Neil Davidson: The New Middle Class and the Changing Social Base of Neoliberalism: a First Approximation

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The term neoliberalism can be sensibly used in three ways. Neoliberalism is an ideology which emerged in Central Europe during the 1930s in opposition to socialism (i.e. state planning and ownership) and which later migrated to the Economics Department at the University of Chicago. Neoliberalism is the strategy adopted by the alliance of state managers, politicians and employers which began to emerge from the mid- to late-1970s, first in the UK, USA and Chile responding to the return of economic crisis by seeking to transfer power in the workplace from the forces of labour to the holders of capital, in the first instance by weakening the trade unions. This was not the implementation of a master plan derived from neoliberalism-as-an-ideology. Once Keynesianism and forms of state capitalism had been rejected as inadequate, ruling classes had a limited set of options. It is therefore unsurprising that most arrived at the same responses: Hayek was not the anti-Marx to Thatcher’s anti-Lenin. Finally, neoliberalism is the entire era in the history of capitalism since this strategy began to be applied. It was not inevitable that the post-1973 era would have this character: there were moments in most major countries, like the 1984-85 miners’ strike in the UK, when different outcomes were possible. By the late 1980s, however, it should have been clear that this was not a short-term shift in the balance of class forces which could be reversed by a victory or two, but a new settlement weighted in favour of capital.

However, at the very moment neoliberalism triumphed in the late 1980s, it underwent a crucial mutation which the adherence of the parties of Social and Liberal Democracy made possible. The all-out frontal attacks on the labour movement and working class conditions characteristic of the first stage of neoliberalism largely ceased by the late 1980s. In some cases this was partly because the ruling class had become more cautious after a general social offensive, including the poll tax in the UK, had overstepped the limits of what was possible. More commonly, ruling class attention shifted to other areas of social life because the earlier onslaught had achieved the basic aim of weakening the labour movement, instilling among the trade union bureaucracy a generalised reluctance to engage in official all-out action – perhaps still the greatest service neoliberalism has achieved for capital. This transition from what I call vanguard regimes of reorientation to social regimes of consolidation, from Thatcher and Reagan to Blair and Clinton, therefore involved moving from what Gramsci called a war of manoeuvre to a war of position. The first involved a frontal onslaught on the labour movement and the dismantling of formerly embedded Social Democratic institutions (‘roll-back’); the second, a more molecular process involving the gradual commodification of huge new areas of social life, and the creation of new institutions specifically constructed on neoliberal principles (‘roll-out’). Although these versions of neoliberalism appeared sequentially, they are now available as alternative approaches to governance, setting the limits of conventional politics in our time.

The question I wish to address here is the changing social basis of neoliberalism during the original shift from vanguard to social neoliberalism. Clearly it extends beyond ‘the 1 percent’ and suggests some of the difficulties with that slogan, namely that in  this era of capitalism, as in every other, the prevailing model of accumulation has to draw support outside the ruling class. A minority of working class people have always supported openly ruling-class parties – only the profoundly ignorant could imagine that this is a novelty in relation to UKIP; but active rather than passive electoral support for the system at any time has come from different fractions among those who do not belong to either the bourgeoisie or the proletariat: the ‘middle classes’. Which were these in the case of neoliberalism?

 

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The term ‘middle classes’ itself is less than helpful since all it establishes is a relative position between the dominant and subordinate classes, the identities of which have varied over time. Under capitalism, where the bourgeoisie is the ruling class and the majority class is the proletariat, the middle class consists of three broad groupings. Two belong to the ‘old’ middle class, which pre-existed capitalism. One is the traditional petty bourgeoisie, exploiters of themselves and their families, which in the UK now overwhelmingly consists of the self-employed: shop owners, taxi drivers, plumbers. The other consists of ‘the professions’: doctors, lawyers, quantity surveyors. Other than their similarly intermediate position these groupings have little in common.

By both social origin and ideological affinity, Thatcher sympathised with the former: ‘Oh, those poor shopkeepers!’ she is said to have exclaimed, after seeing the damage caused to their property by the Toxteth rioters in 1981. The latter she regarded with suspicion as embodying vested interests opposed to the market, however reassuringly conservative surgeons or barristers might be in other respects. Nevertheless, both welcomed the neoliberal fixation with reducing inflation as protective of the value of private pensions and other savings, the actual quantity of which were increased by the related policy of maintaining high interest rates. So too did they support the attack on the labour movement, which they resented not only because of their insubordination, but because industrial action could preserve working-class wages from the effects of the inflation which, in the eyes of the traditional petty bourgeoisie, workers were responsible for causing in the first place. But Thatcher did little else to aid them and high interest rates also made borrowing impossibly expensive. Ultimately both components of the traditional petty bourgeoisie saw the stability of their world crumble as the neoliberal order advanced. Commercial interests came under competition from giant retailers, leading to many more of those poor shopkeepers being driven out of business by Tesco than by rioting Liverpudlians.

The original social basis for neoliberalism came from a fraction of the third grouping, the ‘new middle class’ (NMC). In 1911, during one of the earliest discussions of the question in the classical Marxist tradition, Rudolf Hilferding described the term as ‘unfortunate’. Yet it is preferable to any of the available alternatives – ‘new petty bourgeoisie’, ‘service class’, ‘salariat’, ‘professional-managerial strata’ – none of which capture the full range of its membership. For some writers, the NMC is not a class at all but an adjunct of the bourgeoisie whose primary role, whether in private or public sectors, is the supervision, control and ideological influence over the working class. For others, they can be assimilated directly to the petty bourgeoisie. Neither categorisation is adequate. Unlike the petty  bourgeoisie, which stands outside the central exploitative relationship between labour and capital, the NMC embodies aspects of both main classes. Like the ‘old’ middle class, the NMC also has two components, members with a managerial and supervisory role and members who are semi-autonomous employees. Both occupy contradictory class locations.

In the case of managers and supervisors their position lies between the working class, with whom they share the same situation as wage labourers, and the bourgeoisie, with whom they always share financial rewards far in excess of their actual contribution to the production process. In other words, not only is this component of the NMC not exploited, it benefits from the exploitation of the working class. The bourgeoisie have overall strategic control over the means of production; managers and supervisors are entrusted with day-to-day operational control over the process. The wealth and power of the bourgeoisie is conferred by inherited property in the form of real estate and shares; managers and supervisors occupy their position through the possession of educational credentials which allow them individually to enter and then ascend within a formalised career structure common to both corporate and state bureaucracies.

In the case of semi-autonomous employees, the NMC has the same relationship  towards the working class as managers and supervisors (including levels of remuneration), but their position lies between the working class and the traditional petty bourgeoisie, rather than the bourgeoisie as such. Semi-autonomous employees such as media journalists, higher education lecturers or advertising designers share with the petty bourgeoisie both a control over the work process and – albeit to a lesser extent – the nature of the end product.

There were three main areas of the growth in the NMC after the Second World War. In the private sector, the corporate managerial and supervisory layers required to oversee staff in an increasingly service-orientated economy; in the public sector, state employees involved in the social reproduction of capitalist relations though welfare, health and education; and in both, qualified technical and scientific workers necessary to operate new technologies and systems (such as data-processing) which emerged during the Great Boom. NMC expansion did not cease with the advent of vanguard neoliberalism. In some cases automation and proletarianisation displaced or transformed formerly NMC jobs but others were created, above all in finance. Nor, contrary to a myth which informs both pro- and anti-neoliberal accounts, did state expenditure reduce, although the direction of spending changed. Equally importantly, neoliberal regimes successfully made the public-sector NMC resemble that of the private sector more closely in two respects, both in relation to the labour process.

The first was to strengthen the supervisory role by adding to these functions or emphasising their importance and making more explicit the demarcations between middle and working class civil servants. These had always existed, but had been obscured by the complex set of anonymous formal written procedures governing staff behaviour and performance. The creation of the UK Benefits Agency in 1991, for example, involved a threefold reconstruction of the former Department of Social Security. This involved the establishment of a centralised senior management board, the restructuring and regrouping of local offices into District Management Units, each with their own individual managers, support functions and cost centres, and the adoption of a new management ideology which emphasised local autonomy in relation to work organisation, performance assessment and budgetary control.

The second, focussed at the Civil Service NMC which was already closest to the ruling class, undermined their traditional role as public servants and instead looked to impose values and approaches supposedly characteristic of private capital. Increasingly these involved replacing civil servants with external secondees or temporary appointees, but also by bringing civil service pay and conditions, especially those in ‘arms-length’ executive bodies into line with those in the private sector, partly to provide an incentive to those in position but more so to attract private sector applicants. In return for these improved rewards, the recipients were expected to implement government policy unquestioningly and conform to the ideological convictions of Ministers.

 

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Those members of the NMC who most obviously benefited from both forms of neoliberalism, and who in turn gave it the highest levels of support, were those in the private sector world of speculative finance and corporate takeovers which took shape in the 1980s: hedge fund managers, traders in financial markets, ratings agency evaluators, financial journalists. Their political attitudes should have come as no surprise. The real achievement of social neoliberalism for capital was to win the support of those sections of the NMC that were resistant to the excesses, if not the essence, of vanguard neoliberal regimes. In the public sector this group included those employed in welfare; in the private, those in creative and cultural occupations. This is a group which in the UK increased in size from around half a million in 1951 to one and a quarter million in 1991, although its growth ceased during that decade. The regimes of consolidation performed three major economic services for them. First, preserving those aspects of the welfare state which were actually used by the NMC. Second, privatising aspects of the public sector which nominally remained in state ownership, above all the NHS, thus opening up new employment opportunities for highly paid state functionaries in order to process pseudo-market financial transactions, maintain public surveillance regimes and ensure compliance with state regulations. Third, opening up the possibility of greater disposable income through debt. Unlike for most members of the working class, however, this was not to compensate for falling real earnings, but to engage in genuinely conspicuous consumption, above all in housing.

The regimes of consolidation did, however, also bring an additional, more ameliorative element into the otherwise forbiddingly bleak repertoire of neoliberalism. The seduction of the liberal NMC was therefore not entirely based on economic interest, but on the way social neoliberalism was able to claim that it embodied forms of social concern and tolerance in a way that vanguard neoliberalism would not. They gave, so to speak, permission to partake of the feast without guilt. The embrace of these cultural politics by the regimes of consolidation made neoliberalism acceptable to those who had previously rejected it in two ways.

The first was the dissociation of the cultural from the political critique of capitalism. The movements of 1968 saw, not for the first time, the convergence of two critiques of capitalism: the artistic and the social, concerned respectively with alienation and with exploitation. But these were associated with two different social groups: the former with students or newly graduated workers in white-collar employment, the latter with the working class in the traditional industries. Their concerns were also different: those responsible for the artistic critique wanted, above all, autonomy, personal freedom; those responsible for the social critique wanted, above all, security from the vicissitudes of the capitalist economy, the risks attendant on the anarchy of competition. The two could coexist and overlap in a period where capitalism was being challenged, but in a period of working class defeat and left retrenchment, the artistic critique was all too easily assimilated into neoliberal claims about the abandonment of hierarchy, the freedom of the consumer and so on. It is of course true that, in the absence of an overall victory, capital will always find ways of making partial achievements for social liberation compatible with, or indeed into examples of, commodified relations. The cliché that the left ‘won’ in terms of the social and the cultural while it ‘lost’ in terms of the political and the economic – indeed the idea that such a division is possible under a system as totalising as capitalism – is a kind of wishful thinking typical of economically secure ex-radicals who can now openly engage in ‘lifestyle choices’ impossible before the sixties. But although the first standard bearers for neoliberalism tended towards social conservatism, their successors – many of  whom participated in the countercultural movements of the 1960s – have not, as any comparison of Clinton with Thatcher would suggest.

The second was the endorsement of a politics of personal identity. While homogenisation is undoubtedly one aspect of neoliberal globalisation, it is always accompanied by the inescapable obverse, diversification. Capital has no problem at all with difference except as a problem of niche marketing. Indeed, the identity politics of the 1980s and 1990s virtually invited this response, since neoliberalism is opposed to inequality arising from irrational prejudice. What this means is that the content of certain kinds of identity politics were profoundly changed by the context of neoliberalism. Recent memoirs of the sixties by those who participated in the sexual experimentation and consciousness-raising of the time contain self-criticisms of their inability to distinguish between liberation and libertarianism, a distinction which only became apparent as counter-cultural slogans about collective freedom were recycled in defence of the individual acquisitiveness and instant gratification. In some cases this was not a distortion of but an extrapolation from what was already present in aspects of the counter-culture.

 

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Inevitably, the underlying continuities between the two varieties of neoliberalism meant a reconsideration of the first. As the vanguard neoliberal years themselves became the subject of historical study rather than contemporary assessment, the general tone of reflections became elegiac, mourning the passing of a society which, sadly but inevitably, had to be swept away in order for the NMC to come into its inheritance. It was unfortunate, no doubt, that the requisite transformation required the agency of someone as vulgar as Thatcher or as stupid as Reagan. Regrettable too, that so many trade unionists had their skulls cracked open and their livelihoods shut down for the new order to be established. But such unpleasantness was now past and ultimately all has been for the best.

But of course the return of crisis in 2007-8 demonstrated that it had not all been for the best after all as the effect of the capitalist crisis began to impact on sections of the NMC. Ironically, this is one of the reasons for the current interest in the condition of precarity, leading to the invention of an entirely new – if wholly imaginary class – called ‘the precariat’. For most of the history of capitalism, precarity has been the normal experience of most of the working class. The only period in which stable employment was the norm, across the developed world at least, was during the Great Boom and, despite widespread belief to the contrary, this is one of the few aspects of this otherwise wholly exceptional period which has not yet been wholly reversed in the neoliberal era. What has changed is that certain categories of financial, managerial and administrative employment which previously had the greatest security – in other words those involving the NMC – are now become more vulnerable, not least because of the extent of corporate rationalisation and downsizing that tended to follow the acquisitions and mergers boom of the 1990s and 2000s, but also because the jobs in the public sector which their university-educated children would once have found waiting upon graduation are increasingly unavailable.

In terms of seeking alliances, then, the working-class movement is unlikely to find them in those sections of the professions and the private-sector NMC which still have a material interest in preserving the capitalist system. There are, however, far greater possibilities among the petty bourgeoisie and the public sector and liberal NMC. As always, the very indeterminacy and volatility of middle class attitudes means that their ultimate direction will depend on the availability of a persuasive socialist alternative.

 

Neil Davidson lectures in Sociology at the University of Glasgow. A former winner of the Deutscher Prize, his latest book is Holding Fast to an Image of the Past (Chicago: Haymarket, 2014). His book on neoliberalism, What Was Neoliberalism? Studies in the Latest Stage of Capitalism: 1973-2007-? will appear in 2016.