The deepening recession has thrown free-market fundamentalism, otherwise known as neoliberalism, into a profound crisis. Before the crisis, David Harvey submitted the doctrine to a withering critique in A Brief History of Neoliberalism. Harvey’s book is the most accessible and succinct overview of neoliberalism as an ideology and economic practice yet written. It lays out the origins of the ideas, the devastating impact it has had on labor in both the advanced and developing world, and how it deepened crisis tendencies within the system.
Neoliberalism rose to dominance out of the crisis the world capitalist system entered in the 1970s. Up until then, the capitalist class had struck a class compromise, in Harvey’ words, of “embedded liberalism.” Capitalist classes believed that Keynesian economic policies, including redistribution of wealth within the system, guaranteed strong and sustained growth.
By the 1970s, when high inflation and economic stagnation engulfed the system, the ruling classes opted to abandon the compromise and to shift to an open class war on labor—in order to restructure the system to restore capital accumulation.
Over the course of the 1970s, they turned to a group of anti-Keynesian intellectuals to supply a new set of ideas. From the University of Chicago, future Nobel laureate Milton Friedman had laid the foundations of what would become neoliberalism. Friedman and the “Chicago Boys” advocated the liberation of the market from the state as the best way to ensure both freedom and economic growth. They pushed for privatization, deregulation, and the battering down of barriers to international trade. By the 1990s, such ideas had become the so-called “Washington Consensus” that dominated bourgeois economic policy.
In his survey of its international impact, Harvey argues that neoliberalism certainly transferred enormous wealth to the capitalist class from workers and peasants, but it did not bring about a new age of economic growth.
In fact, according to Harvey, neoliberalism failed to accomplish the “expanded reproduction” of the system through greater investment in plant and machinery, but instead concentrated wealth through what he calls “accumulation through dispossession,” a concept modeled on Karl Marx’s description of capitalism’s “primitive [initial] accumulation of capital”—a process that involved throwing European peasants off the land, enslaving Africans, and looting the Americas.
Harvey argues that “accumulation through dispossession” has continued since then in various ways. Its new forms in the neoliberal period include structural adjustment programs imposed by the International Monetary Fund (IMF). Importantly, he argues that while the U.S. capitalist class pioneered such practices at home, it did not simply force them on the rest of the world. The U.S. found capitalist classes that were very happy to enrich themselves at the cost of their own populations.
Harvey shows the impact of neoliberalism in case studies of a wide variety of countries from the U.S. to Britain, Sweden, Mexico, Argentina, South Korea, and China. In each, he shows how capitalists restored their power, concentrated wealth in their hands primarily through dispossession, and immiserated their populations—but failed to sustain overall high growth rates comparable to the period of “embedded capitalism.” Instead, much of the growth came at the expense of competitors.
Harvey also draws on radical economist Karl Polanyi to show how neoliberalism produces contradictions between its stated ideas and practices—restricting freedom and democracy in order to restore class power. “The neoliberal state,” he writes, “will resort to coercive legislation and policing tactics (anti-picketing rules, for example) to disperse or repress collective forms of opposition to corporate power.” Most dramatically, the Chilean dictator Augusto Pinochet came to power through a coup against a democratically elected leader and imposed the Chicago School’s ideas at gunpoint.
While the Chilean example is extreme, other countries also illustrate the point: major economic decisions are reserved for unelected and unaccountable bureaucrats like the U.S. treasury secretary; privatization of government-controlled programs and institutions robs people of even the illusion of democratic accountability; and the IMF and World Bank have imposed structural adjustment programs on entire nations against the will of their people.
Harvey’s book is an important contribution, but it is not without weaknesses. He presents a rosy picture of embedded liberalism, exaggerating the influence of the working class on the state and also the impact of Keynesian policies on the economic boom of the 1950s and 1960s.
While workers were certainly able to win social reforms during the boom, the state was still capitalist in nature, and when workers went beyond permissible boundaries, it cracked down on them viciously. Moreover, as Marxists in the International Socialist tradition have argued, Keynesianism failed to end the Great Depression and was not responsible for the postwar boom. That boom was the unintended byproduct of super-power imperialism—the permanent arms economy.
Harvey also downplays the expansion, however uneven, of the system over the last thirty years. While some areas of the world have stagnated and others have lurched backwards, there is no doubt that the advanced capitalist economies—and an assortment of developing countries, especially Brazil, Russia, India, and China—experienced substantial booms, achieving, in Marxist terms, “expanded reproduction.”
Harvey wrongly reduces this expansion to accumulation through dispossession. While he has certainly identified one of the key dynamics of the neoliberal boom, what some call “the destruction of the commons” through privatization of things like public lands and state programs, there are a few problems with this concept.
First, the term is too broad. He lists four features of accumulation through dispossession: privatization and commodification; financialization; manipulation of crises; and state redistribution to the rich. The concept is so broad that it loses its specificity. For example, commodification—the transformation of the Earth into things for sale—is a permanent feature of capitalism, not something specific to the neoliberal era.
Secondly, he argues that these mechanisms form a central pillar of growth in the neoliberal period, essentially through plunder of the workers—especially workers and peasants in the developing world. He repeatedly characterizes this as a “tribute” from the Third World to the First World. This is a distortion. As Paul Hirst and Grahame Thompson show in Globalization in Question, the primary expansion of the system has come through trade and investment within the so-called triad—the U.S., Europe, Japan/China, and the countries grouped around each of them. If anything, whole sections of the Third World have been cut out of the circuits of capital.
Thirdly, he draws overblown conclusions about a practical program for the left. Harvey argues that accumulation through dispossession produces different conditions for struggle than expanded reproduction does, and claims that the proletariat can no longer play the role that Marxists have ascribed to it as the leading revolutionary class.
In reality, however, capitalism is still dependent on proletarian labor for its profits. The proletariat is larger and more globally interconnected than ever before, and it is still the class with the interest and power to overthrow capitalism and build socialism. As Marxists have long argued, the working class must take up all the demands of all oppressed groups and classes, including those impacted by accumulation through dispossession, in order to weld together a mass movement for socialism.
With these criticisms and reservations, Harvey has still done the left a great service in laying out a clear, concise, and provocative history of neoliberalism, one that can help educate a new generation of radicals and revolutionaries.