A terrible system: now what’s the alternative?

Labour Hub Editors

AUGUST 26, 2024

Mike Phipps reviews The Invisible Doctrine: The Secret History of Neolberalism (and How It Came to Control Your Life), by George Monbiot and Peter Hutchison, published by Allen Lane.

Is there anything new to say about neoliberalism? It depends, of course, on how you define the capitalist mode of production that it’s based on. Monbiot and Hutchison have a distinctive definition:

“Capitalism is an economic system founded on colonial looting. It operates on a constantly shifting and self-consuming frontier, on which both state and powerful private interests use their laws, backed by the threat of violence, to turn shared resources into exclusive property and to transform natural wealth, labour and money into commodities that can be accumulated.”

The rest of the chapter illustrates this process, beginning with Portuguese colonisation and exploitation from the 15th century onwards.

Global looting allowed countries to stoke their own industrial revolutions at home. One analysis suggests that Britain, over 200 years, extracted from India alone an amount of wealth equivalent to $45 trillion in today’s money. The process continues today in different forms: an estimated trillion dollars a year flows out of poorer countries, through tax evasion and the transfer of money within corporations.

Monbiot and Hutchison take us through the history of neoliberalism from its origins to its global hegemony from the 1980s on. For all the attempts of Bill Clinton and Tony Blair to articulate a ‘Third Way’, this was “little more than a rhetorical device to justify and disguise the capitulation of the left.” Deregulation, privatisation, the weakening of organised labour and the welfare state have continued with little interruption since. In many countries, these ‘reforms’ have been imposed by force.

With increasing privatisation, the opportunities for getting unearned income – rent – have soared. This process reinforces itself, which the authors illustrate with the example of the ending of student grants in many countries. Instead, reliance on loans and the accumulation of debt forces students to restrict their career options, turning to the corporate world for higher salaries, rather than considering public service.

Governments – Keir Starmer’s is the latest example – are in thrall to powerful wealthy elites and shun redistribution, hoping to fund public services through growth. Not explored here are the compromises – environmental, especially – that such a strategy entails.

The impact of neoliberalism on democracy is also a huge cause for concern. The shift in power from elections and parliaments to corporate lobbyists, trade treaties and offshore tribunals has created a crisis of representation, opening the path to cynicism and authoritarianism. Economic and political liberalism are increasingly in conflict.

Trump may have promised to “drain the swamp” of political lobbyists in 2016, but in office he became their tool, particularly of ‘dark money’. In fact, neoliberalism has a history of finding populist figures – even clowns, such as Italy’s Berlusconi, Argentina’s Milei or our own Johnson – to whip up a smokescreen for its ruthless agenda.

Meanwhile, behind the scenes, unpopular lobbies increase their power. One feature of this is the ‘polluter’s paradox’, whereby the most damaging anti-social companies invest most in political lobbying, because they are the ones most likely to face the heaviest regulation in a democratic system; in the process, they come to dominate politics. This helps explain the  “sustained failure by wealthy and technologically advanced governments to prevent our rush towards disaster.”

Neoliberalism’s extreme individualism also attacks our mental health. It undermines community and social connection, reducing relationships to transactions, increasing loneliness, isolation, anxiety and alienation. In 2021, 100,000 people in the US died by drug overdose, a fivefold increase in a decade.

Unsurprisingly for someone of Monbiot’s background, it’s the ecological impact of neoliberalism that gets the strongest condemnation. The book is excoriating on the global exploitation and destruction of nature, the outsourcing of pollution to places where political resistance is weakest and the way the richest countries have poured money into closing their borders to people fleeing climate breakdown.

When neoliberalism fails, it fails big. An example is the 2008 financial crash, fuelled by the commodification of risk, specifically in the US sub-prime mortgage market. But when the system crashes, it turns inexorably to the state for bailouts.

Neoliberalism has been failing for some time: the problem is there is no clear alternative. The authors are right to counterpose cooperation and community to selfishness and atomisation, but that’s a bit abstract. As long as the core feature of the current economic system is the generation of economic inequality, then political democracy and social solidarity will continue to be subverted. Small steps in the right direction, like participatory budgeting and other ideas mentioned in my review of Grace Blakeley’s Vulture Capitalism, are welcome, but they fall well short of constituting a genuine alternative.

Society is ripe for change and this book tries to end on a hopeful note. But I couldn’t help feeling that a lot more work needs to be done on alternatives to neoliberalism if we are really to move in the right direction.

Mike Phipps’ book Don’t Stop Thinking About Tomorrow: The Labour Party after Jeremy Corbyn (OR Books, 2022) can be ordered here.