Philip Mirowski: Neoliberalism and the Crisis of Democracy

How can people dismayed at the unexpected fortification of the Neoliberal Ascendancy feel less stupid? What would a useful intellectual history of the crisis and its aftermath look like?

– Philip Mirowski, Never Let a Serious Crisis Go to Waste

Mirowski reminds us that after the 2007 crash pundits from the Left and Right offered no substantive answers, that each in his own way fulfilled the neoliberal dictum that the “economy was just too complex to understand”.1 In a talk Beyond Denial Philip Mirowski, Jeremy Walker and Antoinette Abboud argue that at the core of the neoliberal critique of socialism and its view of the economy is that “no human intelligence could ever understand itself, much less the chaos that constitutes its natural environment, to a degree sufficient to plan any part of the economy, because the reason we muster is always less complex than the phenomena we wish to master”.

Mirowski in several books (The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective, Machine Dreams: Economics Becomes a Cyborg Science, SCIENCE-MART, and Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown) has slowly documented the Neoliberal economic and social policies that have created the global intelligence vision of capital we see around us. The notion that the market is to great for any one person to master, or to understand led those after the crisis to admit that they could not only not predict it but that they could not even understand it because it was too complex. The idea being that the markets have been so automated by mathematical algorithms and programs, engineered beyond human comprehension or apprehension that only other and better programs could decipher the complexity of such failures in the future. To admit such failure was an admission of pure ignorance on the part of neoliberal pundits.

As Mirowski tells it these ignorant ones, these neoliberal architects of the current system suggested that it was better to treat the Great Recession like an Act of God , and simply move on. This is a cultural debility that predated the crisis but has worked wonders in immobilizing responses to the debacle. He goes on ” the neoliberals have developed a sophisticated position with regard to knowledge and ignorance; getting a grip on how they manage to deploy ignorance as a political tool will go some distance in dispelling the onus of having been transparently duped”. (Mirowski, 262-264). He goes on to remark that to a historian, it is striking the extent to which the neoliberals have repeatedly taken ideas from the left over the last half of the twentieth century and twisted them to their own purposes.(Mirowski, 167-168).

How did all this come about? When did it start? Who were the progenitors of the Neoliberal Front, the kingpins of its ideological economics of ignorance? Mirowski starts with the truth that Neoliberalism is an “ideology of no ideology”, its world view is so normalized within our cultural matrix that know one even knows the forest from the trees anymore. He quotes one critic, saying, “Neoliberalism, it might be argued, is a rather overblown notion, which has been used, usually by a certain kind of critic, to characterize everything from a particular brand of free-market political philosophy to a wide variety of innovations in public management.” (Mirowski, 579-581). The public at large would be hard pressed to know that this strange doctrine of economics actually had a place of origin in the Mont Pèlerin Society, which was the brainchild of Friedrich Hayek. Mirowski tells us that one of the keys to Neoliberalism has always been a sort of “double-truth”, the ability to convey both an outer exoteric version of the truth to the public at large, while at the same time conveying an inward esoteric truth to those in the know: what he terms the Neoliberal Thought Collective:

As we have already intimated, many people still have no clue what neoliberalism is, much less harbor opinions about how their own thought processes might relate to it. In other words, how could they come to reject something which for them putatively lacks spatio-temporal solidity, or at minimum, must they themselves consciously understand their beliefs as part of a coherent intellectual tradition?(Mirowski  ,695-697)

The history of the Right is not some monolithic structure with some single unified world view, instead it is a pluralistic overlap from many differing modalities: classical liberals, cultural conservatives, theocons, libertarians, old-school anticommunists, anarchists, classical Burkean traditionalists, ultranationalist neoconservatives, strict construction federalists, survivalist militias, and so forth.(798-799) Many critics of Neoliberalism have made the mistake of confusing it with libertarianism or classical liberalism. When in fact it much different from either of these two classic models. The key difference is that neoliberalism is not an ideology per se, but is instead a “set of proposals and programs to infuse, take over, and transform the strong state, in order to impose the ideal form of society, which they conceive to be in pursuit of their very curious icon of pure freedom”(Mirowski,  831-833). Contrary to popular opinion neoliberalism is the polar opposite of libertarian anarchism, and this is something that has taken a long while to sink in, but is now becoming widely accepted in circles concerned with political economy.(Mirowski,  835-836)

At the heart of the Neoliberal world is three distinct sects:  the Austrian-inflected Hayekian legal theory, the Chicago School of neoclassical economics, and the German Ordoliberals. (Mirowski, 857-858) Where all three of these sects came to dialogue was in the Mont Pèlerin Society which ultimately evolved into an exceptionally successful structure for the incubation of integrated political theory and political action outside of the more conventional structures of academic disciplines and political parties in the second half of the twentieth century (Mirowski, 877-879). Hayek, no friend of democracy, looked upon this closed society of elite intellectuals as if it were a new Platonic Academy. In fact he saw democracy as a hindrance to the neoliberal world view, saying to his friend Bertrand de Jouvenel, “I sometimes wonder whether it is not more than capitalism this strong egalitarian strain (they call it democracy) in America which is so inimical to the growth of a cultural elite.” (Mirowski, 885-887) So as Mirowski remarks:

Hence the MPS was constituted as a closed, private members-only debating society whose participants were hand-picked (originally primarily by Hayek, but later through a closed nomination procedure) and which consciously sought to remain out of the public eye. The purpose was to create a special space where people of like-minded political ideals could gather together to debate the outlines of a future movement diverging from classical liberalism, without having to suffer the indignities of ridicule for their often blue-sky proposals , but also to evade the fifth-column reputation of a society closely aligned with powerful but dubious postwar interests. Even the name of the society was itself chosen to be relatively anodyne, signaling little in the way of substantive content to outsiders.(Mirowski, 894-899)

Early on they realized if neoliberalism was to ever have an impact beyond the intellectual sphere they’d need plenty of funding so several special-purpose foundations for the education and promotion of neoliberal doctrines were created; in its early days, these included entities such as the Volker Fund, the Earhart Foundation, the Relm Foundation, the Lilly Endowment, the John M. Olin Foundation, the Bradley Foundation, and the Foundation for Economic Education. (Mirowski, 906-908) They also realized they’d need institutional support so several “think tanks” were created: Institute for Economic Affairs, American Enterprise Institute, Schweizerisches Institut für Auslandforschung [Swiss Institute of International Studies], the Hoover Institution at Stanford) and satellite organizations such as the Federalist Society that sheltered neoliberals, who themselves might or might not also be members in good standing of various academic disciplines and universities.(Mirowski, 912-915) And, finally, for their globalist agenda they created the Atlas Economic Research Foundation which was founded in 1981 by Antony Fisher to assist other MPS-related groups in establishing neoliberal think tanks in their own geographic locations.(Mirowski, 918-920) To disseminate their agenda they recruited Rupert Murdoch’s News Corporation,  Bertelsmann AG, and a wide array of Internet blog and social networking sites.(Mirowski, 925-926)

The primary enemies of neoliberalism have always been laissez-faire classical liberalism, social-welfare liberalism, and socialism.(Mirowski, 970-971) As Mirowski defines it the MPS group understood its self against the Great Depression, the first great crisis in capitalism. It also sought to oppose the planned economy that came out of that era and replace it with a comprehensive long-term reform effort to reshape the entire fabric of society, not excluding the corporate world. As he remarks:

The relationship between the neoliberals and capitalists was not merely that of passive apologists. Neoliberals aimed to develop a thoroughgoing reeducation effort for all parties to alter the tenor and meaning of political life: nothing more, nothing less.  Neoliberal intellectuals identified their immediate targets as elite civil society. Their efforts were primarily aimed at winning over intellectuals and opinion leaders of future generations, and their primary instrument was redefining the place of knowledge in society, which also became the central theme in their theoretical tradition.(Mirowski, 971-980)

All of this happened quietly under the rug so to speak, without most Leftward leaning ideologues even being aware of what was happening until it was already like a great spider with its web of deceit in place. Neoliberalism as mentioned above was not some monolithic entity but a set of doctrines. What neoliberals did under the cloak of this closed society of MPS and its think tanks, foundations, funds, etc. was to develop an intricately linked set of overlapping propositions over time— for example , from Ludwig Erhard’s “social market economy” to Herbert Giersch’s cosmopolitan individualism, from Milton Friedman’s “monetarism” to the rational-expectations hypothesis, from Hayek’s “spontaneous order” to James Buchanan’s constitutional order, from Gary Becker’s “human capital” to Steven Levitt’s “freakonomics,” from Heartland’s climate denialism to AEI’s geoengineering project, and, most appositely, from Hayek’s “socialist calculation controversy” to Chicago’s efficient-markets hypothesis.(Mirowski, 1029-1033)

Mirowski hones the basic amalgam of neoliberalism’s base set of tenets down to thirteen projects, agendas, etc.:

1. The starting point of neoliberalism is the admission, contrary to classical liberal doctrine, that their vision of the good society will triumph only if it becomes reconciled to the fact that the conditions for its existence must be constructed, and will not come about “naturally” in the absence of concerted political effort and organization.
2. This assertion of a constructivist orientation raises the thorny issue of just what sort of ontological entity the neoliberal market is, or should be. What sort of “market” do neoliberals want to foster and protect?
3. Even though there has not existed full consensus on just what sort of animal the market “really” is, the neoliberals did agree that, for purposes of public understanding and sloganeering, neoliberal market society must be treated as a “natural” and inexorable state of mankind. Neoliberal thought therefore spawns a strange hybrid of the “constructed” and the “natural,” where the market can be made manifest in many guises.
4. A primary ambition of the neoliberal project is to redefine the shape and functions of the state, not to destroy it. Neoliberals thus maintain an uneasy and troubled alliance with their sometimes fellow-travelers, the anarchists.
5. Skepticism about the lack of control of democracy is periodically offset by recognition of the persistent need for a reliable font of popular legitimacy for the neoliberal market state.
6. Neoliberalism thoroughly revises what it means to be a human person.  “Individuals” are merely evanescent projects from a neoliberal perspective. Neoliberalism has consequently become a scale-free Theory of Everything: something as small as a gene or as large as a nation-state is equally engaged in entrepreneurial strategic pursuit of advantage, since the “individual” is no longer a privileged ontological platform. Second, there are no more “classes” in the sense of an older political economy, since every individual is both employer and worker simultaneously; in the limit, every man should be his own business firm or corporation; this has proven a powerful tool for disarming whole swathes of older left discourse.  Third, since property is no longer rooted in labor, as in the Lockean tradition, consequently property rights can be readily reengineered and changed to achieve specific political objectives; one observes this in the area of “intellectual property,” or in a development germane to the crisis, ownership of the algorithms that define and trade obscure complex derivatives, and better, to reduce the formal infrastructure of the marketplace itself to a commodity. Indeed, the recent transformation of stock exchanges into profit-seeking IPOs was a critical neoliberal innovation leading up to the crisis. Classical liberals treated “property” as a sacrosanct bulwark against the state; neoliberals do not. Fourth, it destroys the whole tradition of theories of “interests” as possessing empirical grounding in political thought.
7. Neoliberals extol “freedom” as trumping all other virtues; but the definition of freedom is recoded and heavily edited within their framework. It is economic freedom only.
8. Neoliberals begin with a presumption that capital has a natural right to flow freely across national boundaries.
9. Neoliberals regard inequality of economic resources and political rights not as an unfortunate by-product of capitalism, but a necessary functional characteristic of their ideal market system.
10. Corporations can do no wrong, or at least they are not to be blamed if they do.
11. The market (suitably reengineered and promoted) can always provide solutions to problems seemingly caused by the market in the first place.
12. The neoliberal program ends up vastly expanding incarceration and the carceral sphere in the name of getting the government off our backs.
13. The neoliberals have struggled from the outset to have their political/ economic theories do dual service as a moral code.(Mirowski, 1133-1346)

So we understand that neoliberalism bought into the anti-realist strain of thought we now understand as social constructivism. The point being to naturalize this artificial construct to the point that the public would be ignorant of its artificiality. Against the libertarian strains within its individual members it sought not to do away with the State, but to modify the state as a partner of the elite in affairs of economics rather than as in the liberal world before it as a buffer against the market and its profiteers. The notion that the market is an information processing system, a computer if you will, in which no single individual or economist has control is one of the lynchpins of this ideology. With its redefinition of the individual as data, classless, propertyless, and without self-interest objectives rational or otherwise it sought to overcome all opposition from the Left based on individual rights, class, property, and public good. It sought on the one hand to break down the apparent democratic appeal to government while on the other hand extoling the virtues of the free-market as the promethean struggle against the regulation of the bad old State. Freedom has nothing to do with democracy or speech or individual rights: for the neoliberal it is about the freedom of the market and the elites who control those markets. The neoliberal agenda hopes to bring about a free flow of capital across national boundaries, and in doing so it seeks to dissolve those boundaries altogether and end the notion of sovereignty forever. Inequality is the freedom of the market and should be upheld in the neoliberal mind. The Corporation as the artificial construct par excellence of the neoliberal world should never be held accountable for its misdeeds. The market is always to be seen as the Big Other behind the scenes whose power is ineffable but upon which we all must rely even in our ignorance. The Neoliberals enforce the full extent of the law against the hoi polloi, while at the same time protecting the elite from State based prosecution. Over time it has created both the drug nation and the penal system that stretches its tentacles across the planet to enforce the illusion of security in the face of ever apparent terror. In the end Neoliberalism is the moral order of the planet and uses the United Nations, IMF, other Financial institutions, Oil and resource depletion, Food control, Medical, etc. and other institutions to enforce its hidden dictatorship over the weaker nations and peoples of the earth.

As Mirowski poignantly puts it:

The Neoliberal Thought Collective tamed many of the contending contradictory conceptions of the “good society” documented in this volume by trying to have it both ways: to stridently warn of the perils of expanding purview of state activity while simultaneously imagining the strong state of their liking rendered harmless through some instrumentality of “natural” regulation; to posit their “free market” as an effortless generator and conveyor belt of information while simultaneously strenuously and ruthlessly prosecuting a “war of ideas” on the ground; asserting that their program would lead to unfettered economic growth and enhanced human welfare while simultaneously suggesting that no human mind could ever really know any such thing, and therefore that it was illegitimate to justify their program by its consequences; to portray the market as something natural, yet simultaneously in need of solicitous attention to continually reconstruct it; to portray their version of the market as the ne plus ultra of all human institutions, while simultaneously suggesting that the market is in itself insufficient to attain and nourish transeconomic values of a political, social, religious, and cultural character.(Mirowski, 1397-1405)

There is a great deal more that needs to be covered in Philip Mirowski’s work, but that would take many more posts so I’ll leave off for now and hopefully add other threads as I investigate both this an his previous works in economics.

1. Mirowski, Philip (2013-07-09). Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown(Verso Books. Kindle Edition)