Tag Archives: neoliberalism

Austerity, Health, Working

Why Austerity Kills

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I think COVID-19 has made all of us realise just how deadly austerity is, but The Body Economic by David Stuckler and Sanjay Basu should be required reading for its death-dealing potential outside of pandemic conditions.

Please, can we not go backwards after this.

I am often nervous about anything that draws parallels too strongly between society and body, policy and medicine. But I think they do it really well here.

Austerity is medicine intended to reduce symptoms of debts and deficits, and to cure recessions. It cuts governmnet spending on healthcare coverage, assistance to the unemployed and housing support. At the start of the trial, its potential side-effects were not well understood (ix).

There is a wealth of work on the social determinants of health such as Marmot‘s review — there is nothing so new here but yet it can’t be repeated enough it seems.

Good health doesn’t start in hospitals and clinics; it starts in our homes and our neighbourhoods, in the food we eat, the air we breathe, and the safety of our streets. Indeed, a top predictor of your life expectancy is your zip code. (xi)

They study the impact of the economy on health and find that it is not recession but austerity that impacts it most negatively. ‘Recessions can hurt,’ they write, ‘but austerity kills (xx)’. Even the IMF has recognized this, reversing previous policy, writing that ‘austerity slows down economies, worsens unemployment, and hampers investor confidence.’ Yet how little has changed.

This book consists of chapter after chapter of evidence pulled from around the world (I love this scope around the world…) where divergent paths can be seen and tested to some degree, starting with the Great Depression in the US. States implemented the New Deal very differently, states taking fullest advantage of government supports and providing social services showing mortality rates far below those states which did not. They move on the the post-communist mortality crisis–which I am humbled to say I had never heard of. The authors show that the huge rise in mortality in men — the awful, heartrending rise in mortality — took place wherever in the former Soviet Union they pushed Shock Therapy, ‘a radical package of market reforms’ designed to push the transition to capitalism as quickly as possible. Primarily Harvard economists were behind this: Andrei Shleifer, Stanley Fischer, Lawrence Summers and Jeffrey Sachs. Russia, Kazakhstan, Kyrgyzstan followed this advice. Stiglitz was on the other side of this argument, pushing for gradual reform, Belarus, Poland and the Czech Republic followed this path.

The austerity imposed through shock therapy did not just cause a spike in mortality, it also significantly slowed economic recovery — even by its own justification (if there could be such a thing causing so many deaths), it failed. Milton Friedman himself admitted Stiglitz was right.

Another chapter on East Asia, again showcasing the deaths caused by IMF imposed austerity in Thailand, South Korea and Indonesia, as compared to Malaysia where austerity was resisted. Heartbreaking again.

On to the ‘Great Recession’, the approach taken by Iceland prosecuting bankers rather than imposing austerity. Quicker economic recovery, fewer deaths. Compare this to Greece. Compare this to the US, where they write:

A 2009 study found that people who lack medical insurance were 40 percent more likely to die prematurely than those who had it. During the great Recession, before the PPACA came into effect, there were approximately 35,000 avoidable deaths due to the lack of healthcare insurance (99).

People were dying, and at the same time

Profits of health insurance companies soared…In 2009 the top five US health insurance companies reported $12.2 billion in profits, a staggering increase of 56% over the figures for 2008. In 2009, a year that saw 2.9 million people lose coverage, insurance companies’ profits rose by 56 percent (101).

I haven’t read Kenneth Arrow, Nobel prize-winning economist, but he wrote in a 1963 paper that markets ‘often fail to deliver affordable, high-quality healthcare‘ (101). What they do instead, is make some people a whole lot of money.

Stuckler and Basu move on to Italy, the protests of the vidove bianche, or white widows of the increasing numbers of men committing suicide after losing employment. This opens a chapter on suicide and its connections to work, the ever increasing numbers of primarily men killing themselves after the imposition of austerity around the world. The way that governments, as they have done here in the UK, averaging out the numbers of deaths erase the spikes that demand attention.

From work to housing… They look at the unprecedented rise of the West Nile Virus during droughts, ultimately it was discovered that this had been caused by the foreclosure of homes and the breeding of mosquitoes in neglected pools. As an aside, West Nile Virus is a pretty terrifying disease.

This is not the only cost to health from the housing and foreclosure crisis. Housing is a precondition for good health — to be without it is to be among the most vulnerable groups.

People without homes tend to die forty years earlier than those with a roof over their heads. They often suffer from a raft of health problems and lack adequate access to healthcare. In addition, the homeless are at high risk of contracting infectious diseases like TB, which can then spread to the rest of the population. Poor health and homelessness are so closely linked that it is difficult to ascertain which came first, but the public health outcome is the same: a huge increase in the risk of death and avoidable suffering (127).

They describe people skipping medicines to be able to pay mortgages, a rise in hospitalisation leading to increased medical debt leading to increased likelihood of foreclosure. They write that the rise in foreclosures in communities strongly correlated to a rates of emergency room visits.

Heartbreaking.

Ultimately austerity has failed because it is unsupported by sound logic or data. It is an economic ideology. It stems from the belief that small government and free markets are always better than state interventions. It is a socially constructed myth–a convenient belief among politicians taken advantage of by those who have a vested interest in shrinking the role of the state, in privatizing social welfare systems for personal gain. It does great harm–punishing the most vulnerable, rather than those who caused this recession (140).

Well said. These are their recommendations:

To break the cycle of radical austerity programs, we need a New New Deal…To work, it must follow three key principles:

1. “First, do no harm” is the ancient higher law of the healing professions. Because social and economic policies have collateral effects on health and sickness, the doctors’ mantra should become a requirement for all such policies.

2. Help people return to work: In hard times, having a stable job is often the best medicine. Unemployment and the fear of unemployment are among the most significant drivers of poor health that people face in an economic crisis (143).

3. Invest in Public Health (144)

Stuckler, David and Sanjay Basu (2013) The Body Economic: Why Austerity Klls. Recessions, Budget Battles, and the Politics of Life and Death. NY: Basic Books.

Books, Building Social Spaces

Nabeel Hamdi’s Small Change

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8739095A wonderful book on creating place — it resonated so much with all I have learned in years of working and planning with community, and it is so good to see so much of it thoughtfully consolidated and codified. Especially in such different contexts.  It calls to some extent on popular education figures I know like Freire and Illich, but to a much greater extent on figures from the development and planning world who I do not yet know and am looking forward to meet.

My principle critique is how this deals with neoliberalism — and I do not join the voices who critique this kind of approach as in itself neoliberal. I think this is how change has to happen, with people owning it, transforming themselves as they transform their lives and take power over their communities. That said, it is up to us I think to help people see how this connects to more fundamental overturnings of unjust power relations. He has this lovely quote from Calvino (I don’t much like the rest of the book):

However, it is pointless to try to decide whether Zenobia is to be classified among happy cities or among the unhappy. It makes no sense to divide cities into these two species, but rather into a different two: those that through the years and the changes continue to give form to their desires and those in which desires either erase the city or are erased by it.
–Italo Calvino, Invisible Cities

We hope to create places that allow us to achieve our dreams. Instead, looking at the barren but massive new developments occurring in London (and elsewhere), it seems clear that the desires of capital are to erase the city of all that does not maximise profit — and thus erase the city itself. And us. We live our lives within these larger forces, and our lives are destroyed by them — so we cannot allow this small scale work to be coopted, rather ensure it is feeding the resistance against destruction. I won’t get started on his example of selling water.

Still, for early steps, for nuts and bolts, this is good (if this work is accompanied by a constant critical questioning of why this is our reality, how did it get this way, what is preventing us from changing it, how ultimately do we create lasting change):

development, like all human processes, needs designed structure with rules and routines that provide continuity and stability and that offer a shared context of meaning and a shared sense of purpose and justice. To these structures we ‘give up some of our liberty in order to protect the rest.’ The question facing practice is: how much structure will be needed before the structure itself prohibits personal freedom, gets in the way of progress… xvii – xviii

This is always the tension I think. I like the idea of ’emergence’ that runs through everything. Inspired by studies of slime molds which aren’t perhaps the most inspiring of creatures, I do love this idea of horizontality and networking and allowing things to emerge from the collectivity as they are needed (and have written about Emergence by Steven Johnson where much of this thinking comes from here — it contains many of the same issues I have with Hamdi and more…). At some point, of course, these horizontal emergings will run smack into the wall of hierarchical power which is rarely on the side of true ‘progress’. And they will have to fight. I believe they can, they are not necessarily subsumed into another level of support, bribed and coopted by such power that often made their organising necessary in the first place. But they can be. We are right to be cautious.

Still, back to what I liked and the thoughts driving the book:

intelligent practice builds on the collective wisdom of people and organizations on the ground — those who think locally and act locally — which is then rationalized in ways that make a difference globally. In the language of ’emergence’, ‘it’s better to build a densely interconnected system with simple elements and let the more sophisticated behaviour trickle up.’ In this respect, good development practice facilitates emergence, it builds on what we’ve got and with it goes to scale. xviii

And I love thinking, have been obsessing over, the importance of dense networks in all aspects of life and health.

Practice, then, is about making the ordinary special and the special more widely accessible — expanding the boundaries of understanding and possibility with vision and common sense. It is about building densely interconnected networks, crafting linkages between unlikely partners and organizations, and making plans without the usual preponderance of planning. It is about getting it right for now and at the same time being tactical and strategic about later. (xix)

I also find quite useful these precepts he gives us to remember and to guide practice (and to support those of us who work this way naturally in defending such practice in the face of those who much prefer structure, plans, controlled process and etc):

Ignorance is liberating

Start where you can: never say can’t
– ‘can’t because’ has to become ‘can if’, if we are to avoid paralysis given all the obstacles in the way (133)

Imagine first: reason later
— we are too often confined by our own experience — ‘Practice, and in particular practitioners who are outsiders, can reveal these other worlds and, in so doing, can disturb people into reconstructing their situation, bringing them to a new awareness of and, therefore, power that increases their freed — which is what development is all about.(134)

Be reflective: waste time

Embrace serendipity: get muddled

Play games: serious games

Challenge consensus
— Consensus gains the passivity of people not their active participation. It is in this sense exclusionary and encourages independence rather than interdependence. In encourages non-participation. (137)
— He quotes Kaplan — ‘creativity and life are the result of tension between opposites…[where] harmony is attained not through resolution bet through an attunement of opposite tensions… (138)

Look for multipliers
— Consensus planning looks for common denomibators. Instead, look for multipliers…ways of connecting people, organizations and events, of seeing strategic opportunity in pickle jars, bus stops and rubbish cans and then going to scale. It means acting practically…and thinking strategically… (139-140)

Work backwards: move forwards

Feel good

I particularly love that he challenges the consensus model. We are different, we do not always have to agree to work together or let important issues be subsumed or relegated to the future because we are a minority.

I also like this idea of outsider as catalyst for change, and how this change connects to wellbeing.

We have learnt that development is ongoing, a process in which occasionally and from outside, some form of intervention is useful to open up opportunities, to facilitate access to resources, to act as a catalyst for change. there is no beginning and no end, no single measure of progress, no primacy given to any one set of values, at least not on paper. Human wellbeing is as important to economic growth as growth is to wellbeing. We find that trust and mutual respect now feature as criteria with which to judge the appropriateness of projects. Interdependence, not dependence, is what we seek, between people, organizations and between nations. (15)

It is clear that process is more important here, a very interesting critique of planning and its modernist heroes, a support for those of us who oppose these kind of schemes:

The problem with these thinkers was not that they had a totalizing vision or subscribed to master narratives or indulged in master plannning. Their problem was not that they had conceptions of the city of the social process as a whole. Their problem was that they took the notion of thing and gave it power over the process. Their second flaw was that they did much the same thing with community. Much of ideology that came out of Geddes and Howard was precisely about the construction of community, in particular about the construction of communities that were fixed and had certain qualities with respect to class and gender relations. Once again the domination of things seemed to be the general flaw… (46, quoting David Harvey, Justice, Nature and the Geography of Difference)

I also like a snippet of Sennet, who I have never really struggled with (and my short-lived embarcation on one of his books was a bit of a struggle), but he discusses three forces that challenge mutual respect: unequal ability, adult dependency and degrading forms of compassion. ‘Respect,’ says Sennet, ‘is fundamental to our experience of social relations and self.’ (50)

I feel like that is one of the things poor people always fight for and never get and so this is the most obvious thing in the world, but few others understand it, much less respect people who are not of their class (or skin colour or gender or sexuality or…).

There are some interesting developments of different forms of community:

community of interest — issues of common concern or common advantage

Community of culture — more homogenous, shared values and beliefs, often need to be disturbed ‘in the interest of reshaping power relations…in our search for equity in gender relations, in democratizing government, in our emphasis on participatory planning and our notion of what makes good governance’  (68)

Community of practice, work — sharing a joint purpose over time becomes a bond — Capra notes the more developed and sophisticated networks are, the more resilient and creative. Hamdi writes ‘The sense of a city being alive resides in its communities of practice, as does its intelligence. (69)

Communities of resistance (term from West) created in face of external threat, times of social unease, or dominance

Communities of place

1. all communities spatial, but in cities this is more through networks, porous and not confined

2. place assumes more importance than space, particularly for vulnerable like elderly or disabled — security and accessibility precedence over use value or identity

3. there exists a relationship between place and identity, where place is often appropriated to empower community, coded

4. spatial sense of community can change over times of day and over time more generally

And I like these problematisations of the constant use of the word community, often masking its complexity:

Whatever the type, community is mostly an ideal in development that we evangelize, something good and worthy…but community can be as much a part of the problem as a panacea. (70)

The treatment of local areas as communities of homogenous interests, said Lisa Peattie, way back in 1968 ‘can result in severe damage to the interests of the weakest inhabitants’. There is an emerging consensus that we bypass the notion of community altogether in favour of a more direct link between household and civil society. (72)

Which means our work is to create an architecture of possibilities — I quite love that idea, especially in thinking how public life and public space come together:

As we set about planning we are, by now, cautious of pre-emptive community-building. Instead, we seek to build an architecture of possibilities in the broadest sense of the term and give this shape, spatially and organizationally. Later, we may attach to it rules or codes of conduct which we will develop with others… (73)

It is again working through how we balance structure and freedom, such a difficult thing but so rewarding when done right. Nabeel Hamdi quotes Capra again here:

The designed structures are the formal structure of the organization (city)… the emergent structures are created by the organizations’ (city) informal networks and communities of practice… designed structures provide the rules and routines that are necessary for the effective functioning of the organization…Designed structures provide stability. Emergent structures, on the other hand, provide novelty, creativity and flexibility. They are adaptive, capable of changing and evolving…The issue is not one of discarding designed structures in favour of emergent ones. We need both. (97 quoting Capra  The Hidden Connections)

More lessons about taking time, building slowly and surely …

Instead, in practice, we need often to act spontaneously, to improvise and to build in small increments. First, spontaneity, as a quality of practice, is vital because most problems and opportunities appear and disappear in fairly random fashion and need to be dealt with or taken advantage of accordingly. (98)

…and creating a community of learning that transforms those involved:

The community-based action planning workshops and events we had adopted served to offer an early insight into the organizational capabilities of community, the responsiveness of planners and government authorities to ideas, the appropriateness of standards, the potential for partnership and the resistance those in charge to adapt. They explored the willingness of people and their local organizations to disturb their habits and routines. They are vehicles for learning and for identifying institutional capabilities and training needs, as much as for getting organized, getting going and solving problems. (100)

So we return to practice, and these final thoughts capture for me what practice should be for committed intellectuals and ‘experts’:

the art of making things possible, of expanding the boundaries of understanding and possibility in ways which make a tangible difference for now and for later, making expert knowledge more widely accessible, turning it all into common sense and common sense into experts’ sense, coupling knowledge with power (Shovkry), creating opportunities for discovery (Chambers), finding creative ways of making one plus one add up to three or even more. (116)

Practicing is about opening doors, removing barriers to knowledge and learning, finding partners and new forms of partnership, building networks, negotiating priorities, opening lines of communication and searching for patterns. it means designing structures — both spatial and organizational — and facilitating the emergence of others, balancing dualities that at first seem to cancel each other out — between freedom and order, stability and creativity, practical and strategic work, the needs of large organization and those of small ones, top and bottom, public and private. (116)

The goal of becoming wise…I wish we taught more students this way, they are instead content to be clever. But then, so are most of their teachers.

This cycle of doing and learning, learning and doing, acting and reflecting involves a kind of ‘activist pedagogy’ which is systemic to becoming skilful and wise. The purpose them of teaching, given this setting, ‘is fundamentally about creating the pedagogical, social, and ethical conditions under which students agree to take charge of their own learning, individually and collectively, to create their own knowledge, much in the same way as later, in practice, we would expect people to take charge of their own development (127)

(Hamdi, Nabeel (2004) Small Change: About the Art of Practice and the Limits of Planning in Cities. London: Earthscan.)

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Books, Environment & Justice, Violence

Hollow Land: Israel’s Architecture of Occupation

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Hollow Land - Eyal WeizmanThis book is an investigation of the transformation of the Occupied Palestinian Territories since 1967. It looks at the ways in which the different forms of Israeli rule inscribed themselves in space, analysing the geographical, territorial, urban and architectural conceptions and the interrelated practices that form and sustain them. In doing so, it provides an image of the very essence of Israeli occupation, its origin, evolution and the various ways by which it functions.

Hollow Land is masterfully done as well. It is not a history or a detailed look at the current situation, but incorporates both into a study that instead does what Weizman calls ‘probing the various structures of territorial occupation’. His discussion of these structures is chronological, corresponding to different periods of occupation. It reads almost more like science fiction than Joanna Russ, who I was reading at the same time. It does not so much call upon Foucault or Deleuze and Guattari as exemplify them, and give them terrifying real world application. It is amazingly grounded and engaged, though the initial language put me off the tiniest bit. You think it will be theoretical and agonizingly abstracted from an unjust reality, but it is the opposite. There is so much here that makes you think about space and its connection to power and politics and war, but I personally am almost afraid to use it, as the situation it describes is unparalleled. The only thing I can relate it to is the murder and complete dispossession of Native Americans in the US and Canada. To relate it to less risks mocking the desperate violence and injustice of the occupation of Palestinian lands.

I am fascinated by the idea of elastic geographies, the way that borders and boundaries shift and change, the way that inside and outside are blurred. The State certainly has a level of power, but such boundaries are elastic because contested thus the actions of multiple actors comes into play:

‘Because elastic geographies respond to a multiple and diffused rather than a single source of power, their architecture cannot be understood as the material embodiment of a unified political will or as the product of a single ideology. Rather, the organization of the Occupied Territories should be seen as a kind of ‘political plastic’, or as a diagram of the relation between all the forces that shaped it.’

Spatial organization as a diagram of operating forces — a very cool way to think about space and power. He says elsewhere ‘The architecture of the frontier could not be said to be simply ‘political’ but rather ‘politics in matter’. This is a perfect connect to Lefebvre (who is never mentioned or cited — so many insights here appear to emerge organically from the subject, but in reviewing the notes and bibliography I found some absences rather curious), especially when he says things like

The various inhabitants of this frontier do not operate within the fixed envelopes of space – space is not the background for their actions, an abstract grid on which events take place – but rather the medium that each of their actions seeks to challenge, transform or appropriate.

Space is both the object of struggle and its product, it is both shaped by and shapes struggle.

I confess I did not know a great deal about the details of Israel’s occupation. While not written as a history, this gives you an incredible depth and breadth of view into the situation. It also challenges you to question liberalism itself, and joins in the growing body of literature critical of both liberal reform and foreign aid (and the ways these so often go together). He writes: ‘The history of the occupation is full of liberal ‘men of peace’ who are responsible for, or who at least sweeten, the injustice committed by the occupation. The occupation would not have been possible without them.’It also looks at the neoliberalisation of discourse: ‘Indeed, the bureaucratic infrastructure of the Oslo process sought to replace an ‘occupation’ with ‘management’. … In this way, Israeli-Palestinian interactions, which by the standards of international law were still performed within the framework of belligerent occupation, were depoliticized into a smilingly neo-liberal ‘service economy’, a mere business transaction.’ there is also the effort to make the situation seem a ‘natural’ rather than ‘political’ one, and the resulting policy effects:

‘Recasting the crisis in terms of ‘humanitarian politics’ was itself a political decision by the European and American donor countries; in doing so, they effectively released Israel from its responsibilities according to international law and undermined their own potential political influence in bringing the occupation to an end.’

The dallying of the IDF with radical and critical theory through their Operational Theory Research Institute (OTRI) was mind-boggling. That it came bundled in a chapter explaining the new Israeli practice of blasting their way through the walls of civilian homes to move around the refugee camps made it more sinister. Being a refugee is terrible enough, but for armed men to come blasting through your wall without warning? Terrifying. Pitched battles took place in living rooms, and people lived with these holes after the conflict, covering them over with shelves and etc. It all came to pieces in the end but wow. Here is Weizman to Naveh, one of OTRI’s directors:

I then asked him, if so, why does he not read Derrida and deconstruction instead? He answered, ‘Derrida may be a little too opaque for our crowd. We share more with architects; we combine theory and practice. We can read, but we know as well how to build and destroy, and sometimes kill.’

They go to look at Deleuze and Guatarri, rhizomes and war machines. Weizman continues

When I asked him if moving through walls was part of it, he answered that ‘travelling through walls is a simple mechanical solution that connects theory and practice. Transgressing boundaries is the definition of the condition of “smoothness”.’

Thus critical theory was divorced of moral content and socialist ideals, stripped down to its ability to disrupt and used both against the Palestinians as well as in power struggles within the Israeli military, allowing it to reinvent itself. Terrifying.

There is the banality of architecture and building construction with brutal consequences:

According to testimony from Machsom Watch, the tight turnstiles ended up causing more harm and chaos. ‘People got stuck, parcels got crushed, dragged along and burst open on the ground. Heavier people got trapped in the narrow space, as were older women and mothers with small children.’45 It is hard to imagine the cruelty imposed by a minor transformation of a banal, and otherwise invisible architectural detail, ostensibly employed to regulate and make easier the process of passage.

So much of interest around defining public and private, making and unmaking subjects, examining defense (against outside forces) as opposed to security (guarding from the enemy within). There is just so much in Hollow Land, I may well read it again.

My only (small) critique is that while Weizman emphasizes the multiplicity of actors responsible for the creation of space in the occupied territories, the role of Palestinian struggle only really emerges in the last chapter on Evacuations. Even where he emphasizes the ways in which Jewish settlers followed their own logics (to counterproductive results at times) and stated outright that Ariel Sharon didn’t mastermind the settlement process, the rest of the chapter (and perhaps the book) seems to prove that his finger was literally in every pie. In spite of its desires to the contrary, there is still some sense of overwhelming power and force that the last chapter doesn’t quite manage to overcome. Where are the points where hope is possible? Though I admit, given Israel’s latest round of assassinations and bombing of the Gaza strip even now, hope seems very far away.

[written back on November 6, 2012]

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Books, Pillars of Capitalism

Milton Friedman, hack

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Milton Friedman - Capitalism and FreedomMilton Friedman has constructed an airtight bubble of neoliberal thought where freedom is the greatest value, and everything makes sense and fits together rationally only because it has no connection whatsoever to any kind of historical context, much less the current social and political realities of our time. None. Period. It is as though neither history nor reality as it is experienced by the poor exist, an astonishing tour de force to explain why those with extreme wealth should feel happy and content and not the least bit guilty because exploitation really is to the benefit of all.

It depressed me to read this, and made me go back and give Hayek more credit. Much as I disagreed with him and was saddened by his reduction of all socialist thought to what was essentially Stalinism, I could at least see him grappling with the very real issues of our world with some kind of integrity.

There is no integrity here I’m afraid. Instead Friedman says absurd things like

“This is a role of inequality of wealth in preserving political freedom that is seldom noted — the role of the patron.” [17]

With these ideas he’ll never lack one.

“children are at one and the same time consumer goods and potentially responsible members of society” [33]

Consumer goods…I don’t even have a comeback to that one. Luckily I don’t need one.

“It is hard to see that discrimination can have any meaning other than a ‘taste’ of others that one does not share.” [110]

Good god, don’t get me started on his views on race and why white people shouldn’t have to interact with a Negro in their local store if they don’t want to.

How unions harm the world at large [124]. The end of child labour and the 8 hour day are enough to start with as a riposte I think…

The evils of requiring medical doctors to be licensed. [149] Yep. Apparently one in a thousand quacks is actually on to something, and licensing reduces their abilities to experiment [157]. But now I begin to see why we need a large pool of really poor people.

And of course, the old familiar and expected standbys lifted directly from this book into attempts at policy — the evils of public housing, minimum wage causing poverty (and sadly not in the correct sense that in the US working for minimum wage leaves you under the poverty line), social security as an invasion of our lives…and etc. To be fair, I did expect the unions are evil bit. But the rest was an enlightening surprise.

To cap it all off he writes

Humility is the distinguishing virtue of the believer in freedom… [188]

Believe me, the last thing this book is characterised by is humility.

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Pillars of Capitalism

Friedrich von Hayek: The Road to Serfdom?

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Friedrich von Hayek's Road to SerfdomFriedrich von Hayek is a huge figure in economics and of immense influence on neoliberalism, and reading this I was struck by just how deeply and completely neoliberalism goes as a theoretical framework. I know many would not agree with that (though many would), but Thatcher claimed him as her own and that is enough for me. There are also those conversations in the Mount Pelerin Society with Milton Friedman. It fascinates me that this resonance is true not just of the ideas, but also in the way language is used and in its underlying sense of victimisation, a sense that continues even as so many neoliberal policies have waxed victorious over Keynsianism across the world.

The Road to Serfdom was written in 1944; I found it so chilling to see the same arguments in so much vogue today used in the context of WWII, Hitler, and Stalin. The chill comes from the fact that so little of the rhetoric has changed in over sixty years, and that really, Hayek saw the world in the same stark black and white that George W. Bush did, and both benefited greatly from it. Below are what I believe to be some of the principle strands of thought found here that were entirely familiar with present day rhetoric:

  • Socialism inexorably leads to fascism, liberalism is the only alternative
  • Glorification of the individual but a fear of the masses
  • Necessity of limited democracy
  • Money as the measure of all things
  • Competition in a free market as the best regulator of society
  • Growing the total wealth rather than redistribution of wealth as the solution to poverty (trickle-down economics)
  • A return to ‘traditional’ individualist values
  • The sacredness of private property
  • The selfishness of organised labour
  • Necessity of government intervention to favour the market

What struck me most forcibly was undoubtedly this claim: “Few are ready to recognise that the rise of Fascism and Nazism were not a reaction against the socialist trends of the preceding period, but a necessary outcome of those tendencies” (p 4). This equation of socialism with fascism seems only to have grown through the years, you have only to witness the immense outcry against “Obamacare”. I wondered where the hell that came from, now I know.

Hayek sets Socialism up essentially as a straw man by first equating it with some brand of what I would call Stalinism (though I’ll never deny that too many calling themselves socialists supported many of these totalitarian ideas), and then insisting that any kind of government effort to achieve a more just world will lead to totalitarianism. To disagree with a critique of an Orwellian system of mind control is something I would never do; to claim that there are only two choices before us, totalitarianism or Hayek’s vision of liberalism, is equally absurd. But going back to the “Obamacare” debacle, that is clearly what many people think.

Hayek in some ways comes off as the more reasonable and kinder face of liberalism when you look through the ages; life for him is not brutal, nasty and short, and he insists that liberalism does not argue that all men are egotistic or entirely selfish (and I use ‘men’ deliberately, the only woman mentioned in the book is the poor plain girl with the futile wish to be a salesgirl in a shop). Men are simply limited in their knowledge and imagination, and it is impossible for them to agree on any but a handful of very general things. This agreement can never stretch to values of any kind. Sad but true.

Read on and there is a darker side to this. Side by side with the glorification of individual choice and freedom, there exists also the characteristic contempt for the masses. Hayek says on page 168:

Probably it is true enough that the great majority are rarely capable of thinking independently, that on most questions they accept views which they find ready-made, and that they will be equally content if born or coaxed into one set of beliefs or another. In any society freedom of thought will probably be of direct significance only for a small minority.

This of course means that any kind of mass movement requires organising the worst elements:”It is, as it were, the lowest common denominator which unites the largest number of people” (p 142). In spite of his statement that democracy cannot exist without capitalism, he wants it in its most limited form. He states tellingly: “We have no intention, however, of making a fetish out of democracy . . . . Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom. As such it is by no means infallible or certain” (p 73).

Thus it is not ‘the people’ who should ultimately control things, but something else. And again there is no room for alternatives here, there is only a stark choice between totalitarianism and the market (never mind that people control and manipulate the market in myriads of ways, just look at centuries of stock market scandal). Hayek argues that in claiming man’s ability to regulate his life and society, one “fails to see that, unless this complex society is to be destroyed, the only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men” (p 210).

Money becomes the measure of all things, the only way we can be motivated to our full potential and know what to value. He writes on page 129,

It is not merely that if we want people to give their best we must make it worth while for them. What is more important is that if we want to leave them the choice, if they are to be able to judge what they ought to do, they must be given some readily intelligible yardstick by which to measure the social importance of the different occupations…

This yardstick is salary. It is absurd to me that I should view a Wall Street trader as a thousand times more valuable to society than any teacher, fireman, nurse, or even the latest winners of the Nobel Prize in physics, but so Hayek argues.

Competition becomes the great regulator, the only possible regulator in the face of human fallibility. Hayek equates competition with justice in that neither favours one person over another, and success is based only on capacity and luck. Even he is forced to admit that this more true in theory than in fact given a system of private property and inherited wealth, but in spite of this, competition is the best we can hope for. And indeed, under a competitive system and with money as the measure of all things, we are able to find the perfect tool for recording all individual actions and guiding them, and that is prices.

So precise a tool is it, Hayek compares entrepreneurs to engineers watching the hands of a few dials and adjusting their activities to the rest of humanity. To rely on anything other than competition to regulate society, even for the best of ends, will inexorably result only in fascism as it substitutes a moral rule of law (controlled by a democratic majority and we’ve already seen where that will end given the lowest common denominator belief) for an arbitrary and predictable one. I’m beginning to understand the zealousness of neoliberalism’s proponents, it’s like a rewriting of the Lord of the Rings really, a saga of good against most absolute evil. And everybody hates fascism.

Rounding it up, we have trickle-down economics: “Perhaps no less important is that we should not, by short-sighted attempts to cure poverty by a redistribution instead of by an increase in our income, so depress large classes as to turn them into determined enemies of the existing political order” (p 214-15), and what is undoubtedly a good line: “It may sound noble to say: damn economics, let us build up a decent world–but it is, in fact, merely irresponsible” (p 215).

We have the return to traditional values:

If we are to succeed in the war of ideologies and to win over the decent elements in the enemy countries, we must first of all regain the belief in the traditional values for which this country stood in the past, and must have the moral courage stoutly to defend the ideals which our enemies attack (p 224).

The values are familiar too, as compassion and kindness are thrown out the window in favour of

independence, self-reliance, and the willingness to bear risks, the readiness to back one’s own conviction against a majority, and the willingness to voluntary co-operations with one’s neighbours (p 218).

Of course there is the sacredness of private property as the most important guarantee of freedom, not just for those who own it, but somehow for those who do not. Organised labour is bad and constraining capitalism only hurts everyone.

To the worker in a poor country the demand of his more fortunate colleague to be protected against his low wage competition by minimum wage legislation, supposedly in his interest, is frequently no more than a means to deprive him of his only chance to better his conditions by overcoming natural disadvantages by working at wages lower than his fellows in other countries (p 231).

I’ve read this so many times before it’s as though it has been copied verbatim into every report and article justifying the existence of exploitation around the world. The necessity of limited government intervention to favour the market is here too (which David Harvey would argue is one thing distinguishing neoliberalism from liberalism), as he argues strongly against a pure laissez-faire position, though you could argue that the interventions we have seen are rarely to make “the best possible use of the forces of competition as a means of coordinating human efforts”.

It’s not just ideas, but attitudes that have continued strong. The way that the right-wing always perceives itself as the underdog, as under attack. Hayek bemoans the fact that socialism is dominant while liberalism is in fact the motor of progress, so taken for granted that people can no longer recognise it. As he states, “It might be said that the very success of liberalism became the cause of its decline” (p 19). There might have been some truth when he was writing, but the rhetoric continues long after the years of Reagan and Thatcher completely turned it around.

There is also the same clarion call to sacrifice, “It is essential that we should re-learn frankly to face the fact that freedom can only be had at a price and that as individuals we must be prepared to make severe material sacrifices to preserve our liberty”, when the growing gap between rich and poor since these policies have become victorious make it so clear just whose sacrifice is required. It is hard to see why sacrifice should still be necessary after so many decades of it. The good times never arrived for most people I’m afraid.

The interesting things that don’t quite mesh with the neoliberal world today? He does admit that some kind of basic safety net may be necessary, even a good thing, as long as it doesn’t inhibit competition. There is also the railing against monopolies. Hayek argues that they also lead to totalitarianism, not quite purposefully but in effect. I think possibly he might not be happy with the giant corporations we see today, it’d be an interesting question and one I’d quite like to ask him. The outcome of policies self-described as neoliberal has, in effect, been the death of competition; I would claim that this is inevitable in a system where the only measure of value is wealth and the only regulatory mechanism is competition, but it would be interesting to hear Friedrich von Hayek’s response.

And the ultimate irony? He also states quite clearly that democracy works best in very small nations, smaller even than the UK…what would he make of America, the country which has done more to promote his views in theory than any other?

All this said, this book reads with a certain sort of integrity, written by someone who has struggled to some extent with ideas and how to bend them to create a better society. I only appreciated this after reading Milton Friedman.