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Neoliberalism, the Revolution in Reverse

By any reasonable measure, the neoliberal dream lies in tatters. In 2008 poorly regulated financial markets yielded a world-historic financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned American striving, has been plunged into foreclosure, bankruptcy, and worse. And a successor generation of aspiring college students is now discovering that their equally toxic student-loan dossiers are condemning them to lifetimes of debt. Both before and after 2008, ours has been an economic order that, largely designed to reward paper speculation and penalize work, produces neither significant job growth nor wages that keep pace with productivity. Meanwhile, the only feints at resurrecting our nation’s crumbling civic life that have gained any traction are putatively market-based reforms in education, transportation, health care, and environmental policy, which have been, reliably as ever, riddled with corruption, fraud, incompetence, and (at best) inefficiency. The Grand Guignol of deregulation continues apace.

In one dismal week this past spring, for example, a virtually unregulated fertilizer facility immolated several blocks of West, Texas, claiming at least fourteen lives (a number that would have been much higher had the junior high school adjoining the site been in session at the time of the explosion), while a shoddily constructed and militantly unregulated complex of textile factories collapsed in Savar, Bangladesh, with a death toll of more than 1,100 workers.

In the face of all this catastrophism, the placid certainties of neoliberal ideology rattle on as though nothing has happened. Remarkably, our governing elites have decided to greet a moment of existential reckoning for most of their guiding dogmas by incanting with redoubled force the basic catechism of the neoliberal faith: reduced government spending, full privatization of social goods formerly administered by the public sphere, and a socialization of risk for the upper class. When the jobs economy ground to a functional halt, our leadership class first adopted an anemic stimulus plan, and then embarked on a death spiral of austerity-minded bids to decommission government spending at the very moment it was most urgently required—measures seemingly designed to undo whatever prospective gains the stimulus might have yielded. It’s a bit as though the board of directors of the Fukushima nuclear facility in the tsunami-ravaged Japanese interior decided to go on a reactor-building spree on a floodplain, or on the lip of an active volcano.

So now, five years into a crippling economic downturn without even the conceptual framework for a genuine, broad-based, jobs-driven recovery shored up by boosts in federal spending and public services, the public legacy of these times appears to be a long series of metaphoric euphemisms for brain-locked policy inertia: the debt ceiling, the fiscal cliff, the sequestration, the shutdown, the grand bargain. Laid side by side, all these coinages bring to mind the claustrophobic imagery of a kidnapping montage from a noir gangster film—and it is, indeed, no great exaggeration to say that the imaginative heart of our public life is now hostage to a grinding, miniaturizing agenda of neoliberal market idolatry. As our pundit class has tirelessly flogged the non-dramas surrounding the official government’s non-confrontations over the degree and depth of the inevitable brokered deal to bring yet more austerity to the flailing American economy, we civilian observers can be forgiven for suspecting that there is, in fact, no “there” there. For all their sound and fury, these set-tos proceed from the same basic premises on both sides, and produce the same outcome: studied retreat from any sense of official economic accountability for, well, anything.

But the neoliberal flight from public responsibility is actually a tangled, and curiously instructive, tale of strikingly other-than-intended consequences—something akin to the fables of perverse incentives that neoliberal theorists themselves love to cook up in their never-ending campaign against the prerogatives of the public sphere. The world of neoliberal market consensus that we now inhabit would likely strike many of the movement’s founders as a grotesque parody of their own aims and intentions. But because it is a fable of intellectual overreach, as opposed to narrow economic self-interest, the neoliberal saga also bears an oddly hopeful moral. The seemingly impermeable armature of terrible social and economic thought that has bequeathed to us our present state of ruin is really a flimsy and jury-rigged set of market superstitions, and could readily be discarded for sturdier wares.

Open and Shut

To be sure, policy consensus is one of the premier breeding grounds of irony in our time, but the mid-twentieth-century movement that became known to us as the neoliberal rebellion is steeped in the stuff. For starters, the original cohort of neoliberal apostles conceived of themselves as an insulated, elite group of critics who were able to approach the great machinery of government and popular political discourse only at a fastidious remove. They began the project of combining their intellectual labors, oddly enough, out of their shared embrace of The Good Society (1937), a treatise on the limits of state planning by New Republic columnist Walter Lippmann, who, like many of his successors at that “contrarian” journal, advertised his growing disenchantment with New Deal liberalism and the whole endeavor of economic policy-making in the public interest. But Lippmann soon fell afoul of the more doctrinaire members of his new fraternity of mostly European fellow travelers—notably German economist Wilhelm Röpke and French publisher Louis Rougier, who would later come into bad odor as a fascist collaborator. The group’s early association with both Lippmann and Rougier underlined the perils of overexuberant detours into the political arena, and when they made a fresh stab at affiliating as transatlantic defenders of market liberty once the interregnum of the Second World War had passed, their formal alliance, now called the Mont Pelerin Society after a resort in the Swiss Alps, began life as something of a standoffish debating society. The first major irony in the annals of neoliberalism is that a clutch of publicity-averse intellectuals would, within three decades of the group’s founding in 1947, end up running a very big chunk of the Anglophone capitalist world.

The neoliberal flight from public responsibility is actually a curiously instructive tale of strikingly other-than-intended consequences.

The Mont Pelerin faithful congregated around the Austrian anti-Keynesian economist F. A. Hayek, an Old World polymath who was eager to integrate his (strictly theoretical) vindication of individual liberty not merely into the heart of the economics discipline, but also into the full sweep of public life, from moral philosophy to scientific research. With the zeal of the ardent émigré, Hayek embraced the skeptical empiricism of conservative British thinkers such as Edmund Burke and David Hume—and also seconded the broader British reverence for political custom and cultural tradition, which he saw as the outcome of adaptation across the generations. As economic historian Angus Burgin writes, Hayek maintained that “traditions were products of extended processes of competition, and had persisted because in some sense—which their beneficiaries did not always rationally comprehend—they worked.” The focus here remained, as it did throughout Hayek’s career, squarely on the radical limitations on knowledge available to individual human agents. In The Constitution of Liberty, the work he regarded, far more than the bestselling polemic The Road to Serfdom, as the summation of his thought, Hayek wrote that “civilization enables us constantly to profit from knowledge which we individually do not possess”—and thereby the “freedom and unpredictability of human action” were to be tempered by “rules which experience has shown to serve best on the whole.” It speaks volumes about Hayek’s own sense of intellectual tradition that he initially proposed the group be called the Acton-Tocqueville Society—a suggestion overruled on the grounds that these particular avatars of noble European tradition were both too Catholic and too aristocratic for modern tastes.

Like many European intellectuals of the time, Hayek was also haunted by the recent terrors of totalitarianism; both he and his harder-line Austrian colleague, Ludwig von Mises, were exiles from the Nazi regime, and the group of like-minded intellectuals they recruited to form the Mont Pelerin Society shared their sense that market-based liberalism remained the only sure refuge from communism and fascism. It was an obvious corollary of this faith that the philosophic values associated with such liberalism—skepticism, open inquiry, and historical contingency—were the most reliable antidotes to totalitarianism. Hayek, for example, argued that the halting and contingent nature of all human knowledge laid bare the conceits of state economic planning and demand management as so much bitter and destructive farce. In a 1936 lecture called “Economics and Knowledge,” he sounded an early note of epistemological skepticism in public affairs that was virtually postmodern: “How,” he demanded to know, “can the combination of fragments of knowledge existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on the part of the directing mind which no single person can possess?”

Clearly, nothing about such radical skepticism entailed an ironclad commitment to free-market fundamentalism. Any brand of liberalism that forced humans into free market relations would be self-contradictory, as liberal theorists from Adam Smith and John Stuart Mill to John Dewey, all of whom shared Hayek’s epistemological stance, understood. Indeed, Karl Popper—the thinker who inspired Hayek and many other Mont Pelerin founders—was himself a social democratic defender of the welfare state with decidedly socialist leanings. As Popper explained in a 1994 interview not long before his death, his conception of individual liberty was not antithetical to principles of economic democracy:

In a way one has to have a free market, but I also believe that to make a godhead out of the principle of the free market is nonsense. . . . Traditionally, one of the main tasks of economics was to think of the problem of full employment. Since approximately 1965 economists have given up on that; I find it very wrong.

Clearly, too, the “open society” that Popper famously envisioned permitted ample room for the adoption of egalitarian, even redistributionist, policies. Even as Hayek himself inveighed against the “collectivist” ideology of New Deal economic reforms, he also took pains to distance himself from a devil-take-the-hindmost model of unregulated market competition. The challenge, as Hayek saw it, was not merely to mobilize the resources of the economic policy elite and its intellectual fellow travelers to ratify a complacent, status quo vision of business civilization, but to collaborate on a far more ambitious project. In a 1949 paper called “The Intellectuals and Socialism,” Hayek sketched out a visionary, classically liberal mandate that became the animating mission of the Mont Pelerin Society:

We must be able to offer a new liberal program which appeals to the imagination. We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects of its early realisation. They must be men who are willing to stick to principles and to fight for their realisation, however remote. The practical compromises they must leave to the politicians.

There is, of course, a contradiction at the heart of Hayek’s vision: How is a utopian free society supposed to pursue its own ambitious battery of universalized mandates while remaining ostensibly founded on the radically unknowable nature of all human experience? But the real irony of Hayek’s utopian longings is that they were fully realized—albeit, of course, in nothing like the form he envisioned. As Daniel Stedman Jones argues in his incisive study of the neoliberal rise to power, Masters of the Universe, “it is hard to think of another ‘utopia’ to have been as fully realized” as Hayek’s came to be in the powerful neoliberal regimes taking shape in Reagan’s America and Thatcher’s Britain: “The free market became the organizing principle for microeconomic reform, especially through the privatization of state assets, nationalized industries, and public services. Trade unions were vanquished and the power of labor was diluted. Exchange controls were abolished. The financial markets were progressively deregulated. Market mechanisms became the models for the operation of health care.” While it’s true, Stedman Jones notes, that “the purity that Hayek advocated was meant as an optimistic and ideological and intellectual tactic rather than a blueprint,” it was to become that and much, much more: neoliberals went on to erect a permanent edifice of postideological assumptions about the natural predominance of markets and the just as rigid limitations of government. “The results,” as Stedman Jones sums things up, “have been extraordinary.”

Interesting Wishes

In retrospect, Mont Pelerin’s guiding spirits probably should have put a lot less stock in Adam Smith’s comforting policy-fable of the Invisible Hand and heeded instead the counsel of the old Chinese curse “May all your wishes be granted.” That aphorism is also rendered in English as “May you live in interesting times,” and both renderings hold with equal force in the neoliberal case. For as the (fairly recondite and academic) proceedings of the Mont Pelerin set were gaining wider traction in the policy world, multiple crackups of the Keynesian model of coordinated economic planning helped to create an opening for the figure who would be the new economic order’s zeitgeist on horseback: the diminutive University of Chicago monetarist-for-all-seasons, Milton Friedman.

The robustly entrepreneurial Friedman embraced a masscult platform.

When Paul Volcker—Jimmy Carter’s appointee to chair the Federal Reserve—adopted a modified version of Friedman’s theology of the money supply to tame the two-digit inflation of the late 1970s, Friedman was suddenly the policy visionary who could do no wrong. He soon served as an informal adviser to both the Reagan and Thatcher governments (and, less prestigiously, to the dictatorship of Chilean general Augusto Pinochet). He reached a popular audience via a column in Newsweek, a hit series on PBS, and several bestselling tracts of unalloyed free-market sloganeering. While demure Europeans such as Hayek distrusted the allure of popular renown as a temptation to oversimplify their ideas and pander to the public, the robustly entrepreneurial Friedman embraced a masscult platform—and for the most part on the very grounds that aroused Hayek’s suspicion. When he succeeded Hayek as chairman of the Mont Pelerin group, Friedman brought it, and the broader project of neoliberal thought, into its high propaganda phase. As he cultivated a high media profile, Friedman positioned himself at the nexus of an influential new group of transatlantic conservative think tanks that would go on to supply much of the concrete policy agendas for the Reagan and Thatcher revolutions: the Institute of Economic Affairs in London; the Hoover Institution at Stanford (where he would spend the balance of his career after retiring from the University of Chicago); and the Cato Institute, the Heritage Foundation, and the American Enterprise Institute in Washington.

And as the institutional platforms for Milton Friedman’s free-market gospel multiplied, the vaunted intellectual range of neoliberal inquiry vanished into a stagnant pool of confident and absolute assertions of the market’s unchallenged sovereignty as the arbiter of all life outcomes. Friedman converted Adam Smith’s classical doctrine of the invisible hand—whereby all self-interested actions mystically possess a benign or munificent social payoff—into an inverted demonology of the public sphere. There is, he said in an address honoring the two-hundredth anniversary of The Wealth of Nations, “an invisible hand in politics that is the precise reverse of the invisible hand in the market”:

In politics, men who intend only to promote the public interest, as they conceive it, are ‘led by an invisible hand to promote an end which was no part of their intention.’ They become the front-men for special interests they would never knowingly serve. They end up sacrificing the public interest to the special interest, the interest of the consumers to that of producers, of the masses who never go to college to that of those who attend college, of the poor working-class saddled with employment taxes to the middle class who get disproportionate benefits from social security, and so down the line.

It’s hard to imagine a purer statement of the founding principles of neoliberalism as we have come wearily to know it in this advanced stage of market collapse. It is pitched, first of all, in a counterintuitive rhetoric of worldly cleverness, a spirit of seminar-room one-upmanship. Not only is Adam Smith right about the hidden virtues of business interests, but the same paradox operates, by a virtually metaphysical law, to transform every action of every individual putatively serving the public interest into a parody of his or her stated intent. Here is a hermeneutics of suspicion that far outstrips the wildest excesses of the death-of-the-author acolytes of high postmodern critical theory. Not only is it the case that public servants will fail to advance the public’s interest out of some depressingly common shortcoming of character—susceptibility to bribery, say, or short-sighted ideological delusion. No, the central idea here is far more radical than that: government, by its very nature, can’t serve the public interest, because of the innately condescending and imperious character of the act of governing.

Friedman’s claim owed its origins in large part to the work of George Stigler, a colleague at the University of Chicago. Stigler helped pioneer the famous neoliberal doctrine of regulatory capture, which in turn is its own ultra-cynical academic appropriation of what seems, at first glance, like a muckraking Marxist’s indictment of the bourgeois state. Stigler and other advocates of the so-called public choice school of economic theory maintained that regulatory agencies inevitably became hostage to the interests of the industries they oversaw. In a 1971 journal article bearing the deceptively wan title “The Theory of Economic Regulation,” Stigler airily dismissed reformist complaints about regulatory corruption as “exactly as appropriate as a criticism of the Great Atlantic and Pacific Tea Company for selling groceries, or as a criticism of a politician for currying popular support.” Stigler’s disdain for pandering political leaders did not, however, prevent him from summarizing his theory in a policy paper for then-president Richard Nixon. And, like most of the leading lights of neoliberal theory, Stigler went on to win a Nobel Prize in Economics.

To be sure, the problem of industry-captive oversight is a common failing of the modern regulatory state, as any cursory glance at the recent track records of, say, the Securities and Exchange Commission or the National Oceanic and Atmospheric Administration will sadly demonstrate. But in promoting regulatory capture as a bedrock law of public-sector enterprise, the neoliberals performed a neat trick; they posited corruption as a permanent condition of the regulatory state. And in so doing, they casually relegated a fistful of traditional Progressive and New Deal reforms—the cause of good government, upgrades in civil service appointments and public-sector unionizing, the punishment of graft and fraud, and (not least by a long shot) the tighter regulation of corruption in the private sector—to the dustbin of history. Such measures, they preached, could breed only perverse and self-defeating outcomes, and would indeed grievously multiply double-dealing in the public sector. Only by harnessing the superior explanatory power of “profit-maximizing” in public life, Stigler argued, could the sad pieties of reformism be laid aside in favor of the sterner and more confident guidance of the true masters of realpolitik—the lords of the economic profession. Because “reformers will be ill-equipped to use the state for their reforms, and victims of the pervasive use of the state’s support of special groups will be helpless to protect themselves,” Stigler reasoned, “economists should quickly establish the license to practice on the rational theory of political behavior.” Thus was born still another pet piety of the neoliberal counter-reformation: the notion that economics is “the imperial science,” duly licensed to dispense its market-pleasing wisdom in every sphere of life, from crime prevention and education policy to dating and food preparation.

The notion that the public and private sectors both bear “defects” is elevated to a metaphysical affront to the market’s sovereignty.

In the brewing theology of the modern conservative backlash, the moral hazards of the captive regulatory state were entirely the creation of the bad actors in the public sector. The bagmen for the industries seeking to purchase regulatory favors from the agents of the state were, after all, only acting in accord with the sainted Smithian dictates of self-interest. What fault could it be of theirs if the state had provided them with an open market in graft, kickbacks, and influence-peddling? Indeed, Friedman, ever alert to opportunities for rhetorical one-upmanship, floated the proposition that critics of free-market policies were foisting a bad-faith “double standard” on the rightful workings of market self-interest. “A market ‘defect,’” Friedman explained in a tribute to Smith’s Wealth of Nations, “whether through an absence of competition or external effects (equivalent, as recent literature has made clear, to transaction costs) has been regarded as immediate justification for government intervention. But the political mechanism has its ‘defects’ too. It is fallacious to compare the actual market with the ideal political structure. One should either compare the real with the real, or the ideal with the ideal.”

Got that? The notion that the public and private sectors both bear “defects”—a completely banal supposition conceded by any Galbraithian on the economic left—is here elevated to a metaphysical affront to the market’s sovereignty. In fact, the double standard that Friedman calls out is nothing of the sort. No progressive-minded supporter of government intervention had staked out the absurd position that the state is morally immaculate, or itself unsusceptible to any constructive outside intervention when its practices are out of line with the public interest. Friedman writes as though Congress had never appointed an inspector general, passed legislation to reform the civil service, and improved regulatory safeguards—or as though the various federal employees’ unions had never pushed for improved hiring practices or better working conditions to upgrade their work product. And that’s because, for critics in the neoliberal camp, such external controls on the state’s behavior simply cannot exist; the regulatory-capture school of neoliberal theory already ruled out, on principle, the possibility that such interventions could yield anything other than market-distorting outcomes. In other words, Friedman’s lament about the mismatched moral standards of state and market is the phony protest of a card cheat seeking mainly to stoke up the theatrical appeal of an already rigged game.

Who’ll Stop the Rana?

You’d think that our recent bruising encounters with the devastating fallout from the deregulators’ handiwork in the housing market of the early aughts should, by rights, render Friedman’s complaints about the public sector’s assaults on market virtue the deadest of dead letters. But, if anything, the ritual defense of the market’s sovereign prerogative has dug in that much more intractably as its basic coordinates have been discredited. As critics such as Dean Baker routinely point out, the stalled recovery out of the Great Recession is almost exclusively a function of the failure of our neoliberal economic establishment to speak honestly about a collapsed housing bubble that created a yawning shortfall in demand—a shortfall that, amid the paralysis of credit markets in the same recession, could be jumpstarted only by government stimulus.

All sorts of absurdities have flowed from this magisterial breakdown in comprehension. Since the neoliberal catechism holds that stimulative government spending can never be justified in the long run, much of our debate over the recovery’s prospective course has been given over to speculative nonsense. Chief among these talismanic invocations of free-market faith is the great question of how to placate the jittery job creators. At virtually every turn in the course of debate over how steeply to cut government spending in this recession, our sachems of neoliberal orthodoxy have insisted that any revenue-enhancing move the government so much as contemplated would spook business leaders into mothballing plans to expand operations and add jobs. It became the all-purpose worst-case scenario of first resort. If health care reform passed, if federal deficits expanded, or if marginal tax rates were permitted to rise for the vapors-prone investor class, why, then the whole prospect of a broad-based economic recovery was as good as shot.[*]

And since neoliberalism is most notably a global—or properly speaking, the globalizing—ideology, such pat distortions of economic reality are no longer confined to the Anglo-American political economy. Nor are they confined to strictly cognitive errors in policymaking. The collapse of the Rana Plaza garment factory in Bangladesh has yielded commentary from neoliberals that might well merit entry into the psychiatric profession’s DSM-5 as textbook illustrations of moral aphasia. Here, after all, was a tragedy that would appall even the darkest Victorian imaginings of a Charles Dickens or a Karl Marx: factory workers earning a monthly wage of $38 crowded into a structurally unsound multistory facility built on a foundation of sand above a drained pond. Three stories of the factory had been hastily erected on top of an already unsound existing structure just to house the fresh battalions of underpaid workers demanded by bottom-feeding international textile contractors.

Government inspectors repeatedly demanded that the facility be shuttered on safety grounds, but the plant’s proprietors ignored their citations, reckoning that the short-term gains of maintaining peak production outweighed the negligible threat of a fine or safety citation. Nor was there likely to be any pressure from Western bastions of enlightenment and human rights. The ceremonial stream of Astroturf labor-and-safety-inspecting delegations from Western nations made zero note of the cracked and teetering foundations of the Rana Plaza structure. Lorenz Berzau, the managing director of one such industry consortium (the Business Social Compliance Initiative), primly told the Wall Street Journal that the group isn’t an engineering concern—and what’s more, “it’s very important not to expect too much from the social audit” that his group and other Western overseers conduct on production facilities. And, as Dave Jamieson and Emran Hossain reported in the Huffington Post, labor organizers have long since learned that the auditing groups serve largely as pro forma conduits of impression management for consumer markets in the West. The auditing of manufacturing facilities in the developing world “ends up catering more to the brands involved than the workers toiling on the line,” Jamieson and Hossain write.

Yes, factory owners and managers well understand the permissible bounds of discourse in such Potemkin-style inquiries—and instruct their workforce accordingly. “What to say to the auditors always comes from the owners,” a Bangladeshi line worker named Suruj Miah told the two reporters. “The owners in most cases would warn workers not to say negative things about the factories. Workers are left without a choice.” Sumi Abedin, one of the survivors of an earlier disaster—a factory fire in the nearby Tazreen plant that claimed the lives of 112 workers in November 2012—told the Huffington Post that on the day of an international audit team’s visit, management compelled workers to wear T-shirts designating them as members of a nonexistent fire safety committee, and had them brandishing prop fire-extinguishing equipment that plant managers had procured only for the duration of the audit.

What this disaster ought to have driven through the neoliberal consensus’s collective solar plexus is something close to the polar opposite of its cherished, evidence-proof theory of the captive regulator: a largely cosmetic global watchdog effort funded overwhelmingly by private-sector concerns, far from delivering oversight and accountability, has incentivized fraud and negligence. And conveniently enough, it’s the race-to-the-bottom competitive forces unleashed by the global workplace that ritually sanctify all of this routine dishonesty. In their malignant neglect of worker safety measures, local factory managers are able to cite the same market pressures to maximize production and profit that have prevented the ornamental Western groups conducting audits of workplace safety practices from releasing their findings to the workers at risk of being killed by the neoliberal regime of global manufacturing.

Barking Dogmas

Still, the dogmas of neoliberal market prerogative are far sturdier than a collapsing factory or a raging fire on the production line. If the dogmatists have thrown overboard Hayek-era intellectual values like experimentation and skepticism, at least they can stave off their inevitable extinction by shoring up Friedman-era platitudes and, from the mantles of the nation’s most prestigious universities and op-ed shops, try to pass them off as the nation’s highest common sense. So former University of Chicago law professor Richard Epstein, who helped found the influential law and economics movement that essentially transposed the shibboleths of public choice theory into legal doctrine, has patiently explained that the just and measured response to the collapse of Rana Plaza is to seek enforcement of preexisting building codes across the Bangladeshi private sector. Writing on the heels of the disaster, in the Hoover Institution’s web journal, Defining Ideas, Epstein takes pains to rule out the passage of any “new laws” to improve worker-safety standards or international monitoring efforts.

In other words: Bangladeshi workers can either be more safe or starve more rapidly.

But lest even this minimal recourse to regulation sound like too heady a plunge into statist remedies, Professor Epstein also cautions that the aggrieved and grieving workers in the Bangladeshi garment trade must not veer recklessly into unionism or other non-market-approved modes of worker self-determination. After all, he reasons, “in order to stave a shutdown off by improving factory safety, the savvy firm will have to raise its asking price from foreign purchasers . . . and may have to lower wages to remain competitive.” (This is another classic myth of the neoliberal faith—the rational “trade-off” between personal safety and wages that the independent broker makes when he or she contracts with an employer to freely exchange time and skills for wages. Only, of course, the notion of such rational choice has been reduced to a bitter farce in workplaces such as Rana Plaza, where the basic human rights of workers are only acknowledged theatrically, for the purposes of Potemkin auditing tours.) A more activist approach to the crisis in global worker safety would create intolerable distress to Epstein’s utopian vision of the carefully calibrated relations of global market production. Sure, the EU might ban exports of clothes bearing the taint of labor exploitation—but such a measure would just perversely create “undeserved economic protection” for EU economies that are net clothing exporters (and by implication, would deprive consumers of the sacred right to the cheapest possible attire that bullied and undercompensated labor can provide).

And do not get Epstein started on the mischief wrought by unions, which are all but certain to multiply calamities like the Rana Plaza disaster:

It is not as though the only thing that a union does once it gains its dominant position is to advocate for the safety of its workers, even if that item is at the top of its agenda. Unions also bargain over wages, work rules, seniority, pensions, benefits, and other conditions of employment. In dealing with these issues, they exert a monopoly clout that can easily raise wages and reduce productivity. In a market with many firms, they can exert that force only if they are prepared to take retaliatory action against the firms that refuse to bow to their conditions. And they can only do so if they induce the government to take measures to restrict the entry of non-union firms that could underbid them.

In other words: Bangladeshi workers can either be more safe or starve more rapidly. But according to Epstein, they assuredly aren’t entitled to earn a living wage without the threat of being crushed or burned to death at any given moment. The pertinent market trade-offs simply won’t permit it. Indeed, if you want to know the truth, Epstein claims, “labor agitation was . . . one of the contributing causes to the collapse at Rana Plaza.” Even the threat of union-related disruptions to established work discipline can be Kryptonite to the beleaguered clothes barons of Bangladesh. We find ourselves confronted yet again by the torments of the heroic job creator. Prospective labor agitation, Epstein contends, “places enormous strains on the firms that have to deliver goods to foreign purchasers in order to remain in business. The threat of a repeat protest has led many firm bosses to step up the pace of work in the factories, which in turn means longer shifts, more workers, more extensive use of heavy equipment in order to make up for lost production, and stockpiling goods. That maneuver turned into a fatal insurance policy against future labor disruptions.”

You see? One minute you’re protesting for a wage increase or a work regime less likely to injure you, and before you know it, you’ve frightened your employer into stockpiling inventory at such a frenetic pace that he kills you. Could the tonic discipline of market preferences really be any clearer? One can only hope that future no-goodnik labor agitators will heed this tragic lesson and recognize “foreign purchasers” as the remote, punitive, and awesome deities that the market meant them to be.

Trapped in the Moneybox

It is not all that surprising, in light of the trajectory of neoliberal ascendancy, to see rigidly orthodox market apologists like Professor Epstein driven to such extremities to tease out a neoliberal moral from the bloody, smoldering squalor of the Rana Plaza disaster. But the neoliberal consensus has long since transcended conventional divisions of party and ideology; the axiomatic assertion of market dominance is a conditioned reflex among nearly all established pundits.

In a now-infamous April 24 write-up of the Bangladeshi catastrophe, Slate’s Moneybox columnist Matt Yglesias—an eager Democratic partisan brandishing pious Washington credentials from The American Prospect and the Center for American Progress—tried his own hand at an Epstein-style vindication of the market’s undeviating wisdom. In a post bearing the reassuring free-to-be-you-and-me headline “Different Places Have Different Safety Rules and That’s OK,” Yglesias framed his defense of the status quo regime of erratic standards for worker safety in the hoary rhetoric of the public choice “trade-off.” “While having a safe job is good,” Yglesias chirped, “money is also good.”

OK, then! But note again the pinched moral universe in which employees are permitted only to have a safe job or a (barely) sustenance income, and never both at the same time. It seems a modest social goal to demand that the exchange of labor value for a paycheck in non-mortal conditions be accepted as an incontrovertible human right. If a rapidly globalizing market order is unable to secure that baseline personal and financial security, its support for wildly varying models of job safety should be regarded precisely as the problem—and not as the taken-for-granted standard for phony assertions about what individual workers (let alone “the Bangladeshis,” tout court) are purported to be choosing.

“While having a safe job is good,” Yglesias chirped, “money is also good.”

But Matt Yglesias, like many of Washington’s market-besotted, faux-contrarian pundits on the notional left side of the partisan aisle, will not be rushed into stating the morally obvious. Yes, he concedes, there could well be an abstract case here for collective action aimed at upgrading the safety conditions of Bangladeshi workplaces—but like Epstein, he frets that the collective-action models of richer, Western workplaces create prohibitive costs of doing business and therefore may not fall within the ambit of choices that workers in Bangladesh should reasonably be permitted to make. “Bangladesh is a lot poorer than the United States, and there are very good reasons for Bangladeshi people to make different choices in this regard than Americans,” Yglesias writes. “Safety rules that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh.”

So, not to worry, Mr. Moneybox confidently asserts. The trade-offs have yielded optimal gains in each diverse market setting, in this, the best of all possible neoliberal worlds: “American jobs have gotten much safer over the past 20 years, and Bangladesh has gotten a lot richer.” As an authority for this sweeping claim—which, by the way, is untrue in what Yglesias sees as the argument-clinching “safer” U.S. end of the spectrum; Bureau of Labor Statistics data on workplace fatalities show steady increases over the past five years, with right-to-work states such as Texas leading the grisly toll—Yglesias cites the work of Robert Frank, a public-choice enthusiast who, in his recent book The Darwin Economy, seeks to lay the groundwork for a terrifying entity he calls the “libertarian welfare state.”

Social media scourges wasted little time in calling out Yglesias’s smug, fatuous, and opportunistic effort to advertise his market contrarianism on the ruins of the Rana Plaza collapse. Eventually the scribe was hounded into publishing a passive-aggressive follow-up post averring that he’d been misread and unfairly castigated by his critics. The stalwart wonk remained unbowed, however; Yglesias wrote that he still “absolutely” stood by the conclusion that, in matters of workplace safety, it’s “appropriate for rich countries to have more stringent standards than poor ones.”

Now, Matt Yglesias is not a doctrinaire neoliberal thinker—certainly not in the sense that a disciplined propagandist like Milton Friedman was (even though he longs, absurdly, for a revival of “Friedman-style pragmatism” to bring the economic right to its senses).[**] But that’s precisely the point. Neoliberal orthodoxy has leached so deeply into the intellectual groundwater of the nation’s political class that it’s no longer a meaningful descriptor of ideological difference. That’s why Yglesias’s erstwhile American Prospect colleague Ezra Klein, over at his prestigious post atop the Washington Post’s economic blog shop, can marvel at the tough-minded budget “seriousness” of serial Randian liar Paul Ryan—or why the Obama White House can confidently slot offshore billionaire Penny Pritzker as its second-term commerce secretary while it continues to mouth empty platitudes about saving the nation’s middle class.

All Friedmans Now

It was Milton Friedman himself who famously announced, during his tour as an informal adviser to Richard Nixon, that “we’re all Keynesians now”—but that oft-quoted maxim has been badly truncated from its full context. What Friedman actually said, in a 1968 interview with Time magazine, was “in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer.” He went on to spell out the paradox more fully: “We all use the Keynesian language and apparatus; none of us any longer accepts the initial Keynesian conclusions.”

Now, more than four decades on, Friedman’s savvy rhetorical dodge is the watchword of all mainstream macroeconomic thought. Even putative liberals who pay lip service to the efficacy of government intervention dig in behind their own pet postulates about the market’s transcendent wisdom and beneficence—about the need to temper the alleged excesses of the social-democratic usages of social wealth with sterner, more austere pieties about the real-world trade-offs mandated by the lords of neoliberal market liberation.

It is an undeniable species of gibberish, one that would have likely appalled even as firm a market stoic as Hayek, who, whatever his other intellectual handicaps, well understood the mischief wrought by a glib and self-seeking centrism. During the Mont Pelerin group’s tenth anniversary gathering in 1957, Hayek delivered a controversial speech called “Why I Am Not a Conservative.” It was designed, among other things, to distance the group from the steady accretion of self-insulated and untested right-wing bromides that would later be the hallmark of Friedman’s successor reign. Today, however, Hayek’s oration sounds a much more sobering note of prophecy for our political culture at large. “Advocates of the Middle Way with no goal of their own, conservatives have been guided by the belief that the truth must lie somewhere between the extremes—with the result that they have shifted position every time a more extreme movement appeared on either wing,” Hayek announced.

The one true road to intellectual serfdom, in other words, was the one that Hayek correctly saw lurking within the heart of the neoliberal revolution.


[*] Meanwhile, the actual state of the labor economy told a different story—that corporate profits had spiked to record highs and that, instead of scaling back entirely on job expenditures, employers were in fact adding hours to the average employee workweek, rightly calculating that they could continue getting more value out of the existing workforce in an artificially slack job market with anemic, and declining, union representation. (Once again, Dean Baker was virtually alone among economic commentators in noting this important shift.) Never mind, as well, that when significant provisions of the allegedly business-killing health care law finally began to kick in, health care spending in the private sector started to slow and stabilize on what looked to be a permanent and structural basis, with a projected decline of $770 billion over the next decade. In other words, government intervention in the economy—even via a mechanism as compromised and graft-riddled as the 2010 Affordable Care Act—was showing a striking capacity to even out and stabilize one of the most stubborn and devastating inequalities in the American economy, access to affordable health care. And far from producing a steeper drag on broader conditions for recovery, the stabilization of health care spending occurred amid a pronounced spike in health care hiring, and indeed a long overdue (if still altogether too weak) rebound in the labor economy generally.

[**] Yglesias has offered qualified support for the Obama stimulus plan and health care overhaul, and on this past May Day, even ventured a classically coy Slate post where he pretended to flirt with Marxism. (Hipster-trolling headline: “Capitalism is looking pretty shabby.”)