to the rape of the planet and enslavement of large segments of the working poor, mostly in “silent” dictatorships no one heard about, or wanted to hear about. There is nothing new being offered here; no new philosophy or economic system. At least with Marx and Engel, there was something. Even Hitler had something. The labour movement and institution of labour unions: that was something. But so quickly it was all taken for granted, then came the lies spouted by the likes of Reagan and Thatcher – which I gather sums up as neoliberalism but which I called simply neofascism. The people became their own worst enemies (and that was the plan) and continue to be so as we can see in the US presidential race debacle. It’s a horror show, not even good entertainment.

        We’re once again at a crossroads. This one most likely will bring about the final defeat of the remnants of the Western Christian Empires whose heads have been “hiding” (and profiting) under American world hegemony. OK, not to belabor this point, but what’s new? What is being offered to replace (not counter, not fix, but replace) the zombie American globalist empire? Whatever it is, it better be good; a lot of lives are in the balance. The planet’s in the balance.

      • Quite the contrary, I think you have a grip on what’s going on – even if you’re resorting to the only thing that diverts the literate, semantics – I believe the disintegration of traditional structures of order will come about through mass civil disobedience. Since you’ve mentioned dialectical materialism already, one of its tenets depended on the ability and very structure of the establishment to contribute to its own demolition, from within. Look at the United States and the panic now arising amongst the Republican party establishment at the prospect of Trump becoming president when, less than three months ago, less than three weeks ago, they were hailing him the chief-in-waiting. The problem for them now is they may have created a monster beyond their control, or anyone’s. Yet he is the logical manifestation of their own fears, or at least, the fears they create to persuade the voter but which they would never try to resolve in the fashion they might suggest, simply to win votes. Trump is the manifestation of the anti-establishment, anti-government sentiment that same establishment has helped to create by its own policies, neoliberalist or neofascist or whatever label you might wish to hang on it. They’ve created Pandora’s Box, Trump is simply the instrument by which it will be opened. But then, once opened, well, there’s no telling what might happen. Maybe we should begin to study those post apocalyptic movies more carefully, to pick up survival hints?

      • Amazing how your comments remind me of what I read about Hitler, how the German elites at first mocked and opposed his popularist demagoguery but as he kept gaining with his dirty tricks they eventually saw no option but to support his rise to power. It’s what seemed propitious to them at the time. Prosperity, whatever based on, was what they were after. Trump, though somewhat less of a demagogue than Hitler bears an amazing political resemblance. Put Clinton and Trump in a personality blender and I think you could clone a new Hitler. Then “it” launches a lose-lose war against Russia and China simultaneously; Europe gets nuked; the Muslim Middle East finally unites against Israel, crushing Zionist forces. US forces begin to be forced out, or retreat on all fronts and finally, total defeat. Who divides the spoils? Russia maybe reverts to Communism and takes what’s left of Europe and takes Canada. China takes over the Far East and installs a puppet dictator over the US, forcing Mexico and South America into an economic “partnership.” India, having remained neutral, doesn’t experience much change and continues it’s rivalry with Pakistan, both bleeding themselves into bankruptcy through endless warfare. Australia and New Zealand become non-entities under Chinese military rule. Just a broad overview of the mop-up… not a final solution, just part of a longer term continuing collapse of civilization because eventually Russia and China will have to have their game of chess to decide who really rules the world.

      • There are many American activists who would welcome the election of Trump since, in their estimation and fervent hope, it would trigger a populist revolution, sooner rather than later. I don’t share your pessimism but I do find your post apocalypse global analysis entertaining. I don’t share it though. I believe no-one can predict what will happen when that box is opened.

  2. Labels – they co opt thinking about what we attempt to describe the minute they become standard. As a long-time playwright friend of mine put in the mouth of one of his southern characters, “A piss ant may wanna’ be called a June Bug, too, but that don’t make it so.”
    (Madelyn Griffith-Haynie – ADDandSoMuchMore dot com)
    – ADD Coach Training Field founder; ADD Coaching co-founder –
    “It takes a village to transform a world!”

    • Im not sure what you mean, Madelyn, neo-liberalism may be a relatively new politico-economic theory, as it was first conceived in the 1930s but as a political practice, it is even newer, late 1970s, early ’80s, really. What makes it different from other political theories is its strength is in not being identified as a politico-economic system, in being able to hide in plain sight, so to speak.

      • I’m not questioning the theory – and I follow the points in your article. Loved it, actually – good job.

        My comment referenced only what our brains do with labels of any sort – and what happens when people opt in or out of any particular “category” of belief system by name.

        People like you and I may remain conscious of the distinctions – and it certainly makes it easier to communicate with “shorthand” (nouns, names, etc. – we DO need them) – but it also carries a down-side as a term becomes more known and popular.

        The science indicates that the more we keep it conscious, the more we are able to remain present to what we hope to achieve and to overcome confirmation bias.

        xx, mgh

    • Unfortunately, we need labels. A jug of vinegar resembles a jug of water but they are not interchangeable. Labeled wrongly a poison can pass itself off as a life-giving substance. How would you for example, describe the type of system the “West” is now collapsing under? To me it doesn’t have to be “neoliberalism” but it has to be something I can define. I can define democracy (I’ve never seen that in action by the way, yet many live under the delusion they are in one) and I can define communism based on the Soviet and Chinese experiences (and a huge thumbs down on that) and there are terms like dialectical materialism or Marxism – which mean a whole lot less to me, in fact very little except to note that I don’t think that’s ever been applied seriously either. Another label I’m very familiar with: Catholicism, I was riased under that, so I know experientially what it means. However, as in all labelled social movements or constructs, my experiences probably do not match what a classical theologian would understand it to mean. Still, we need the “label” if we’re to have a conversation about a particular condition, don’t we? And it’s not what I think being a fact (as Trump’s supporters are accused of saying, or in the case of Kipling’s ape chant. Just a basis for intelligent interaction or conversation. A starting point we can all go back to when the conversation goes off track, as all conversations tend to.

      • I think the point is the almost complete distrust in labels, political establishment. No-one ever takes a poll about disillusionment, distrust and disregard of those labels generally offered to the public like security blankets or placebos. Perhaps because they’re afraid of the answers?

      • Excellent points, all. Communication would be impossible without a common language – and “labels” are part of what keeps us in the same coversational ball park.

        Those of us who think more rigorously about what we are saying (labeled articulate lol) are probably fine using label “shorthand” – as long as we remember, as you point out, that our references may not be the same as those of another, even though we are using the same terms. (learned THAT in the dating trenches many years ago – when a particular man and I used the same words but meant VERY different things) 🙂

  3. “For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.”
    It will indeed. It will also need a very focused and very disciplined Left to achieve that. An Apollo programme is a very good analogy.

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