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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Thursday, February 03, 2005

The Neoliberal Myth of "Small Government"

Just stumbled across an amazing article.

I've already argued, in a subsection of Chapter 8 of Studies in Mutualist Political Economy, that there's simply no way that neoliberal retrenchment can reduce total government spending and intervention to pre-New Deal levels. The reason is that, even in periods characterized by a crisis of under-accumulation, the fundamental underlying tendency of state capitalism is still toward over-accumulation and under-consumption.

Reaganite/Thatcherite neoliberalism, despite all its anti-"big gummint" rhetoric, must in practice maintain massive levels of government spending to buy up the corporate economy's excess product and utilize excess capacity.

And although there have been major shifts in the direction of government intervention under neoliberalism, it's questionable whether the net level of government activity under Reaganism-Thatcherism is lower at all. The types of government intervention and spending have changed somewhat; but overall, corporate capitalism is heavily reliant on state intervention for its very survival. I have tended to suspect that the overall level of state involvement in the economy is actually higher under neoliberalism, in many ways, than it was under the corporate liberalism of the mid-20th century.

So you can imagine how pleased I was to find my suspicions confirmed by the aforesaid amazing article: Nicholas Hildyard. "The Myth of the Minimalist State: Free Market Ambiguities" Corner House Briefing 05 (March 1998).

The political rhetoric surrounding neoliberalism, Hildyard points out, makes heavy use of terms like "laissez-faire" and "free market." The neoliberal revolution, ostensibly, aims at a "minimal state."

Yet the practical outcome of these policies has not, in most cases, been to diminish either the state's institutional power or its spending. Instead, it has redirected them elsewhere. It has also strengthened the power of many Northern nations to intervene in the economic affairs of other countries, notably the indebted countries of the South, the emerging economies of the former Soviet Union, and the weaker industrialised partners of trade blocs such as the European Union.
For example:

Far from doing away with state bureaucracy, free market [sic] policies have in fact reorganised it. While the privatisation of state industries and assets has certainly cut down the direct involvement of the state in the production and distribution of many goods and services, the process has been accompanied by new state regulations, subsidies and institutions aimed at introducing and entrenching a "favourable environment" for the newly-privatised industries.

The state has actually played a central role in implementing free market [sic] policies and, moreover, has a continued "intimate and ubiquitous" involvement in regulating the minutiae of the market economy -- a direct consequence of the hand-in-glove relationship that free market [sic] governments have fostered between "adjusted" state institutions and market interests....

Overall levels of government spending have, in fact, continued to rise under neoliberalism. "Deregulation" can more accurately be called "reregulation": a shift of the regulatory state's activities in a more corporate-friendly direction. "Privatization" of government activity, as Hildyard maintained above, leaves a larger share of functions under nominally private direction, but operating within a web of protections, advantages and subsidies largely defined by the state. Spending cuts on social services have been more than offset by other forms of spending that subsidize the operating costs of corporate enterprise. Subsidies from multilateral development banks, especially, which are necessary to render much overseas capital investment profitable, are on the rise. Neoliberal trade agreements include a legal framework (e.g., so-called "intellectual property" [sic] rights) designed mainly to protect big business against the market. Many such agreements require the creation of international bodies, de facto supra-national governments, to overrule the policies of signatory states.

On the whole, the neoliberal version of the "free market" is like one of those old-fashioned chess-playing machines they used to have at a county fair. It's apparently "automatic" operation, on closer inspection, was achieved by a little person on the inside busily pulling the levers. In the case of the neoliberal "free market," it is the state that pulls the levers.


Anonymous Anonymous said...

"Spending cuts on social services have been more than offset by other forms of spending that subsidize the operating costs of corporate enterprise."

Excellent point. This is why I often laugh when I hear conservatives accusing liberals of "class warfare."


February 03, 2005 2:38 PM  
Blogger Kevin Carson said...

I like Al Franken's comment on class warfare. He briefly described the Jacquerie, a 14th century French peasant uprising that involved a lot of massacred landlords and burnt manor houses. In particular, on one manor the serfs roasted a knight alive in front of his wife, gang raped her in front of the children, forced her to eat her dead husband's corpse, and then finished her off.

That, said Franken, is class warfare--not a discussion of the marginal tax rate on the top 1%.

February 07, 2005 11:45 PM  
Blogger earth that was said...

It's great for supporters of genuine free markets, whether they call themselves, voluntarists, anarcho-capitalists, mutualists or even distributivists, to point out the holes and hypocrisies in neo-liberal economics etc. However I think it is important not to be just "me tooing", in other words, using fancy mutualist talk to jump on the left social democrat bandwagon. The social democrats are way worse statists than even neo-liberals.

January 10, 2006 12:21 AM  
Anonymous Anonymous said...

The Jacquery - sounds like an excellent story for a movie. Come to think about it, how about a whole series of "bottom up" peasant revolts, the Cadists, the Shay's, the Whiskey revolts?

How come Ken Burns and PBS don't do something with these? Of course, they would probably wind up being apologetic white washes for excusing the predatory elites.

Chris Toto

June 09, 2006 12:22 PM  
Blogger A said...

I know this is a really old post, but do you recall where it was that Franken said this (regarding the Jacquerie)?

November 06, 2008 10:24 AM  
Blogger Kevin Carson said...

Currence: It's somewhere in Lies and the Lying Liars Who Tell Them, I believe.

November 06, 2008 10:22 PM  

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