David Harvey and neoliberalism

By Joe McClure (Fightback Whanganui-a-Tara/Wellington)

David Harvey, according to his website, is a Distinguished Professor of Anthropology and Geography at the City University of New York. While this is not entirely accurate – his role does not include geography – he is nonetheless considered one of the foremost academic authorities on Marxism and how it informs geography, his area of personal expertise.

In 2005, he published A Brief History of Neoliberalism, charting the rise and rise of neoliberal economics, and how it has come to direct world politics. First of all, he defines his subject, as follows:

“Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade.

“The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets.

“Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture. State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit.”¹

Harvey, like many other commentators, relies significantly on Karl Polanyi’s predictions in The Great Transformation, that:

“the market economy under which these freedoms throve also produced freedoms we prize highly. Freedom of conscience, freedom of speech, freedom of meeting, freedom of association, freedom to choose one’s own job… Planning and control are being attacked as a denial of freedom. Free enterprise and private ownership are declared to be essentials of freedom. No society built on other foundations is said to deserve to be called free. The freedom that regulation creates is denounced as unfreedom; the justice, liberty and welfare it offers are decried as a camouflage of slavery.”²

Agreeing in principle with this economic argument, he suggests that in reality, neoliberalism has taken a more gradated route, travelling along lines of regional importance rather than emerging as a standard development from the Keynesian economics that were widely adopted in ‘Western’ countries after World War II. He comments that:

“…A moving map of the progress of neoliberalization on the world stage since 1970 would be hard to construct. To begin with, most states that have taken the neoliberal turn have done so only partially––the introduction of greater flexibility into labour markets here, a deregulation of financial operations and embrace of monetarism there, a move towards privatization of state-owned sectors somewhere else.”

One of the major criticisms of David Harvey’s depiction of Marxism is that it is completely reliant on the reader accepting his geographical approach – that economic development cannot exist independently of spatial conditions, and therefore, takes place differently in different conditions. This scientific position informs all his sociological research, and, critics have pointed out, “has distanced him from concepts whose purchase is limited by the calculus of spatial science or whose provenance lies in Continental European philosophy.”

Because of this focus on geographical trends and local (i.e., contained) events, he is able to easily and accurately cite instances of economic trends within well-known companies. Concretely, in a comment that encapsulates both Harvey’s ability to produce illustrative examples and yet be imprisoned by geographical constraints, he tells us in 1990 about:

“the condition that Marx… picked upon in developing one of his most telling concepts – the fetishism of commodities. He sought to capture by that term the way in which markets conceal social (and, we should add, geographical) information and relations. We cannot tell from looking at the commodity whether it has been produced by happy laborers working in a cooperative in Italy, grossly exploited laborers working under conditions of apartheid in South Africa, or wage laborers protected by adequate labor legislation and wage agreements in Sweden. The grapes that sit upon the supermarket shelves are mute; we cannot see the fingerprints upon them or tell immediately what part of the world they are from.

“We can, by further enquiry, lift the veil on this geographical and social ignorance and make ourselves aware of these issues (as we do when we engage in a consumer boycott of non-union or South African grapes). But in so doing we find we have to go behind and beyond what the market itself reveals in order to understand how society is working. This was precisely Marx’s own agenda. We have to go behind the veil, the fetishism of the market and the commodity, in order to tell the full story of social reproduction.”³

Intriguing though it may be, this description does not bring us closer to an analysis of neoliberalism, though, in a subsequent volume he adopts a much simpler view, arguing in The Enigma of Capital (2010) that “neoliberalism… refers to a class project that coalesced in the crisis of the 1970s. Masked by a lot of rhetoric about individual freedom, liberty, personal responsibility and the virtues of privatisation, the free market and free trade, it legitimised draconian policies designed to restore and consolidate capitalist class power.”

When it comes to class, Harvey argues that neoliberalism “has… entailed its redefinition.” He cites class despots such as Margaret Thatcher, Rupert Murdoch and Ronald Reagan, whose policies, despite initially promoting Keynesian redistribution, leading Reagan him to comment, “We’re all Keynesians now,” soon shifted toward an attack on unions, and a rearrangement of the economy – the Volckner shock – that forced foreign governments to become dependent on the US currency and subject to conditions put in place by US investors. In England, he argues, by opening up the country to immigration and foreign investment, Thatcher created a new middle-class, whose philosophy consisted of individualism, consumerism, and entrepreneurship. She used this new class to help crush working-class resistance, by enforcing the financial dominance of the City of London over the rest of the British economy, and demolishing the structure of traditional institutions such as mining, shipbuilding, and car manufacture.

After setting the scene for the development of neoliberalism, Harvey goes on to discuss its inherent contradictions, and how these make neoliberal states more unstable. These include, the tension between forcing the state to withdraw from a free market, to ensure everyone has the same impact, and maintaining national its influence at the global level. This has recently been seen in political programmes such as the TPPA, which gives governments significantly greater powers to pursue lawbreakers, but removes trade barriers and government subsidies on regularly-used goods.

Similarly, he argues, authoritarian demands for market freedoms can often come into conflict with individual freedoms, when producers set prices that consumers cannot afford – another issue raised by the TPPA, particularly in light of rising pharmaceutical costs. Excessive market speculation, he adds, is inherently risky, and leads to events such as the Global Financial Crisis of 2008. In a totally commercialised system, he notes, a few companies will inevitably come to dominate each industry, creating an almost feudal structure.

Finally, he suggests, the series of attacks on social structures, spiralling into Margaret Thatcher’s denial of society itself, has created a nearly unprecedented level of social anxiety, which has expressed itself through the rise of populist politicians such as Donald Trump or far-right organizations in Europe, which have started campaigns to reappraise questions of citizenship and basic personal rights.

Ultimately, he concludes, neoliberalism has effected a huge redistribution of resources, and the introduction of a new class structure, in which business managers and corporate groups have taken over government functions. Worse still, he contends, their practice is based on privatization, lending, commodification, the creation of debt crises to force government bailouts, and the reversal of Keynesian social policies. This process of commodification extends “to all… processes, things, and social relations, [so] that a price can be put on them, and… they can be traded subject to legal contract.”

The most detrimental effects are induced by the commodification of labour, as employees become simply parts of the production process, and manufacturers can choose from the entire global economy to get the cheapest labour available, leading to horrific conditions of exploitation in regions where factories are not closely regulated. So well-established, however, is this economic system, that only a major crisis could jolt countries out of neoliberal methods. Given that the 2008 GFC did not achieve this, despite doing huge damage to the world economy, a crisis sufficient to bring about the abandonment of neoliberalism would be an order of magnitude greater, and would have flow-on effects for decades to come. Unfortunately, Harvey does not propose a well-reasoned alternative, suggesting instead that the world might return to some kind of earlier stage that had existed before neoliberalism was introduced – but, he admits, after decades of neoliberal governments, many voters have simply accepted that, as Margaret Thatcher insisted, “there is no alternative.”