Has Neoliberalism Defined Postmodernity?

Page | 68 Has Neoliberalism defined Postmodernity? JULIA LETHBRIDGE MHIS375 Shock and Awe: A History of the Postmodern World While circulating since the 1940s, neoliberalism began to exert a heavy ideological influence from the late 1970s to become the defining aspect of postmodernity. Application of free market, individualist, small government principles has impacted not only economic and political policies but has also shaped social and cultural aspects of the postmodern age. The perceived failures of the modernist social state and the emergence of postmodern concepts of the individual and fragmented expression aided the adoption of neoliberal principles. Exported from the developed, capitalist Western nations, the influence of neoliberalism has been a global trend that has been adopted by influential international organisations such as the International Monetary Fund (IMF) and the World Bank. Evidence of neoliberal influence in social policy, cultural identity, development and globalisation indicates that it is the defining ideology of postmodernity. The late modern era was characterised by the Keynesian economic approach which sought to achieve a workable balance between capital, government and labour. In an attempt to promote a period of stability, growth and peace that had been lacking for much of the early 20th century, modernist concepts of rationality and order were applied on a national and international level through the structures established by the Bretton Woods agreements.1 The IMF and the International Bank of Reconstruction and Development (IBRD, later to morph into the World Bank), along with fixed exchange rates anchored by the US dollar, were established to facilitate the flow of trade, strike a balance between capital and labour, and promote stable international relations between the capitalist, democratic states of the Western world. While there were structural differences between these states, all had in common a state policy of full employment, economic growth and a focus on the welfare of national citizens; there was a consensus that state power should be deployed to 1 Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman and the Birth of Neoliberal Politics (Princeton: Princeton University Press, 2012), p. 25. Page | 69 intervene in market processes to ensure these goals were achieved.2 Ruggie dubbed this system ‘embedded liberalism’,3 as the system was based on liberal principles facilitating the open flow of trade while also embedding the market within the control of the state apparatus. These Keynesian-influenced economic policies sought to promote prosperity for all citizens through establishing a regulatory environment encircling the market and maintaining a class compromise through intervention in industry policy and setting of a social wage, in an attempt to keep the threat and destruction of war and revolution that had destabilised the previous decades at bay.4 By the 1970s, rising unemployment tied with inflationary pressures and limited economic growth (stagflation) across the revived Western nations led to the breakdown and criticism of embedded liberalism and its underlying theory.5 Fordist production based on Keynesian economic principles of compromise between capital, state and labour, striking a balance between the two great ideologies of the 20th century, capitalism and communism, was found to be failing. Attacks mounted on the increased size, scope and cost of governmental spending on social programs.6 With the unmaintainable system of fixed exchange rates crumbling and a dramatic spike in oil prices caused by the 1973 oil crisis, came the demise of the system and ‘handed free-market liberals their biggest soapbox in decades.’7 Neoliberalism had found a foothold as the dominant paradigm replacing the modernist concepts of embedded liberalism, made concrete by the 1979 election of Margaret Thatcher in Britain and 1980 election of Ronald Reagan in the United States.8 The neoliberals followed a creed that defence of the market was defence of freedom: if the market could function then so could freedom.9 Thatcher and Reagan led their countries and the world to follow this creed and embrace the neoliberal policies and practice that were clearly becoming the hegemonic ideology of postmodernity ‘to the point where it has 2 David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2005), p. 10. 3 John Gerard Ruggie, ‘International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order,’ International Organisation 36 (1982): p. 383. 4 Ruggie, ‘International Regimes, Transactions and Change,’ p. 388. 5 Stedman Jones, Masters of the Universe, p. 215. 6 Nikolas Rose, Powers of Freedom: Reframing Political Thought (Cambridge: Cambridge University Press, 1999), p. 141. 7 Michael Behrent, ‘Liberalism without Humanism: Michel Foucault and the Free-Market Creed 1976-1979,’ Modern Intellectual History 6 (2009): p. 555. 8 Rose, Powers of Freedom, p. 138. 9 Eduardo Rosenzvaig and Ronaldo Munck, ‘Neoliberalism: Economic Philosophy of Postmodern Destruction,’ Latin American Perspectives 24 (1997): p. 57. Page | 70 become incorporated into the common sense way we interpret, live in and understand the world.’10 Deregulation, liberalisation of markets, and privatisation extended not only to industrial and financial policy but further into areas of social policy such as housing, health and education. To the point where the ‘ripple of deregulation would turn into a tidal wave that washed away controls from large segments of the economy in the last two decades of the twentieth century.’11 The ideologically neoliberal push of free market policies show clearly in a review of Margaret Thatcher’s approach to housing and urban issues. In 1979, twenty-five percent of the British population lived in public housing with a further five percent living in social or assisted housing schemes run by housing associations for low-income groups.12 To remove this large investment from the hands of government, and shift from the modernist emphasis of a social wage, Thatcher’s Right to Buy policy sought to address the issue of disadvantage through incentives, deregulation and the creation of opportunities for engagement in the private market for individuals. Under the scheme tenants were given the opportunity to purchase a home at a substantially reduced amount with no requirements for a deposit. Over two million homes were purchased through the policy. The reduced role for the state, central to neoliberalism, was epitomised by the privatisation of public housing in Britain, and represents a clear break from Keynesian past.13 The influence of the neoliberal belief in the superiority of free market solution is evident in The Right to Buy policy, ‘the first and most popular of the Thatcher government’s landmark privatisations.’14 The popularity of the scheme paved the way for a greater spread and acceptance of underlying neoliberal ideology amongst the public. Building on the traditional liberal and conservative belief in the importance of private property, neoliberal theory added an argument for great efficiency to this belief.15 The argument followed that the most efficient means of delivering better service and outcomes for the disadvantaged 10 David Harvey, ‘Neoliberalism as Creative Destruction,’ Annals of the American Academy of Political and Social Science 610 (2007): p. 23. 11 Stedman Jones, Masters of the Universe, p. 216. 12 Ibid., p. 275. 13 Sarah Glynn, ‘You Can’t Demolish Your Way Out of a Housing Crisis,’ City: Analysis of Urban Trends, Culture, Theory, Policy, Action 16 (2012): p. 657. 14 Stedman Jones, Masters of the Universe, p. 289. 15Ibid., p. 276. Page | 71 was not through the government provision of housing stock but rather through an individual’s engagement with and investment in the market encouraged through deregulation and tax relief. Introducing competition and private enterprise would allow individuals to prosper. The counter argument was that much of the best public housing was sold, and that which was left under government ownership fell into disrepair through a series of escalating cuts to funding.16 This popular push by the Thatcher government for a move to homeowner democracy introduced to the public a neoliberal concept of the supremacy of free markets, paving the way for continued and more controversial privatisations of other national industries. The continuing neoliberal emphasis entailed a progression from citizen democracy, to homeowner democracy, to shareholder democracy.17 The rigid structures of postwar Keynesianism were argued by neoliberals to be limiting flexibility and confining the market; Harvey states ‘the neoliberal project is to disembed capital from these restraints.’18 Neoliberal faith in the mechanisms of free market meant that deregulation was not only required from the government in relation to economic involvement, but could also be applied as ‘a principle of decipherment of social relations and individual behaviour.’19 The central assumption that through free markets an individual will be able to realise economic freedom and be guaranteed other freedoms, is the central feature of neoliberal ideology. Harvey dubs this state a ‘neoliberal state’ and argues, ‘the freedoms it embodies reflect the interests of private property owners, business, multinational corporations and financial capital.’ 20 Harvey presents the argument that neoliberalism is in fact an effort to restore the position of economic elites that had

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