What is neoliberalism ?

What is neoliberalism ?

Jeremy Schahil: I’m so glad that you brought up the neoliberal ideas. The term neoliberal is thrown around so much these days by people that I think have literally no clue what neoliberal economic policy is or neoliberalism is in general. I think would be fantastic: give people a definition. What does neoliberalism mean?

David Harvey: I took it to be a political project, which originated in the 1970s with the Business Roundtable and the Rockefellers and everybody else, which is to reorganize the economy in such a way as to restore power to an ailing capitalist class. The capitalist class was in difficulties in the late 1960s, early 1970s, because the worker movement was rather strong, there were lot of community activists, the environmental, there were all of these reform things coming through, the formation of the EPA and all those kinds of things. So they decided, through the Business Roundtable, that they were going to really try to recuperate and accumulate as much economic power as they could amongst themselves.

And that had a number of elements to it, such that, for example, if you were faced with a situation of bailing out the people or bailing out the banks, you would bail out the banks and let the people struggle. You would always, say if there’s a conflict between capital and the well-being of the people, you choose capital. That was the simple form of the project, elements of that, that, you know, Reagan set in motion and Thatcher set in motion and that’s basically what it’s been about. It was a political project.

Now some people say it’s just an idea about the free market. Well, yeah, a free market to some. Personal responsibility, yeah. A redefinition of citizenship such that a good citizen is not a needy citizen. So any citizen who’s needy is a bad person. And I don’t know if you’ve seen the movie “I, Daniel Blake.” It’s a very good example. It’s a terrifying example of how social services get set up to punish people as opposed to really assist them and help them.

JS: What I often think of as one of the most visible aspects of neoliberal economic policy is the notion of austerity measures that are imposed on economies in the global south, but also in the case of Greece, for instance. You see this demand from the creditors that the first thing that has to go if we were to give you this debt is your social programs and the money that you would normally spend on those is going to go toward paying off either the principle or the interest on the money that is being generously lent to you.

DH: Well, it’s the debt peonage again. You organize debt peonage in such a way as to lock people in, and then they have to pay. But, you don’t take the money away from the bondholders. I mean, in the case of Greece for example, it wasn’t as if anybody went after the French and the German banks who lent all that money to Greece. They kind of basically socialized their debt, turned it into the IMF and the European Stability Fund and all the rest of it and then made the Greeks pay.

Well, actually, if the banks made a bad judgment they should pay. But they didn’t and this is this neoliberal principle at work. And I tend not to like the term austerity, started because austerity —

JS: I’m using the term that they use.

DH: Yes, they use. But austerity is used for policies which are administered to the population. Austerity is not for capital.

JS: Right.

DH: Absolutely not for the financial institutions, and it’s not for the top one percent. So austerity is about social programs. And, in fact, the state has been heavily, heavily involved in subsidizing capital over the last ten or fifteen years. So, state power is used that way. So, this again, is part of the neoliberal kind of mix. And it preaches free market but especially for the ideology, as I’ve said earlier, there’s a tremendous amount of monopoly power in this supposedly free market system.

JS: I’ve often thought that at least in part the situation that we saw unfold in Greece is very similar in some ways to what happened in the financial crisis in this country in 2007, 2008. You had these lenders that knew that the people they were giving the money to were not going to be able to afford their monthly payments, not to mention even making principal loan payments. And in Greece it was the same thing. These German, and to a lesser extent, other European financial institutions, they knew that the money that they were giving, or that they were lending to Greece was not going to be repaid and that it would ultimately come to a head. So why did these institutions — why do German banks or U.S. financial institutions — what benefits them to pour money into Greece knowing that it’s not going to be paid back, or other countries?

DH: Because they know it will be paid back to them.

https://theintercept.com/2018/01/21/marxist-scholar-david-harvey-on-trump-wall-street-and-debt-peonage/