From the New Right to Neoliberalism: the Threat to Democracy Has Grown


Public Eye Fall 2014

This article appeared in the special neoliberal edition of The Public Eye magazine

The U.S. is in the grip of an unprecedented dominance of right-wing ideologies and policies. Many progressive commentators see that the same band of New Right actors that have long pushed a conservative agenda are up to their old tricks, trying to block any reformist progress under a Democratic president. But what we are experiencing now is not simply “more of the same.” There has been a political shift in the Right’s reigning ideology. The shift is from the Right’s fixation on capturing and consolidating power to establishing rule by the laws of unfettered capitalism.
The Right’s current success owes much to its persistent pursuit of a well-established social agenda and its increased emphasis on existing economic goals. To maintain that we are in the “old” struggle alone is to miss the rise of what we might call the Right’s “Chamber of Commerce” wing. This sector has a storied history that many people, aside from economists, often gloss over. Its current manifestation embraces a far-reaching, effective, and increasingly entrenched ideology: “neoliberalism.”
Political Research Associates and many others have documented the Right – from the 1970s and the rise of the New Right, to the reelection of George W. Bush in 2004, to the present moment. But it is wrong to think that our current condition is simply the triumph of the New Right coalition. The New Right used democratic processes to promote a reactionary, antidemocratic agenda: for example, use of the referendum, partisan redistricting, voter mobilization, new media outlets, and boycotts of companies that support gay rights or reproductive choice. Neoliberal political theory, in contrast, explicitly opposes democratic goals and principles.
What is neoliberalism?
Neoliberalism can be a difficult concept for most progressives, who may incorrectly understand it as a watered-down version of New Deal liberalism – in other words, part of the platform of the current Democratic Party. But that is not what neoliberalism is. Because neoliberalism best captures the shift we are seeing in the U.S., it is crucial that we understand its actual meaning.
Neoliberalism is the economic, social, and political analysis that best describes the startlingly unequal distribution of wealth and power in the U.S. today. Neoliberalism, and the policies it undergirds, results from the triumph of capitalism and is sometimes called “late-stage capitalism” or “super-capitalism.”
The roots of neoliberalism lie not primarily with the New Deal but in the years immediately after World War II, when a group of U.S. and European economists met to discuss how to prevent another Holocaust. They concluded that the only protection against dictatorship, fascism, or rule by military junta was individual freedom, which only a weak government and unfettered, free-market capitalism could preserve. As pure theory, this describes “classical liberalism,” best formulated by 17th-century English philosopher John Locke and 19th-century British philosopher John Stuart Mill. But, in practice, neoliberalism takes this theory to extremes. Unlike neoliberalism, classical liberalism neither explicitly opposes democratic principles nor seeks to replace democracy with oligarchy.
A leading U.S. participant in the post-war economic think tank was University of Chicago economist Milton Friedman, who received intellectual guidance from group members Friedrich von Hayek, of Germany, and Ludwig von Mises, of Austria. They founded the Mont Pélerin Society, which convened neoliberal leaders to discuss strategy and which continues to meet today. Friedman’s ideas became the guiding principles of U.S. neoconservatives, driving the economic “reforms” of the Reagan administration. These morally conservative former Democrats switched parties and embraced a “new” conservatism that sidelined blatant racism and anti-Semitism, and touted free-market capitalism.
Later in the 20th century, leftist scholars from emerging countries (and some wealthy ones) adopted the term “neoliberalism” as a pejorative to capture the policies of exploitation, privatization, and inequality imposed on them by the U.S. and other economic superpowers. This was done through trade agreements, and by the policies of the International Monetary Fund and the World Bank. Leftist U.S. scholars – perhaps most prominently, Noam Chomsky – adapted the term to describe the co-optation of economic and political institutions of developing nations.
Neoliberalism became characterized by the use of international loans and other mechanisms to suppress unions, squelch regulation, elevate corporate privilege, privatize public services, and protect the holdings of the wealthy. As U.S.-backed policies and puppet politicians were labelled “neoliberal” by scholars, the term became widely-recognized shorthand for rule by the rich and the imposition of limits on democracy.
Neoliberalism has now come home to roost, with the people of the U.S. subject to its policies and goals. Here in the United States, we are increasingly not a democracy but a country ruled by an oligarchy. Neoliberals most often exercise power in the U.S. not by working through the International Monetary Fund, the World Trade Organization, or the World Bank, but rather by shifting rule from the people to corporations. Voting rights, reproductive rights, the right to a fair and just legal system, a strong and effective safety net for the poor, and even the right to a secular state are all under attack.
Austerity at Home and Abroad
Democratic principles are now under attack. Voting rights (an issue that many thought to be settled through Supreme Court decisions and the remarkable organizing of the Civil Rights Movement) are being limited. A constant drumbeat of the message of scarcity and debt helps “smaller government” neoliberals to justify putting additional budgetary restrictions on government agencies and functions. (A recent example of this was the 2012 “sequestration” passed by Congress, which imposed draconian cuts on federal agencies even as private financial service corporations enjoyed record profits.)
In its Citizens United decision, the Supreme Court made legal the right of an individual or corporation to exercise disproportionate influence in elections. The “established” right of women to have access to safe and legal abortion is increasingly diminished; moreover, our intelligence services can monitor our most personal movements seemingly without limit or public justification. These trends all point to the Right’s attacks on democracy’s very core.
Today, the neoliberal Right has succeeded in making weak and ineffectual the policies that have long kept the forces of capitalism at least somewhat in balance with commitments to human rights.
Three additional examples illustrate how neoliberals have, by seizing the policy-making roles normally held by representative government, weakened democracy. We see growing dominance by the captains of capitalism in the Trans-Pacific Partnership (TPP), a trade agreement that elites representing business – including more than 600 from the U.S., and representatives from eleven other “democratic” and “free market” countries – are now negotiating. Excluded from this process are any elected representatives. The U.S. representatives, who are negotiating in secret, are primarily corporate lobbyists, whose job is to oppose regulations and protect the aggregation of profit by their companies, and who are, almost by definition, neoliberals. What the rest of us know of the TPP negotiations comes from leaked documents.
This closed decision-making process, which will affect the people of all twelve countries (the U.S., Brunei, Malaysia, Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru, Vietnam, and Singapore) and more, involves only negotiators who support neoliberal principles. TPP’s proposed trade policies, which feature deregulated markets and bans on organizing and safety programs, reveal just how far neoliberals would go to impoverish workers and sideline efforts to promote the general good.
As currently conceptualized, TPP goes beyond North American Free Trade Agreement’s (NAFTA’s) promotion of prominent neoliberal policies through the export of jobs to low-wage countries and the simultaneous repression of union organizing. TPP would also ease restrictions on food safety, drug prices, and financial regulation, allowing corporations even greater freedom to make decisions that could harm consumers.
It is possible that TPP, which Congress must ratify, will never be approved, despite President Obama’s commitment to “fast track” the agreement. A coalition of environmental and labor groups and 151 Congressional representatives has formed to oppose it. However, the media, by failing to cover the story, has left the general public uninformed.
Cloaked in even greater secrecy is the Trade in Services Agreement (TISA). This agreement would set the terms for cross-border “services,” from banking and construction to telecommunications and tourism. It would further deregulate the financial sector and prevent countries from imposing restrictions on foreign financial firms. Even as 50 countries have been in talks about TISA since 2012, all we know of TISA’s draft content is through the material that leaker Julian Assange published via WikiLeaks in June 2014.
A third example of neoliberalism’s opportunistic greed in the private financial sector is the existence of “vulture funds,” which enable a small number of hedge funds to make a profit from the debt defaults of entire nations. Vulture funds purchase the debt of (usually the economically weakest) countries at a reduced rate, then file lawsuits to force the countries to repay the debt at a higher rate. These hedge funds are known as vulture funds because the hedge fund purchased the debt with full knowledge that the selling country could not repay it without implementing debilitating austerity policies. Vulture fund capitalists benefit at the expense of emerging countries’ inability to sustain their debt burden. This example of rapacious capitalism is a dominant characteristic of neoliberalism.
Challenging Neoliberalism
Some have argued that because “everyone was hurt” by the recent recession, it cannot be true that the current system is rigged to benefit the wealthy. Millionaires lost millions as the stock market crashed, businesses went into survival mode, banks had to be bailed out, and huge corporations nearly went under. But, as economist Philip Mirowski points out, “Unaccountably, the political right emerged from the tumult stronger, unapologetic, and even less restrained in its rapacity and credulity than prior to the crash.”
Banks, interest groups, corporations, the financial sector, and wealthy Republicans are still able to block attempts to restructure the economic system that brought us the crash. Even the reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which were designed to correct the abuses of power that led to the recent recession, have done little to counter mounting inequality and the disproportionate political influence of the wealthy. The affluent in the U.S., as a recent study by political scientist Martin Gilens has demonstrated, dominate political and economic decision-making.
The U.S. is drifting toward oligarchy, while people living here seem to lack the indignation and power to overthrow neoliberalism. Foundations, in many cases the life-blood of progressive non-profit groups, now encourage their grantees to pursue “social entrepreneurship” by developing a money-making arm; such groups are increasingly judged by capitalist standards of efficiency and “results.” Yet, there are opportunities for resistance. The Occupy Movement, though flawed (like all movements), was prophetic in its message that people must call out and overturn a power structure run by banks, corporations, and the rich.
If the Left is to mount a defense of the victims of neoliberalism (in other countries, and now in the U.S.), it must base that defense on an understanding of how and why growing inequality is happening. A good first step is to recognize that there has been a shift in the mechanisms and strategies that elites are using to achieve dominance. Using the moniker of freedom, free-market ideologues (who have only the interest of corporations – not people – at heart) have captured, dismantled, and reconstituted the machinery of governance. As these neoliberals pursue their policies, in the absence of either external controls or organized opposition, we see an increasing and alarming decline in democracy.


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