Tory neoliberalism

There is a very good chance that by the time the Tories are eventually voted out of office (2020 at the earliest, but more likely 2025 or even later) most existing public institutions will have been largely or fully dismantled, either through cuts or through privatization. The welfare state is rapidly being eroded; privatization of the NHS is likely to be extended; education policy will, by design, result in more schools taken out of local authority control and into the hands of private companies; central funding of higher education and the arts, already decimated by cuts, will almost certainly have been slashed further; the BBC is facing a relentless attack on its role as a publicly funded broadcaster; despite denials from the government, plans have been drawn up to privatize Channel 4. Apart from parliament itself, the royal family and the armed services, we may find that within a decade almost nothing will be left of publicly funded institutions.

The budget deficit is the government’s convenient but dishonest rationale behind this programme. The reality, of course, is that the cuts are driven by an ideological commitment to neoliberal economic principles. It is interesting to consider why the government will not admit this, instead choosing to depict itself as having to make unfortunate but necessary decisions to (as the myth goes) clean up the mess created by the previous Labour government. There are understandable presentational reasons for this: in general, most people are suspicious of ideology but fond of practicality (which helps explain why the Chancellor of the Exchequer preferred to be seen wearing a hard hat rather than reading economic theory for his election campaign photo opportunities); and it is a lot easier to communicate via social media and tabloid newspapers an idea as simple as ‘sorting out a mess’ than complex economic theories.

But perhaps the primary reason for playing down the ideological nature of the policies is that the government knows full well that at best the policies are highly risky, and at worst they simply do not work (or at least do not work in the way many of their most enthusiastic proponents would hope). It is worth acknowledging, even for those of us on the Left who oppose the government’s policies, that neoliberalism makes a serious claim to be the best and most rationale way of organizing society. There is no lack of weight or sophistication to neoliberalism as a set of ideas, and to reduce it simply to an ideology of greed or hatred of the poor is an intellectual dead end. Certainly neoliberals maintain that profit, self-interest, competition and, if you like, greed are key motivating factors behind human action, and they positively encourage inequality not only as the most effective way to ensure that merit is justly rewarded but also as a dynamic that stimulates productivity and economic growth. Whatever one thinks of the neoliberal analysis, there is no doubt that it presents a body of psychological, philosophical, political, social and economic theory that demands serious engagement.

Like many ideologies, however, neoliberalism works better in theory than in practice. At the heart of neoliberal thought is a belief in laissez-faire capitalism, free markets, deregulation and the excision of the “dead hand” of the state. It is supposed that markets, unlike governments or the state, know best; therefore, markets that are fully free (i.e. that are subject to no government intervention through red tape, regulation, or state ownership) will, it is argued, work efficiently and in the interests of everyone. The economic laws of supply and demand, so long as they are left to operate freely, will benefit society as a whole.

As a theory neoliberalism is seductively persuasive—as long as one accepts that there are economic laws as true as scientific laws. But there is little hard evidence that neoliberalism works well in practice. As its name indicates, neoliberalism is a modern reworking of classical economic liberalism. Associated particularly with the politics and ideas of the nineteenth century, above all in Britain, classical liberalism has impressive intellectual credentials stemming from the thought of, among others, Adam Smith and John Stuart Mill. The history of nineteenth-century Britain is instructive for some of the strengths and weaknesses of economic liberalism. On the one hand, liberal policies (e.g. lack of regulation) helped the phenomenal economic growth set off by industrialization; on the other hand, they also generated some truly dreadful social conditions. In theory, by maximizing profit and increasing wealth, everyone will benefit (or, rather, all those who deserve to—the lazy and the workshy, for example, will deservedly not benefit); but this is not how it turned out in practice. For example, although profits are increased from, for example, the employment of cheap child labour, what resulted was not only suffering children but also depressed adult wages and increased adult unemployment. Such was the moral outrage at the social effects of economic liberalism, that the only remedy was for the state increasingly to intervene in the social and economic sphere, by regulating working conditions and alleviating poverty and its results.

The neoliberal Tory vision of society has clear echoes of liberal nineteenth-century society. David Cameron’s idea of the ‘Big Society’ (which still occasionally sees the light of day in his pronouncements) is in essence a modern take on the nineteenth century: promote laissez-faire capitalism, rein in government and state intervention in social and economic regulation, and encourage philanthropy, charity and human kindness to fill in the gaps. It’s an optimistic vision, but one for which the evidence is hardly encouraging. There were certainly philanthropists in the nineteenth century, but philanthropy and charity on their own had a minimal impact on the alleviation of social problems. In the US, the most neoliberal of all western countries, there is a long tradition of philanthropy, but American society is nevertheless beset by levels of poverty and inequality—and increasing ones at that—that dwarf those of western Europe. When, during the election campaign, the Tories unveiled a policy that would, through statutory paid leave, compel employers to enable workers to undertake voluntary and charitable work, it was perhaps an unspoken acknowledgement that neoliberalism may not work.

Austerity and the ‘shock doctrine’ so beloved of the IMF (and US) have similarly provided little real evidence that they work. As has been well documented (by, for example, Joseph Stiglitz and Naomi Klein), despite repeatedly failing to achieve the desired results, the IMF has for decades nevertheless relentlessly pushed on with its blinkered neoliberal policies, convinced that the rarefied theories of the Chicago School economists trumps the actual evidence before its eyes. In so far as problems were acknowledged, these were usually attributed to the failure of countries to move to a fully free market quickly enough, or to the continuing intervention of governments in economic policy. Even in cases where the IMF policies had some success, it was only a small part of society who benefited—not a surprise to critics of the IMF and neoliberalism, but not the anticipated outcome expected by the IMF and neoliberals themselves.

Neoliberal ideologists (among whom much of the current government can be included) tend to be dogmatic in their approach. And there is nothing wrong with that, provided the evidence supports the dogma. But the evidence invariably points the other way. In a recent essay discussing the life and work of the social scientist Richard Titmuss (a strong believer in the importance of public institutions), Stefan Collini discusses Titmuss’s final book, The Gift Relationship: From Human Blood to Social Policy (1970), in which Titmuss considered the provision of human blood to meet medical and scientific needs.* In the US, a neoliberal approach was adopted as the best response: market principles should apply, according to which the demand for blood will be met by supply, and a price mechanism will develop which will satisfy all concerned. In short, leave it to the market. Consequently a commercial trading system developed: for donors there were financial incentives to give blood, and there were profit incentives to encourage companies to trade in and supply blood. In the UK, however, the publicly-funded National Blood Service (part of the NHS) was established, which relied on voluntary donations of blood. A neoliberal would assert that the US model should prove to be the most effective. But as Collini describes, Titmuss’s work demonstrated ‘the greater efficiency of the [UK system] as measured by all the relevant criteria: purity of blood, availability and reliability of supply, cost and administration.’ (As further subsequent confirmation of this, one may note that it was blood sourced largely from the US and infected with Hepatitis C and HIV that was at the centre of the ‘Tainted blood scandal’.)

It is not simply its invariable failure to work in practice and its often calamitous social effects that makes neoliberalism such a disastrous ideology. Just as corrosive is its moral bankruptcy. One of the more interesting moments of the election campaign was when Cameron was confronted by an audience member on Question Time about the fact that he spends all his time talking about the economy but never about morality. The Prime Minister gave a good answer in the context of the debate: he argued that getting people into work and improving their economic security and prospects were above all moral issues, since it was only by doing this that poverty could be reduced. Indeed, his answer probably sums up neoliberal moral theory: assuming laissez-faire capitalism works, then the society that emerges will be morally good. But, as I’ve suggested, laissez-faire capitalism does not work. The dogmatism of neoliberals makes them blind to the bankruptcy of their morality.

The effects of this dogmatism and moral bankruptcy are hugely damaging, for they result in an impoverished moral culture. Even if we accept that public institutions such as the NHS, or the welfare state, or the BBC, could be run more efficiently according to market principles (and according to narrow economic criteria they almost certainly could), this would nevertheless miss an important point about their existence. Throughout Titmuss’s work there was, as Collini explains, ‘a governing preoccupation…: the need for societies to give effective institutional expression to non-economic values in the face of the tiresomely corrosive power of the profit motive.’ It is this ‘institutional expression to non-economic values’ that matters so much—and it is this which will be lost as the Tories dismantle the welfare state and drastically cut back on public funding. The NHS may well be a bloated, inefficient organization, but its importance lies not only in the healthcare it provides but also in the values it represents: the belief that society should look after all its members, the idea that we are collectively responsible for looking after one another, the valuing of care over profit. When a museum or gallery allows free access, this is an important statement about the value of making heritage, art and education available to all. Even if charges did not lead to declining museum attendance (as the evidence indicates they do), by implementing those entrance charges we would nevertheless be replacing a non-economic value with an economic value. Profit and efficiency may be increased by such charging, but at the cost of abandoning the shared moral value that education and heritage should be universally accessible.

When the Tories talk about values, usually specifically ‘British’ values, conspicuously absent are such things as compassion, caring, and sharing. This is hardly surprising: neoliberals tend to be sceptical about these types of virtue, not because they don’t admire them but because they do not fit well with their narrow economic theories. For neoliberals, first and foremost should be a focus on free market principles; in so far as compassion, caring and sharing have a role, these will emerge naturally from the wonderful society that laissez-faire capitalism will create. But it may well be wondered what happens when a government consistently emphasizes economic virtues over moral virtues. If, for example, the message is consistently sent out that economic inefficiency is a more pressing concern than the damage caused by poverty, then society is likely to internalize this message—to value wealth and profit, and to devalue welfare and caring. A cynic might of course argue that such internalization of the profit motive at the expense of welfare is precisely the intention of the Tory neoliberals.

London Review of Books, vol. 37, no. 19, 8 October 2015, pp. 29-33.

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