Where it came from

Issue: 110

Mike Haynes

David Harvey, A Brief History of Neo-Liberalism (Oxford University Press, 2005), £14.99

David Harvey, the leading Marxist geographer, manages to cram a lot into this brief history of the renaissance of free market capitalism in the guise of neoliberalism. He wants to explain how, from New York, to Europe, to China, key figures like ‘Volcker, Reagan, Thatcher, and Den Xiaoping all took minority [neo-liberal] arguments that had long been in circulation and made them…the central guiding principle of economic thought and management’.

This shift did not happen automatically. Neo-liberalism triumphed in the 1990s after ‘a series of gyrations and experiments’. Its success, Harvey argues, reflected two main things. One was
pressure on profits in global capitalism. The other was the determination of the ruling class to find a solution that would
remould the world in their favour.

The bluntness, even crudeness, of this second argument will shock some, especially as Harvey has not been afraid in the past to argue for more complexity rather than less. Now he argues that the paradox of the last two decades has been that while the left has been agonising about the disappearance of class, our
rulers have been pursuing a project which has aimed to consolidate their political power and to secure an astonishing redistribution of wealth in their favour. ‘If it looks like class struggle and acts like class war,’ writes Harvey, ‘then we have to
name it for what it is’ (p202).

Seemingly more sophisticated accounts cannot grasp this central element of neoliberalism. The philosopher John Grey, for example, presents neo-liberalism as an intellectual conceit, a genuinely utopian project, which is bound to fail, as 19th century free market liberalism did before it, when it encounters the real world. Joseph Stiglitz, on the other hand, treats neo-liberalism as an intellectual error. While the best economic theorists have been showing the limits of the market, market populists have mistakenly stripped away any qualifications from public debate and policy.

For Harvey, accounts like this fail to focus on the way in which self-interest has been at the heart of the neo-liberal project. The
wider political system has been deliberately manipulated through the strategic intervention of think tanks, pressure groups, lobbying and the like, and behind all this have stood ruling classes intent on strengthening their power. The left too, in not wanting to
appear unsophisticated, has missed the obvious. Neo-liberalism as a project for raising the rate of global growth, reducing inequality, widening freedom has consistently failed. But this was never its real object. At first more or less intuitively and semi-consciously, but then more openly, neo-liberalism has secured its main object: ‘to redistr ibute, rather than generate, wealth and income’. This was not, as writers like Grey or Stiglitz might argue, an unfortunate by-product of theoretical failings—it was the main
agenda all along.

I have much sympathy with this view. The audacity of the changes of the last two decades is so great that it is intimidating. However, as the contours of the changes become clearer so does the centrality of the concentration of global power and wealth. Although Harvey adds many nuances—discussing how the ruling
class itself has been remoulded, the uneven spread of neo-liberalism, its Chinese manifestation and so on—the central demand that one should judge neo-liberalism by what it has done and see this as the object all along makes considerable sense. Indeed it might be possible to go even further and to supplement Harvey’s class account with a more particular corruption theory of
privatisation—seeing its real object as providing legal ways through which the state could be milked for the individual benefit of members of the ruling class. At the turn of the 19th century the state was a huge redistributive mechanism which took from the poor to give to the rich—they it called ‘old corruption’ at the time.
In many countries a similar mechanism of ‘new corruption’ has been created for the turn of the 21st century.

Harvey suggests that we can find an alternative to this through struggle ‘to regain popular control of the state apparatus’. But this is a problem. Any selfrespecting political activist will support struggles which help to limit the control our rulers have over us. But is this enough? Note the strange sound of the word ‘regain’. Does Harvey really mean to suggest that there was once a point where the state apparatus was under popular control?

The issue here runs deeper than a difference over political tactics. Harvey follows the valuable work of Duménil and Levy (reviewed in IS 108) in tracing how the crisis of global profitability emerged in the late 1960s, the extent of its resolution and the way that the
redistribution of wealth and income has changed. But despite his effective summary of these trends he offers no real examination of where the cr isis of profitability came from in the first place. Instead he characterises the period after 1945 as an era of ‘embedded liberalism’, meaning by this some form of welfare
capitalism. Corporate power was constrained by state ownership, planning and regulation, and inequality held in check by the welfare state.

There are two obvious difficulties with this that bear directly on Harvey’s argument. The first is that if the democratic deficit was less after 1945 than it is now, it was still substantial. Socialists,
including Harvey, have argued that state action never confronted the fundamentals of the capitalist system, but aimed to perpetuate them. Even then the redistributive impact of the state was less than is often imagined, as any critique of earlier welfare states would show.

The second obvious problem is that this system broke down. When the crisis of profitability began to emerge, attempts to use more of the same failed. State action was undermined by global flows of capital and goods; the state’s own fiscal crisis; and political polarisation. Harvey describes all of this but he does not want to discuss its implications for the future, and the possibility and direction of change.

History certainly shows that neoliberalism is but one of the forms
capitalism can take. The analysis Harvey makes also shows that the system is more neo-liberal in rhetoric than practice and that its stability is far from assured. This means that the state is an area of struggle. But Harvey, like Joel Bakan in his The Corporation, risks the charge of nostalgia by presenting a return to the past as a solution for the future.

There is little in Harvey’s account here to tease out exactly how he would resolve this. But it is not hard to see that the central hole in his analysis is the nature of state power. He repeats the failing of Karl Polanyi, who he draws on at a number of points. In The Great Transformation, published at the end of the Second World War, Polanyi wrote a devastating indictment of laissez-faire liberalism as an attempt to impose a utopian doctrine on the world. Out of its failure came depression, poverty and war but out of it also came a determination of society through the state and community to assert itself against the liberals. This analysis remains much in the minds of all critics of neo-liberalism. But what I have elsewhere called the Polanyi problem (See Journal of
European Economic History,1998 27(3)) here becomes the Harvey problem. Just what are these things called ‘society’, ‘the
community’ and the ‘state’? And in whose interest do they work and with what limits?

This is not only a problem for Harvey’s political analysis. It also affects his economic discussion. He sees a key part of the neo-liberal agenda as involving what he calls ‘accumulation by dispossession’—effectively a primitive accumulation of capital. Accumulation by dispossession is a nice concept but it needs careful application. Here, for example, he defines it as having four main features: ‘privatisation and commodification’;
‘financialisation’; ‘the management and manipulation of crises’; and ‘state redistribution’. The elements are clear but they form a ragbag category and seem to confuse a number of different things.

When Marx wrote of the original primitive accumulation of capital in the 16th and 17th centuries he saw it as a process involving two related aspects. One was plunder from outside of the system—gold from the Americas for example. The other was the separation of labour from the means of production—for example,
forcing peasants off their land through the enclosure acts. Today it is puzzling to imagine a process which involves either a significant accumulation from outside of the system or by the separation of workers from control of the means of production—for where in the last century has that control been evident? This is
most clear when Harvey tries to apply it to the heartlands of capitalism.

Harvey might want to make the argument that this can be seen in the incorporation of previously state controlled economies like Russia and China into global capitalism. But this presumes that these societies were non-capitalist in the first place—a point that would be rejected here but is not explicitly confronted. But
Harvey appears to want to go further than this and suggest that similar processes can be seen within advanced capitalism. The
idea of ‘accumulation by dispossession’ seems to suggest that what might appear as a normal part of crisis restructuring,
where there is a movement from control being held in one capitalist ‘pocket’ to another, is, in reality, a movement from a
‘non-capitalist pocket’ to a capitalist one.

So he writes, for example, of whole state sectors being opened up as ‘new fields for capital accumulation’ from public utilities to welfare provision to warfare. We can agree that with privatisation these have become more ruthlessly subject to the ‘calculus of profitability’ but it does not make sense to argue that they were outside of this before. This suggests a strange view of the nature of the capitalist state, whether in its welfare or warfare forms.
Financialisation seems more to refer to a redistribution within the system, as does the management of crises and state redistribution. Most of what Harvey discusses here seems familiar in terms of crisis theory, and given his argument that things should be called by their proper names it is perhaps unhelpful to try to give these the additional gloss of ‘dispossession’.

There are then serious arguments to be had. But these should not alter the fact that this is also a good account of neoliberalism and one that we can draw on to sharpen our attacks on the malign and
cynical self-interest that Harvey suggests motivates it.