I.

Around 1970, something went wrong. The global economy, after twenty-five years of good post-war growth, suddenly blipped.

The post-WWII-but-pre-1970 economic world - the world of “embedded liberalism” - was a pleasant place. There were corporations, but they didn't do anything garish like compete with each other. Executive pay was taxed so heavily that nobody had much incentive to try to increase their profit margin; workforces were so heavily unionized that companies were nervous about any changes that might upset employees. As long as companies followed the script, the government embraced and protected them. Starting a new business was considered some bizarre act of alchemy, like discovering a new form of matter; normal people worked for the same giant company their whole life and got a nice gold watch as a reward when they retired. The government wasn't exactly socialist per se, but it kept starting and expanding programs like Medicare and Medicaid and Social Security, and every night you went to sleep knowing there would be probably be another uncontroversial, mostly-successful government welfare program tomorrow.

Then the global economic system blipped. As usual, economists will debate the exact causes forever. But the basic story is: after World War II, the great powers came together at Bretton Woods to design a new financial system. The US, as leader of the free world, dictated the terms: all global currencies would be pegged to the dollar, which in turn would be pegged to gold. This heavily favored the US, and the US pressed its advantage to get two decades of stellar growth and fund all those government programs and concessions to public sector unions. But the harder the US pressed, the more stress it placed on Bretton Woods, until finally in 1971 it collapsed under the strain and the global economy flailed around, confused.

Status 451 had a great post about the 1970s as lacuna in cultural memory - we don't remember how bad it was. Their focus was violence and terrorism - "people have completely forgotten that in 1972 we had over nineteen hundred domestic bombings in the United States", including attacks on the Capitol and Pentagon. "A Puerto Rican group bombed two theaters in the Bronx, injuring eleven, in 1970; NYT gave it 6 paragraphs".

Reading A Brief History Of Neoliberalism, I got the impression that our economic amnesia about the 1970s is no less striking. There was no 1929-style thunderclap market crash, just one damn thing after another. I read the book close enough to Passover that the Ten Plagues came to mind. The dollar glut (*spills drop of wine*). The Nixon Shock (*spills another drop*). The Economic Stabilization Act of 1970. The fall of the gold standard. The 1970s Steel Crisis. The 1973 Oil Crisis. Stagflation. The Winter of Discontent. The 1979 Energy Crisis. And the Angel of Death was the Volcker Shock of 1980, when unemployment crossed 10% and people mailed the Federal Reserve coffins and unused two-by-fours in protest.

It was bad. New York City came one day away from declaring bankruptcy in 1975 (other sources say it was technically bankrupt, but avoided getting called on it) and got taken over by state government for a few years until it got back on track. The stories from Britain were even worse:

[Government] supporters were in open revolt, and public sector workers initiated a series of crippling strikes in the 'winter of discontent' of 1978. Hospital workers went out, and medical care had to be severely rationed. Striking gravediggers refused to bury the dead. The truck drivers were on strike too. Only shop stewards had the right to let trucks bearing "essential supplies" cross picket lines. British rail put out a terse notice "There are no trains today"...striking unions seemed about the bring the whole nation to a halt.

Mexico declared bankruptcy in 1982; by the time the smoke cleared, average Mexican wages had fallen 40%. The rest of Latin America did little better. Communists suggested that the inevitable fall of capitalism was finally at hand.

But we know how this ended. The US got Reagan. Britain got Thatcher. A tide of free-market sentiment, later termed "neoliberalism", swept over the world. Governments confronted public sector unions and left them shells of their former selves; a series of regulatory changes let companies do the same with their own workforces. Top tax rates went down; newly money-hungry executives launched an orgy of mergers and buyouts. Entrepreneurs founded new companies and forced the old dinosaurs to compete on an equal footing; the dinosaurs responded by downsizing and offshoring their employees. Employment went from a lifetime guarantee to a bullet point you put on your resume when applying to the next place. By 1990-2000, most of this had settled down, and for better or worse we had a stable new system.

II.

Sound straightforward? Not if you read about it in David Harvey's A Brief History Of Neoliberalism. This treatment is almost the opposite of the way ABHoN describes events. Telling the story this way makes me feel like Jacques Derrida deconstructing some text to undermine the author and prove that they were arguing against themselves all along.

Harvey is an extreme conflict theorist. The story he wants to tell is the story of bad people destroying the paradise of embedded liberalism in order to line their own pockets and crush their opponents. At his best, he treats this as a thesis to be defended: embedded liberalism switched to neoliberalism not primarily because of sound economic policy, but because rich people forced the switch to “reassert class power”. At his worst, he forgets to argue the point, feeling it so deeply in his bones that it’s hard for him to believe anyone could really disagree. When he’s like this, he doesn’t analyze any of the economics too deeply; sure, rich people said something something economics, to justify their plot to immiserate the working classes, but we don’t believe them and we’re under no obligation to tease apart exactly what economic stuff they were talking about.

In these parts, ABHoN’s modus operandi is to give a vague summary of what happened, then overload it with emotional language. Nobody in ABHoN ever cuts a budget, they savagely slash the budget, or cruelly decimate the budget, or otherwise [dramatic adverb] [dramatic verb] it. Nobody is ever against neoliberal reform - they bravely stand up to neoliberal reform, or valiantly resist neoliberal reform, or whatever. Nobody ever “makes” money, they “extract” it. So you read a superficial narrative of some historical event, with all the adverbs changed to more dramatic adverbs, and then a not-very-convincing discussion of why this was all about re-establishing plutocratic power at the end of it. This is basically an entire literary genre by now, and ABHoN fits squarely within it.

Harvey's theses, framed uncharitably, are:

1. Embedded liberalism was great and completely sustainable. The global economic system collapsing in 1971 was probably just coincidence or something, and has no relevance to any debate about the relative merit of different economic paradigms.

2. Sure, some people say that the endless recession/stagflation/unemployment/bankruptcy/strikes of the 1970s were bad, but those people are would-be plutocrats trying to seize power and destroy the working class.

3. When cities, countries, etc, ran huge deficits and then couldn't pay any of the money back, sometimes the banks that loaned them that money were against this. Sometimes they even asked those places to stop running huge deficits as a precondition for getting bailed out. This proves that bankers were plotting against the public and trying to form a dystopian plutocracy.

4. Since we have proven that neoliberalism is a sham with no advantages, we should switch back to embedded liberalism.

Let's go through these one by one and see whether I'm being unfair.

The first thesis is mostly implicit. ABHoN doesn't give any reason for the failure of Bretton Woods and the 1970s economic crisis. It mostly takes it as a given, interesting only insofar as plutocrats used it as an excuse for pushing neoliberal policies. It never explicitly denies that it happened, it just thinks that it happened in the same sense that the sinking of the Maine happened - less interesting in and of itself than the fact that sinister forces were able to leverage it for their sinister ends.

Which brings us to the second thesis. How do we know that the neoliberal reformers - the people saying "given that the economy is in shambles, maybe we should reform it" - were sinister, rather than genuinely motivated by the extremely real economic shambles all around them? Harvey's argument is complex. One part of it is "because there was organized lobbying for it". He ably charts the existence of various neoliberal lobbying groups, explains how corporate funding flowed into think tanks, and quotes important business figures saying that neoliberal reform would help their bottom lines. For example:

In the US case I begin with a confidential memo sent by Lewis Powell to the US Chamber of Commerce in August 1971. Powell, about to be elevated to the Supreme Court by Richard Nixon, argued that criticism of and opposition to the US free enterprise system had gone too far and that ‘the time had come—indeed it is long overdue—for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it’. Powell argued that individual action was insufficient. ‘Strength’, he wrote, ‘lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations’. The National Chamber of Commerce, he argued, should lead an assault upon the major institutions—universities, schools, the media, publishing, the courts—in order to change how individuals think ‘about the corporation, the law, culture, and the individual’. US businesses did not lack resources for such an effort, particularly when pooled."
How directly influential this appeal to engage in class war was, is hard to tell. But we do know that the American Chamber of Commerce subsequently expanded its base from around 60,000 firms in 1972 to over a quarter of a million ten years later. Jointly with the National Association of Manufacturers (which moved to Washington in 1972) it amassed an immense campaign chest to lobby Congress and engage in research. The Business Roundtable, an organization of CEOs ‘committed to the aggressive pursuit of political power for the corporation’, was founded in 1972 and thereafter became the centrepiece of collective pro-business action. The corporations involved accounted for ‘about one half of the GNP of the United States’ during the 1970s, and they spent close to $900 million annually (a huge amount at that time) on political matters. Think-tanks, such as the Heritage Foundation, the Hoover Institute, the Center for the Study of American Business, and the American Enterprise Institute, were formed with corporate backing both to polemicize and, when necessary, as in the case of the National Bureau of Economic Research, to construct serious technical and empirical studies and political-philosophical arguments broadly in support of neoliberal policies. Nearly half the financing for the highly respected NBER came from the leading companies in the Fortune 500 list. Closely integrated with the academic community, the NBER was to have a very significant impact on thinking in the economics departments and business schools of the major research universities. With abundant finance furnished by wealthy individuals (such as the brewer Joseph Coors, who later became a member of Reagan’s ‘kitchen cabinet’) and their foundations (for example Olin, Scaife, Smith Richardson, Pew Charitable Trust), a flood of tracts and books, with Nozick’s Anarchy State and Utopia perhaps the most widely read and appreciated, emerged espousing neoliberal values. A TV version of Milton Friedman’s Free to Choose was funded with a grant from Scaife in 1977. ‘Business was’, Blyth concludes, ‘learning to spend as a class.’

This seems like a kind of conspiratorial take on “businesses did not like anti-business policies, and lobbied to change them”. Also, I wonder if any movement could survive this level of critique. Some progressives formed anti-inequality think tanks after the Great Recession? Guess progressivism is a sham astroturf movement that merely used the Great Recession as an excuse to push their class war agenda!

Harvey’s other argument here is that neoliberalism is ideologically incoherent in ways that don’t match its supposed commitment to freedom, but do make sense as a Trojan horse for plutocratic interests.

The two economic engines that have powered the world through the global recession that set in after 2001 have been the United States and China. The irony is that both have been behaving like Keynesian states in a world supposedly governed by neoliberal rules. The US has resorted to massive deficit-financing of its militarism and its consumerism, while China has debt-financed with non-performing bank loans massive infrastructural and fixed-capital investments. True blue neoliberals will doubtless claim that the recession [SA: I think he means the dot-com crash recession of the early 2000s, but it’s not clear even in the book] is a sign of insufficient or imperfect neoliberalization, and they could well point to the operations of the IMF and the army of well-paid lobbyists in Washington that regularly pervert the US budgetary process for their special-interest ends as evidence for their case. But their claims are impossible to verify, and, in making them, they merely follow in the footsteps of a long line of eminent economic theorists who argue that all would be well with the world if only everyone behaved according to the precepts of their textbooks.
But there is a more sinister interpretation of this paradox. If we lay aside, as I believe we must, the claim that neoliberalization is merely an example of erroneous theory gone wild (pace the economist Stiglitz) or a case of senseless pursuit of a false utopia (pace the conservative political philosopher John Gray), then we are left with a tension between sustaining capitalism, on the one hand, and the restoration/reconstitution of ruling class power on the other. If we are at a point of outright contradiction between these two objectives, then there can be no doubt as to which side the current Bush administration is leaning, given its avid pursuit of tax cuts for the corporations and the rich. Furthermore, a global financial crisis in part provoked by its own reckless economic policies would permit the US government to finally rid itself of any obligation whatsoever to provide for the welfare of its citizens except for the ratcheting up of that military and police power that might be needed to quell social unrest and compel global discipline.

I’m not super sure what Harvey means by saying that the Bush tax cuts are antithetical to true free market ideology. But apparently he thinks this is true, and a sign that the government is trying to provoke a global financial crisis in order to “finally rid itself of any obligation whatsoever to provide for the welfare of its citizens”.

There were some other supposed examples of neoliberal practice contradicting liberal ideology - although I can’t find easily quotable bits, I think he’s thinking of the Iraq War and various bailouts (though not the 2008 bailouts, since this book was written in the early 2000s). I agree that the government has not been a perfect ideological neoliberal at all times, but this impresses me less than it seemingly impresses David Harvey. Again, I think this critique is strong enough to apply to any ideology - what government has ever perfectly followed the diktats of socialism, or conservatism, or theocracy? The government is a blob of power that gets captured by different groups at different times and directed willy-nilly to one purpose or another; just because it does not perfectly follow a specific philosophy without deviation for fifty years doesn’t make that philosophy inherently fraudulent.

The third thesis, the one about debts and bankers, starts in the book’s fascinating narrative of the 1975 NYC near-bankruptcy. Here’s a (long) excerpt:

The New York City fiscal crisis was an iconic case. Capitalist restructuring and deindustrialization had for several years been eroding the economic base of the city, and rapid suburbanization had left much of the central city impoverished. The result was explosive social unrest on the part of marginalized populations during the 1960s, defining what came to be known as ‘the urban crisis’ (similar problems emerged in many US cities). The expansion of public employment and public provision—facilitated in part by generous federal funding—was seen as the solution. But, faced with fiscal difficulties, President Nixon simply declared the urban crisis over in the early 1970s. While this was news to many city dwellers, it signalled diminished federal aid. As the recession gathered pace, the gap between revenues and outlays in the New York City budget (already large because of profligate borrowing over many years) increased. At first financial institutions were prepared to bridge the gap, but in 1975 a powerful cabal of investment bankers (led by Walter Wriston of Citibank) refused to roll over the debt and pushed the city into technical bankruptcy. The bail-out that followed entailed the construction of new institutions that took over the management of the city budget. They had first claim on city tax revenues in order to first pay off bondholders: whatever was left went for essential services. The effect was to curb the aspirations of the city’s powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision (education, public health, transport services), and to impose user fees (tuition was introduced into the CUNY university system for the first time). The final indignity was the requirement that municipal unions should invest their pension funds in city bonds. Unions then either moderated their demands or faced the prospect of losing their pension funds through city bankruptcy.
This amounted to a coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had earlier occurred in Chile. Wealth was redistributed to the upper classes in the midst of a fiscal crisis. The New York crisis was, Zevin argues, symptomatic of ‘an emerging strategy of disinflation coupled with a regressive redistribution of income, wealth and power’. It was ‘an early, perhaps decisive battle in a new war’, the purpose of which was ‘to show others that what is happening to New York could and in some cases will happen to them’.8
Whether everyone involved in negotiating this fiscal compromise understood it as a strategy to restore class power is an open question. The need to maintain fiscal discipline is a matter of concern in its own right and does not, like monetarism more generally, necessarily entail regressive redistributions. It is unlikely, for example, that Felix Rohatyn, the merchant banker who brokered the deal between the city, the state, and the financial institutions, had the restoration of class power in mind. The only way he could ‘save’ the city was by satisfying the investment bankers while diminishing the standard of living of most New Yorkers. But the restoration of class power was almost certainly what investment bankers like Walter Wriston had in mind. He had, after all, equated all forms of government intervention in the US and Britain with communism. And it was almost certainly the aim of Ford’s Secretary of the Treasury William Simon (later to become head of the ultra-conservative Olin Foundation). Watching the progress of events in Chile with approval, he strongly advised President Ford to refuse aid to the city (‘Ford to City: Drop Dead’ ran the headline in the New York Daily News). The terms of any bail-out, he said, should be ‘so punitive, the overall experience so painful, that no city, no political subdivision would ever be tempted to go down the same road’.
While resistance to the austerity measures was widespread, it could only, according to Freeman, slow ‘the counterrevolution from above, it could not stop it. Within a few years, many of the historic achievements of working class New York were undone’. Much of the social infrastructure of the city was diminished and the physical infrastructure (for example the subway system) deteriorated markedly for lack of investment or even maintenance. Daily life in New York ‘became gruelling and the civic atmosphere turned mean’. The city government, the municipal labour movement, and working-class New Yorkers were effectively stripped ‘of much of the power they had accumulated over the previous three decades’. Demoralized, working-class New Yorkers reluctantly assented to the new realities.
But the New York investment bankers did not walk away from the city. They seized the opportunity to restructure it in ways that suited their agenda. The creation of a ‘good business climate’ was a priority. This meant using public resources to build appropriate infrastructures for business (particularly in telecommunications) coupled with subsidies and tax incentives for capitalist enterprises. Corporate welfare substituted for people welfare. The city’s elite institutions were mobilized to sell the image of the city as a cultural centre and tourist destination (inventing the famous logo ‘I Love New York’). The ruling elites moved, often fractiously, to support the opening up of the cultural field to all manner of diverse cosmopolitan currents. The narcissistic exploration of self, sexuality, and identity became the leitmotif of bourgeois urban culture. Artistic freedom and artistic licence, promoted by the city’s powerful cultural institutions, led, in effect, to the neoliberalization of culture. ‘Delirious New York’ (to use Rem Koolhaas’s memorable phrase) erased the collective memory of democratic New York. The city’s elites acceded, though not without a struggle, to the demand for lifestyle diversification (including those attached to sexual preference and gender) and increasing consumer niche choices (in areas such as cultural production). New York became the epicentre of postmodern cultural and intellectual experimentation. Meanwhile the investment bankers reconstructed the city economy around financial activities, ancillary services such as legal services and the media (much revived by the financialization then occurring), and diversified consumerism (gentrification and neighbourhood ‘restoration’ playing a prominent and profitable role). City government was more and more construed as an entrepreneurial rather than a social democratic or even managerial entity. Inter-urban competition for investment capital transformed government into urban governance through public–private partnerships. City business was increasingly conducted behind closed doors, and the democratic and representational content of local governance diminished.
Working-class and ethnic-immigrant New York was thrust back into the shadows, to be ravaged by racism and a crack cocaine epidemic of epic proportions in the 1980s that left many young people either dead, incarcerated, or homeless, only to be bludgeoned again by the AIDS epidemic that carried over into the 1990s. Redistribution through criminal violence became one of the few serious options for the poor, and the authorities responded by criminalizing whole communities of impoverished and marginalized populations. The victims were blamed, and Giuliani was to claim fame by taking revenge on behalf of an increasingly affluent Manhattan bourgeoisie tired of having to confront the effects of such devastation on their own doorsteps.

If you’re like me, you read all of this about “the counterrevolution from above”, “the final indignity” and “narcissistic exploration of self, sexuality, and identity” (does he mean gay people?) and after a while you want some numbers or at least some background. Like - how did New York get this far in debt? Were its creditors unreasonable (by the standards of the time) in asking them to pay it back, or was this accepted practice? How does Harvey believe that governments and banks should handle a situation where someone takes out a loan and can’t pay it back? We get none of this, Harvey doesn’t even seem to understand it’s a potential question, and instead there’s page after page about how greedy bankers destroyed New York.

Also, I think at least some of those pages are false: Wikipedia says that “the city [had] gained notoriety for high rates of crime and other social disorders” by 1970, five years before any of this happened. Also, here’s some more of the relevant article:

The Transport Workers Union of America (TWU) led by Mike Quill shut down the city with a complete halt of subway and bus service on mayor John Lindsay's first day of office. As New Yorkers endured the transit strike, Lindsay remarked, "I still think it's a fun city," and walked four miles (6 km) from his hotel room to City Hall in a gesture to show it. Dick Schaap, then a columnist for the New York Herald Tribune, coined and popularized the sarcastic term in an article titled Fun City. In the article, Schaap sardonically pointed out that it was not.
The transit strike was the first of many labor struggles. In 1968 the teachers' union (the United Federation of Teachers, or the UFT) went on strike over the firings of several teachers in a school in Ocean Hill and Brownsville.
That same year, 1968, also saw a nine-day sanitation strike. Quality of life in New York reached a nadir during this strike, as mounds of garbage caught fire, and strong winds whirled the filth through the streets. With the schools shut down, the police engaged in a slowdown, firefighters threatening job actions, the city awash in garbage, and racial and religious tensions breaking to the surface, Lindsay later called the last six months of 1968 "the worst of my public life."

So Harvey’s picture of an idyllic New York getting hit with a financial crisis for no reason, being betrayed by greedy bankers, and then turning gritty and mean doesn’t really seem to check out.

Harvey comes across a little better when talking about debt crises in Mexico, Latin America, and beyond. My understanding here is something like: the Volcker Shock caused a sharp increase in the price of the US dollar. Latin American countries had taken out a lot of dollar-denominated debt, which (as the dollar rose) suddenly became much bigger. They had been prepared to pay off their old debts, but not their new, much-bigger debts, so they had to cut deals with their creditors. These were mostly American banks, and the American government was backing them. The banks and government, negotiating partly through the IMF, weren’t really willing to compromise and demanded quite a lot of the money back. But also, as a condition for what compromises they did make, they demanded these countries neoliberalize. The banks/US/IMF said this was so that they could break their addiction to debt and overspending, have functional economies, and be able to pay off what they owed eventually. Obviously Harvey isn’t buying it, and says it was a plot for the American rich to enhance their power, plus crushing all fair and decent systems that might have provided an alternative to the dystopia they were planning at home.

What the Mexico case demonstrated, however, was a key difference between liberal and neoliberal practice: under the former, lenders take the losses that arise from bad investment decisions, while under the latter the borrowers are forced by state and international powers to take on board the cost of debt repayment no matter what the consequences for the livelihood and well-being of the local population. If this required the surrender of assets toforeign companies at fire-sale prices, then so be it. This, it turnsout, is not consistent with neoliberal theory. One effect, as Duménil and Lévy show, was to permit US owners of capital to extract high rates of return from the rest of the world during the 1980s and 1990s (Figures 1.8 and 1.9). The restoration of power to an economic elite or upper class in the US and elsewhere in the advanced capitalist countries drew heavily on surpluses extracted from the rest of the world through international flows and structural adjustment practices.

I am not sure what Harvey means here about how under (non-neo) liberal practices lenders take the losses. In the 1960s, would bankers have loaned to Mexico and then, when Mexico couldn’t pay it back, just said “okay, whatever, keep the extra”? Maybe they would have! I don’t know! I would like to learn more about this! But Harvey doesn’t tell me. He leaves the minds, actions, systems, and norms of bankers as a black box, except for the part where they are trying to crush others and “reestablish class power”.

There’s an interesting section on how countries that followed IMF recommendations tended to do badly, and those that spurned the IMF tended to recover and go on to even greater heights. I suspect something like this is true, and am trying to read some other books to understand it better. But ABHoN, despite its chapter on this, is of little help.

The fourth thesis is that we should return to embedded liberalism. The exact details of how to do this are left to the reader, but I imagine it would involve pro-union regulation, higher taxes on the rich, and instituting some sort of cradle-to-grave welfare heavily tied up with employment. Most of us should want this (says the book) because it means people other than plutocrats can lead decent lives. But even the plutocrats should be a little in favor:

Previous phases of capitalist history—one thinks of 1873 or the 1920s—when a similarly stark choice arose, do not augur well. The upper classes, insisting on the sacrosanct nature of their property rights, preferred to crash the system rather than surrender any of their privileges and power. In so doing they were not oblivious of their own interest, for if they position themselves aright they can, like good bankruptcy lawyers, profit from a collapse while the rest of us are caught most horribly in the deluge. A few of them may get caught and end up jumping out of Wall Street windows, but that is not the norm. The only fear they have is of political movements that threaten them with expropriation or revolutionary violence. While they can hope that the sophisticated military apparatus they now possess (thanks to the military industrial complex) will protect their wealth and power, the failure of that apparatus to easily pacify Iraq on the ground should give them pause. But ruling classes rarely, if ever, voluntarily surrender any of their power and I see no reason to believe they will do so this time. Paradoxically, a strong and powerful social democratic and working-class movement is in a better position to redeem capitalism than is capitalist class power itself. While this may sound a counter-revolutionary conclusion to those on the far left, it is not without a strong element of self-interest either, because it is ordinary people who suffer, starve, and even die in the course of capitalist crises (examine Indonesia or Argentina) rather than the upper classes. If the preferred policy of ruling elites is après moi le déluge, then the deluge largely engulfs the powerless and the unsuspecting while elites have well-prepared arks in which they can, at least for a time, survive quite well.

III.

Here’s a more positive take on ABHoN: despite all of that, it manages to be a good read anyway. It talks about under-explored topics in an engaging way. Although I was unsatisfied with Harvey’s explanation of some issues, this is a 200 page book, he can’t explain everything in depth, and he got me reading papers and Wikipedia articles on things I wouldn’t have read about otherwise. Although the book has too many loose ends and apparent mistakes that for me to trust everything it says, some of the things it says would be fascinating if true, and I plan to follow up on them and try to see if they are.

And although I think I’m fair in characterizing Harvey as far left, he has some unique and original views that I found surprising and challenging. These were most apparent when he was condemning things I thought of as pretty left-wing/progressive as symptoms of neoliberalism. For example, NGOs:

It should not be surprising that the primary collective means of action under neoliberalism are then defined and articulated through non-elected (and in many instances elite-led) advocacy groups for various kinds of rights. In some instances, such as consumer protections, civil rights, or the rights of handicapped persons, substantive gains have been achieved by such means. Non-governmental and grassroots organizations (NGOs and GROs) have also grown and proliferated remarkably under neoliberalism, giving rise to the belief that opposition mobilized outside the state apparatus and within some separate entity called ‘civil society’ is the powerhouse of oppositional politics and social transformation. The period in which the neoliberal state has become hegemonic has also been the period in which the concept of civil society—often cast as an entity in opposition to state power—has become central to the formulation of oppositional politics. The Gramscian idea of the state as a unity of political and civil society gives way to the idea of civil society as a centre of opposition, if not an alternative, to the state.

Or human rights:

Neoliberalization has spawned within itself an extensive oppositional culture. The opposition tends, however, to accept many of the basic propositions of neoliberalism. It focuses on internal contradictions. It takes questions of individual rights and freedoms seriously, for example, and opposes them to the authoritarianism and frequent arbitrariness of political, economic, and class power. It takes the neoliberal rhetoric of improving the welfare of all and condemns neoliberalization for failing in its own terms. […]
The rise of opposition cast in terms of rights violations has been spectacular since 1980. Before then, Chandler reports, a prominent journal such as Foreign Affairs carried not a single article on human rights. Human rights issues came to prominence after 1980 and positively boomed after the events in Tiananmen Square and the end of the Cold War in 1989. This corresponds exactly with the trajectory of neoliberalization, and the two movements are deeply implicated in each other. Undoubtedly, the neoliberal insistence upon the individual as the foundational element in political-economic life opens the door to individual rights activism. But by focusing on those rights rather than on the creation or recreation of substantive and open democratic governance structures, the opposition cultivates methods that cannot escape the neoliberal frame. Neoliberal concern for the individual trumps any social democratic concern for equality, democracy, and social solidarities. The frequent appeal to legal action, furthermore, accepts the neoliberal preference for appeal to judicial and executive rather than parliamentary powers […]
This appeal to the universalism of rights is a double-edged sword. It may and can be used with progressive aims in mind. The tradition that is most spectacularly represented by Amnesty International, Médecins sans Frontières, and others cannot be dismissed as a mere adjunct of neoliberal thinking. The whole history of humanism (both of the Western—classically liberal—and various non-Western versions) is too complicated for that. But the limited objectives of many rights discourses (in Amnesty’s case the exclusive focus, until recently, on civil and political as opposed to economic rights) makes it all too easy to absorb them within the neoliberal frame. Universalism seems to work particularly well with global issues such as climate change, the ozone hole, loss of biodiversity through habitat destruction, and the like. But its results in the human rights field are more problematic, given the diversity of political-economic circumstances and cultural practices to be found in the world. Furthermore, it has been all too easy to co-opt human rights issues as ‘swords of empire’ (to use Bartholomew and Breakspear’s trenchant characterization). So-called ‘liberal hawks’ in the US, for example, have appealed to them to justify imperialist interventions in Kosovo, East Timor, Haiti, and, above all, in Afghanistan and Iraq. They justify military humanism ‘in the name of protecting freedom, human rights and democracy even when it is pursued unilaterally by a self-appointed imperialist power’ such as the US.
More broadly, it is hard not to conclude with Chandler that ‘the roots of today’s human rights-based humanitarianism lie in the growing consensus of support for Western involvement in the internal affairs of the developing world since the 1970s’. The key argument is that ‘international institutions, international and domestic courts, NGOs or ethics committees are better representatives of the people’s needs than are elected governments. Governments and elected representatives are seen as suspect precisely because they are held to account by their constituencies and, therefore, are perceived to have “particular” interest, as opposed to acting on ethical principle’. Domestically, the effects are no less insidious. The effect is to narrow ‘public political debate through legitimizing the developing decision-making role for the judiciary and unelected task forces and ethics committees’. The political effects can be debilitating. ‘Far from challenging the individual isolation and passivity of our atomised societies, human rights regulation can only institutionalise these divisions.’ Even worse, ‘the degraded vision of the social world provided by the ethical discourse of human rights serves, like any elite theory, to sustain the self-belief of the governing class’.

I’m not sure I would have thought of human rights as a symptom of neoliberalism before. But as a neoliberal, I am happy to accept the blame!

IV.

One more great thing about David Harvey: he makes specific predictions. And since it’s been 16 years since he wrote ABHoN, we can check how he did. In order to avoid debate over which things I count as predictions, I’ll only be looking over the middle of his last chapter, Freedom’s Prospect, which deals with the future. You can follow along here and make sure I’m representing him honestly.

Harvey says that US spending is growing out of control. The Bush administration’s wars and tax cuts for the rich create an unsustainable situation. Foreign countries are currently funding this by buying US debt, but the interest will soon spiral out of control. Americans will get increasingly angry as foreigners own more and more of the country, America will have less and less ability to service its debts, and “it is unthinkable but not impossible that the US will become like Argentina in 2001 overnight”. For example:

Already nearly one-third of stock assets on Wall Street and nearly half of US Treasury bonds are owned by foreigners, and the dividends and interest flowing out to foreign owners are now roughly equivalent to, if not more than, the tribute that US corporations and financial operations are extracting from abroad (Figure 7.1). This balance of benefits will turn more strongly negative the more the US borrows, and it is now borrowing from abroad at a rate approaching $2 billion per day. Furthermore, if US interest rates rise (as at some point they must) then what happened to Mexico after the Volcker interest rate increase in 1979 starts to loom as a real problem. The US will soon be paying out far more to service its debt to the rest of the world than it brings in. This extraction of wealth from the US will not be welcome domestically. The perpetual increases in debt-financed consumerism that have been the foundation of social peace in the US since 1945 would have to stop.
The imbalances seem not to trouble the Bush administration, judging by cavalier statements to the effect that the current account deficit, if it is a problem, can easily be dealt with by people buying US-made goods (as if such goods are readily available and cheap enough and as if nominally US-made goods do not have a high foreign-input component). If this really happened then Wal-Mart would be put out of business. The budget deficit, Bush says, can easily be dealt with without raising taxes by curbing domestic programmes (as if there are any large discretionary programmes left to dismantle). Vice-President Cheney’s remark that ‘Reagan taught us that budget deficits do not matter’ is alarming, because what Reagan also taught is that running up deficits is a way to force retrenchment in public expenditures and that attacking the standard of living of the mass of the population while feathering the nests of the rich can best be accomplished in the midst of financial turmoil and crisis. If, furthermore, we ask the general question, ‘Who has actually benefited from the numerous financial crises that have cascaded from one country to another in wave after wave of catastrophic deflations, inflations, capital flights and structural adjustments since the late 1970s?’, the weak commitment of the current US administration to fending off a fiscal crisis in spite of all the warning signs becomes more readily understandable. In the wake of a financial crash, the ruling elite may hope to emerge even more empowered than before.

As far as I know, nothing at all like this happened. We kept spending money, interest rates stayed low, foreigners didn’t get too much of our debt, nobody protested foreigners having too much debt, and nowadays economists (including the most left-leaning ones) are telling the government it should be less concerned about debt, not more.

Harvey gets some credit for predicting a financial crisis, which in fact happened in 2008, three years after he published. But he seems to have gotten all of the specifics wrong, and it’s not clear how much credit he gets. There will always be a next recession, so predicting “recession coming!” without a time scale will always sound good later. I don’t know enough about different kinds of recessions to know whether saying “fiscal crisis” and “financial crash” made this extra-prescient.

During/after the crisis, Harvey predicts the US’ only options will be hyperinflation, or prolonged Japan-style deflation, and goes into detail about which one we might choose (neither happened in 2008). He doesn’t think either of these will go very well, and thinks neoliberalism will need a new trick in order to survive.

That trick will be neoconservatism. In several places throughout the book, but most emphatically in Chapter 7, Harvey predicts that the neoconservatism of the Bush years is the beginning of the next phase of neoliberalism. For example:

Though it has been effectively disguised, we have lived through a whole generation of sophisticated strategizing on the part of ruling elites to restore, enhance, or, as in China and Russia, to construct an overwhelming class power. The further turn to neoconservatism is illustrative of the lengths to which economic elites will go and the authoritarian strategies they are prepared to deploy in order to sustain their power.

And:

Neoconservatism, I argued in Chapter 3, sustains the neoliberal drive towards the construction of asymmetric market freedoms but makes the anti-democratic tendencies of neoliberalism explicit through a turn into authoritarian, hierarchical, and even militaristic means of maintaining law and order. In The New Imperialism I explored Hannah Arendt’s thesis that militarization abroad and at home inevitably go hand in hand, and concluded that the international adventurism of the neoconservatives, long planned and legitimized after the 9/11 attacks, had as much to do with asserting domestic control over a fractious and much-divided body politic in the US as it did with a geopolitical strategy of maintaining global hegemony through control over oil resources.

As far as I can tell, neoconservatism reached its apex during the Bush administration, and since then everyone has backed away from it. It was not an inevitable next phase of capitalism. The US is now less militarily entangled than it was for most of the 20th century including the embedded liberalism period, and capitalism has done just fine.

But:

Traditional worker-based movements are by no means dead even in the advanced capitalist countries where they have been much weakened by the neoliberal onslaught on their power. In South Korea and South Africa vigorous labour movements arose during the 1980s and in much of Latin America working-class parties are flourishing if not in power. In Indonesia a fledgling labour movement of great potential importance is struggling to be heard. The potential for labour unrest in China is immense though unpredictable. And it is not clear either that the mass of the working people in the US, who have over this last generation often willingly voted against their own material interests for reasons of cultural nationalism, religion, and moral values, will for ever stay locked into such a politics by the machinations of Republicans and Democrats alike. Given the volatility, there is no reason to rule out the resurgence of popular social democratic or even populist anti-neoliberal politics within the US in future years.

Wrong about China - but right about the US! Harvey goes on to predict that these may not happen within traditional political parties, but instead be more amorphous movements like the Zapatistas in Mexico. I’m not sure how to judge this - my guess is there’s a Revolt Of The Public argument that he’s right, and I’m too stuck in modernity to notice.

Overall it looks like Harvey was wrong about all of his specific beliefs, but right that increasingly many people would agree with him. This is probably a metaphor for life. Read A Brief History Of Neoliberalism to figure out what all the fuss is about, I guess.

Astral Codex Ten

Book Review: A Brief History Of Neoliberalism