Hegel Summer School 2006. Neo-Liberalism by Andy Blunden

“All that is Solid Melts into Air ...”

Ideology and Ethics

When you are asked to define a certain ideology you immediately come up against the following problem: that while at first sight there appear to be certain principles which define the ideology normatively, closer examination usually reveals that few instances of the ideology adequately conform to the norm. But the ideology acquires a certain coherence not so much because of shared theoretical principles, but because of its association with the consciousness of a social movement or shared conditions of life.

However, nothing could more be unsatisfactory in the critique of an ideology, than to criticise its social roots while refusing to engage it on the level of ideas, denouncing neo-liberalism as ‘bourgeois ideology’ as if that were a sufficient response to its claims.

Nevertheless, at the heart of any social movement or institution, and at the heart of any ideology, is some ethical principle, a principle about how we should live, and it is this principle which is at the heart of the conceptions which characterise an ideology. A theory can be legitimately tested against an ethical principle without any kind of reductionism or sectarianism.

Let us go to neo-liberalism.


The ‘neo’, like a ‘post’, tells us that something has come to an end with liberalism, some kind of continuity is claimed while simultaneously negating what has been terminated.

So we need to agree first what ‘liberalism’ means. In the current context ‘Liberalism’ is a political creed or social movement which dates back to the early 1820s and 30s. At that time, it meant religious beliefs which were open to modernity, free of bigotry or unreasonable prejudice in favour of traditional opinions or established institutions, and open to the reception of new ideas or proposals for reform. But altogether I take it to be exactly that disposition which Marx projected in the famous words of the Communist Manifesto:

“All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his, real conditions of life, and his relations with his kind.”

Marx makes his meaning quite clear when he goes on:

“The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his ‘natural superiors’, and has left remaining no other nexus between person and person than naked self-interest, than callous ‘cash payment’. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom – Free Trade.”

I take liberalism to refer to that social movement which seeks to break down all other social relationships, all principles of association, other than that of exchange of commodities, the market principle. The principle of ‘fair exchange’ is a perfectly valid and venerable principle of ethics. After all, who is opposed to trade, and if you’re going to trade obviously it should be ‘free’? The commodity relation is the basic relation of autonomy and equality which underpins modern society, and Liberalism is the social movement which affirms that principle, over and above all other, conflicting principles.

It is important to recognise that not only is the market principle a legitimate ethical principle, but it is also a very powerful and attractive one; most women do not want to bind themselves before God to serve their husband unto death; most children are not content to follow their father into a trade, and like military conscription even less, prostitutes believe they have a legitimate profession and parents like to choose which school to send their kids to. The market principle is the leading alternative both to traditional principles and bureaucratic social control.

This ethic of ‘free trade’ asserts itself wherever people engage in commerce. Its logic is the accumulation of capital. Liberalism is essentially the ideology of capital.

What do we make of ‘neo’ then? The term neo-liberalism is actually 100-years-old, but in the sense it is used here today it is of much more recent coinage, dating from the mid-60s at the earliest, and more commonly from the 1980s.

Two Stages of Neo-Liberalism

I see neo-liberalism as emerging in two stages since the crisis emanating from the failure of the Bretton Woods arrangements and Keynesian policies at the end of the 1960s.

Firstly, the crisis of stability in the world economy brought forward a number of neo-liberal economists and political leaders who advocated the monetarist methods of Milton Friedman, or variants of it, to stem inflation by crashing the economy and generating systemic unemployment. Friedman saw himself as a classical liberal, promoting decriminalization of drugs and prostitution, opposing conscription and advocating the school voucher system.

The second and in my view, more significant stage of neo-liberalism came in the wake of two almost simultaneous events: (1) The failure by the mid-1980s, of both monetarist and Keynesian macro-economic measures to resolve the crisis of stagflation, (2) The collapse of the Soviet bloc (i.e., around 1990).

The fall of the Soviet Union removed a major support for the welfare state and state regulation of the economy, while at the same time, the failure of both Keynesianism and then Monetarism impelled capital to return to its roots so to speak, abandon compromise with communitarian forms of social control and take on the organised working class within the company. In Australia it was called ‘micro-economic reform’ at the time. Milton Friedman and his political supporters created the basis for this phase of neo-liberalism, with the Reagan-Thatcher assault on full employment, trade unions and the welfare state. Monetarism was the last gasp attempt to use macro-economic instruments to control the world economy; its effect was to generate large-scale systemic unemployment, tipping the balance of power against organised labour, and provide the opening for the postmodern development neo-liberalism itself. The point of neo-liberalism is that it relies less on macro-economic manipulation of the market, but addresses class relations at the coal face, so to speak, within the company.

Two processes were at work during the 20th century, especially after the war, which undermined the former modes of social cohesion. Women’s labour was socialised by the welfare state and then by commodification as domestic labour was supplanted by wage labour both in manufacturing and services industries. Both these processes also undermined working class solidarity, which operated through mutual aid and the networking activity of women. The intervention of the welfare state destroyed workers’ mutual aid, leaving nothing in its place as the welfare is dismantled.


Neo-liberalism brought with it a new style of management which did away with reliance on authoritarianism and paternalism, and introduced radical uncertainty and market mechanisms into relations within companies.

In the days of classical liberalism (John Stuart Mill, Jeremy Bentham and so on), the company was almost invariably the family firm. Relations within the firm were a kind of extended family, with employees approximating to servants. Of course, the growth of large-scale manufacture and the appearance of trade unions changed this, but the liberal ideal still included a paternalistic relation to employees. During the 20th century this gradually changed, with the growth of large corporations employing thousands of workers, on one side, and an organised labour movement on the other. Keynesianism consolidated this position, but while companies were home to often intense class conflict, the norms remained those of paternalism. Neo-liberalism marks the final eclipse of the family firm and its replacement by large public corporations, generally with anonymous commodified ownership, its capital floating on the stock exchange, frequently using franchising, out-sourcing, consulting, subcontracting, labour-hire, work-teams and one-line budgets to marketise what were formerly paternalist forms of cooperation. The master-servant relation which is the key to the employment of wage-labour is essentially at odds with Liberal ethics. It is not the proletariat which is seeking to abolish wage-labour nowadays, but the employers.

So, prior to the rise of neo-liberalism, the company, the social form in which a single unit of capital is embodied, the basic unit of organisation of the capitalist class, was home to two diametrically opposed ideologies, two contradictory ethics. On the one hand, in relation to other productive units, whether potential employees or rival companies, the relations of the market place prevailed, i.e., liberalism; but within the company, and within classical liberalism, relations of authority, respect for one’s betters, obedience to rules, loyalty, and so on, prevailed. Thus the company provided the social base for both social conservatism and liberalism, and the figure of the conservative liberal politician (like Bob Menzies) expressed this ethos. With the arrival of neo-liberalism, there is no longer any room for this co-existence. The figure of the corporate boss, who can be female to boot, who dresses casually and operates an open regime with all the weasel worded corporate mission statements and so on, while screwing the unions, exporting capital to the free trade zones and swallowing up corporate rivals for dinner – this is the new figure of liberal capitalism (I think of Bill Gates).

I contend that all the other conservative currents are reactions to neo-liberalism, vain attempts to defend what is melting into air.

Ideology and Ethics of Neoliberalism

Rather than attempting to define neoliberal theory normatively, my claim is that the central principle of neo-liberalism, insofar as it constitutes a theory of society, is its figure of the ideal person, a figure which is nothing but a translation of commodity exchange into a concept of virtue: what sort of person ought we to be. This is the rational, individual economic agent. That this person is a fiction is of course news to no-one, but it does constitute an ideal. The neo-liberal economist or politician may claim that homo oeconomus is an adequate approximation or simplification of the real person, a simplification of the kind engineers use to solve problems in mechanics, nothing more. But it is able to do that only because homo oeconomus is an ethical ideal, an image of how a person ought to be.

Milton Friedman said:

“the belief that a theory can be tested by the realism of its assumptions independently of the accuracy of its predictions is widespread and the source of much of the perennial criticism of economic theory as unrealistic. Such criticism is largely irrelevant ...”

That is, economic science does not depend for its validity on whether or not the real person resembles homo oeconomus. The image of homo oeconomus does not claim to be how people really are; the validity of the assumption rests on the efficacy of the policy measures which it suggests. Neo-liberalism therefore recommends public policy on the basis of a very specific notion of what sort of people we should be and how we should behave. Is it too much to suggest that such public policy contributes to the creation of homo oeconomus, that is, if people should be economic animals, isn’t it likely that public policy based on this ethic will tend to bring about a species of economic animal?

The triumph of neo-liberalism over both socialism and social conservatism is expressed in the eclipse of the ethics of virtue and the ethics of duty by the ethics of right, in which the concept of right is reduced to an abstraction.

Rights had been at the centre of concerns of classical liberalism as well. But the classical liberal’s idea of rights were quite different to those of today’s neo-liberal. Classical Liberalism did not limit itself to ‘abstract right’, which is property in its broadest sense, the negative right not to be interfered with, but concerned itself with ‘concrete right’ – positive right to participation as an equal in the political life of the community.

‘Abstract right’ rises as far as the ethics of commodity exchange and equality before the law, placing the obligation of honesty upon the parties to every contract, but beyond that every act is a free act: – “deal or no deal.” The only duty is to respect the rights of others, and, as Marx observed, those rights reduce to the right of Free Trade. As Friedman put it:

“The major aim of the liberal is to leave the ethical problem to the individual to wrestle with.” [Friedman, Capitalism and Freedom, p. 12]

Homo Oeconomus

Virtue is therefore reduced to the capacity to act rationally in pursuit of one’s own individual desire, within the constraints of honesty, on the kind of level playing field they had at the Colosseum.

For classical liberals of the 19th century, rights were the rights of the citizen, recognition not only of your property but of your real capacity to participate in making decisions in public life. Once the social basis for the real human cooperation that takes place in the family and the family firm is taken away, as Marx says, no other relation between person and person exists other than that of cash payment. Only the bonds of solidarity stand between modern society and chaos, and these are being destroyed.

Homo oeconomus is a creature of desire, and one totally lacking in discernment what’s more. He is constantly trying to manipulate others for his own ends, but is himself an easy object of manipulation. She believes that she wins by having more stuff when she dies, and in the adage of you-scratch-my-back-and-I’ll-scratch-yours. She is incapable of engaging in cooperative activity. He never volunteers or does anything for nothing; marriage is nothing but a contract for managing domestic labour, she minimises her tax and penalties and charges are the only way to make him do the right thing. ‘User pays’ is her maxim.

It is not just that real people are not like homo oeconomus, but that people ought not to be like homo oeconomus; neo-liberalism is not just bad science, but a lousy way to live. The target is not just the sloppy economist but the heartless money-grubber, the wheeler-dealer who does anything for a buck, homo oeconomus in all his or her ugly and parasitic incarnations. He should be attacked ad hominum, not just for poor science, but for being up for sale to the highest bidder, for understanding nothing but cash payment. The point is not to prove that he doesn’t exist but that he is a contemptible human being.

Symbol, Index and Icon of Neoliberalism

There are in fact three bases on which to criticise neo-liberalism: firstly, in the symbolic register, neo-liberalism is indeed bad science, and it is essential to continue the assault on its false claim to legitimate scientific credentials; secondly, the index of its failure is all around us in the sum of human misery that it generates, and it is essential to keep bringing before public attention the social devastation and suffering that it has produced. The third is that people like Christopher Skase and Alan Bond and the Murdoch and Packer offspring, and other icons of this evil kind of human being, homo oeconomus, must be treated with the contempt they deserve.

The contradiction is that in order to control this Colosseum, an Imperial Army is necessary. Unemployment and modern neo-liberal methods have proved pretty effective against the trade unions, but the pandemonium unleashed by homo oeconomus on the national and world stage requires a dictatorial state to keep it in order. Under the banner of small government, neo-liberalism builds a monster state for the purpose of maintaining order. Neoliberals do not in fact propose that the state should not intervene in economic life, but rather they propose a specific kind of intervention, namely an intervention which protects the action of the market from competing ethical principles.

Production and Commerce

It is less and less possible to draw a line between production and commerce. As relations of cooperation are more and more replaced by market relations, the market more and more manages and directs the labour process.

But at the same time, homo oeconomus is incapable of sustaining human life which rests essentially on cooperative labour. Humanity, like Nature, is an external so far as the market is concerned; left to itself, neo-liberalism will destroy both Humanity and Nature. Neo-liberalism is a regime of crisis which must of necessity ally itself with some brand of social conservatism in order to maintain order and the conditions for human life.

A final word on agency. I think all the currents of conservative thought have clear connections with social agents. The question of the agency which opposes neo-liberalism is more difficult. In my opinion the agency which fights against neo-liberalism, i.e., against the dominance of the market, can only be an agency which encompasses the great majority of the working population, and if this not to be an anti-modern agency, it is essentially not hegemonic. It is rather a problem of fostering the development of anti-capitalist agents and organising the cooperation of these agents without resort to hegemony.