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The real road to serfdom

By Marko Beljac - posted Monday, 5 January 2015


The contemporary order just about everywhere is oft justified with respect to neoliberal ideas, and so it is that we may frame a hypothesis; examination of the discord, should there be one, between neoliberal theory and practice informs us plenty regarding the nature of contemporary society.

As we know neoliberal ideas are presented as the natural intellectual heir of classical liberalism, especially so as neoliberalism places a strong emphasis upon a critique of the centralised power of the state.

It is said that state power militates against individual liberty and autonomy, and should always be tempered and countered by those whose hearts beat to a liberal drum.

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Perhaps the most well known exposition of neoliberalism remains Hayek's The Road to Serfdom.

Hayek wrote in the late 1940s when state power in much of the Western world was being expanded in two important ways.

The first was through the development of social welfare states and the second through the development of the national security state most especially, and most crucially, in the United States.

In the neoliberal canon you will find much ire directed at the first, but little to none at the second. The difference exposes the role that neoliberal ideas play in our society, and the true centres of power that reside within them.

The difference is readily explainable; in the former the state helps the poor, in the latter the rich. When state action assists the poor it is trenchantly attacked by our erstwhile neoliberals but when aiding the rich it is quietly left aside if not readily applauded.

The social welfare state is, of course, associated with pensions, unemployment benefits, public health, public education, just about everything associated with the needs and concerns of most, especially the most underprivileged and disadvantaged, members of society.

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The market left to its own devices, it was recognised, fosters inequality and class hierarchy and thereby an interventionist state was required to pull up those left by the wayside.

Hence it was that state power expanded through provision of welfare programmes and the adoption of labour market regulations.

The welfare state was also associated with Keynesian demand management of the economy geared toward the maintenance of full employment.

A critical facet to the rise of the social welfare state was the gradual rise of the labour movement as the organisational expression of the working class, and the parlaying of its social power to concrete political outcomes through the extraction of a social contract between capital and labour.

The social welfare state was intellectually founded upon an expansion of our conception of liberty, and of course by Keynesian economic theory.

It came to be understood that liberty equates to more than liberty from the arbitrary powers of the state. That a person could be said to be truly free if one had the opportunity to live an autonomous and fulfilling life, that the individual had "the right to a modicum of economic welfare and security; to the right to share in the social heritage and to live the life of a civilised being according to the standards prevailing in the society."

Without such one could not be autonomous and without autonomy one could not be free.

So it was that ideas of social justice came to increasing intellectual prominence.

Keynesian theory rejected the notion that a self regulating free market economy has the natural tendency toward full employment equilibrium. The Great Depression taught us that the market economy is prone to slumps, and may stay indefinitely in a condition characterised by mass unemployment. Because the market economy cannot fully employ resources state intervention and robust wages here too are also required.

Full employment was justified also on grounds of individual autonomy and social justice.

Hayek and a panoply of neoliberals, lavishly funded by corporate interests, understood that an assault on social welfare required an attack on these justificatory ideas and so it was that we saw The Road to Serfdom and all that.

The neoliberals represented that part of the corporate sector that never reconciled with the social contract between capital and labour.

As the New Zealand chapter of the Industrial Workers of the World pointed out long ago "any understanding between workers and employers is only an armistice, to be broken, when convenient, by either side."

It became both convenient and necessary for capital to break the social contract underpinning the welfare state in the mid to late 1970s and they justified this by trotting out the neoliberal ideas that were promoted by those of their number always opposed to that contract.

What might we say of the second expansion of state power?

The late 40s saw the entrenchment of a national security state whose main features consisted of an imperial presidency usurping greater political power, the development of political police forces such as the FBI and ASIO, a system of state support for high technology industry built upon the Pentagon, and large expeditionary military forces equipped to enforce world order.

Each of these facets of the national security state were, and are, highly functional for the rich.

An imperial presidency is useful for it is surely easier for corporations to wheel and deal with a more centralised system of executive power than legislators incrementally more accountable to electors.

In Australia only the corporate elite can sway, say, the Expenditure Review Committee of Cabinet. To petition the ERC is akin to petitioning the Politburo.

The requirement to centralise state power in this fashion follows on from the insights of Aristotle made at the very dawn of systematic political thought; the interests of the rich come at the expense of democracy. Today corporate led neoliberal globalisation is accompanied by an attack on substantive democracy. The people continue to vote yet their preferences matter less.

The national political police, under the rubric of fraudulent McCarthyite and Menzian red scares, enforced ideological and political discipline ostensibly against communism but in reality against the broader left and popular countercultural movements that sought to further prise open the bounds of the possible within the advanced industrial states.

The Pentagon system of high technology subsidy was necessary because it was understood that an advanced society could not rely upon market forces to achieve the fundamental advances in science and technology needed to sustain economic growth.

Funnelling the subsidy through the Pentagon diminishes greatly the social democratic effects that come with greater state spending and entrenches hierarchies and inequalities of wealth and power.

The Western system of economic growth relies upon public subsidy for innovation and private exploitation of innovation by a small corporate class.

Large scale military power is needed to enforce corporate interests in any system of world order based upon mercantile interests and principles, as Adam Smith well knew. So it is with our highly mercantile system of world order which is structured upon the interests of multinational corporations. Military force is used to promote not just sectional corporate interests, but the very stability of the system as a whole.

Notice that this system of mercantile world order, where states advance the interests of multinational corporations even if need by means of military firepower, hardly is a Smithian world of free trade and free markets.

Our neoliberals never have had a problem with this, and sing the praises of Western military interventionism at every turn.

For example, both Hayek and Milton Friedman lauded the torture regime of Augusto Pinochet in Chile. At the operative level, as opposed to the doctrinal, there is no contradiction at play here, for Pinochet's torturers tortured for the rich.

All of these features of encroaching state power endure, and were never subject to attack or erosion from neoliberal administrations. Indeed the most vociferously supported by neoliberals, such as the Thatcher and Reagan administrations, expanded upon them.

Note the difference.

State power directed toward alleviating poverty and suffering is condemned whilst state power, no matter how large or bloody or vulgar, is overlooked indeed applauded so long as it caters to the interests of the rich and the institutional expression of their hegemony in society namely corporations.

That's the neoliberal position on the state, with of course all the accompanying rhetoric regarding liberty and markets and the like which should primarily be of interest to those who study propaganda and public relations.

All of this remains highly relevant.

Indeed we note that today the West is increasingly locked into, mercantile derived, geopolitical tensions and contests with Russia and China, and whose penchant for global military intervention remains undiminished.

Under the pretext of terror threats, from 9/11 onward, we have seen major expansions in the oversight and coercive powers of the state. Some of the effects of overly militarised forms of policing we can see daily on our TV screens, and the Edward Snowden revelations show us how far the state has encroached upon the daily life of the individual.

Throughout the world people are rising up against the injustices and inequities of financialised capitalism and neoliberal globalisation.

In response the state, from Spain to Mexico, from Greece to the United States, is cracking down hard on dissent and activism.

Austerity programmes throughout much of the world are being used to further erode state programmes directed toward the poor, made possible by our very bailout of the rich following the crashing of their cashed up gluttonous orgy which otherwise is known as the global financial crisis.

The rich demand that the state "never let a serious crisis go to waste" even though they caused the very crisis to be exploited to further smash the poor.

Yet the people of the world strangely object to this, and this objection increasingly takes the form of autonomous forms of direct political action.

At the forefront of these actions, even if unconsciously, one is able to discern the use of anarchist ideas on direct action and self governed assemblies to frame dissent.

As the global popular uprising proceeds the coercive power of the state steps in to do what the coercive power of the state does best, all the while our neoliberals nod sagely under the bust of Smith and other representatives of the liberal pantheon.

The neoliberal vision in reality is a vision of a society dominated by corporate power, for which the vast bulk of the population in an increasingly regimented fashion are compelled to rent themselves, one were most are deluded through propaganda into feverishly consuming corporate goods even though they are neither wanted nor needed, where concern for others is left for manufactured reality television contestants, that extends a helping hand through corporate subsidy and bailout only to the rich, that destroys the ecological substance of life and subjects much of the organic world to bondage, that thinks nothing of wrecking countries for generations so long as there's a buck to be made, and which at the slightest dissent and protest batters down with great force and vigour through coercive state power.

Many a moniker has been articulated in the last 30 odd years to describe the ever closer approximation of our world to this vision.

Permit me to add one more.

Serfdom.

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About the Author

Mark Beljac teaches at Swinburne University of Technology, is a board member of the New International Bookshop, and is involved with the Industrial Workers of the World, National Tertiary Education Union, National Union of Workers (community) and Friends of the Earth.

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