OK. So the definition of neoliberalism in the previous entry is verbose and not at all concise, though I still think it’s valuable. I want to give it another go.
So what is neoliberalism? And why am I so obsessed with it?
The best answer to this question requires some background. I come from a fairly white-bread, middle class background. When I was a kid, I thought I’d be a lawyer or an engineer, and be making 6 figures by now. After all, I was an intelligent kid, and an intelligent kid in my situation of white, upper-middle-class privilege should dream about how he will be able to profit from The System, right? I was a Republican. I hated cats. I can actually remember cheering when the US bombed Libya in 1986.
So what has this to do with neoliberalism?
First of all, neoliberalism is an economic term, and not precisely a political one, except to the extant that economics is politics. Secondly, the “liberal” in neoliberalism does not apply to what Rush Limbaugh calls “liberals.” Funny, but the rest of the world regards the term “liberal” to be very different from how it is regarded in the US. In the US, “liberal” means roughly “left wing,” whereas throughout the rest of the world “liberal” indicates a stance on the right.
Liberalism, from an economic perspective, refers to the laissez-faire attitude in capitalism, that the market governed by Adam Smith’s “invisible hand” phantom will take care of itself. It is the fundamental belief that the profit motive is the best way to ensure progress as a society. That by encouraging the relentless pursuit of profit for personal, selfish gain, society is best served, because people will strive to be most productive, which benefits everyone in society.
Sounds OK, on the surface.
But there problems with it, and most of the problems have to do with how this attitude has developed historically. Around the end of the 19th century, the notion of a “corporation” came into being in the way it exists today; basically from a legal perspective, corporations are equivalent to persons, and are entitled to the same legal protections under the US Constitution that people receive. This was decided in 1886 by the US Supreme Court, in the Santa Clara County v. Southern Pacific Railroad Company decision. If you’re interested, you should read the previous link. The basic story is that the judge in that case asserted without question the doctrine of corporate personhood, and since that doctrine ended up “on the record,” it was assumed by law from then on. This case has been the foundation for corporate law since.
So I ask again: what has this to do with neoliberalism?
The problem comes when you apply the classical liberal economic principles of “free market” economy to the present political/economic climate, in which corporations are persons.
If a person — or a corporation; there is no distinction in the eyes of the law — can operate freely without government intervention, then the relentless pursuit of profit (the goal of any corporation) can run unfettered. And since a corporation is just another kind of person, then there is no putting the needs of people ahead of the needs of corporations.
So this is the essence of neoliberalism. Liberal economic policies, applied anew to corporations. Neo-liberalism.
Now even still, what’s wrong with that? You also have to consider the notion of globalization. Corporations are now multinational, although most corporations are controlled in the US. Virtually all the land in the US (and for that matter the world) is already owned. The corporations cannot continue to grow their profit margins with only the US population as its customer base. Furthermore, American workers have, by global standards, high wages and decent working conditions, a result of a very long labor struggle. Labor is much cheaper overseas, so we see more and more products being made in different countries from where they are sold.
Furthermore, there are international money organizations that control how these international commerce situations develop. These are the IMF (International Monetary Fund), The WB (World Bank), etc. These organizations are largely controlled by the US, and more specifically by US corporate interests. So while corporations are, legally, on an “equal level” with persons, the reality is that these organizations manipulate global economic conditions to favor the corporations over the people. Their biggest tool for doing so is the “Structural Adjustment Program,” which has historically had very negative effects on poor people worldwide.
So it comes back to the title of Chomsky’s book excerpted below: profits over people.
This mode of capitalism (neoliberalism) took hold in the early to mid 1970s, replacing Keynesianism which was dominant from WWII until then. It can be no coincidence that 1973 was also the peak of the earning power of the American working class. The oil crisis took hold then. The upheaval and hope of the 60s gave way to the complacency and consumerism of the 1980s. Underlying all of these changes is the spectre of neoliberalism.