What is Neoliberalism?
Over the last eighteen years as I wrote for many progressive outlets, editors often asked me not to mention the word “neoliberalism,” because I was told readers wouldn’t comprehend the “jargon.” The situation is even worse with literary journals, my main territory, which are determined not to have anything to do with this vocabulary. This has begun to change recently, as the terminology has come into wider usage, though it remains shrouded in great mystery.
People throw the term around loosely, as they do with “fascism,” with the same confounding results. Imagine living under fascism or communism, or earlier, classical liberalism, and not being allowed to acknowledge that particular frame of reference to understand economic and social issues. Imagine living under Stalin and never using the communist framework but focusing only on personality clashes between his lieutenants, or likewise for Hitler or Mussolini or Mao or Franco and their ideological systems! But this curious silence, this looking away from ideology, is exactly what has been happening for almost thirty years, since neoliberalism, already under way since the early 1970s, got turbocharged by the Democratic party under the Democratic Leadership Council (DLC) and Bill Clinton.We live under an ideology that has not been widely named or defined.
Absent the neoliberal framework, we simply cannotgrasp what is good or bad for citizens under Cruz versus Trump, or Clinton versus Sanders, or Clinton versus Trump, away from the distraction of personalities. To what extent does each of them agree or disagree with neoliberalism? Are there important differences? How much is Sanders a deviation? Can we still rely on conventional distinctions like liberal versus conservative, or Democrat versus Republican, to understand what is going on? How do we grasp movements like the Tea Party, Occupy, and now the Trump and Sanders insurgencies?
Neoliberalism has been more successful than most past ideologies in redefining subjectivity, in making people alter their sense of themselves, their personhood, their identities, their hopes and expectations and dreams and idealizations. Classical liberalism was successful too, for two and a half centuries, in people’s self-definition, although communism and fascism succeeded less well in realizing the “new man.”
It cannot be emphasized enough that neoliberalism is notclassical liberalism, or a return to a purer version of it, as is commonly misunderstood; it is a newthing, because the market, for one thing, is not at all free and untethered and dynamic in the sense that classical liberalism idealized it. Neoliberalism presumes a strong state, working only for the benefit of the wealthy, and as such it has little pretence to neutrality and universality, unlike the classical liberal state.
I would go so far as to say that neoliberalism is the final completion of capitalism’s long-nascent project, in that the desire to transform everything—every object, every living thing, every fact on the planet—in its image had not been realized to the same extent by any preceding ideology. Neoliberalism happens to be the ideology—unlike the three major forerunners in the last two hundred and fifty years—that has the fortune of coinciding with technological change on a scale that makes its complete penetration into every realm of being a possibility for the first time in human history.
From the early 1930s, when the Great Depression threatened the classical liberal consensus (the idea that markets were self-regulating, and the state should play no more than a night-watchman role), until the early 1970s, when global instability including currency chaos unraveled it, the democratic world lived under the Keynesian paradigm: markets were understood to be inherently unstable, and the interventionist hand of government, in the form of countercyclical policy, was necessary to make capitalism work, otherwise the economy had a tendency to get out of whack and crash.
It’s an interesting question if it was the stagflation of the 1970s, following the unhitching of the United States from the gold standard and the arrival of the oil embargo, that brought on the neoliberal revolution, with Milton Friedman discrediting fiscal policy and advocating a by-the-numbers monetarist policy, or if it was neoliberalism itself, in the form of Friedmanite ideas that the Nixon administration was already pursuing, that made stagflation and the end of Keynesianism inevitable.
It should be said that neoliberalism thrives on prompting crisis after crisis, and has proven more adept than previous ideologies at exploiting these crises to its benefit, which then makes the situation worse, so that each succeeding crisis only erodes the power of the working class and makes the wealthy wealthier. There is a certain self-fulfilling aura to neoliberalism, couched in the jargon of economic orthodoxy, that has remained immune from political criticism, because of the dogma that was perpetuated—by Margaret Thatcher and her acolytes—that There Is No Alternative (TINA).
Neoliberalism is excused for the crises it repeatedly brings on—one can think of a regular cycle of debt and speculation-fueled emergencies in the last forty years, such as the developing country debt overhang of the 1970s, the savings and loan crisis of the 1980s, the Asian currency crisis of the 1990s, and the subprime mortgage crisis of the 2000s—better than any ideology I know of. This is partly because its very existence as ruling ideology is not even noted by the population at large, which continues to derive some residual benefits from the welfare state inaugurated by Keynesianism but has been led to believe by neoliberal ideologues to think of their reliance on government as worthy of provoking guilt, shame, and melancholy, rather than something to which they have legitimate claim.
It is not surprising to find neoliberal multiculturalists—comfortably established in the academy—likewise demonizing, or othering, not Muslims, Mexicans, or African Americans, but working-class whites (the quintessential Trump proletariat) who have a difficult time accepting the fluidity of self-definition that goes well with neoliberalism, something that we might call the market capitalization of the self.
George W. Bush’s useful function was to introduce necessary crisis into a system that had grown too stable for its own good; he injected desirable panic, which served as fuel to the fire of the neoliberal revolution. Trump is an apostate—at least until now—in desiring chaos on terms that do not sound neoliberal, which is unacceptable; hence Jeb Bush’s characterization of him as the “candidate of chaos.” Neoliberalism loves chaos, that has been its modus operandi since the early 1970s, but only the kind of chaos it can direct and control.
To go back to origins, the Great Depression only ended conclusively with the onset of the Second World War, after which Keynesianism had the upper hand for thirty-five years. But just as the global institutions of Keynesianism, specifically the IMF and the World Bank, were being founded at the New Hampshire resort of Bretton Woods in 1944, the founders of the neoliberal revolution, namely Friedrich Hayek, Ludwig von Mises, Milton Friedman, and others were forming the Mount Pelerin Society (MPS) at the eponymous Swiss resort in 1947, creating the ideology which eventually defeated Keynesianism and gained the upper hand during the 1970s.
So what exactly is neoliberalism, and how is it different from classical liberalism, whose final manifestation came under Keynesianism?
Neoliberalism believes that markets are self-sufficient unto themselves, that they do not need regulation, and that they are the best guarantors of human welfare. Everything that promotes the market, i.e., privatization, deregulation, mobility of finance and capital, abandonment of government-provided social welfare, and the reconception of human beings as human capital, needs to be encouraged, while everything that supposedly diminishes the market, i.e., government services, regulation, restrictions on finance and capital, and conceptualization of human beings in transcendent terms, is to be discouraged.
When Hillary Clinton frequently retorts—in response to demands for reregulation of finance, for instance—that we have to abide by “the rule of law,” this reflects a particular understanding of the law, the law as embodying the sense of the market, the law after it has undergone a revolution of reinterpretation in purely economic terms. In this revolution of the law persons have no status compared to corporations, nation-states are on their way out, and everything in turn dissolves before the abstraction called the market.
One way to sum up neoliberalism is to say that everything—everything—is to be made over in the image of the market, including the state, civil society, and of course human beings. Democracy becomes reinterpreted as the market, and politics succumbs to neoliberal economic theory, so we are speaking of the end of democratic politics as we have known it for two and a half centuries. As the market becomes an abstraction, so does democracy, but the real playing field is somewhere else, in the realm of actual economic exchange—which is not, however, the market. We may say that all exchange takes place on the neoliberal surface.
Neoliberalism is often described—and this creates a lot of confusion—as “market fundamentalism,” and while this may be true for neoliberalism’s self-promotion and self-presentation, i.e., the market as the ultimate and only myth, as were the gods of the past, I would argue that in neoliberalism there is no such thing as the marketas we have understood it from previous ideologies.
The neoliberal state—actually, to utter the word state seems insufficient here, I would claim that a new entity is being created, which is not the state as we have known it, but an existence that incorporates potentially all the states in the world and is something that exceeds their sum—is all-powerful, it seeks to leave no space for individual self-conception in the way that classical liberalism, and even communism and fascism to some degree, were willing to allow.
There are competing understandings of neoliberal globalization, when it comes to the question of whether the state is strong or weak compared to the primary agent of globalization, i.e., the corporation, but I am taking this logic further, I am suggesting that the issue is not how strong the state is in the service of neoliberalism, but whether there is anything left over beyond the new definition of the state. Another way to say it is that the state has become the market, the market has become the state, and therefore both have ceased to exist in the form we have classically understood them.
Of course the word hasn’t gotten around to the people yet, hence all the confusion about whether Hillary Clinton is more neoliberal than Barack Obama, or whether Donald Trump will be less neoliberal than Hillary Clinton. The project of neoliberalism—i.e., the redefinition of the state, the institutions of society, and the self—has come so far along that neoliberalism is almost beyond the need of individual entities to make or break its case. Its penetration has gone too deep, and none of the democratic figureheads that come forward can fundamentally question its efficacy.
I said almost. The reason why Bernie Sanders, self-declared democratic socialist, is so threatening to neoliberalism is that he has articulated a conception of the state, civil society, and the self that is not founded in the efficacy and rationality of the market. He does not believe—unlike Hillary Clinton—that the market can tackle climate change or income inequality or unfair health and education outcomes or racial injustice, all of which Clinton propagates. Clinton’s impending “victory” (whatever machinations were involved in engineering it) will only strengthen neoliberalism, as the force that couldn’t be defeated even when the movement was as large and transcendent as Sanders’s. Although Sanders doesn’t specify “neoliberalism” as the antagonist, his entire discourse presumes it.
Likewise, while Trump supporters want to take their rebellion in a fascist direction, their discomfort with the logic of the market is as pervasive as in the Sanders camp, and is an advance, I believe, over the debt and unemployment melancholy of the Tea Party, the shame that was associated with that movement’s loss of identity as bourgeois capitalists in an age of neoliberal globalization. The Trump supporters, I believe, are no longer driven by shame, as was true of the Tea Party, and as has been true of the various dissenting movements within the Republican party, evangelical or otherwise, in the recent past. Rather, they have taken the shackles off and are ready for a no-holds barred “politically incorrect” fight with all others: they want to be “winners,” even at the cost of exterminating others, and that is not the neoliberal way, which doesn’t acknowledge that there can be winners and losers in the neoliberal hyperspace.
In the current election campaign, Hillary Clinton has been the most perfect embodiment of neoliberalism among all the candidates, she is almost its all-time ideal avatar, and I believe this explains, even if not articulated in such a fashion, the widespread discomfort among the populace toward her ascendancy. People can perceive that her ideology is founded on a conception of human beings striving relentlessly to become human capital (as her opening campaign commercial so overtly depicted), which means that those who fail to come within the purview of neoliberalism should be rigorously ostracized, punished, and excluded.
This is the dark side of neoliberalism’s ideological arm (a multiculturalism founded on human beings as capital), which is why this project has become increasingly associated with suppression of free speech and intolerance of those who refuse to go along with the kind of identity politics neoliberalism promotes.
And this explains why the 1990s saw the simultaneous and absolutely parallel rise, under the Clintons, of both neoliberal globalization and various regimes of neoliberal disciplining, such as the shaming and exclusion of former welfare recipients (every able-bodied person shouldbe able to find work, therefore under TANF welfare was converted to a performance management system designed to enroll everyone in the workforce, even if it meant below-subsistence wages or the loss of parental responsibilities, all of it couched in the jargon of marketplace incentives).
The actual cost to the state of the AFDC program was minimal, but its symbolism was incalculable. The end of welfare went hand in hand with the disciplinary “crime bill” pushed by the Clintons, leading to an epidemic of mass incarceration. Neoliberalism, unlike classical liberalism, does not permit a fluidity of self-expression as an occasional participant in the market, and posits prison as the only available alternative for anyone not willing to conceive of themselves as being present fully and always in the market.
I believe that the generation of people—in their forties or older—supporting Hillary have already internalized neoliberal subjectivity, which they like to frame as realism or pragmatism, refusing for instance to accept that free college or health care are even theoretical possibilities. After all, they have maintained a measure of success in the past three or four decades after conceptualizing themselves as marketplace agents. Just as the Tea Party supporters found it intolerable that government should help irresponsible homeowners by bailing them out of unsustainable debt, the Clinton supporters hold essentially the same set of beliefs toward those who dare to think of themselves outside the discipline of the market.
I spoke of the myth of the market, as something that has no existence in reality, because none of the elements that would have to exist for a market to work are actually in place; this is even more true for neoliberalism than it was for the self-conscious annihilation of the market by communism, because at least in that system the market, surreptitiously, as in various Eastern European countries, kept making an appearance. But when the market takes neoliberal shape, i.e., the classical conceptions of the buyer and seller as free agents are gone, then radical inequality is the natural outcome. And inequality in the last four decades, as statistics for the U.S. and everywhere neoliberalism has made inroads prove beyond a doubt,has exploded, thereby invalidating neoliberalism’s greatest claim to legitimacy, that it brings about a general increase in welfare. So neoliberalism, to the extent that the inequality discourse has made itself manifest recently, must insist all the more vocally on forms of social recognition, what Clinton, for example, likes to call the “fall of barriers.”
Neoliberalism likes to focus on public debt—in the Clinton years debt reduction became a mania, though George W. Bush promptly spent all the accumulated surpluses on tax cuts for the wealthy and on wars of choice—rather than inequality, because the only way to address inequality is through a different understanding of public debt; inequality can only be addressed through higher taxation, which has by now been excluded from the realm of acceptable discourse—except when Sanders, Trump, or Jeremy Corbyn in England go off script.
So to recapitulate neoliberalism’s comprehensive success, let us note that we have gone from a liberal, Keynesian, welfare state to a neoliberal, market-compliant, disciplinary state.
Neoliberalism expects—and education at every level has been redesigned to promote this—that economic decision-making will be applied to all areas of life (parenthood, intimacy, sexuality, and identity in any of its forms), and that those who do not do so will be subject to discipline. Everyone must invest in their own future, and not pose a burden to the state or anyone else, otherwise they will be refused recognition as human beings.
This supposed economic “rationality” (though it is the greatest form of irrationality) applies to civil society as much as the state, so that none of the ideals of classical liberalism, or previous ideologies rooted in humanism, are valid any longer, the only value is the iteration of the market (as myth, not reality); in other words, neoliberalism, unlike the elevation of the individual in classical liberalism or the state in fascism or the collectivity in communism, has erected something, the market, that has no real existence, as the only god to serve! And it is just like a god, with an ethereal, unchallengeable, irrefutable, ubiquitous presence. Whatever in state policy does not serve market-conformity is to be banned and banished from memory (the secular scriptures are to be rewritten), which explains neoliberalism’s radical narrowing of public discourse, including the severance of identity politics from any class foundation.
Neoliberalism will continue to perpetuate reduced opportunity, because one of its characteristics—as in any system that wants to thrive on the world stage—is to constantly refine the field upon which the human subject can operate.
As such, those displaced workers who have suffered the most from the erosion of the old industries in the former manufacturing centers of the world are not even factors to contend with, they are invisible and cannot be part of the policy equation. To the extent that their actual presence is reckoned with, the economy can be said to have crashed; but the problem doesn’t arise because of the management of unemployment or underemployment statistics, unlike a housing crash which is palpable and cannot escape statistical definition.
The danger for neoliberalism—as is clear from the support of millions of displaced human beings for Trump—is that with each crisis neoliberalism sheds more workers, makes individuals and firms more “disciplined,” narrows the scope of opportunity even further. At times, the disciplining of the non-neoliberal other—as with the killing of Michael Brown or Eric Garner—explodes to surface consciousness in an unsavory way, so an expert manager like Clinton or Obama is required to tamp down the emotions of such unruly entities as Black Lives Matter which arise in response. If climate change, according to Clinton and her cohort, can and should have market solutions, then surely racial disparity, or police violence, should also have market solutions and no others; it is here that neoliberal multiculturalism, operating in the academy, is so insidious, because at the elite level it functions to validate market discourse, it does not step outside it.
The present breakdown of both major political parties can be explained by the frustration that has built up in the body politic over the past decade, because after the crash there was no sustained intellectual movement to question the myth of the market. The substitution of economic justice with identity politics is something Ralph Nader, Howard Dean, and now Bernie Sanders have contested in a humane manner, while the same process is at work, admittedly in an inhumane way, in the Trump phenomenon.
Thus, also, Hillary Clinton’s animus against free college education; that form of expansion of opportunity, which was a reality from the 1950s to the 1980s, cannot be allowed to return, human beings are supposed to invest in their own future earnings potential, they are not entitled to a transcendent experience without barriers manifesting in discipline and self-correction. Education, like everything else, including one’s own health, becomes an expensive consumer good, not a right, no longer an experience that might lead to a consciousness beyond the market but something that should be fully encapsulated by the market. If one is a capable market player, education as we have classically understood it becomes redundant.
Unlike the interregnum between 1945-1973, the rising tide—no matter the befuddlements Arthur Laffer and his fellow Reaganite ideologues proffered—doesnotlift all boats today, it is outside the logic of neoliberalism that it do so, so the idea of reforming neoliberalism, or what is often called “globalization with a human face,” is a rhetorical distraction. All of the policy innovations—interpreted as “socialism” by the Tea Partiers—offered by Barack Obama fall within the purview of neoliberalism, above all the Affordable Care Act, whose genesis was hatched in neoliberal think tanks decades ago.
It is important to note that neoliberal economic restructuring necessarily means social restructuring, i.e., a movement toward disciplinarity and away from liberalism; the disciplinarity can take a Bushian, Clintonian, or Trumpian form, but these are manifestations of the same tendency.
When wage growth is decoupled from economic growth (as it has been since Friedman and others inaugurated the revolution in the early 1970s), this means that the human subject is ripe for discipline. Furthermore, wage fairness cannot be rationally discussed (hence the obfuscation surrounding the $15 minimum wage orchestrated by Clinton and others) because the concept of the market has been disembedded from society; the market as abstraction, not a concrete reality, makes any notion of reform or restructuring impossible. Like the minimum wage, something like free child care also remains outside the bounds of discourse, because public policy cannot accommodate discussions that do not take the self-regulating market as unassailable myth.
What neoliberalism canaccommodate is relentless tax cuts (Trump has already offered his huge tax cut plan, as Bush did as his first order of business), which only exacerbate the problem, leading to increasing concentrations of wealth. It has to be said, though, that Ted Cruz more comfortably fit the neoliberal paradigm, with his familiar calls for lower taxes along with reduced regulation and further limits on social welfare, whereas Trump shows, for now, some elements of apostasy. If neoliberalism were to get a Cruz, it would have no problem working with him, or rather, Cruz would have had no problem executing neoliberalism, beyond the surface dissimilarities from Hillary Clinton.
As Sanders has consistently noted, economic inequality leads to political inequality, which means that democracy, after a certain point, becomes only theoretical (viz. Citizens Unitedand the electoral influence of such powerful entities as the Koch brothers). Both processes—economic inequality and political inequality—have accelerated after each downturn in the forty-five-year history of neoliberalism, therefore a downturn is always exciting, and even preordained, for a Bush, a Trump, or a Clinton. Again, economic inequality and political polarity (polarity is simply a manifestation of democracy having become dysfunctional) strongly correlate, and both have come to a head in this election.
Neoliberalism’s task, from this point on, is to mask and manage the increasing inequalities that are likely to befall humanity, especially as the planet reaches a crisis point in its health. In a way, George W. Bush threw a wrench—he was a perverted Keynesian in a way, believing in war to prime the pump, or inflating unsustainable bubbles, or spending exorbitantly on grandiose gestures—into the process of neoliberal globalization that was going very smoothly indeed under Bill Clinton and would likely have flourished under Al Gore as well. With Hillary Clinton, the movement will be toward further privatization of social welfare, “reforming” it along market principles, as has been true of every neoliberal avatar, whether it was Bill Clinton’s incentives to work in the performance management makeover of welfare, George Bush’s proposed private social security accounts, Mitt Romney’s proposed private health care accounts, or the school vouchers that tempt all of them from time to time.
What remains to be seen is the extent to which the millennial generation might be capable of thinking outside the neoliberal paradigm, i.e., they don’t just want more of what neoliberal promises to give them yet fails to deliver, but want things that neoliberalism does not or cannot promise. On this rests the near-term future of the neoliberal project.
Beyond Sanders himself, the key question is the ability of the millennial generation to conceive of themselves outside the neoliberal subjectivity they have been pushed to internalize. They have been encouraged to think of themselves as capital producers, turning their intellectuality into social media popularity for the benefit of capital, in the service of the same abstract market that has no place, no role, no definition beyond the fallen liberal calculus. Does the millennial generation believe, even about its most intimate core, that everything has been privatized?
I am not necessarily making a pessimistic prediction. I am merely outlining the strength of an opponent that has refused to be namedfor forty-five years, although it has been the ruling ideology that long! In defining neoliberalism, I have sought to distance myself from the distraction of personalities, and tried to expose the dark side of our politics which we can only see when we name and understand the ideology as such. We are up against a system that is so strong that it has survived, for the most part, the last crash, as citizens couldn’t get their heads around the idea of nationalizing banks or health care.
It is existentially imperative to ponder what happens beyond Sanders, because neoliberalism has its end-game in sight, letting inequality continue to escalate past the crash point (meaning the point where the economy works for most people), past any tolerable degradation of the planet (which is being reconceptualized in the shape of the market).
What, indeed, does happen beyond Sanders, because as we have seen Hillary Clinton is one of the founders of neoliberal globalization, one of its central historical figures (having accelerated the warehousing of the poor, the attack on trade unions, and the end of welfare and of regulatory prowess), while Trump is an authoritarian figure whose conceptions of the state and of human beings within the state are inconsistent with the surface frictionlessness neoliberalism desires? To go back to Hillary Clinton’s opening campaign commercial, to what extent will Americans continue to believe that the self must be entrepreneurially leveraged toward maximum market gains, molded into mobile human capital ever ready to serve the highest bidder?
As to whether a non-neoliberal globalization is possible and what that might look like on the international stage after a quarter-century of Clinton, Bush, and Obama—which is essentially the frustration Trump is tapping into—this is the question of the day, which needs to be answered to clarify the differences between Sanders versus Clinton, and Trump versus Clinton.
For now, I would suggest that it is not that globalization causes or has caused neoliberalism, but that neoliberalism has pushed a certain form of globalization that suits its interests. This is a crucial distinction, on which everything else hinges. The neoliberal market doesn’t actually exist; at the moment it is pure abstraction; what is actually filling up economic and political space can only be discussed when we step away from this abstraction, as Sanders has so ably done, and as the Occupy and Black Lives Matter movements tentatively set in motion.
This essay, a version of which originally appeared at Salon, is excerpted from the book Why Did Trump Win? Chronicling the Stages of Neoliberal Reactionism. Shivani is also the author of Confronting American Fascism: Essays on the Collapse of the Democratic Order, 2001-2017and This Is the Only Way to Solve the Immigration Problem: A Radical Human Rights Approach. A History of the Cat in Nine Chapters or Less: A Noveland Logography: A Poetry Omnibusare forthcoming in early 2019.
 Alex Chadwick, “Hillary Clinton to Chart Centrist Democratic Agenda,” NPR, July 26, 2005: http://www.npr.org/templates/story/story.php?storyId=4771471.
 A short primer on Keynesianism: http://www.economicshelp.org/blog/6801/economics/keynesian-economics/.
 Milton Friedman’s Capitalism and Freedom(1962) and Free to Choose(1980) are essential to understanding today’s ideological landscape. Here he is dissing an idealistic student at Stanford University: https://www.youtube.com/watch?v=0E-URmNAa5o.
 Jerome Roos, “Since the Mexican Debt Crisis, 30 Years of Neoliberalism,” Roar Magazine, Aug. 22, 2012.
 Ramon Moreno, “What Caused East Asia’s Financial Crisis,” Federal Reserve Bank of San Francisco, August 7, 1998: http://www.frbsf.org/economic-research/publications/economic-letter/1998/august/what-caused-east-asia-financial-crisis/.
 Michael Kreiter, “Neoliberal Multiculturalism: The Diversity That Divides Us,” unpublished paper 2013, Department of Sociology, Boise State University.
 Danilo Trisi and Ladonna Pavetti, “TANF Weakening As a Safety Net for Poor Families,” Center on Budget and Policy Priorities, May 14, 2012.
 Oxfam International, “Richest 1% will own more than all the rest by 2016,” Jan. 19, 2015.
 Pamela Prah, “Laffer’s Supply-Side Economics Staging a Comeback,” Stateline/Pew Charitable Trust, March 2, 2012: http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2012/03/06/laffers-supplyside-economics-staging-a-comeback
 Avik Roy, “How the Heritage Foundation, a Conservative Think Tank, Promoted the Individual Mandate,” Forbes, October 20, 2011: http://www.forbes.com/sites/theapothecary/2011/10/20/how-a-conservative-think-tank-invented-the-individual-mandate/#2c5410f1621b.
By Anis Shivani
Source: Counter Punch