The high cost of neoliberalism

Financial liberalisation undermines democracy, handing power to a “virtual senate” that acts on beha

In the contemporary world of state-capitalist nations, loss of sovereignty can lead to a diminution of democracy, and a decline in the ability of states to conduct social and economic policy on their own terms. History shows that, more often than not, loss of sovereignty leads to liberalisation imposed in the interests of the powerful. In recent years, the regime thus imposed has been called "neoliberalism". It is not a very good term, as the social-economic regime in question is not new; nor is it liberal, at least as the concept was understood by classical liberals. The very design of neoliberal principles is a direct attack on democracy.

The central doctrine of neoliberalism is financial liberalisation, which took off in the early 1970s. Some of its effects are well known. With the increase in speculative capital flows, countries were forced to set aside much larger reserves to protect their currencies from attack. It is striking that countries which maintained capital controls - among them India and China - avoided the worst of the Asian financial crisis of 1997-98.

In the United States, meanwhile, the share of the financial sector in corporate profit rose from just a few per cent in the 1960s to over 30 per cent in 2004. Concentration also increased sharply, thanks largely to the deregulatory zeal of the Clinton administration. By 2009, the share of banking industry assets held by the 20 largest institutions stood at 70 per cent.

Among the consequences of financialisation is the creation of what an analysis by the investment bank Citigroup calls "plutonomy". The bank's analysts describe a world that is dividing into two blocs: the plutonomy and the rest. The US, UK and Canada are the key plutonomies: economies in which growth is powered by - and largely consumed by - the wealthy few. In plutonomies, these rich consumers take a disproportionately large slice of the national pie. Two-thirds of the world's economic growth is driven by consumption, primarily in the pluto­nomies, which monopolise profits as well.

The virtual senate

Citigroup's "plutonomy stock basket" has far outperformed the world index of developed markets since 1985, when the Reagan-Thatcher programmes for enriching the very wealthy were taking off. This is a substantial extension of the "80-20 rule" that is taught in business schools: 20 per cent of your customers provide 80 per cent of the profits, and you may be better off without the other 80 per cent. Corporations recognised years ago that modern information technology allows them to identify profitable customers to whom they can provide grand treatment, while deliberately offering skimpy services to the rest, creating a form of "consumer apartheid".

Financial liberalisation also creates what some international economists have called a "virtual senate" of investors and lenders, who "conduct moment-by-moment referendums" on government policies. If the virtual senate determines that those policies are irrational - meaning that they are designed to benefit people, not profit - then it can exercise its "veto power" by capital flight, attacks on currency and other means. Take one recent example: after Hugo Chávez was elected president of Venezuela, capital flight escalated to the point where assets held abroad by wealthy Venezuelans equalled a fifth of the country's GDP. With capital flow liberalised, governments face a "dual constituency": voters and the virtual senate. And even in the richest countries, the private constituency tends to prevail.

The Bretton Woods system put in place at the end of the Second World War was designed on the understanding that capital controls and regulated currencies would create a space for government action responding to public will - for some measure of democracy, that is. Keynes considered the most important achievement of Bretton Woods to be the establishment of the right of governments to restrict capital movement. In dramatic contrast, in the neoliberal phase that followed, the US treasury department came to regard free capital mobility as a "fundamental right", unlike such alleged rights as those guaranteed by the United Nations Universal Declaration of 1948: to health, education, decent employment and security - entitlements that the Reagan and Bush administrations dismissed as "preposterous", "letters to Santa Claus", mere "myths".

In earlier years, the public had not been much of a problem. In his definitive history of the international monetary system, the economist Barry Eichengreen observes that, in the 19th century, governments had not yet been "politicised by universal male suffrage and the rise of trade unionism and parliamentary labour parties". This meant that the severe costs imposed by the virtual senate of lenders and investors could be transferred to the general population.

But with the radicalisation of the general public during the Great Depression and the anti-fascist war that followed, this luxury was no longer available to private power and wealth. Hence, in the Bretton Woods system, Eichengreen writes, "limits on capital mobility sub­stituted for limits on democracy as a source of insulation from market pressures". It is only necessary to add the obvious corollary: with the dismantling of that system from the 1970s on, functioning democracy was restricted.

Real choices

In Latin America, specialists and polling organisations have, for some time, observed that the extension of formal democracy was accompanied by an increasing disillusionment about democracy and a lack of faith in democratic institutions. A persuasive explanation for these disturbing tendencies was given by the Argentinian political scientist Atilio Boron, who pointed out that the new wave of democratisation in Latin America coincided with neoliberal economic "reforms", which undermine effective democracy. The phenomenon extends worldwide, although it appears that the tendency may have reversed in recent years, with departures from neoliberal orthodoxy.

The annual polls on Latin American opinion by the Chilean polling agency Latinobaró­metro, and their reception in the west, are interesting in this respect. Few elements of the reigning western orthodoxy are upheld with more fervour than the view that Chávez is a tyrant dedicated to the destruction of democracy. The polls are therefore a serious annoyance that have to be overcome by the usual device: suppression.

The November 2007 poll had the same irritating results as in the preceding few years: Venezuela ranked second behind Uruguay in satisfaction with democracy and third in satisfaction with leaders. It ranked first in the assessment of the current and future economic situation, equality and justice, and education standards. True, it ranked only 11th in favouring a market economy but, even with this flaw, overall it ranked highest in Latin America on matters of democracy, justice and optimism, far above the US favourites Colombia, Peru, Mexico and Chile.

The Latin America analyst Mark Turner has written of an "almost total English-speaking blackout about the results of this important snapshot of [Latin American] views and opinions". He also found the usual exception: there were reports of the finding that Chávez is about as unpopular as Bush in Latin America, a fact that will come as little surprise to those who are familiar with the bitterly hostile coverage to which the Venezuelan president is subjected in the media, not least (and this is an odd feature of this putative dictatorship) in his country.

In the US, faith in institutions has been declining steadily. It is interesting to compare recent presidential elections in the richest country in the world and the poorest country in South America, Bolivia. In the 2004 US presidential election, voters had a choice between two men born to wealth and privilege, who attended the same elite university, joined the same secret society where privileged young men are trained to take their place in the ruling class, and were able to run in the election because they were supported by pretty much the same conglomerations of private power. Their announced programmes were similar, consistent with the needs of their primary constituency: wealth and privilege.

By contrast, in the December 2005 election in Bolivia, voters were familiar with the issues: control of resources, cultural rights for the indigenous majority, problems of justice in a complex multi-ethnic society and many others. They eventually chose Evo Morales, someone from their own ranks, and not a representative of narrow sectors of privilege. There was real participation, extending over years of intense struggle and organisation.

Election day was not just a brief interlude for pushing a lever and then retreating to passivity and private concerns, but one phase in ongoing participation in the workings of the society. The comparison, and it is not the only one, raises some questions about where democracy promotion is most needed.

Latin America has real choices, for the first time in its history. The usual modalities of imperial control - violence and economic strangulation - are much more limited than before. There are lively and vibrant popular organisations providing the essential basis for meaningful democracy. Latin American and other former colonies have enormous internal problems and there are sure to be many setbacks, but there are promising developments as well. It is in these parts of the world that today's democratic wave finds its basis and its home. That is why the World Social Forum has met in Porto Alegre, Mumbai, Caracas, Nairobi, not in northern cities, though by now the global forum has spawned many regional and local offshoots, doing valuable work geared to problems of significance in their own regions.

The former colonies, in Latin America in particular, have a better chance than ever before to overcome centuries of subjugation, violence and foreign intervention, which they have so far survived as dependencies with islands of luxury in a sea of misery. These are exciting prospects for Latin America, and if the hopes can be realised, even partially, the results cannot fail to have a large-scale global impact as well.

Extracted from "Hopes and Prospects" by Noam Chomsky (Hamish Hamilton, £18.99)
© Noam Chomsky 2010 penguin.co.uk

CREDIT: COLIN ANDERSON/BLEND IMAGES
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The humanist left must challenge the rise of cyborg socialism

A new “accelerationist” movement, defined by its embrace of technological determinism, represents a threat to the ethical socialist tradition and liberal democracy. 

Undiagnosed by the mainstream media and much of the academic community, a major intellectual renewal is underway across the left. It is energetic and tech-savvy, building platforms such as Novara Media. It maintains a radical, rich heritage within the European left, embraces bold ideas, and is well-organised and networked.

It is fast becoming a new political movement; best captured in influential articles and books discussing “accelerationism”, “postcapitalism” and even “fully automated luxury communism”. It has entered green and radical thinking, and has subtly influenced many political commentators - especially when discussing Universal Basic Income.

Yet there has been little critical engagement with this new thinking in terms of its intellectual origins and assumptions.

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The US political scientist Mark Lilla has offered a popular diagnosis of the state of the left. He suggests a modern closure of the American mind after changes within liberal thought made it barely recognisable from its previous iterations. The result is the long march of a malign identity politics through the left - which helps to account for the success of Donald Trump and various nationalist movements. Across both the left and the right, politics is now defined by identity and the losers sit on the progressive side.

Lilla’s basic pitch is a compelling one. Following Ronald Reagan’s victory in 1980, the left failed to develop a new body of ideas as post-war social democracy disintegrated. Consequently, two generations of radicals retreated back onto campus. The political imperative was to build a new public philosophy for the left but this was sidelined and replaced by the embrace of an individualised identity politics; one that “distorted the liberal message to such a degree that it has become unrecognisable”. The historic concerns of the left - nurturing citizenship and building the “common good” - were lost through a descent into relativism and a politics of the self.  We entered the culture wars.

The character of the left has shifted. It has become obsessed with the belief that politics is an authentic search for the self, rather than a sacrificial contribution to the commons, with its trade-offs and compromises. Movement politics - rather than one anchored in the complexities of representative democracy - now dominates. This politics assumes that generalisation is not possible given our assorted personal histories and experiences of privilege, inequality and exploitation. Left politics has turned inward, preoccupied by questions of personal identity and with a new language of fluidity, hybridity and intersectionality. This dovetails with our modern narcissistic, individualised culture and Facebook echo chambers, in contrast to historic forms of collective agency and physical solidarities informed by traditional - often ancient - models of justice.

So far, so good. Lilla’s argument helps define the detachment of the liberal left from both its historic traditions of language and thought and a discernible working class base. This detachment has been brought into sharp political focus over the last 18 months on both sides of the Atlantic.  

How, though, does this liberal reorientation relate to wider shifts across the left? The real challenge is to identify how this liberal rewrite has tacitly joined forces with darker ideas and histories. It is not just about the evolution of modern identity politics; it is about how parts of the left are once again returning to anti-humanist thinking to scientifically determine the true path.  

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The signature book for much of this fashionable thinking on the left is Inventing the Future: Postcapitalism and a World Without Work - Nick Srnicek and Alex Williams’ brilliant, iconoclastic 2015 text which introduced what we have come to know as “accelerationism” into our political mainstream. It is a genuinely audacious, supremely confident intervention in terms of its intellectualism and its presentation of a highly specific future for the left. It has caught a wave and helped to re-populate the left’s post-crash void and jettison late New Labour managerialism.

Given its many virtues, it is easy to understand why the book has been so uncritically welcomed, especially in its embrace of both automation and a Universal Basic Income. It is seen to speak for a disenfranchised generation: a modern classic imbuing the left with both ideas and confidence. No surprise, then, that the authors and their allies have been invited into the orbit of “Corbynism”. We might therefore request closer scrutiny of their ideas.

For example, the authors make a significant philosophical assertion when they write: “there is no authentic human essence to be realised” and that “humanity is an incomplete vector of transformation” (p.82). A few pages earlier, they suggest that the future demands “synthetic freedom”, exemplified by “Cyborg augmentations, artificial life, synthetic biology and technologically mediated reproduction”’.

This is not just some prosthetic envy but the demand for a new “Promethean Spirit”, as Ray Brassier, another accelerationist thinker, terms it. “Synthetic freedom” involves “at least three different elements: the provision of the basic necessities of life, the expansion of social resources and the development of technological capacities”. This final element is a recurring, disturbing drumbeat within the history of the left.

Things become clearer when the authors proclaim that their overall aim is to “undertake an interventionist approach to the human that is opposed to those humanisms that protect a parochial image of the human at all costs.”

The rebuke of political opponents as “parochial” is common within the left’s internal - and often impenetrable - doctrinal battles. It is not difficult to see why. You frame your opponent as a backward-looking reactionary whilst virtue-signalling your personal grasp of modernity; you own the future whilst your opponent languishes in nostalgia. This approach seeks to define a binary politics: the future against the past, progress against reaction, and right against wrong. It has a long tactical history. For example, witness Perry Anderson’s takedown of Raymond Williams in the Politics and Letters interviews or Tony Judt’s assessment of E.P. Thompson in the New York Review of Books.

So, who and what do they trash-talk as “parochial”? The authors provide two examples of “parochial defences” of the human. First, Jürgen Habermas in The Future of Human Nature, and second, Francis Fukuyama in Our Posthuman Future. The sin of both writers - their parochialism - is to suggest that modern “transhumanist” thinking might threaten the foundations of liberal democracy.

Habermas’ “parochial defence” is to propose that we retain what he calls “the species ethic” when negotiating modern technological acceleration. A generous opponent might suggest that this is hardly surprising given that Habermas inhabits a country with recent experience of eugenics. His request is to dare to suggest we search for philosophical rigour and establish moral and ethical principles to achieve minimal human self-understanding to survive these technological currents. Morality is rooted in this understanding; one, however, which is considered a “parochial defence” of the human condition.

Fukayama operates in the same vein. In a recent Foreign Affairs article, he suggested that transhumanism threatens the foundations of our liberal democracy, specifically that “[the] idea of the equality of rights is the belief that we all possess a human essence that dwarfs manifest differences in skin color, beauty, and even intelligence. This essence, and the view that individuals therefore have inherent value, is at the heart of political liberalism. But modifying that essence is the core of the transhumanist project. If we start transforming ourselves into something superior, what rights will these enhanced creatures claim, and what rights will they possess when compared to those left behind?”

This argument is also central to the history of socialist humanism. Fukayama concludes that “transhumanism” is “one of the world’s most dangerous ideas”. So, what is going on here? Maybe - and this is related to Lilla’s assessment of liberal identity politics - we are seeing the formation of a wider chronocentric left generation.

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A few years back, Fukuyama suggested: “history is directional, and its endpoint is capitalist liberal democracy”. It was a chronocentric argument.

Chronocentrism - first coined to describe “the belief that one’s own times are paramount, that others pale in comparison” -  asserts a chronological snobbery; that a specific period of time - usually the present – holds greater significance than others.

It can present itself as a form of generational egotism through overvaluing the significance of your own generation; a personal “end of history” illusion.

Politics attracts the chronocentrically disposed, especially through various forms of economic determinism. New Labour, for example, was affected through its belief in a new cosmopolitan, liberal, knowledge-driven global moment. So too was much Scientific Marxism with its understanding of how the forces of production determine the relations of production, which became an overconfident assertion of revolutionary imminence.

Historically, much left-wing thinking has been prone to this condition through a belief in linear progress driven by technological innovation. But the danger has been an obvious and recurring one -  when the link between technological change and human “enhancement” leads to either tyranny and repression or an explicit embrace of anti-humanist political philosophies. The history of eugenics and the left is an obvious case in point.

Today, the clearest expression of the chronocentric malady is represented in the way that once obscure, marginal ideas regarding “accelerationism” have crept into the mainstream of left discourse. Here, modern technological change creates unique possibilities to transcend (or, in their vocabulary of disguise, to “enhance”) the human condition; for some it offers the opportunities of a technological “singularity”.

This chronocentrism might appear as unhinged, morally deficient nihilism, yet others regard it as the only truly utopian worldview on offer. Today, it is fashionable - as the book says, it is helping to “invent the future”.

Another example - containing a similar, highly deterministic take of Marx’s value theory and asserting revolutionary possibilities driven by modern technological change - is Paul Mason’s PostCapitalism, a modern chronocentric bible and companion work to Inventing the Future.  

These books have been treated uncritically despite the reappearance of anti-humanist thinking within the left. Humanism needs to be defended; or, as Orwell wrote, “the job of the thinking person is not to reject socialism but to make up his mind to humanise it”.

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We might suggest three “parochial defences” against this hybrid chronocentric left. First, against its technological determinism. Second, against its form of cosmopolitanism. Third, against transhumanism - or, in old money, the new eugenics – in that it falls foul of scientism and fanaticism.

The origins of much of this new thinking lie in the radical politics of 50 years ago. “Autonomism” or “Autonomist Marxism” emerged out of the 1960s Italian workerist movement - the operaismo - characterised by a muscular critique of the centralised, orthodox Italian left. It sought to build a politics autonomous from traditional forms of representative democracy.

This mutated into “post-operaismo” - literally post-workerism - popularised by Michael Hardt and Antonio Negri in their book Empire, a work highly influential among those inspired by the anti-globalisation movements, Occupy protests, and militant campus agitation of the last decade.

The young academic Frederick Harry Pitts offers a brilliant critique of this literature. In his book Critiquing Capitalism Today: New Ways to Read Marx he demonstrates how a highly specific and misleading interpretation of Marx’s value theory leads the contemporary left to celebrate and seek to accelerate  the substitution of human labour - the working class - with technology. In its place, the base of the left becomes a new urban, networked educated youth, rather than the historic class base of left politics.

For the left thinkers Pitts critiques, the era of postcapitalism beckons as the capitalist relations of production cannot manage the epochal shifts in the forces of production. As with traditional scientific Marxism, there is little role for actual struggle - for politics. Sit back, relax and enjoy the ride as the laws of history unfold and take us to “postcapitalism”. Resistance is conservative.

If you challenge this teleology, out comes the counter-charges: parochial, reactionary, nostalgic, humanist or Luddite. History is on the side of the left – just not the dematerialising working class. Change is immanent. As with the old scientific left, immanence brings with it political “hope”.

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In February 1998 (in the New Statesman) one of the founders of the “Third Way” - the sociologist Ulrich Beck - detailed the “Cosmopolitan Manifesto”. Identifying “freedom’s children”, he suggested the basis for a new “world citizenship” through an “ethical globalisation”. He identified the two stages of this entrenched modernity. First, the legacy of freedom captured through various civil rights struggles. Second, through our dissolved attachments where “community, group and identity structure loses their ontological cement” replaced by a radical individualism and strengthened democracy especially amongst the more educated youth.

There are political movements within and between nation states emerging to form “world parties” in a threefold sense. First, their appeal - “liberty, diversity, toleration!” - transcends values that appear in every culture and religion. Second, they prioritise global political action. Third, they seek to democratise transnational regimes and regulators. Here, as with modern technological determinism - the new base of the left is seen to be among the post-national, urban, networked, educated youth, rather than the working class.

This is where Lilla’s identity politics of the liberal left joins forces with today’s cosmopolitan accelerators. As the “Third Way” has collapsed, a notionally more radical left has again pronounced the nation as dead, or at least as offering diminishing returns given intensifying globalisation. Hardt and Negri identify the declining significance of the sovereign nation given the amorphous power of capital; modern rule suggests a declining relevance attached to questions of territory and country - empire without the significance of nation. This has brought forward the political possibilities offered by a transnational multitude.

Followers of Negri, such as Mason, suggest that the globally-oriented networked youth are the new progressive agents as the working class is being destroyed and the nation state is insignificant – and mostly reactionary. Cosmopolitanism asserts a privileged global citizenship over other forms of society or fidelity – parochial attachments or defences

***

Ancient ontology considered the world as a hierarchy, ascending from non-living matter through the levels of plants and animals, to humanity and ultimately the divine. This was contested by Descartes, for example, for whom the world was conceived as two fundamentally disparate substances: the rational human subject and nature; the task, he believed, was to master nature.

Within European left philosophy, the failures of 1968 produced a dramatic reorientation. The superstars of modern cultural studies - Deleuze, Guattari, Lyotard – suggested an accelerationist approach to modern capitalism, rather than a search to overcome it, echoed in today’s fashionable texts.

According to another young academic, Lewis Coyne, postmodernism finishes the job Descartes started. As Descartes stripped the dignity from non-human nature Deleuze reduces humans to mere substance. Being - humanity - is construed as “a plane of immanence” -  a continuous movement of matter and time: “there are only relations of movement and rest, speed and slowness between unformed elements, or at least between elements that are relatively unformed, molecules, and particles of all kinds. There are only subjectless individuations that constitute collective assemblages.”

This “plane of immanence” also sits behind the postoperist thought that Pitts critiques. This suggests that everything is one single “assemblage” and there is nothing more; nothing such as parochial human nature with its sociability, relationships and attachments.

Modern transhumanism - in the guise of accelerationism - assumes that technological change creates the opportunity to transcend the present human condition - of becoming transhuman - and critically maintains that this is to be celebrated. Political resistance is “parochial”, nostalgic and futile.

Transhumanism is a modern, in-vogue cyber philosophy, but one which has its origins in a quite conscious anti-humanist philosophy of matter. In the 1990s, the Warwick Philosophy Department, specifically within the Cybernetic Culture Research Unit, incubated a home-grown accelerationist movement consuming all the sacred continental texts. It has subsequently helped create a networked movement of activists and thinkers, which is producing books, conferences, and new media platforms that define today’s left.

At times, transhumanism reappears in debates around human “enhancement” - the quest to eliminate ageing, enhance physical and intellectual capacity and transcend mortality. Numerous practical and ethical criticisms can be rehearsed against this literature many of which historically resonate - think Huxley’s Brave New World.

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Contrary to our chronocentric generation, it appears that history repeats itself. In a previous era, in one of the great essays of the English left, Edward Thompson took aim at Louis Althusser and structuralism; he wrote: “Enchanted minds move through humourless, visionary fields, negotiate imaginary obstacles, slay mythical monsters (‘humanism’, ‘moralism’) perform tribal rites with the rehearsal of approved texts.”

Today, the fashionable left seeks to surrender humanism. What previous generations fought for and defended - from William Morris and George Lansbury to Thompson, Raymond Williams and the Independent Labour Party -  is to be replaced with a decentred, plastic tech utopia.

Historically, humanist Marxists and ethical socialists retained a notion of human nature; without this, it was deemed impossible to establish an agenda for durable economic and social change. The left rejected determinism so that the human being could be reinserted back into history and the means by which lives are commodified could be resisted, rather than accelerated. This was considered the very essence of politics.

The three elements of this modern hybrid chronocentric left - its deterministic embrace of technology and abolition of the working class; its attachment to a specific vision of the cosmos and rejection of the nation state as a politics of land and territory; and its incipient transhumanism - refract into a political worldview and manifesto which is a world away from the everyday experiences of the people. In this new world, apart from a certain chronocentric group of mainly young men, everything else is presented as reactionary and parochial.

For the left, it appears a shift away from concerns regarding social justice and institution-building, towards a narcissistic concern with self and identity. This is the interface with modern identity liberalism – everything is fluid, change is immanent, we are individually all in transition. It also shares an almost fanatical approach to questions of progress and a disdain for history and tradition, or what Chesterton once called the “democracy of the dead”.

Maybe the left should noisily discuss the quiet rise of cyborg socialism.

Jon Cruddas is Labour MP for Dagenham and Rainham and is writing a book on the future of the left

Jon Cruddas is Labour's policy review coordinator and MP for Dagenham