@JohnRawls This is an excerpt from a breakdown of neoliberal economics.
https://plato.stanford.edu/entries/neoliberalism/It is part of a criticism of neoliberalism. It is true criticism. And the model has been tried in Latin America. It does not work because it is about letting all human relationships break down into commercial transactions without any sense of social obligations and denying workers in having a lot of control over their ourplus value.
This is the issue I have with it. What is your rebuttal of such criticisms?
7. Criticisms of Neoliberalism
This section covers criticisms of neoliberalism, but it leaves out a great many of them. The reason for this is that many of the most well-known criticisms of neoliberalism are simply criticisms of capitalism as such. Accordingly, this section focuses on criticisms aimed directly at neoliberalism.
7.1 Ethos Criticisms
Many criticize neoliberalism for structuring society around the market, commodifying market relations, and in general manipulating people into serving the ends of what is best for commerce or economic production. In this way, neoliberalism builds society around a cash nexus. But unlike full capitalism, neoliberalism does so in a covert way that takes serious scholarly work to demonstrate. Neoliberalism itself is not an ethos, as noted above, but neoliberalism might be seen to give rise to an excessively capitalist/transactional relationship between persons. While she rejects this characterization of neoliberalism, Jessica Whyte argues that it is often characterized as
an amoral economic ideology that subordinates all values to an economic rationality, (2019: 19)
following a number of others, like Wendy Brown (2015). Here the analysis draws heavily on Foucault (2010) where neoliberalism is said to reduce practical rationality to economic considerations, where
there is no difference between the infraction of the highway code and a premeditated murder. (2015: 253–4)
Indeed, one might make the more worrisome argument that neoliberalism leads not so much to selfish attitudes but towards bigoted, hierarchical, and traditional ones (Brown 2019: 7, 37).
7.2 Inequality
One central concern about neoliberalism is that, even if it boosts economic growth, it also increases economic inequality, which is problematic in several ways. Two kinds of inequality criticisms are generally offered. The more well-known are the empirical criticisms that neoliberal regimes lead to dangerous inequalities just from the data, such as Thomas Piketty’s book, Capital (2014), which holds that economic inequality is growing and is a threat to democracy, much as Martin Gilens’s (2014) work on inequality and the responsiveness of democratic policy-making to the richest 10%.
The other kind of critique of inequality under neoliberalism is derived from Rawls’s work. As is well-known, Rawls rejected welfare-state capitalism and a more robust form of capitalism which he called the system of natural liberty on the grounds that they do not satisfy Rawls’s two principles of justice (Rawls 2001; O’Neill and Williamson 2014). Rawls argued that even welfare-state capitalism cannot protect the value of political liberty or realize its priority (Rawls 1993 [2005]) because it allows for the accumulation of capital in too few hands, which leads to economic domination of politics, and shuts many people out of the goods of owning and operating at least some of the capital they need to enjoy the worth of their constitutional liberties.
There you are @JohnRawls your screenname has issues with that horrible neoliberalism as practiced in Latin America. It SUCKS. Defend it John. Go ahead.
Another kind of inequality that has been raised as a concern for neoliberal societies is the imbalance of political power within the firm between bosses and workers. Elizabeth Anderson (2019) has argued, for instance, that this is a form of tyrannical “private government” and that the institutions defended by neoliberals (though she does not use this term) are insufficient to equalize the freedoms of capitalists and workers.
7.3 Undermining Democracy
A very common criticism of neoliberalism is that it undermines democracy. This might be because high economic inequality undermines democracy, as Martin Gilens (2014) argues in Affluence and Influence and defended by Larry Bartels (2008 [2016]). Another way in which neoliberalism could undermine democracy is by prioritizing the protection of classical liberal economic liberties, like the right to private property. These can lead to restrictions on the ability of democratic citizens to choose to redistribute wealth. This problem is especially acute given Hayek’s favorable view of the Pinochet regime in Chile. Hayek hoped that Chile would become a democracy, but he believed that the Pinochet coup had allowed Chile to dodge the bullet of democratic socialism as advocated by Salvador Allende, Pinochet’s predecessor. There is a tension between the liberalism and the democratic commitments within neoliberalism that in practice tends to mean that democracy suffers.
7.4. Economic Irrationality
Neoliberal regimes rely heavily on market mechanisms, and neoliberals claim that markets are efficient or at least highly economically productive (neoliberals disagree about how to characterize and explain market productivity and efficiency). But behavioral economists (Kahneman 2013; Ariely 2010) have identified various biases in human reasoning that undermine the homo economicus model that neoliberals are said to use to model and predict economic development (though as shown above, neoliberals have a subtler relationship with homo economicus). See entry on bounded rationality.
7.5 Keynesian Rebuttals
Neoliberalism, as noted, arose in part in response to the dominance of Keynesian macro-economic policy. But Keynesians, most notably Paul Krugman (2012), have struck back by arguing that neoliberal criticisms of Keynesian policy fail. This is especially true because neoliberals often claimed that fiscal policy is ineffective stimulus vis-à-vis monetary stimulus. During the Great Recession, Krugman argued that the Federal Reserve had lowered interest rates so much that further monetary stimulus would fail, and so fiscal policy had to intervene.
Many of the criticisms of neoliberal regimes engaging in “austerity” during the Great Recession are based in an underlying Keynesian model, as the critics of government spending cuts during the Great Recession were often based on the idea that they hurt the economic prospects of the poor, whereas according to neoliberals, shrinking government spending during a recession is not harmful to the poor for a variety of reasons. See entry on philosophy of economics.
7.6 Trickle-Down Economics
One common charge against neoliberalism is its false promise of “trickle-down” benefits of economic growth to the poor from the rich (Quiggin 2012). Strictly speaking, trickle-down economics is not a genuine school of economic thought, nor would Hayek, Friedman, or Buchanan have accepted that description of their views. They did argue that all would benefit from the prosperity brought about through the free market, but this was not necessarily because the rich would benefit first. Hayek (1960 [2011]) argued that there is a kind of trickle-down effect for the prices of goods and services, where luxuries for the rich become commonalities for the poor because manufacturers figure out how to lower prices to broaden market penetration over time. And indeed, it is standard in mainstream economics to hold that as businesses accumulate capital, they can afford to pay their workers more and so can bid workers away from other companies. That process often involves increasing wages, so more capital in the hands of the rich can lead to higher wages for the poor through fairly ordinary causal channels. All the same, many neoliberal officials promised gains for the poor that did not often materialize.
7.7 Libertarian Criticisms
Neoliberalism and libertarianism are distinct, if related views. And in some respects, the neoliberals were libertarian under some conditions. Indeed, Buchanan thought anarchy was the morally best regime, even if it was infeasible in practice. But it is still common for libertarians to criticize more moderate libertarians for allowing any redistribution of wealth, such as Murray Rothbard (1973, 1982 [2002]), Robert Nozick (1974), or for prioritizing democracy over more epistocratic or elite-leaning forms of political decision-making, such as Jason Brennan (2016).
7.8 Colonialist Criticisms
It is common in some circles to argue that neoliberal regimes are colonialist in character, though in an unusually direct way. The thought is that neoliberalism was adopted by regimes in the Anglophone world and in much of Western Europe, and that this formed an international elite consensus about how economies around the world should be run. This led to a “Washington Consensus” that caused policy interventions that interfered with the democratic governance of developing nations, increased inequality, and made the poor worse off. For comprehensive discussion, see Whyte (2019: chapters 3–5).
7.9 Populist/Nationalist Criticisms
It is increasingly common for right-wing populists to criticize neoliberal policy on the grounds that it emphasizes free trade and free immigration lead to a range of deleterious consequences, from the shrinking of the industrial base of rich democratic countries like the United States, such as that advanced by Patrick Deneen (2019). A stronger form of this concern is that allowing immigrants from different cultures to acquire citizenship within a country will harm or degrade the culture and politics of that country.
7.10 Feminist Criticisms
Some, like Nancy Fraser (2017), worry that neoliberalism has co-opted feminism by making the feminist ideal into one that serves as a kind of false market-based meritocracy, where the aim of feminism is, for instance, that woman who has well-paying career, and at its highest ideal, female entrepreneurship and becoming CEOs of a company. This left feminism unable to attend to the needs and interests of women who neoliberalism has harmed. See entry on feminist perspectives on globalization.
7.11 Remaining Criticisms
Neoliberalism is subject to other objections, but many resemble problems for other liberal democratic theories, such as the conflict between liberal rights (however understood) and democracy—the “procedure-substance” dispute in the deliberative democracy literature, as well as how any sufficiently liberal approach to associational freedom takes the freedom of marginalized groups seriously given the prospect for local oppression. Neoliberals have diverse conceptions of freedom, though typically negative, with all the standard criticisms those views invite. And, then, to the extent that neoliberalism like Hayek and Buchanan adopt a contractarian framework for justifying institutions, their defenses will inherit all the difficulties with contractarianism.
8. Summary
This entry is not meant to determine the one true meaning of “neoliberalism”, but rather to illuminate neoliberalism as a coherent philosophical doctrine embraced by figures commonly called neoliberals. The entry also prioritizes more even-handed and less pejorative uses of the term in recent historical research. This is not to discount more historical and dynamic understandings of neoliberalism. They contain insight. But the goal of this entry has been to characterize neoliberalism as a philosophical position. If we do so, we can understand neoliberalism as a politico-economic doctrine that embraces robust liberal capitalism, constitutional democracy, and a modest welfare state.[11]
Bibliography
Anderson, Elizabeth, 2019, Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It), Princeton, NJ: Princeton University Press.
Ariely, Daniel, 2010, Predictably Irrational: The Hidden Forces That Shape Our Decisions, New York: Harper Collins.
Bartels, Larry, 2008 [2016] Unequal Democracy: The Political Economy of the New Gilded Age, Princeton, NJ: Princeton University Press; second edition 2016.
Biebricher, Thomas, 2018, The Political Theory of Neoliberalism, Stanford, CA: Stanford University Press.
Brennan, Geoffrey and James Buchanan, 1981, “The Normative Purpose of Economic ‘Science’: Rediscovery of an Eighteenth Century Method”, International Review of Law and Economics, 1(2): 155–166. doi:10.1016/0144-8188(81)90013-2
–––, 1985, The Reason of Rules: Constitutional Political Economy, New York: Cambridge University Press. doi:10.1017/CBO9780511895937
Brennan, Jason, 2016, Against Democracy, Princeton, NJ: Princeton University Press.
Brown, Wendy, 2015, Undoing the Demos: Neoliberalism’s Stealth Revolution, New York: Zone Books.
–––, 2019, In the Ruins of Neoliberalism: The Rise of Antidemocratic Politics in the West, New York: Columbia University Press.
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