Monday, January 06, 2020

Why neoliberalism is untenable

Let's take the neoliberals at their word: neoliberalism is about using markets to achieve maximum productivity and (maybe) some social democratic ends, while using the power of government to regulate markets and provide what markets cannot. As stated, this idea cannot work because markets contradict government. Neoliberalism calls for freedom and regulation, distribution and centrality, elitism and egalitarianism. At best, neoliberalism simply handwaves over these inherent contradictions; at worst, it is just a cover for libertarianism.

Economists understand that markets have inherent problems that stem from the individualistic competitive nature of markets. First, sellers, both firms selling goods and services and households selling their labor power, have a powerful market incentive to create and maintain monopolies, which economists understand are inefficient. Second, absent the police, it is always easier and cheaper to "cheat" rather than "play fair", and again, the individualistic nature of markets embeds an incentive to cheat. Third, a market economy concentrates and refines the class struggle between rentiers (bourgeoisie) and workers (proletariat), always to the detriment of workers. When markets are used everywhere possible, market competition becomes a life-and-death struggle for everyone, bourgeoisie and proletariat; when everyone's life is on the line, the incentive to monopolize, to cheat, to oppress and enslave others, overwhelms any sense of social or civic value.

Opposing these market incentives, the neoliberals vaguely wave their hands and say, "The government will regulate these markets, break up monopolies, punish cheaters, and protect the proletariat from slavery." But how? Whatever neoliberals think they're trying to do to corral markets for social democratic ends does not seem to be working. Yes, neoliberals can say, with perhaps some deserved pride, that a global markets-in-everything economy has doubled the income of the desperately poor, from \$2 per day to \$4. But it's not enough, and helping the desperately poor shouldn't be mutually exclusive with creating a decent society for working people.

There are, I think, two reasons for this. First, government regulation of a market economy is both as practically difficult and ideologically illiberal as a centrally planned communist economy. Neoliberal economists, like central planners and literally everyone else, are never as smart as they think they. And, fundamentally, any government regulation entails coercing individuals for the sake of the collective. Second, people with political power decide government regulation, and a market economy gives political power to those who can successfully accumulate wealth. Why would such people give up their own power? For the sake of abstract "liberal" principles and altruistic public spirit? Grow the fuck up and re-read Machiavelli.

Libertarians understand these tensions, and, while they dissemble (because why not fool people if fooling them is profitable), they understand that libertarianism is just liberalism without the fuzzy-headed sentimentality. The race may not always be to the swift, nor the battle always to the strong, but it often enough is. If we are going to compete, it makes no sense to punish the winners nor reward the losers.

Do neoliberals understand these tensions? Are they merely better than libertarians as dissimulation? Or are they merely more naive? I don't think it even matters. Liberals — classical and neo- — are either fellow travelers or useful idiots for the right. They are not part of the left.

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