The Failure Of Capitalism As An Ideology

Isabella Weber writes “The neoliberal state is neither small nor weak, but strong (e.g., Bonefeld, 2013, 2017; Chang, 2002; Davies, 2018). Its purpose is to fortify the market.” Freedom is narrowly constrained as the freedom of the richest person to do what they want, even if the poorest cannot get what they need. Indeed, because the poorest cannot get what they need.

Neoliberalism is broadly the idea that markets know best. That governments (ie, democratic institutions) should not be directly involved in economic activity and that businesses (ie, oligarchs) should be left alone, their individual greed stitched into collective good by an ‘invisible hand’. It is a frankly religious belief in the mathematically divine right of the merchant class no different than the divine right of kings. It is equally false if you look at it closely enough, ie at all.

The collapse of the Soviet Union is viewed as ‘proof’ of the superiority of capitalism, but just look at what the imposition of shock therapy (what Weber calls ‘the quintessentially neoliberal policy prescript’—did to Russia.

“The average real income of 99 percent of people in Russia was lower in 2015 than it had been in 1991… As a result of shock therapy, Russia experienced a rise in mortality beyond that of any previous peacetime experiences of an industrialized country (Notzon et al., 1998).”

Meanwhile, China’s socialism with Chinese characteristics and incorporation of markets into socialism both produced more wealth and lifted more people out of poverty faster than any nation in history. This is ignorantly credited to them ‘becoming capitalist’ but I invite you to read Weber’s review of the actual literature and history to see that it was anything but. Indeed, if you read Marx it is very much about production and running an economy, just running it differently.

Capitalism is viewed as generating wealth and ‘trickling it down’ but this is again a false religious belief, no different from the feudal idea of noblesse oblige. As Jason Hickle et al document in a recent paper (and tweetstorm):

First, the rise of capitalism from the 1500s onward was associated with a dramatic deterioration in human welfare (declining wages, declining heights, and an increase in premature mortality), in all five regions. In some cases, wages and/or heights have still not recovered.

I should emphasize that by capitalism here we do not mean a generic system of markets and trade. It is a world-system where production is organized around elite accumulation and corporate power, which involves “core” states subordinating and extracting from “peripheral” regions.

These results are striking, but not surprising. The global expansion of capitalism often involved dispossession, enslavement, coerced labour, genocide, colonisation, policy-induced famines, and destruction of subsistence economies. The effects are visible in the empirical record.

During the period of capitalist integration, we see increased famines in Europe (1500s-1800s); demographic collapse in the Americas; a 15% population decline in Central/East Africa (1890–1920); ∼100 million excess deaths in India (1880–1920), and so on. Massive dislocation.

Fortunately, for most people life has improved considerably since then. And this brings us to our second conclusion: Where progress has occurred, it began several hundred years after capitalist integration… around 1880s in the core, and early/mid 20th c in the periphery.

Where did progress come from? Well, it coincided with the rise of labour movements, democracy movements, socialist movements and anti-colonial movements that fought to organize production around human needs and public provisioning, quite often against the interests of capital. (via Hickel’s Twitter)

That is to say, what neoliberals ascribe to the benefits of capitalism are actually rebellions against capitalism. Social programs like a five-day work week, working hours, not having child labor, having healthcare, housing, etc… all things which impinge on the ‘freedom’ of the rich in order to provide the needs of the poor. The great power of capitalism is not markets—which have existed and exist under socialism—but marketing. Capitalism devours its rebellions and uses stuff like human happiness and climatic existence to sell more products. Capitalism is, of course, mathematically opposed to all this shit, devoted as it is to the profit motive above all.

As the arch-capitalist priest Milton Friedman said in an interview with Joel Bakan,