It’s the system

The brilliant book Vulture Capitalism by Grace Blakeley is well worth your reading time and, while it would be quite possible to quote the whole book, here is just one insightful perspective that hopefully might compel readers of these words to read these...

Privatisation, for example, was supposed to create efficient, profit-maximising private corporations out of inefficient public behemoths run by unaccountable bureaucrats. Instead, it simply transferred the governance of vital national infrastructure from the public sector to an oligopoly of quasi-public corporations, whose profits were effectively guaranteed by the state. These sales were undertaken by small investors who were able to buy up public assets on the cheap and sell them for a profit.

In fact, the priorities of the neoliberal state are increasingly indistinguishable from those of the modern corporation.⁸⁶ States are judged according to economic metrics, and public bureaucrats learn to adopt a corporate register to describe their aims. Leading theorist of neoliberalism Wendy Brown quotes Donald Trump’s son-in-law, Jared Kushner, who argued that ‘the government should be run like a great American company’.⁸⁷ As Brown highlights eloquently, one of the defining features of neoliberalism is the shrinking of the political sphere, and the replacement of the language and values of politics with those of economics. The result is the radical attenuation of the ‘exercise of freedom in the social and political spheres’.⁸⁸

At the same time, human beings become ‘human capital’, responsible for maximising their own particular interests through ‘hustling’ and ‘entrepreneurialism’.⁸⁹ We are no longer citizens, engaged in conflict and debate as part of a political sphere. Instead, we become passive ‘consumers’, changing our votes based on a disinterested calculation as to which party is likely to provide us with the best and most efficient services. We are no longer collective owners of public assets, we are ‘mini-capitalists’ charged with managing our own portfolios of assets and liabilities.⁹⁰

The rules of the economic game are seen as natural forces governing our lives, over which we as consumers have little control.⁹¹ These economic rules are no longer subject to political contestation, yet they consistently seem to favour some over others. Less powerful individuals – much like smaller, less powerful firms – are destined to be buffeted by the ineluctable forces of market competition, while powerful individuals – much like large, powerful firms – are able to shape those very forces to their own advantage.

Outside of the economic realm, the violent and coercive power of the neoliberal state is, if anything, greater than that of the social democratic state.⁹² This violence is exercised for capital, not against it – which is why so few white-collar crimes are ever prosecuted. In fact, criminologists have argued that we live in a world of ‘state-routinized crime’ in which governments permit – or actively facilitate – criminality on the part of large corporations.⁹³

The dramatic expansion in the US’s prison population, through the prison-industrial complex that sees private corporations profit from state violence, is an excellent example of this trend – as is the astonishing force used by Margaret Thatcher to destroy the UK labour movement. But the violence of the neoliberal state is most clearly on display in the global South. In Chile, for example, tens of thousands of innocent people were murdered or disappeared by Pinochet’s neoliberal regime, supported by neoliberal acolytes like Milton Friedman, all in the name of destroying socialism and building ‘free markets’.

The neoliberals ultimately succeeded in ‘generating an anti-democratic culture from below, while building and legitimating antidemocratic forms of state power from above’.⁹⁴ The end result has been the emergence of a kind of ‘crony capitalism’ that Brown claims the original neoliberals would have abhorred.⁹⁵ Hayek himself wrote in The Road to Serfdom that he would ‘prefer to have to put up with some such inefficiency than have organised monopoly control my ways of life’.⁹⁶ And yet the movement that he spawned has birthed some of the largest and most powerful monopolies in human history.

Early neoliberal thinkers like Hayek would likely have argued that the expansion of domination and curtailment of free market processes seen under neoliberalism have only happened because their plans for a leaner state and freer markets have been subverted by vested interests like unions and bureaucrats. But this response defies reality. In most advanced economies, the labour movement was utterly defeated throughout the 1980s thanks to legislation introduced by neoliberal governments in order to destroy working people’s capacity to resist the power of capital. And it was state bureaucrats who were some of the most enthusiastic implementers of neoliberal policies. Not content to enforce these policies on the rest of society, they even set about enforcing them on themselves.

In the UK, the neoliberal shift towards ‘new public management’ was all about bringing market efficiencies into the public sector by assessing the performance of civil servants according to rigid targets.⁹⁷This approach appeared to contradict Hayek’s perspective on markets and planning – after all, market outcomes are supposed to be unknowable and unplannable. But actually existing neoliberalism is based on a fusion between Hayek’s free market thinking and a longer managerialist tradition focused on developing ever more efficient methods through which to control workers.⁹⁸

As Hayek might have predicted, without any real marketplace to speak of, these reforms simply ended up increasing bureaucracy and leading to a dramatic expansion in middle management across the public sector. This bureaucratisation isn’t just a feature of the neoliberal shift; it’s been associated with ‘free market’ reforms over the last several centuries. As David Graeber forcefully argues in his The Utopia of Rules:

English liberalism, for instance, did not lead to a reduction of state bureaucracy, but the exact opposite: an endlessly ballooning array of legal clerks, registrars, inspectors, notaries and police officials who made the liberal dream of a world of free contract between autonomous individuals possible. It turned out that maintaining a free market economy required a thousand times more paperwork than a Louis XIV-style absolutist monarchy.⁹⁹

Neoliberalism has become a monstrous regime of ‘managerial governance’ premised upon ever greater levels of surveillance and control.¹⁰⁰ But this is only a contradiction if we take the neoliberals at their word when they said they wanted to build a ‘free market economy’. The idea behind new public management wasn’t to curtail the power of the state, or even to subject state institutions to the power of the ‘free market’. The idea was to replace democratic government with technocratic governance – to replace government by the people with rule by technocratic elites.¹⁰¹

Neoliberal ‘dreams of an apolitical state’ are often couched in the language of freedom, in which neutral and objective policymakers can create laws that protect the private sphere from government interference.¹⁰² These reforms were supposed to prevent ‘vested interests’ from exercising undue influence over the policymaking process. If policies could be assessed with reference to the ‘science’ of economies, there would be no need for contestation or deliberation among different groups. Policies could be developed without any ‘politics’ at all.¹⁰³

And yet, these claims to legal neutrality are always and everywhere undermined by the actual practice of neoliberal policymaking, in which policymakers are expected regularly to receive feedback from ‘key stakeholders’.¹⁰⁴ These stakeholders are those with the most knowledge of the policy area under discussion, which generally means they are the very people the policy is most likely to affect. ‘Vested interests’ return to the policymaking process in the guise of ‘technical experts’.

Neoliberalism was never about ‘shrinking’ the state, it was about ‘seizing and then retasking’ it.¹⁰⁵ Many of the founders of neoliberalism would have admitted as much. As Philip Mirowski points out, the maxim of the neoliberals could be summed up as ‘[o]nly a strong state can preserve and enhance a free-market economy’.¹⁰⁶ Only a strong, ‘laser focused’ state could hope to insulate itself from the demands of ‘the masses’.¹⁰⁷

In other words, state power hasn’t expanded because the neoliberal dream was subverted; it has expanded precisely because the neoliberals took control.

The foundations of this new world order were built on a lie – or what Hayek referred to as a 'double truth'. The elite would have to be trained in the art of repressing representative democracy and building a strong and powerful state, while the masses would be fed lines about ‘rolling back the nanny state’ and 'freedom to choose'.¹⁰⁸ For some, such as Hayek himself, this ‘double truth’ was a necessary evil that resulted from the difficult interaction between elegant neoliberal theory and the real, messy world of capitalist political economy.¹⁰⁹ For others, the neoliberal project, while framed as a project that aimed to deliver freedom, was always nothing more than a naked assertion of the power of capital.

Yet the lie at the heart of neoliberalism, despite having been debunked decades ago, retains huge sway over our politics. The idea that markets are ‘clean’ and efficient is, as Wolfgang Streek puts it, ‘propagated with remarkable success particularly by the economics profession, despite what is known about cartels, price agreement, “bank rescues” etc.’.¹¹⁰

Neoliberal politicians will still claim they seek to shrink the state and create space for a free market, yet upon entering office they proceed to distribute public cash to private corporations, promulgate regulation that enriches vested interests, and violently repress all those who stand in their way. Perversely, the popular anger caused by the use of state power to support the interests of capital then serves to strengthen the very same politicians who claim to support ‘free markets’.

As we have seen in this chapter, the nature of capital’s rule has changed over time. The competitiveness of markets shapes the extent of corporate power and executives’ ability to plan. The nature and extent of cooperation between corporate and state actors shapes the kinds of policies we get, and the state of the perennial conflict between capital and labour determines whose interests dominate the planning process. But one thing that has remained the same is the fact of centralised economic planning under capitalism – whether undertaken by corporations, financial institutions, states or empires.

This is not to say that there exists one, centralised plan for the global economy being executed behind closed doors by an omnipotent elite. Capitalism is not defined by the presence or absence of markets, but the anarchic market mechanism does still have a central role to play within the capitalist world system. Despite the planners’ best attempts to contain them, we still see wild swings in variables like growth, employment and inflation – swings which often affect even the most powerful capitalist firms and states. As we’ll see in the next chapter, capitalism and crisis go hand in hand.

When J. K. Galbraith observed the emergence of the ‘new industrial capitalism’ after the Second World War, he was pointing both to an increase in planning and centralisation on the one hand, and to the growing role of workers within the planning process on the other.¹¹¹ One result of this shift was a decrease in the frequency and ferocity of capitalist crises. In the 1980s, Scott Lash and John Urry claimed that neoliberalism meant the ‘end of organized capitalism’, arguing that this era of stability had come to an end.¹¹² But while crises certainly did become more frequent with the advent of neoliberalism, this was not because planning had become less prevalent – it was because capitalists had figured out how to privatise the gains from economic booms, while socialising the losses from the busts.¹¹³

Neoliberals discouraged policymakers from attempting to attenuate the ups and downs of the business cycle, and instead argued that their efforts should be focused on cleaning up after the crash.¹¹⁴ The idea was that the economic cycle should be allowed to run its course, rather than facing interference from unaccountable state bureaucrats. In reality, this new approach to crisis management simply meant that powerful capitalists were able to reap all the benefits of booming financial markets, while being protected during the bust.¹¹⁵ Workers were the ones forced to bear the consequences in the form of unemployment, lower wages and cuts to public services and social security.¹¹⁶ And these crises actually served to reinforce the status quo.

Naomi Klein’s account of ‘disaster capitalism’ in The Shock Doctrine shows exactly how the most powerful firms and states often work together during moments of crisis to manage events in their interests.¹¹⁷ Nobody planned the financial crisis. But the response to that crisis was determined by a tight-knit network of financiers and politicians deciding among themselves who would be saved and who would be sacrificed. Unsurprisingly, most of the big banks that caused the crisis survived in one form or another, as did all of the states, while working people around the world paid the price for the greed and recklessness of big finance. Before long, many of these banks were back to making record profits.

The fusion of political and economic power that we see during these moments of crisis is integral to the way capitalist societies function, not an aberration resulting from conspiratorial networks or clandestine societies. Conspiracy theories – from the Illuminati to the Great Reset – tend to be based on a similar view of the world to that propounded by right-wing libertarians. These people believe that capitalism works, but that it is being corrupted by evil elites (and these elites are often overtly or covertly racialised as in the case of antiSemitic conspiracy theories).

But capitalists aren’t evil monsters, they’re just people acting according to their own interests. The problem is that those interests are diametrically opposed to those of the majority. Even if we replaced every single politician, financier and executive with a completely different person, the system would still function more or less as it does today (though many of the characters mentioned in this book do have some fascinating foibles).

The financial crisis wouldn’t have been prevented if, as Christine Lagarde once said, we had had Lehman Sisters instead of Lehman Brothers.¹¹⁸ Capitalism is a class-based system that contains an inherent tendency towards instability and crisis. The only way to solve this problem is to dissolve the distinction between capital and labour upon which the system is based. The solution runs through the thorough democratisation of our entire economy.

Grace Blakeley Vulture Capitalism

...and then read the whole book!

Hopefully that quoted section from Grace Blakeley’s great book, Vulture Capitalism, was read and taken in, plus, maybe even inspired its reader to seek out the actual item to read it in full and then champion its message(s).

Power to the people, like Salvador Allende of Chile in the 1970s and Mike Cooley and his colleagues democratic and socially-inspired work around creating the Lucas Plan in England in the 1970s and the great vision of the work and report, The Limits to Growth, by Donella H. Meadows (and others) in the 1970s as well... we’re architects, not bees, despite what the apparently non-planning neoliberal, capitalist people of the early 21st century (who are actually hegemonic planners themselves) might say; things seemed so progressive and useful back in the 1970s and before the global North went nuts and Thatcher and Reagan et al. were let loose destroying any decent and productive chance and sense of a (global) society that was truly collaborative and collectivist…