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How Decades of Neoliberalism Led to the Era of Right-Wing Populism

Right-wing neoliberalism’s assault on the very idea of society laid the groundwork for today’s right-wing nationalist backlash. But the Left’s hands aren’t entirely clean either.

Milton Friedman speaks on May 9, 2002 during a White House event in Washington, DC. Alex Wong / Getty

In the heated year of 1968, the Chicago economist and Nobel Prize winner George J. Stigler jotted down some thoughts on how to introduce the “price system” into the process of democracy. Stigler had been one of Milton Friedman’s closest friends and part of his neoliberal “thought collective” since its inception. Both men participated in the first meeting of the Mont Pèlerin society in 1947, one of the founding events of the neoliberal movement. In the following decades, the two Chicago economists made vital contributions to what, according to Wendy Brown, became the overriding objective of the worldwide neoliberal agenda: “the economization of all features of life,” a project that sought to substitute the price system for more political forms of collective decision-making.

Stigler proposed a particular mode for this “economization.” He had already previously provided cost/benefit models to, for example, probe the “optimal” rate of car accidents or to ask if it would be more optimal to bomb Japan “continuously” or “discontinuously” in war time. From that point of view, shouldn’t we also view democracy itself as having a “cost” and needing to be run in the most efficient way? The cost of periodic elections, Stigler thought, was generally too high and “distracting” with all its “unnecessary campaigns.” Unlike in a private company, the terms of employment for elected officials were limited in time. “The costs of ‘rehiring’ elected officeholders,” he argued, were excessive and superfluous as long as voters were satisfied with their elected officials. Perhaps surprisingly, the “abandonment of periodic elections” became for Stigler a more rational way of organizing political representation, bringing it into closer alignment with “orderly economic life.” It was always “costly to discover, examine, and train a new worker, and the worker finds it costly to discover, explore, and move to a new job,” he followed. Why not, as in the private sector, “adopt the rule of indefinite tenure?” With a presidential term understood as a simple employment contract, a president could then stay in power as long as his employers — read, citizens — want him there. Voters, Stigler proposed, could call an election by means of a petition requiring one-tenth of the electorate to sign on. In today’s demographic terms, this would represent more than 20 million voters.

Furthermore, to avoid an excess of elections (“excessive” democracy could easily degenerate into totalitarianism), Stigler added that “the petitioners for a new election would pay its costs to the state.” This “introduction of the price system” into the democratic process would allow for it to “become responsive to the desires of the electorate and the costs of elections.” Implementing such a system would, of course, imply a very strict containment of politics and democracy, making even elections difficult to organize; considering the “cost” of an election, only the wealthy or corporations would then have the resources to contest elected officials. “Politics” in the classical sense would thus be, to take Hayek’s expression, “dethroned,” making the vast majority of citizens unable to shape the social order collectively.

Following on her earlier study of neoliberalism (Undoing the Demos, 2015) political theorist Wendy Brown’s newest book, In the Ruins of Neoliberalism, focuses on this neoliberal effort to dismantle the political and the social and how that project has laid the groundwork for the rise of antidemocratic politics in the West.

Neoliberalism’s Frankenstein

A lot has happened in between those two volumes, however. History, as Marx once wrote, never follows a linear evolution, but is always made of downturns and accelerations. For a political theorist, the four years that separate these two studies look more like a century. Trump and Brexit alone constitute two of the most remarkable evolutions in contemporary politics since neoliberalism’s political triumph. In the light of these developments, Brown tries to understand how what she calls “neoliberal rationality” prepared the ground for these “antidemocratic forces” to rise. Going “beyond” and even “revising” some of her earlier arguments, she takes a closer look at how the “neoliberal mode of reason” generated something that is indeed “radically different from the neoliberal utopia of an inegalitarian liberal order in which individual and families would be politically pacified by markets.” Brown tries to explain how, while central proponents of neoliberalism themselves probably did not envision or aim at our political and economic present, their ideas and reforms worked as an excellent “fertilizer” to nurture it. Trump, whose rule appeals to nihilism, fatalism, and resentment, and relies on an antidemocratic alliance between “business and moral-religious traditionalists,” is thus not to be understood as neoliberalism’s intended creation but its “Frankenstein.”

Relying partly on Melinda Cooper’s brilliant study of the neoliberal-social conservative alliance, Family Values, Brown shows how in Hayek’s work, morals, and markets constitute, together, the foundations for freedom, both being “organized spontaneously and transmitted through tradition, rather than political power.” The decentralized and impersonal signals of the market replace collective political deliberation, and traditional morals constitute an appropriate substitute for “society” conceived as organized common pursuit. Both are “spontaneous orders” rather than “designed” purposes that would put us on the slippery slope of “unlimited democracy.” In neoliberalism, morals function as a useful alternative to the social and the political by deflecting challenges to traditional inequalities and hierarchies that could distort the proper functioning of markets.

Brown admits that her initial focus on the drive to economization failed to address how neoliberalism’s violent charge against the very notion of “society” or “politics” has reshaped our societies. “Dismantling society” and “dethroning politics” constitute in this framework the two central components of the “moral-political” project that opened the path to what Brown calls the “return of the repressed.” By using markets and morals to erase the very notions of popular sovereignty, the social, and social justice, neoliberalism provoked the rise of an “enraged” form of majority rule, characterized by far-right nationalism and religious fundamentalism, freed from any form of civil norms, and fueled by resentment. Trump is thus not caused by neoliberalism, but was produced in the “ruins” of it. Out of its remains erupted these ferocious “social and political forces that the neoliberals once opposed, underestimated, and deformed with their de-democratizing project.”

Brown’s stimulating account nevertheless suffers from her focus on the conservative bent neoliberalism took in the eighties, underestimating the Left’s contribution to the acceptance, development, and spread of neoliberalism. While she occasionally seems to acknowledge that the notion of “the social” and a certain conception of political deliberation vanished from the Left as well during that period, this theme plays a marginal role in her story. And yet we know from Daniel Rodgers’s intellectual history of the late twentieth century how the Left contributed to a shift in American thought in which traditional ideas of collective concerns and institutions were unhinged and replaced by a more fractured and individualized way of thinking about society that emphasized choice, agency, and performance, and came to rely on the metaphor of the market. Nancy Fraser has likewise pointed to the disappearance of New Deal–style social democracy and its replacement by a “progressive neoliberalism” that specifically “hollowed out working-class and middle-class living standards” while promoting, at the same time, the “mainstream currents of new social movements (feminism, anti-racism, multiculturalism, and LGBTQ rights) on the one side, and high-end ‘symbolic’ and service-based business sectors (Wall Street, Silicon Valley, and Hollywood), on the other.” This convergence between left and right unfolded on a number of terrains of political thought and practice that are all ignored in In the Ruins of Neoliberalism.

The Consumer Trumps the Citizen

Part of the problem in Brown’s account is her restrictive understanding of how neoliberalism understood its relation to “popular sovereignty.” In her account it seems essentially a conservative project. But she fails to recognize that it encompassed an alternative vision of the good society that could easily be appropriated into a progressive outlook. Most importantly, the neoliberal attempt to curtail traditional notions of democracy went hand in hand with the invention of a new, positively framed, and supposedly superior notion of “market democracy” that drew on the idea of consumer sovereignty. By drawing a direct parallel between choice in the marketplace and at the ballot box, neoliberals portrayed sovereign consumers’ daily “voting” on the marketplace as a superior solution to securing the representation and participation in sociopolitical processes for the individual citizen. This is a solution that supposedly allows for individual choice unbound by the will of the majority and seeks to limit and ultimately replace traditional institutions of political democracy with those promoting the dynamics of market capitalism. In the words of Milton Friedman:

When you vote daily in the supermarket, you get precisely what you voted for, and so does everyone else. The ballot box produces conformity without unanimity; the marketplace, unanimity without conformity. That is why it is desirable to use the ballot box, so far as possible, only for those decisions where conformity is essential.

Alongside other notions appealing to personal freedom (think the “entrepreneur of the self”), consumer sovereignty provided neoliberalism with popular appeal and legitimacy. Central here was of course the idea that the good society is to be created through market mechanisms rather than through the traditional institutions and mechanisms of the welfare state.

Today, this idea is arguably widespread on the Left, too — not only because the Left failed to develop an alternative to neoliberalism, but also because it actively embraced and helped disseminate neoliberalism’s “progressive ideas,” such as applying consumer sovereignty to various societal contexts.

In the discipline of economics in the postwar era, leftist and centrist scholars such as Kenneth Arrow and Anthony Downs contributed just as much as Milton Friedman and George Stigler to the new trends of elevating consumer sovereignty into the only norm according to which societal well-being can be measured, reworking the ideal of traditional political democracy by interpreting it through market metaphors, and challenging the role of the state as a collective decision-maker and social planner.

In politics, center-left parties in the 1990s not only followed in the footsteps of their neoliberal predecessors by privatizing state-owned companies to further individual choice, but went a step further by reforming the public sector itself, modeling it after the market in portraying the citizen as its “customer,” thus recasting political democracy as a mechanism of choosing between available products or goods.

In the realm of cultural critique, it was intellectuals from across the political spectrum including Tom Wolfe, Marshall McLuhan, Jürgen Habermas, and Roland Barthes who in the 1960s broke with a long tradition of worrying about the deleterious effects of mass consumption and began to view the dynamics of the market in a more positive light, emphasizing the elements of pleasure, play, and symbolic exchange as the essence of a vibrant and potentially liberating and individualizing consumer culture.

Marketizing Equality

Another result of the Left’s embrace of market thinking has been a notable marketization of equality. Indeed, the sanctity of the price mechanism for neoliberals was not, as Brown suggests, anti-egalitarian per se; indeed, it would gradually find many proponents within the Left. Against a vision in which social institutions and political deliberation would be placed at the core of the idea of equality, through the socialization of wealth and generous public services or social security, a new perspective arose, centered on ways to redistribute wealth while preserving the price system as the central tool for allocating resources in society. By the mid-fifties, as historian Peter Sloman has argued for the British context, something that could be called “redistributive market liberalism” slowly displaced approaches to social justice focused on “wage bargaining, contributory insurance, and social services” in favor of a vision in which “poverty and inequality are best alleviated through income transfers rather than through direct intervention in labour and product markets.” A new generation of economists, including people like Anthony Atkinson, who basically created the field of inequality in economics, would come to see public-service based social policies as less efficient ways to tackle poverty than direct transfer payments.

Contrary to what Brown suggests, Friedman himself wasn’t at first hostile to equality. His main criticism until the late fifties did not concern the fact of redistribution per se, but the tools used to reach it. He admitted to having “strong egalitarian leanings,” but thought that “the major fault of the collectivist philosophy” “is not in its objectives” but rather “in the means.” “Failures to recognize the difficulty of the economic problem of efficiency” he continued, “led to readiness to discard the price system without an adequate substitute and to a belief that it would be easy to do much better by a central plan.”

This displacement was not just a technical matter, however. The shift from one vision to the other entailed not only a change in the understanding of equality but also in the importance attached to politics in shaping the social order. While social institutions and public services are submitted to public deliberation and represent a way for society to collectively shape its own destiny, reducing social policy to cash transfers “hollows out” equality from any kind of collective deliberation. It preserves equality as a moral horizon but restricts it as a political space. This shift was obviously part of the Third Way’s program of “progressive neoliberalism” in the 1990s. Blairites were to a certain extent concerned with redistribution — though generally limited to poverty-reduction rather than a broader attack on inequality — while at the same time promoting the expansion of markets at the global level and introducing New Public Management–inspired public sector reform in a domestic setting. Both were enacted in the name of consumer sovereignty, alongside promises of individual freedom and autonomy.

As Brown correctly remarks, part of this success is probably due to how neoliberalism was able to radically limit our conception of normativity and coercion. In the postwar period, economists were extremely effective in popularizing the idea (first invented in the 1930s by neoliberal economist Lionel Robbins) of economics as a “value-free” science that should only inform us on the choices we have rather than “normatively” deciding for us. Economics had to distance itself from any notion of the “good life” or moral philosophy, any shared Aristotelian telos. Coercion and normativity in this setup is then essentially a problem of any policy that tries to define collective norms or institutions aiming at implementing things such as “social rights.” The role of economics would then essentially be, as Friedman put it, maximizing the “effective freedom” — understand “choice” — “of individuals.” While this redefinition became an excellent opportunity for the conservative right to, as Brown suggests, “[cast] principles (and law based on them) of equality and inclusion as tyrannical political correctness”, it had also its effect on the Left — whether in the Third Way’s embrace of “equal opportunity” against “equality of conditions” or, in the realm of social and political theory, visible in the anti-statist turn taken by the New Left in the late 1960s.

The Anti-Statist Left

In Hayek’s “dethronement of politics,” scholars like Michel Foucault, Pierre Clastres, Antonio Negri or, more recently, James C. Scott seemed to have found a way to “cut off the head of the king.” Highly critical of the “old left,” of the “labor centered” defense of full employment, social security “biopolitics,” or the state-centered conception of social change, this intellectual left would find elective affinities with the decentralized and impersonal signals of the market as an alternative way to think about power and resistance. In the search for alternative ways of conceptualizing social change outside the sovereign model — meaning outside majority rule and the conquest of state power — they sometimes saw, along with neoliberals, the state as the primary, or worst, kind of coercion.

If in the early twenties, the lawyer and economist Robert Lee Hale had legitimated the New Deal by arguing that coercion was a constitutive part of economic life under capitalism, not limited to purposeful, deliberate action by an institution, by the seventies several social theorists within the Left would be unable to provide a theory of coercion that also addressed the workings of the market. We can find an illuminating portrait of how social security institutions shape our relation to ourselves in Foucault, and of how “seeing like a state” leads to mass standardization in Scott. But none of these authors were able to make us think substantively about how coercion and normalization are not just the products of centralized institutions and do not simply disappear when those institutions do. In fact, they implicitly shaped an intellectual framework in which the market appears less as a way in which norms are imposed than as a more effective space for subverting them.

Hadn’t Friedman himself famously depicted the market as a genuine “system of proportional representation” protecting the preferences of minorities through its “absence of coercion”? In the market, “each man can vote” he argued, “for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit.” Producing conformity without unanimity, the marketplace could potentially also be a less coercive space for experiments in alternative lifestyles. This often took the form of alternative modes of consumption, offering ways to enact “social change” through individual and ethical choices.

Implicitly and explicitly, part of the Left participated in spreading this false dichotomy. The postwar welfare state was heavily normative and aimed to shape family structure around the male breadwinner and the Fordist factory worker. But by definition, and this is perhaps one of the key intellectual tasks for us today, all policies — whether statist or neoliberal — are normative. If we decide to grant everyone a basic income instead of free health care, we substitute a certain normativity (which defines certain subjects through certain “social rights”) by another (who makes “individual choices” in the market the priority). The market did not lead to a less normative society, but just one where the grip of normativity was even more unequally distributed.

The Left’s abandonment of the project of imagining and building collective institutions devoted to creating the good society is a crucial component of our present situation. It’s in the void left by “progressive neoliberalism” that the Trumps of the world prosper. In other words: If Brown is right to point to neoliberalism’s failure in getting rid of the political and the social, she captures only half of the picture..