On Facebook today, Adam noted a strange issue that appears repeatedly in David Harvey’s Brief History of Neoliberalism. Harvey insists that financial bailouts, of the sort that would later follow the 2008 crash, contradict neoliberal theory despite the fact that these sorts of provisions are manifestly consistent with the work of a number of neoliberal theorists, given any reasonably charitable standards of interpretation. In other words, Harvey insists on a contradiction between neoliberal policy and neoliberal theory where none need be posited. The question that arises then is why? Adam raised the point that Harvey’s Marxism may be part of what’s in play here: squaring theory and policy isn’t crucial here because Harvey is beginning from the assumption that neoliberal theory can’t be more than a superstructural factor. I wonder, though, if there’s a more basic issue in play though, one that gets to the heart of some of the ambiguities in the concept of neoliberalism itself.
I’ve been thinking lately that there’s a fundamental semantic confusion in play with regard to the concept of neoliberalism. In recent theory, the term neoliberalism is often used in order to name not one, but at least three more-or-less distinct notions. First of all, it names [1] a set of theoretical positions in economic theory or political economy. In this sense, it is a position primarily associated with members of the Walter Lippmann colloquium, the Mont Pelerin society, and—most specifically—the ideas of Ludwig von Mises, Friedrich Hayek, and Milton Friedman. Second, it can name [2] a policy orientation, and third [3] a generalized ‘situation’ or ‘dynamic’ in ‘late capitalist’ society. In the first two senses, we may refer to neoliberal ‘theories’ and neoliberal ‘policies’ or ‘movements;’ each of which are things that could be said to act ‘on,’ for instance, markets, societies, and institutions. Only in this third sense, however, does it make sense to specify ‘markets,’ ‘societies,’ and so on as themselves neoliberal.
Generally, it’s hard to talk about more than two of these at once without losing hold of neoliberalism as a name for anything specific, so a theorist is forced to pick. Harvey emphasizes [2] and [3], insofar as it’s policy (2) as a response to inherent contradictions in post-Fordist production (3) that drives neoliberalism. As a result, he can’t integrate [1] without losing resolution, but that causes the aforementioned slips. Other theorists make different choices of emphasis. Wendy Brown, e.g., really pushes [3] in Undoing the Demos and ties in [2] and [1] as loose subordinates. The concept, in other words, is tasked with pulling together such a wide variety of referents that it doesn’t seem to be able to support them all. Brown, in fact, recognizes the issue explicitly, calling the term’s expansion across difficult to connect spheres a “paradox.” (Undoing the Demos, 21) What Brown doesn’t do, however, and what I’m increasingly suspicious that we should do, is question this situation, and the pertinence of a catch-all concept like neoliberalism that has a tendency to expand to include new data rather than to specify. To use an Adam-ism: what do you think, readers?
An und für sich 
I suggested on Adam’s post that “neoliberalism” has reached the stage of development where attempts to clearly define it will always fail one way or another, either by incoherence or by leaving something essential out.
Partly because it’s a “normative” “essentially contested concept” which is used by everyone differently according to their political needs and intentions, like “freedom”, “justice”, “equality”, etc. (or “totalitarianism”, “fascism” or “exploitation”. (Also called generic concepts: “everyone is in favor of freedom but there’s no agreement as to what it is”.)
Reading history I’ve seen a tendency to dissolve all such terms (which may not be “concepts” properly speaking) into nothingness. Is there such a thing as “fascism”, “feudalism”, “modernity”, “decadence”, “courtly love”, etc. (or more obscurely, the Mongol “yasa”) , AT ALL?
I think that your three-way division is about right. Credit Mirowski with #1 (“The Road from Mont Pelerin”) which I think is fundamental. But the specific change he sees is the acceptance of authoritarian liberalism (free markets, authoritarian state). #2 would the unmaking of the New Deal and social democracy, by reducing “social spending” and deregulating business and finance. There were differences here, and possibly changes over time; Friedman and Hayek didn’t always agree, and there were later developments. In particular, the kind of intervention represented by the bailout may not have been acceptable to Hayek, or even Friedman, but is entirely consistent with #1 — strong state neoliberalism. #3 would be the historical situation in which #2 is possible and/or actual — historical specifics may have impelled the changes in #2,
It’s also worth noting Milton Friedman’s big initial work argued that bank bailouts + loose money from the Fed would have prevented the Great Depression, making Keynesian spending irrelevant. Austrian economists disagreed strongly with him, including at points Hayek. The strict version of his monetarism failed in the early 1980s and clearly didn’t stop the Great Recession from being so awful.
(It’s worth noting the rumor, Mirowski goes through it, that Friedman blocked Hayek from joining UChicago’s economics department, forcing him to go to Social Thought.)
emersonj: I think you’re right that there’s a connection between the the normative baggage the term has acquired and its expansion into a catch-all.
The internal contradictions of the MPS is a fundamental feature of neoliberalism, as Mirowski explains. The neoliberal state of affairs depends on the arguments that take place between someone like Obama on the one hand, and the arch-libertarians like the Austrians on the other. It’s a kind of performance that conceals the fact that it’s always already about markets.
Interesting post, Sean. As Mike begins to point out above, though, I think you might have to choose between (1) your preferred(?) reading of the bank bailouts’ relationship to neoliberalism (i.e. as implying no contradiction, pace Harvey); and (2) including Mises/Hayek in the theoretical framework of neoliberalism. There were passionate arguments against the bank bailouts (that no one of influence took seriously), and they came from the Austrian side of things.
Joshua: I don’t think Adam’s point was that *all* consistent neoliberal theorists agreed on the point, but simply that it doesn’t involve an inherent inconsistency between theory and practice, since the existence of canonical neoliberal theorists who advocated for similar policies means that it’s at least not *obvious* that such intervention is inconsistent with the assumptions of neoliberal economic theory or policy derived from it, in the way that Harvey describes.
I’m tempted to be a vulgar Marxist, and just say neoliberalism is the use of a liberal political forms to funnel ever more tax payer money to the rich. So the system has to contain arguments for many different economic approaches, as one needs accepted arguments for whatever contingent policy will funnel public funds and property to wealthy individuals.
Sean: From what I understand, someone like Hayek views prices as essentially signalling mechanisms that distribute information about the relationship between supply and demand for different commodities in an exchange economy. The problem with the central planning, on this view, is that it “distorts” this distribution of information in such a way that artificially picks “winners” and “losers,” which in turn causes malinvestment in fake winners until the bubble bursts. Bailing out a bank is a perfect example of creating a fake winner and further distorting the signalling of “real” prices (i.e. prices determined without the coercive power of central planning). In short, the market was telling us that these banks shouldn’t exist, but central planners were telling us that they should. And, obviously, an Austrian wants the market to have final say. In fact, to correct my initial comment, there actually was an initial resistance to the bailout legislation that came overwhelmingly from free-market Republicans in the House. Obviously they were eventually brought in line, but it strikes me as a confirmation of the point.
My point wasn’t exactly that the term had acquired normative baggage. Essentially, any idea of any complexity used in political debate or political thought must have a normative aspect, explicit or veiled, or it’s functionless. That’s why they say “essentially” contested. I don’t think that clearer thinking would solve many problems, because the problems are real and not an artifact of terminology.
As far as I know all macroeconomic theories involve unproven claims which have normative weight if examined at all closely.
As I understand it, old-style freemarketers (i.e. conservative free market Republicans) are not neoliberals, They’re old conservatives. The neoliberal distinction from old freemarketers is that they accept a strong state, while being leary of taxation and regulation of business and of social spending. There’s obviously overlap and ambiguity, and both old freemarketers and neoliberals jave prospered during recent decades.
Joshua: Hayek’s against “planning” but even Hayek recognizes that there are norms and institutions necessary for the market to even exist in the first place; and even for Hayek this makes the financial sector a special case that’s different from normal industries. He opposed bailout actions, but his view of policy was’t quite as simply laissez faire as all that.