The Deep Roots of American Neoliberalism

A Cultural, Economic, and Philosophical History

Bruce N. Waller

• Publisher: Routledge
• Year: 2022
• Print ISBN: 9781032257198
• eBook ISBN: 9781000578775
• Topic: Filosofía
• Subtopic: Historia y teoría filosóficas

Focusing on why neoliberalism gained such a unique strong hold in the United States, philosopher Bruce N. Waller in this book traces the source back to the country's origins and the entwined core values of the nation's Founding Fathers. Their extreme commitment to private property rights (as evinced in a unanimous vote for the Constitution's Fugitive Slave Clause), an aversion to widespread democracy, and a deep belief in the uniquely just nature of their new country together created the ideal conditions for neoliberalism's growth and success.

Waller also provides a clear analysis of the moral and psychological conditions so hospitable to neoliberalism, including the compatibility of a faith in the "invisible hand" of the free market with the widespread belief – which remains prevalent in the United States – that the world is just and people generally get what they deserve. Waller examines how the ideal of moral responsibility in the United States provides the core belief that holds in place the basic principles of American neoliberalism. The book ends by shedding light on the deleterious effects of neoliberalism and shows that its replacement requires not only the amelioration of enormous inequity in wealth, but also the opportunity for all citizens to exercise autonomy, control, and critical thought in their lives and workplaces.

Key Features

• Traces neoliberal values deep into American history and culture
• Uses empirical psychological research to explain the broad appeal of neoliberalism
• Describes the strong interconnected neoliberal value system of belief in a just world, personal responsibility, and radical individualism, and their combined influence on American culture
• Examines the influence of neoliberal values on the American criminal justice and educational systems

1NEOLIBERALISM

DOI: 10.4324/9781003284680-1

Neoliberalism has a powerful influence around the world, especially in the United States and the United Kingdom. Though contemporary neoliberalism originated in Europe – primarily in Austria – in the mid-20th Century, the neoliberal system took root in the United States during the 1970s and 1980s. It gained followers among some economists, but its real power was in conservative political movements. Why did this invasive European species gain swift influence and sink deep roots in American thought? Framing the question in that way implies that neoliberalism is a radically new model that defeated and replaced traditional American beliefs and values. But the basic elements of neoliberal thought – “proto-neoliberalism” – have long been present in the United States. Neoliberalism is the contemporary manifestation of a belief system that has endured and flourished from the Founders to the present. Neoliberalism found a comfortable home in the United States because the fundamental principles of neoliberalism are deep American values.

The rise of neoliberalism is not a unique US phenomenon, but the United States and the United Kingdom are the settings in which it has had the greatest influence. The degree to which neoliberalism influenced other cultures is an interesting and intensely debated question (especially in Australia and Canada); but the focus here is on the rapid and deep adoption of neoliberal policies in the United States. The strength of neoliberalism in the United Kingdom is also impressive, and some common principles between the US and the UK versions will be noted, but the emphasis will be on the development of neoliberalism in the United States. What conditions made the United States fertile soil for neoliberal policies; and to what extent do those conditions still exist?

Contemporary neoliberalism emerged in the mid-20th century, the 1947 founding of the Mont Pelerin Society marking its systemic origins (though of course its champions, such as Ludwig von Mises and Friedrich von Hayek, had been developing its doctrines long before). It has flourished in the United States and the United Kingdom since the time of Reagan and Thatcher, spreading its tentacles around the world through think tanks (including the Institute of Economic Affairs (IEA) and the Centre for Policy Studies (CPS) in the United Kingdom, the Heritage Foundation and the Ludwig von Mises Institute and the Competitive Enterprise Institute (CEI) in the United States, and the Institute of Public Affairs (IPA) in Australia), international monetary funds – such as the World Trade Organization (WTO) (Chorev 2005), the International Monetary Fund (IMF), and the World Bank (Babb and Kentikelenis 2018; Slobodian 2018) – and through political and military power. Its influence is worldwide, though the United States remains its strongest citadel. But some of the key ideas of neoliberalism have a much longer history, especially in the United States. Much of the neoliberal agenda was already present when the framers met in Philadelphia to draft the new Constitution of the United States – so much so that the United States might well be regarded as a “proto-neoliberal” culture from its revolutionary origins. The proto-neoliberal values of American culture made the United States a welcoming haven for a contemporary neoliberalism that had struggled for survival in Europe but flourished when transplanted to US soil.

Neoliberal Principles

Though different accounts of neoliberalism emphasize different features, David Harvey provides an adequate starting definition:

the theory of economic practices that proposes that human well-being can best be advanced by liberating individual entreprenurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets, and free trade.

Harvey 2005, 1–2

Individualism, personal responsibility, celebration of freedom, and noninterference with the free market are basic neoliberal – and American proto-­neoliberal – values.

The guiding principle of the neoliberal movement is the supreme virtue of the free market. Favoring a market economy does not make one a neoliberal: most people acknowledge the benefits of a free market when it operates efficiently and fairly. But neoliberal adoration of the market goes far beyond that. For neoliberals, the market is not merely a useful way of exchanging goods; it is the objective arbiter of values and the optimum source of knowledge. Hayek’s grand neoliberal principle is that the market is the only path to objective knowledge: all else is mere preference or bias. The unified wisdom of the combined market far exceeds what can be known or understood by any individual. The free market is an impersonal force that collects all the fragmentary knowledge of its participants and produces the best possible overall output of material goods. Because this remarkable collective knowledge far exceeds the possible understanding of any person or group, the beneficial functioning of the market operates through an “invisible hand” that must not be impeded by the efforts or designs of those who are necessarily ignorant of its larger machinery.

Hayek insists that the unfettered operation of the free market will produce the greatest overall benefit, but he acknowledges that the impersonal functioning of the free market will result in some people suffering harm:

I has of course to be admitted that the manner in which the benefits and burdens are apportioned by the market mechanism would in many instances have to be regarded as very unjust if it were the result of deliberate allocation to particular people. But this is not the case. Those shares are the outcome of a process the effect of which on particular people was neither intended nor foreseen by anyone when the institutions first appeared – institutions which were then permitted to continue because it was found that they improve for all or most the prospects of having their needs satisfied.

Hayek 1976, 64–65

The market cannot be judged by “social justice” standards any more than we can complain of injustice when a tornado strikes a community. Suffering from a tornado is unfortunate but has nothing to do with social justice; the impersonal operations of the free market benefit some and harm others but like the effects of the tornado that is not injustice.

When the market results in poverty for some and riches for a few, or causes harm to many people – harms from dangerous products such as tobacco and opiates, harms to the shared environment, harms to those persuaded to spend on products of little or even negative value – that is no reason to suppose that the market needs restrictions and regulations. To the contrary, exercising market freedom entails being responsible for the results: whether riches or poverty, the market honors your free choices and yields your just deserts. Without real consequences, the neoliberals insist, there is no genuine freedom. The “freedom to fail” is part of the charm. For neoliberals, freedom and individual moral responsibility are inseparable. As Hayek (1960/2011, 69) stated, “To be free may mean freedom to starve, to make costly mistakes, or to run mortal risks.” When someone lands in poverty as a result of market transactions, most think that’s unfortunate; neoliberals view it as justice, confirmation of a well-functioning market, and certainly not a problem to be ameliorated. The free market weighs you in the balance, and you are either successful or found wanting, and there is no appeal from its verdict. As neoliberalism critic Simon Clarke notes, in neoliberalism, “Every individual has the freedom to choose the fate that will befall him or her, so the judgement of the market is a moral judgement. Hard work, foresight, initiative and enterprise will be rewarded, while the idle and lethargic will suffer their just punishment” (Clarke 2005, 55).

Efforts to “correct” the impersonal market outcomes by taking resources from the rich to aid the poor are steps down a dreadful and inexorable path toward a totalitarian system that destroys all freedom of choice: “So long as the belief in ‘social justice’ governs political action, this process must progressively approach nearer and nearer to a totalitarian system” (1976, 232). For neoliberalism, the state exists solely for the purpose of protecting individual liberty (including particularly the liberty to participate freely in the market) and the right of private property. Anything beyond that minimal state is an illegitimate restriction on individual freedom. Because entrepreneurs and consumers make independent and free marketplace decisions and cast their “votes” whenever they do so, the only real democracy is marketplace democracy.

In neoliberalism, all aspects of social and political life must be governed by market concerns and principles: all persons are rational economic actors or rational entrepreneurs. Rather than commitment to egalitarian principles, neoliberals extol “the equal right to inequality”: the right of everyone to make their own decisions and enjoy or suffer the consequences. Everything focuses on the individual. Prime minister Margaret Thatcher, an early and passionate advocate of neoliberal policies, championed radical individualism not as policy but as indubitable fact: “There is no such thing as society. There are individual men and women, and there are families” (Thatcher 1987). As David Harvey summarizes Thatcher’s crusade: “All forms of social solidarity were to be dissolved in favour of individualism, private property, personal responsibility, and family values” (2015, 23).¹ Your success and your property are entirely your own and carry no obligations to anyone. Each person is strictly an individual entrepreneur: The poets may say that “no man is an island,” but in neoliberalism, every man is an island. “Ask not for whom the bell tolls,” because if it does not toll for thee, then it is irrelevant noise.

Neoliberal Submission

Neoliberalism (both proto and contemporary) adds another key principle that distinguishes it from traditional economic liberalism: the necessity for submission to the operations and judgments of the market. The free market must be protected from those who wish to control and distort the market for their own selfish benefit (or the special benefit of their communities or families), rather than accepting the objective judgment of the market. Liberal economics places great faith in the free market as the optimum instrument for maximizing wealth; neoliberals (and their proto-neoliberal American ancestors) raise that faith to sublime heights and emphasize the necessity for guarding the market from the masses who would interfere with its perfect functioning.

Traditional “liberalism” – as favored by Adam Smith (1776/1993) – cherished the virtues of the free market. When the market is free, with free trade and respect for private ownership, then an “invisible hand” guides the market to provide the greatest possible overall benefit, including benefits not aimed at by those freely participating in the competitive market. In traditional economic liberalism, the competitive free market provides the greatest possible benefits, and those benefits result automatically when the market operates freely. Neoliberals have an even more exalted confidence in the virtues of the free competitive market, but very little confidence in the ability of most people to voluntarily forgo meddling with its operations. The competitive free market will not automatically flourish; it must be protected from interference, and the larger population must be trained – even coerced – into allowing the market to function freely for the greatest possible benefit.

The masses must learn submission to the operations and results of the free market. That may be accomplished by means of indoctrination (perhaps with the aid of religion); but harsher measures are justified by the ultimate market benefits. The free market will function optimally on its own, with no interference; establishing the conditions for such free hands-off functioning requires rigorous efforts and severe measures. The masses are greedy and short-sighted, they want benefits to which they are not entitled, and – like impetuous children – they want them now. Those who are incapable of the proper (and properly constrained) exercise of liberty must be compelled by the better people to submit themselves to the market judgment.

The close relation between American proto-neoliberal values and the values of contemporary neoliberalism explains why the contemporary version of neoliberalism found such a congenial home in the United States; and tracing that close relation is the major task of this book. But understanding the strength of those values in American thought requires starting with two more basic questions. First, what is the appeal of those values? Why did such values take hold in early American thought and endure through two and a half centuries? And why did those values have general appeal – an appeal not felt as strongly as in the United States and the United Kingdom, but still strong enough to make inroads in a wide range of cultures around the world? In short, what is the broader source of proto-neoliberal/neoliberal appeal? Second, why did those values have unusually strong and enduring – even exceptional – appeal in America? The first question is the subject of the next chapter, while the second question will be examined in Chapter 3.

Note

1. See also Cooper 2017, for a more extensive account of the neoliberal program of making the family and the individual responsible for all aspects of social welfare.

2THE PSYCHOLOGY OF NEOLIBERALISM

DOI: 10.4324/9781003284680-2

It is obvious why the wealthy and privileged would embrace a system that guarantees not only their absolute right to their wealth but also celebrates their wisdom and transmutes their selfishness into virtue. The broader appeal of neoliberalism – extending to many who are condemned by neoliberal standards of virtue – is more difficult to understand. Neoliberalism (in both its proto and contemporary forms) taps into deep psychological needs, and examination of those powerful psychological factors helps explain both the charms of neoliberali...

Table of contents

• Cover Page
• Half-Title Page
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• 1 Neoliberalism
• 2 The Psychology of Neoliberalism
• 3 American Neoliberalism
• 4 Rugged Individualism
• 5 Freedom
• 6 Moral Responsibility
• 7 Neoliberal Dignity
• 8 Neoliberal Justice
• 9 The Neoliberal Academy
• 10 Beyond Neoliberalism
• 11 Replacing Neoliberalism
• References
• Index