Economics is the method. The object is to change the soul.
Margaret Thatcher, Sunday Times, 7 May 1988
The crisis and resilience of neoliberalism
In the immediate aftermath of the collapse of Lehman Brothers and in the subsequent outbreak of the financial crisis in September 2008, many believed that neoliberalism had been dealt a deathblow. The president of France, Nicholas Sarkozy, who had as late as 23 July 2008 passed a decisive law loosening the regulation of the French economy, now surprisingly condemned the ‘dictatorship of the market’ and declared that ‘laissez-faire capitalism is over’. Likewise, Nobel Prize laureate in economics, Joseph Stiglitz, toured the world in 2009 preaching the end of neoliberal policies.[1] The death of neoliberalism was, however, not to be. In fact, rather than decreasing the tyranny of the market, the 2008 financial crisis had the perverse result of intensifying policy-making oriented towards appeasing the market. As the financial crisis was alleviated by state interventions and costly bail-outs, the crisis turned into a ‘sovereign debt crisis’ pressuring governments to please credit-ranking agencies, which could only be appeased by cutbacks in welfare spending and by further deregulation not only of the financial markets themselves but also of labour markets. In Denmark, the right-wing government openly articulated its massive pension downgrades and lowering of unemployment benefits as ‘picking up the bill from the crisis’. As a consequence of such policies detrimental to ordinary voters, the governments of Denmark, Spain and numerous other European countries were substituted by the disillusioned electorates only to be replaced by other governments implementing even harsher austerity measures. On a theoretical level, the remarkable irony of this outcome leaves us to consider what Colin Crouch has aptly called ‘the strange non-death of neoliberalism’ and to address the question posed by du Gay and Morgan: Why has neoliberalism proven ‘so resilient and adaptable when faced with evidence of its own hubris’?[2]
In this short piece, I will address this question giving special attention to Michel Foucault’s lectures on neoliberalism and to the framework of Luc Boltanski and Ève Chiapello’s The New Spirit of Capitalism.[3] Within this framework, neoliberalism comes to signify a specific and historically shaped normative rationality that justifies and guides participation in capitalism. The aim here is thus to briefly indicate the overall contours of this normative rationality, since such an indication also provides important clues to the apparent durability of neoliberalism. The obvious danger in trying to indicate some of the overall traits of ‘neoliberalism’ is of course the risk of overemphasizing the coherence and unity of a phenomenon that is really quite historically and socially complex. But while one should not forget that the policies lumped together under the heading of ‘neoliberalism’ were all formed through a precarious history and in response to quite specific practical problems – as the important historical work of Harvey or Mirowski and Phelwe have emphasized – it is not too far-fetched to assert that they share a certain family resemblance.[4] Accordingly, I will briefly try to lay out how we might characterize this sort of normative rationality, how it might be studied and how we might recognize it in everyday politics. More specifically, I will first determine the concept of neoliberalism vis-à-vis classical liberalism, drawing mainly on Foucault’s surprisingly prescient analysis in his 1978-9 lecture series at the Collège de France, and then proceed to lay out Boltanski and Chiapello’s specific take on the remarkable resistance to critique displayed by neoliberalism.[5]
Liberalism versus actually existing neoliberalism
In the discussion of communism and its perils, it is customary to distinguish between the theory of Marxism – the stringent economic arguments and good intentions of Marx – and actually existing communism: the political practice and terror of Stalin. In assessing and determining ‘neoliberalism’, we need a similar distinction. That is to say, in giving some substance to this admittedly somewhat vague and contested concept, we can distinguish between (a) the political philosophy of classical liberalism and the associated neoclassical methods in economics and (b) the actual adoption of private and public policies that have come to bear the name of ‘neoliberalism’. Classical liberalism is a neat and appealing (even if ultimately philosophically misguided) theory resting on a ‘thin’ and formal conception of justice, society and politics. Stemming from eighteenth century political theory, it was committed to universal values, the natural rights of the individual and the limiting of state intervention into market affairs. Neoliberalism as it actually exists today is a very different creature. As a much more practical animal, it rests on ‘thick’ normative ideas about the individual, markets, entrepreneurship and society rather than on a formal and ‘thin’ conception of political justice.[6] In the following sections, I will expand a bit on these various differences between liberalism and neoliberalism in order to spell out a point which is also of relevance in contemporary political debate, namely the peculiar fact that, while not a betrayal or a negation of it, neoliberalism is in fact not a smooth continuation of classical liberalism. It is perhaps not even its most natural heir.[7] In brief, neoliberalism is not a ‘return’ to the classical virtues of liberalism. Its proponents should not pretend that neoliberalism is a sudden resurgence in the defense of the natural rights of individuals, nor should the Left labour under such an illusion concerning its adversary. Rather there are a number of crucial differences between liberalism and neoliberalism that concern, as Foucault phrased it, ‘how far the market economy’s powers extend’ with regard to ‘informing the state’ and ‘reforming society’.[8]
From nature to cultivation: the natural markets of classical liberalism versus the neoliberal creation of markets.
Classical liberalism, taking its point of departure in the philosophical and juridical theories of natural law from the eighteenth century, advocated not only that individuals had certain ‘natural rights’, which it could assert towards others and the government, but also that the exchange between individuals on a market was a natural phenomenon. Later during the nineteenth century, the conception of the market was extended from a place for mere exchanges between individuals to a general space of competition between men. But one thing remained the same in this classical liberal conception of the market: a commitment to laissez-faire economics. Since the market sprang from human nature, it was itself to be conceived as a natural thing that the state was not to meddle with except by formally guaranteeing the integrity of private property. So in classical liberalism, the state confronted a natural market which should be left to its own devices. The state should only interfere in order to avoid, so to speak, other artificial interferences such as unnatural monopolies or outright theft. Concerning interference, the minimum was the optimum.[9]
Such a conception of markets – while admittedly often popularly associated with ‘neoliberalism’ – is in fact absent from neoliberalism. Even the early proponents of the neoliberalism in the 1930s and 1940s flatly rejected the ‘naive naturalism’ of classical liberalism. While they thought that ruthless market competition is efficient and even beneficial in itself, they acknowledged that markets are not natural things, but instead have to be actively created.[10] Competition occurs within games, but these games and their rules have to be made up in order to unleash the beneficial effects of competition and of markets more generally. As economic historian François Bilger states, neoliberals no longer ‘see the theory of perfect competition as a positive theory, but as a normative theory, an ideal type one must strive to achieve’.[11] This move from a descriptive and naturalistic theory of the market to a normative and constructivist one provides an important clue to the political and practical orientation by which neoliberalism might be recognized: markets do not just exist, they have to be actively constructed and implemented according to a normative and political agenda.
A diametrical reversal of the state: a passive minimalist state versus an active marketized state
With this change in the conception of the market, the role of the state is diametrically reversed. The state is no longer a passive guarantor of a naturally occurring market; rather it should actively advance the creation of markets and devise ways in which evermore things and services can take on market form. The governmental question is thus no longer, as in classical liberal theory, one of freeing up a space for the market to unfold itself. Under neoliberalism, the question is rather the reverse: how can market forces inform state policy itself and reform society more generally? The answer, as we now know, consists in attempting to turn the state itself into a market leading to the massive privatization, outsourcing and marketization of services which were previously offered as public goods and held by the state. As Colin Crouch has meticulously shown in the British case, this reform process, which has gained increasing momentum from the 1970s, has been largely a travesty for the public sector resulting, at best, in almost no expenditure savings and significant service degradations and, at worst, in expensive malfunction.[12]
The private sector has experienced a similar transformation, for while the traditional liberal picture envisioned the market as a place for competition between distinct enterprises, new management gurus such as Tom Peters preach that enterprises themselves should be transformed into miniature markets. Departments as well as individual employees should compete against each other and should be constantly benchmarked in order to achieve maximum efficiency.[13] Tom Peters’s strongly interventionist slogan for implementing such management techniques is depressingly predictable: ‘If it ain’t broke, fix it anyway’. The public sector has of course not been spared from such management techniques, leading to constant restructuring and towards a marketization of the state itself. The overall effect on the landscape of public policy is that the market is no longer an external instrument that serves the interests of the state.
In the terms from Hegel’s well-known master-slave parable, the state is no longer a master who oversees that his market servant will carry out the relevant tasks to benefit society as a whole.[14] The relation is rather the reverse: the market is the master towards which the state servant always reflexively adjusts its preferences even before carrying out the slightest task. There is thus no need for the market or for giant corporations to exercise their power overtly, since their preferences have already been internalized by the policy makers. In Hegel’s abstract vocabulary, this means that the state is now the victim of market domination. In very concrete political terms, it simply means that policy-making today tends to start from the question: What would the market think of this? This market-centric starting point often eludes political debate, exactly because policy proposals tend to be already adjusted to the imagined preferences of the market, even before they are being put forward for public consideration.
The flexible justifications of neoliberal capitalism
These very general characteristics by which neoliberalism might be recognized, at least in a ‘perfect’ form, confronts us with the political and practical problem that Foucault calls ‘the problem of inversion of the relationships of the social to the economic’.[15] But the sketched characteristics would also seem to make the continuing success of neoliberalism even more remarkable than initially indicated. Are the public, the civil servants, the politicians and the general public really so enthusiastic about the expansion of market structures everywhere? The starting point of Boltanski and Chiapello’s magnum opus, The New Spirit of Capitalism, is the quite overt fact that they are not. Rather, contemporary capitalism is constantly scrambling to mobilize the necessary motivation for the continued participation in its neoliberal practices. Accordingly, Boltanski and Chiapello’s research program aims at charting the shifting justifications for capitalism that have nevertheless secured its continued participation and support, especially during the last fifty years.[16]
The basic reference for Boltanski and Chiapello in this endeavor is Max Weber.- For Weber, ‘the spirit of capitalism’ denoted the set of (protestant) ethical motivations which, although totally foreign to the formal logic of capitalist accumulation itself, could support the calling of making money.[17]In the Weberian analysis, capitalism was, formally, merely the art of making money through exchange relations, but it needed to be supplemented by something foreign to it, i.e. a form of religious ethics, in order to get going. In applying a similar line of reasoning, Boltanski and Chiapello also use a formal conception of capitalism: ‘Capitalism [is] a process striving for an ever greater accumulation of capital measured by a monetary value.’[18] However, it is exactly because of its formal character that capitalism must seek and lend itself normative support from other sources. Consequently, it is exactly because of its formal normative neutrality that capitalism is always normatively saturated and driven by a particular set of values. When it comes to the specific content of such a historically variable set of values, capitalism is paradoxically sensitive to the forms of critique to which it is subjected, since it seeks to incorporate the critique and transform the values of the critique into its own normative foundation. As Boltanski and Chiapello write:
Capitalism needs its enemies, people whom it outrages and who are opposed to it, to find the moral supports it lacks and to incorporate mechanisms of justice whose relevance it would otherwise have no reason to acknowledge.[19]
The biting irony of Boltanski and Chiapello’s historical diagnosis becomes evident when one considers the origin of the justifying values for neoliberalism and the present configuration of capitalist organization. These values can be tracked to the ideals of May ’68. What do modern knowledge-driven companies in the Western hemisphere want today? They want flexible and autonomous workers capable of working in flat hierarchies of constantly changing project groups; they want creativity, authentic commitment and employees striving for self-realization at work. What did protesters of May ’68 want? They wanted the abolition of hierarchies, flexibility at the work place, increased autonomy, self-realization and increased possibilities of creativity. Accordingly the protester of May ’68 now seems like the perfect model for an employee in a modern consultancy firm.
The values and the normative rationality that now inform neoliberal organization prescribes a hierarchical flat, flexible and network-based organization. In the popular idiom, the employee becomes human capital or an ‘entreployee’; a competitive project worker not so much motivated by external constraint or economic incentives as by personal ‘authentic’ commitment. What Boltanski and Chiapello’s detailed historical analysis tracks is how this normative rationality emerged as a gradually perversion of values stemming from the various historically complex forms of criticism that briefly peaked and converged in the crisis of governability of May ’68. The social critique of ’68 that criticized economic relations in the name of the social ended up being virtually indistinguishable from its reverse, the neoliberal economization of the social.
In explaining the mechanism that generates this paradoxical outcome, it is useful to refer to what Foucault called ‘the tactical polyvalence of critique’, an idea which indicates that the direction of critical discourses is not always uniform and that critical terms may indeed often be reversed in their political implications. Consider, for instance, how the critical terms initially directed against homosexuality (for example, ‘queer’) were turned upside down at the moment when homosexuals themselves began to speak in such terms.[20] Something similar occurred in during the waves of Marxist critique in the 1970s. In denouncing the compromise between social democracy and capitalism (‘state monopoly capitalism’), the Marxist critique hailed the state as its enemy criticizing it as a ‘monopoly of violence’ and as an ‘ideological bureaucracy’. But in doing so, its rhetoric became libertarian to the point where it became ‘neoliberal without knowing it’, as Boltanski and Chiapello conclude.[21]
The point of Boltanski and Chiapello’s much more detailed historical analysis of political critique since May ’68 is accordingly that the gradual emergence of a neoliberal form of capitalism is also simultaneously the story of how the very terms of criticism that were initially directed against capitalism grew into a normative foundation supporting capitalism. This versatility of capitalism confronted with crisis and critique – its ability to be a constantly moving target – helps to clarify the immense task confronting political critique today. Paraphrasing Twain’s famous witticism, it also helps to elucidate why the rumors of the death of neoliberalism were greatly exaggerated.
Conclusion: Neoliberalism, critique and the present
The reason to theoretically examine the criteria by which neoliberalism might be recognized and to politically engage with its differences from classical liberalism is really that it concerns the heart of our present:
What interest is there in talking about liberalism, the physiocrats, d’Argenson, Adam Smith, Bentham, the English utilitarians, if not because this problem in fact arises for us in our immediate and concrete actuality? What does it mean when we speak of liberalism – when we, at present, apply a liberal politics to ourselves, and what relationship may there be between this and those questions of right that we call freedoms or liberties?[22]
The differences between liberalism and neoliberalism should however not lead us to believe that we now live in a new epoch sharply distinguished from others, where arguments of classical liberalism are now totally absent, or where neoliberalism has thoroughly colonized all forms of political debate such that critique of it is impossible.[23] What it should lead us to consider is the subtle and gradual discontinuities in the organization of the economy and to consider the equally subtle continuities between the critique of capitalism and the very justifications for capitalism. Such considerations establish the means of making the constantly changing face of neoliberalism recognizable, and as such they constitute the immensely difficult starting point for a critique of neoliberalism.
Thomas Presskorn-Thygesen is a Ph.D. Fellow at the Department of Management, Politics and Philosophy, Copenhagen Business School.
[1] Nicholas Sarkozy, quoted in The Economist, 13 November 2008. Also see Pierre Dardot and Christian Laval, The New Way of the World: On Neoliberal Society (London: Verso, 2013), p. 1.
[2] Colin Crouch, The Strange Non-Death of Neoliberalism (Cambridge: Polity, 2011); Paul du Gay and Glenn Morgan, ‘Understanding Capitalism: Crises, Legitimacy, and Change Through the Prism of The New Spirit of Capitalism’, New Spirits of Capitalism?: Crises, Justifications, and Dynamics, ed. Paul du Gay and Glenn Morgan (Oxford: Oxford University Press, 2013), p. 2.
[3] Michel Foucault, The Birth of Biopolitics: Lectures at the Collège de France, 1978-79 (Basingstoke: Palgrave Macmillan, 2008); Luc Boltanski and Eve Chiapello, The New Spirit of Capitalism (London: Verso, 2007).
[4] David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2005); Philip Mirowski and Dieter Phelwe (eds.), The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (Cambridge, MA: Harvard University Press, 2009). On the assertion that there is, in spite the historical complexities and contingencies traced by Harvey and Mirowski, nevertheless a family resemblance to be detected in neoliberal policies, see du Gay and Morgan, p. 2 and generally Foucault, The Birth of Biopolitics. Methodologically, at least it is not necessary to oppose a multiplicity of historical causes with the discernment of overall and quite general effects. Multiple causes can generate quite homogenous overall effects. As Foucault’s lectures points out, it is exactly on account of the multiplicity of a heterogeneous historical process of ‘phenomena of coagulation, support, reciprocal re-enforcement, cohesion and integration’ that one can now discern the ‘overall effect’ of the creation new neoliberal type of governmental rationality (Michel Foucault, Security, Territory, Population: Lectures at the Collège de France, 1977-78 (Basingstoke: Palgrave Macmillan, 2007), pp. 239ff. Also see Dardot and Laval, p. 17.
[5] For some remarks on their ‘uncanny’ prescience and a remarkably thorough introduction to Foucault’s lectures on neoliberalism, see Marius Gudmand-Høyer and Thomas Lopdrup Hjort, ‘Liberal Biopolitics Reborn’, rev. of Foucault, The Birth of Biopolitics, Foucault Studies, 7 (September 2009), pp. 99-130.
[6] The formal and ‘thin’ conception of political justice (rather than economic justice as elaborated by Marx) inherent to classical liberalism is effectively summed up by Bentham’s maxim ‘Every law is an evil for every law is an infraction of liberty’.
[7] Dardot and Laval, p. 17.
[8] Foucault, The Birth of Biopolitics, p. 118.
[9] See Gudmand-Høyer and Lopdrup Hjort, p. 111.
[10] Foucault traces the rejection of naive market naturalism to German ordoliberalism specifically in Foucault, The Birth of Biopolitics, p. 120, 128 n50. This rejection can, however, also be found more broadly and was especially prevalent in Friedrich Hayek’s internationally influential works. For a reading of Hayek which transcends Foucault’s in depth, see Nicholas Gane, ‘The Emergence of Neoliberalism: Thinking Through and Beyond Michel Foucault’s Lectures on Biopolitics’, Theory, Culture & Society, 31.4 (July 2014), 3-27.
[11] François Bilger, La Pensée Économique Libérale dans l’Allemagne Contemporaine (Paris: R. Pichon et R. Durand-Auzias), p. 155; quoted in Foucault, The Birth of Biopolitics, p. 128 n52.
[12] See Colin Crouch, Making Capitalism Fit for Society (Cambridge: Polity, 2013); Crouch, The Strange Non-Death of Neoliberalism (Cambridge: Polity, 2013). See also William Davies, The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition (London: Sage, 2014).
[13] See Tom Peters, Thriving On Chaos: Handbook for a Management Revolution (New York: HarperCollins, 1991). Also see the equally influential call by Peter Drucker for the adoption of such strategies leading to so-called ‘New Public Management’ in Peter F. Drucker, The Age of Discontinuity: Guidelines to Our Changing Society (London: Heinemann, 1969; repr. Transaction, 1992).
[14] See Georg Wilhelm Friedrich Hegel, The Phenomenology of Mind, 2nd rev. edn. (New York: Dover, 2003), pp. 104-12.
[15] Foucault, The Birth of Biopolitics, p. 240.
[16] The following exposition of Boltanski and Chiapello’s view of capitalism draws on my previous work on their theoretical framework, a framework which may broadly by characterized as the attempt to develop a ‘a sociology of critique’ which takes existing forms of critique and political formations as its object of study rather than a ‘critical sociology’, which sees its main task as being critical and political itself; see Thomas Presskorn-Thygesen, ‘The Morality of Mobility: The View from the Sociology of Critique’, forthcoming in Ephemera: Theory and Politics in Organization (2015).
[17] Max Weber, The Protestant Ethic and the Spirit of Capitalism [1905] (London: Allen & Unwin, 1930; repr. Routledge, 2001).
[18] Boltanski and Chiapello, p. 371.
[19] Boltanski and Chiapello, p. 27.
[20] See Michel Foucault, Histoire de La Sexualité, 3 vols (Paris: Gallimard, 1976-84) I: La Volonté de Savoir, p. 132. See also L. Thorup Larsen: ‘Turning critique inside out: Foucault, Boltanski and Chiapello on the tactical displacement of critique and power’, Distinktion, 12.1 (2011), 37-55.
[21] Boltanski and Chiapello, p. 202.
[22] Foucault, The Birth of Biopolitics, p. 22.
[23] For a critique of ‘epochalisms’ in the description and diagnosis of present capitalist societies generally see Paul du Gay, ‘The Tyranny of the Epochal: Change, Epochalism and Organizational Casuistry’, in Organizing Identity: Person and Organizations ‘After Theory’ (London: Sage, 2007). For a thorough critique of epochalist readings of Foucault’s work on neoliberalism specifically see Sverre Raffnsøe, Marius Gudmand-Høyer and Morten Thanning, Foucault (London: Palgrave Macmillan, forthcoming 2015), esp. chapter 13.
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