The New Way of the World

On Neoliberal Society

Christian Laval, Pierre Dardot, Gregory Elliott

• Publisher: Verso
• Year: 2014
• Print ISBN: 9781784786243
• eBook ISBN: 9781781685303
• Topic: Philosophy
• Subtopic: Political Philosophy

Exploring the genesis of neoliberalism, and the political and economic circumstances of its deployment, Pierre Dardot and Christian Laval dispel numerous common misconceptions. Neoliberalism is neither a return to classical liberalism nor the restoration of "pure" capitalism. To misinterpret neoliberalism is to fail to understand what is new about it: far from viewing the market as a natural given that limits state action, neoliberalism seeks to construct the market and use it as a model for governments. Only once this is grasped will its opponents be able to meet the unprecedented political and intellectual challenge it poses.

Part One

THE INTELLECTUAL REFORMATION

CHAPTER 1

The Crisis of Liberalism and the Birth of Neo-Liberalism

The real world of liberalism is shot through with tensions. Its unity has always been problematic. Natural law, free trade, private property, the virtues of market equilibrium – these were so many dogmas in the liberal thought dominant in the mid-nineteenth century. Infringing these principles would shatter the machine of progress and rupture social equilibrium. But such triumphant Whiggery did not have everything its own way in western countries. A wide variety of doctrinal and political critiques flowered throughout the nineteenth century. This is because in none of its spheres is ‘society’ open to being reduced to a set of contractual exchanges between individuals. If we set aside socialism, which denounced the lie of a merely fictive equality, French sociology has not stopped making the point since at least Auguste Comte. In Britain, radicalism, having inspired the most liberal forms of assistance to the poor and helped promote free trade, fostered a challenge to this naturalistic metaphysic and even encouraged democratic and social reforms on behalf of the greatest number.

The crisis of liberalism was also an internal crisis – something easily forgotten when people try to write the history of liberalism as if it were a unified corpus. As early as the mid-nineteenth century, liberalism revealed fault lines that were to go on deepening down to the First World War and the inter-war period. In fact, the tensions between two types of liberalism – between that of social reformers, who defended an ideal of the common good, and that of supporters of individual liberty as an absolute end – never ceased.¹ This rift, which makes the unity of liberalism a retrospective myth, precisely constitutes the long ‘crisis of liberalism’ that extended from the 1880s to the 1930s and saw challenges to its dogmas in all the industrialized countries, where social reformers gained ground. These challenges, which sometimes seemed to coalesce with socialist ideas about running the economy, form the intellectual and political context of the birth of neo-liberalism in the first half of the twentieth century.

What did the ‘crisis of liberalism’ consist in? Marcel Gauchet is certainly right to identify among its aspects a notable problem: how could a society that has emancipated itself from deities, discovering its fully historical character, abandon itself to a fatal course and thus surrender any control over its future? How could human autonomy be synonymous with collective impotence? As Gauchet asks, ‘What is an autonomy that is not in control of itself?’ The success of socialism precisely stemmed from the fact – in this it was a worthy successor of liberalism – that it could seem to be the embodiment of an optimistic desire to construct the future.² But this is true only if liberalism is reduced to a belief in the virtues of the spontaneous equilibrium of markets and the contradictions are located exclusively in the domain of ideas. Since the eighteenth century, however, the question of government action has been raised in a much more complex fashion. In reality, what is commonly called the ‘crisis of liberalism’ was, in Foucault’s terms, a crisis of liberal governmentality – that is, a crisis that essentially posed the practical problem of political intervention in economic and social affairs and its doctrinal justification.³

What was posited as an external limit to such action – in particular, the inviolable rights of the individual – became a pure and simple blocking factor on the ‘art of government’, at a time when the latter faced economic and social issues that were at once novel and urgent. What threw dogmatic liberalism ‘into crisis’ was the practical need for government intervention to confront organizational changes in capitalism, class conflicts that threatened ‘private property’, and the new international balance of power.⁴ ‘Solidarism’ and radicalism in France, Fabianism and social liberalism in Britain, and the birth of ‘liberalism’ in the American sense – these were at once symptoms of this crisis in the mode of government and some of the responses generated to confront it.

AN UNDULY NARROW IDEOLOGY

Well before the Great Depression of the 1930s, the doctrine of the free market was failing to encompass the new realities of capitalism as it had developed during the long phase of industrialization and urbanization, even though a number of ‘old liberals’ were unwilling to relinquish their most dogmatic positions.

Registration of the ‘debacle of liberalism’ went far beyond the socialist or reactionary milieus most hostile to capitalism. A whole set of new trends and realities dictated comprehensive revision of the representation of economics and politics. ‘Historical capitalism’ corresponded less and less to the theoretical schemas of the liberal schools as they elaborated on the idealization of ‘economic harmonies’. In other words, the liberal triumph of the mid-nineteenth century did not last. The capitalisms of the United States and Germany, the two emergent powers of the second half of the century, demonstrated that the atomistic model of independent, isolated economic agents, guided by considerations of their clearly understood interests, and whose decisions were coordinated by the competitive market, hardly corresponded to the structures and practices of the really existing industrial and financial system. The latter, increasingly concentrated in major branches of the economy, and dominated by an oligarchy closely linked to political rulers, was governed by ‘rules of the game’ that had nothing to do with the rudimentary conceptions of the ‘law of supply and demand’ associated with the theoreticians of orthodox economics. The rule of a few autocrats at the head of giant companies controlling the railway, oil, banking, steel and chemical sectors in the United States – the ‘robber barons’ of the time – may perhaps have created the mythology of the self-made man. But by the same token it utterly discredited the idea of a harmonious coordination of private interests.⁵ Well before the elaboration of ‘imperfect competition’ and the analysis of enterprise strategies and game theory, the ideal of the perfectly competitive market already seemed very far removed from the realities of the new large-scale capitalism.

What classical liberalism had not adequately incorporated was precisely the phenomenon of the enterprise – its organization, its legal forms, the concentration of its resources, and new forms of competition. The new imperatives of production and sale called for a ‘scientific management’ mobilizing industrial armies supervised by qualified, loyal personnel in accordance with a military-style hierarchical model. The modern enterprise, incorporating multiple divisions and managed by organization specialists, had become a reality which the dominant economic science had not yet succeeded in understanding, but which numerous minds less bound by dogma – in particular, among the ‘institutionalist’ economists – had begun to examine.

The emergence of large cartelized groups marginalized the capitalism of small units; the development of sales techniques undermined faith in consumer sovereignty; agreements and the overbearing, manipulative practices of oligopolies and monopolies as regards prices destroyed depictions of fair competition as advantageous to everyone. A section of opinion began to regard businessmen as grade A crooks, rather than heroes of progress. Political democracy seemed to be irremediably compromised by massive corruption at all levels of political life. Politicians were predominantly thought of as puppets in the hands of those who possessed the power of money. The ‘visible hand’ of managers and financiers, and the politicians connected to them, had hugely undermined belief in the ‘invisible hand’ of the market.

The inadequacy of liberal formulas to the imperatives of changing the condition of wage-labour, their incompatibility with occasional attempts at social reform, represented another factor in the crisis of dogmatic liberalism. From the mid-nineteenth century, and especially after Bismarck’s initial reforms in the late 1870s and early ’80s, Europe witnessed an increasing trend towards the emergence of apparatuses, regulations and laws intended to protect the condition of wage-earners and, as far as possible, prevent them succumbing to the pauperism that haunted the whole nineteenth century: legislation on child labour, limits on the working day, the right to strike and combine, accident insurance, and workers’ pensions. Above all, the new poverty bound up with the business cycle was to be combated by measures of collective protection and social security. The idea that the wage-relation was a contract involving two independent, equal wills increasingly seemed to be a fiction completely divorced from social reality at a time of major industrial and urban concentration. In this respect, the working-class movement, rapidly expanding on the trade union and political planes alike, represented a constant reminder of the collective and conflictual dimension of the wage-relation – a challenge to the strictly individual and ‘harmonic’ conception of the work contract as conceived by liberal dogma.

Internationally, the late nineteenth century scarcely resembled the great universal, pacific society, organized in accordance with the rational principles of the division of labour, imagined by Ricardo at its start. Customs protection and the rise of nationalisms, rival imperialisms and the crisis of the international monetary system – these appeared so many exceptions to the liberal order. It no longer even seemed true that free trade was the formula for universal prosperity. Friedrich List’s theses on ‘educative protection’ appeared to be more reliable and more attuned to the new realities: Germany, like America, also offered the spectacle of a capitalism of large-scale units protected by high customs barriers, while Britain saw its industrial position come under challenge.

The conception of the ‘night watchman’ state, diffused in Britain by the ‘Manchester School’ and in France by doctrinaire economists in the wake of Jean-Baptiste Say, projected a singularly narrow view of government functions (maintenance of order, enforcement of contracts, elimination of violence, protection of property and persons, defence of the territory against external enemies, an individualistic conception of social and economic life). What represented a critique of the different possible forms of ‘despotism’ in the eighteenth century had gradually become a conservative defence of property rights. This conception, which was highly restrictive even by comparison with the areas of intervention of the ‘laws of police’ imagined by Smith and the administrative spheres of the Benthamite state, seemed increasingly out of synch with the exigencies of organizing and regulating the new urban and industrial society of the late nineteenth century. In other words, liberals no longer had a theory of the government practices that had developed since the middle of the century. Worse, they isolated themselves by appearing to be obtuse conservatives incapable of understanding the society of their time when they claimed to embody its very dynamic.

THE PRECOCIOUS CONCERN OF DE TOCQUEVILLE AND MILL

The ‘crisis of liberalism’ at the century’s close – what has been called the sense of ‘liberalism’s paradise lost’ – did not explode all at once. Aside from socialists or declared supporters of conservation, there were some sufficiently troubled minds within the great liberal current to early on cast doubt on belief in the virtues of the natural harmony of interests and the free development of individual action and faculties.

To take but one exa...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Acknowledgements
• Introduction to the English Edition
• Part One: The Intellectual Reformation
• Part Two: The New Rationality
• Conclusion: The Depletion of Liberal Democracy