Dear Sublation Magazine Readers,

Thank-you for supporting us by reading and sharing our articles. To help us keep all of our content free, please consider supporting us with a donation.

Neoliberalism or Squishy Totalitarianism: What Period Are We In?


The Stanford Encyclopedia of Philosophy is an outstanding scholarly resource; I speculate that most philosophy professors consult it most weeks. As you might expect, it is very respectable and responsible. Every entry is elaborately peer-reviewed, and each is updated fairly frequently. I’ve consulted it often for years, and I can’t remember anything that seemed like an error. It is the standard reference work in my field.

For such reasons, the entry on ‘neoliberalism’ is somewhat surprising. “For many years, the term “neoliberalism” has been in search of a referent,” says the entry, written by Professor Kevin Vallier of Bowling Green State. Now, the term has been thrown around for decades (notably by leftist thinkers such as Frederic Jameson, Slavoj Źiźek, and David Graeber). Nevertheless, SEP points out, it took “several recent book-length treatments” from around 2018 to “give form to an arguably inchoate political concept.” Now, ‘arguably inchoate’ may well be intended to mean ‘unarguably tendentious,’ but the point throughout is that the word was used long before it was associated with any coherent or crisply-formulable meaning, which is an odd sort of history for an alleged concept to have.   

At any rate, to get through the introduction and on to the body of the entry, Vallier finally says that, though the word remains obscure, it’s probably no more obscure than ‘conservatism’ or ‘socialism.’ And he seems to tell us fairly straightforwardly what it means: “a society’s political and economic institutions should be robustly liberal and capitalist, but supplemented by a constitutionally limited democracy and a modest welfare state.” He then specifies that neoliberalism is the position shared by F. A. Hayek, Milton Friedman, and James Buchanan. Now, this makes neoliberalism a political ideology or philosophy, and treats it as identical with what is usually called ‘libertarianism’ or ‘minarchism,’ the position with which Hayek, Friedman, and Buchanan are widely associated, though Vallier makes some vague distinctions between them as well (neoliberals might be slightly less libertarian than some libertarians).

Now, ‘neoliberalism’ in this sense is a perfectly real political ideology. But this is not the way the word is typically used by leftists. For people like Jameson, for example, who is still, after all these years, intent on attacking the late Margaret Thatcher, ‘neoliberal’ is intended to describe the economic realities of our period. Thatcher and Reagan broke unions, extolled private markets, and cut social programs in the 1980s, thus establishing the period of neoliberalism. Through international aid and financial organizations, they forced many governments into ‘austerity’ to gain needed loans. A classic late example might be Greece, which was forced to reduce government spending as a condition of an EU bailout in the 2010s.

Neoliberalism is not, for these thinkers, supposed fundamentally to refer to the political program of the Libertarian Party with a bit more welfare state, or the economic theories of Friedrich von Hayek, but to the real condition of the world economy, 1980-present. It is not supposed to be normative, but descriptive.

But used in this sense, the concept seems weirdly detached from reality. ‘Neoliberalism’ has little to do with the economic realities of the period from which it emerged and which it purportedly describes. The most obvious developments in the political economy of the last half century are the more or less uninterrupted growth of the state as a proportion of the economy and the steady merger of state and economy, of governments and enterprises, all over the world.

Here is a pretty accessible portrait of the relation of government spending to gross domestic product in a number of world economies. The graph shows a steady growth from around 10% to around 50% for the period 1910-2020. There are dips and spikes here and there (especially registering wars and, lately, a pandemic), but the trend is obvious: governments devouring economies. The climb is as steep in the austere ’80s as in any period short of WW2. If there was austerity in the ’80s, it was a brief flattening of the rate of government growth, immediately reversed as countries pulled out of recession.

And we might point out that the line graph would look much more extreme if it included certain other countries. For example, what percentage of the economy of China is outside of state control? Of Iran? Of Egypt? Of Saudi Arabia? Of Russia?

As an aside, I’m puzzled in this regard by certain features of the IMF’s map, which seems to indicate that the government of Canada spends more of its national GDP than the government of China does of its. But I’ll speculate that the map registers that though “only” around 40% of China’s GDP consists of direct government spending, the government is directly involved in and dominates every economic transaction in China, and of China around the world. That is, these statistics do not show the full involvement of governments and multi-state organizations in the world economy. Governments might ‘only’ directly account for 60% of all economic activity, but at this point they affect the other 40%, all over. They have strong effects even on illegal black markets in various goods, of course.

The Nobel Prize winner Joseph Stiglitz, like SEP, characterizes neoliberalism as the philosophy of Hayek and Friedman, contrasting it with that of Keynes. And then he flatly asserts that we have been in a period of neoliberalism in economic reality – a Hayekian or Friedmanian phase, for 40 years. “Friedman argued that “free markets” were indispensable to ensure political freedom,” writes Stiglitz. “In Hayek’s words, government overreach would lead us down ‘The Road to Serfdom.’ We’ve now had four decades of the neoliberal ‘experiment,’ beginning with Ronald Reagan and Margaret Thatcher. The results are clear. Neoliberalism expanded the freedom of corporations and billionaires to do as they will and amass huge fortunes, but it also exacted a steep price: the well-being and freedom of the rest of society.”

To repeat, this is a bizarrely counter-empirical series of assertions given the very most obvious structural facts about the economy of now and how we got here. What would be interesting is not to try to refute Stiglitz line by line, but to try to understand how anti-factual assertions like that could appear plausible to actual economists with access to the basic data, and why everyone just seems to nod along.

What the statistics do show is that the most conspicuous economic fact of now, the accumulated effect of a century of growth, is ever-growing government control of, or as we might say, identity with economies. I take the identity of state and economy to be the definition of ‘socialism,’ though I acknowledge other characterizations are possible. But if we think of it that way, it’s obvious that we are living the outcome of a century of growing socialism. If you say that on a college campus now, people look at you like you just landed from Mars. But no, I just landed from the Planet of Obvious Facts.

So how did the trope of neoliberal austerity come to dominate the mind of the left and (bizarrely, considering how ill-defined the concept has been) academic discourse? Well, as a matter of fact, the discourse of neoliberal austerity, being neither descriptive nor normative, is strategic. If I describe a situation in which half of all economic activity is government spending as ‘austere’, I am trying to motivate the push to 60%, or toward 100%. Or, I’m saying that 100% or so would be ‘normal’, so 60% is ‘austere.’ That is, the purpose is manipulation, the attempt to persuade us imperceptibly that state and economy ought to be fully identical, here and now. That, I feel, is the real position of Joseph Stiglitz.

To which I might ask: are you sure? Suresure? How do you feel about the people who are running your government now, or who might, after the next election? Is there any aspect of anyone’s life you don’t want to be controlled by Trumps, Melonis and Orbans, for example? Or on the other hand by the AOCs and the AMLOs? Then maybe austerity wouldn’t be so bad after all. However, looking at those charts, I wouldn’t expect any austerity anytime soon. That’s just not the direction we’re headed. Rather, we are headed into a period of ‘squishy totalitarianism’: the full merger of state and economy.

Crispin Sartwell’s most recent book is Beauty: A Quick Immersion.