Rise an Fall Neoliberlaism

The Rise and Fallof Neoliberalism

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About the Editors

Kean Birch is a lecturer in the Department of Geographyand Sociology at the University of Strathclyde. Previouslyhe was a research fellow in the Centre for Public Policyfor Regions at the University of Glasgow. His mainresearch interests concern the social and geographicalbasis of different economies and especially the implica-tions that new knowledge, science and technologies havefor these economies. He teaches courses on globalization,neoliberalism and knowledge-based economies.

Vlad Mykhnenko is a research fellow in the School of Geog-raphy at the University of Nottingham. Previously he wasa research fellow in the Centre for Public Policy forRegions at the University of Glasgow, before acting as aninternational policy fellow at the Central European Uni-versity and Open Society Institute, Budapest. His researchinterests broadly include critical political economy, post-communist transformations, and European urban andregional studies. He teaches courses on European regionalgeographies and countries in transition.

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The Rise and Fall of Neoliberalism

The Collapse of an Economic Order?

Edited by

Kean Birch and Vlad Mykhnenko

Zed BooksLONDON & NEW YORK

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The Rise and Fall of Neoliberalism: the Collapse of an Economic Order? was first published

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Contents

ACKNOWLEDGEMENTS viiABOUT THE CONTRIBUTORS viii

INTRODUCTION • A World Turned Right Way Up 1KEAN BIRCH AND VLAD MYKHNENKO

PART ONE • THE RISE OF NEOLIBERALISM 21

1 How Neoliberalism Got Where It Is: Elite Planning, 23Corporate Lobbying and the Release of the Free Market DAVID MILLER

2 Making Neoliberal Order in the United States 42KEAN BIRCH AND ADAM TICKELL

3 Neoliberalism, Intellectual Property and the Global 60Knowledge EconomyDAVID TYFIELD

4 Neoliberalism and the Calculable World: the Rise of 77Carbon TradingLARRY LOHMANN

5 Tightening the Web: the World Bank and Enforced 94Policy ReformELISA VAN WAEYENBERGE

6 The Corruption Industry and Transition: Neoliberalizing 112Post-Soviet Space?ADAM SWAIN, VLAD MYKHNENKO AND SHAUN FRENCH

7 Remaking the Welfare State: from Safety Net 133to TrampolineJULIE MACLEAVY

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PART TWO • THE FALL OF NEOLIBERALISM 151

8 Zombieconomics: the Living Death of the Dismal 153ScienceBEN FINE

9 From Hegemony to Crisis? The Continuing Ecological 171Dominance of NeoliberalismBOB JESSOP

10 Do It Yourself: a Politics for Changing Our World 188PAUL CHATTERTON

11 Dreaming the Real: a Politics of Ethical Spectacles 206PAUL ROUTLEDGE

12 Transnational Companies and Transnational 222Civil SocietyLEONITH HINOJOSA AND ANTHONY BEBBINGTON

13 Defeating Neoliberalism: a Marxist Internationalist 239Perspective and ProgrammeJEAN SHAOUL

CONCLUSION • The End of an Economic Order? 255VLAD MYKHNENKO AND KEAN BIRCH

INDEX 269

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Acknowledgements

We would like to thank the Economic and Social Research Council(ESRC) for funding the seminar series titled ‘Neoliberalism, anti-neoliberalism and de-ideologisation’ (RES-451-25-4258) from whichthese chapters are drawn. We would also like to thank our ex-colleague and co-organizer of the seminar series Katherine Trebeckfor her help and advice during the editing process. Further thanks toall the contributors for their forbearance, including to those whowithdrew, and to the editors at Zed Books, Ellen Hallsworth andKen Barlow.

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About the Contributors

Anthony Bebbington is professor in the School of Environment and

Development, University of Manchester, an ESRC professorial fellow,

and research associate of the Centro Peruano de Estudios Sociales.

Paul Chatterton is a writer, researcher and scholar-activist based in the

School of Geography at the University of Leeds.

Ben Fine is professor of economics at the School of Oriental and

African Studies, University of London.

Shaun French is lecturer in economic geography at the University of

Nottingham.

Leonith Hinojosa is researcher and fellow lecturer at the School of

Environment and Development in the University of Manchester,

faculty associate in the Brooks World Poverty Institute and research

fellow in the Impact Assessment Research Centre.

Bob Jessop is distinguished professor of sociology and co-director of

the Cultural Political Research Centre at Lancaster University.

Larry Lohmann is an activist based at The Corner House, a UK non-

governmental organization.

Julie MacLeavy is a lecturer in human geography in the School of

Geographical Sciences at the University of Bristol.

David Miller is professor of sociology in the Department of Geography

and Sociology at the University of Strathclyde.

Paul Routledge is a reader in human geography at the Department of

Geographical and Earth Sciences at the University of Glasgow.

Jean Shaoul is professor of public accountability at Manchester Busi-

ness School.

Adam Swain is an associate professor of economic geography at the

School of Geography, University of Nottingham.

Adam Tickell is vice principal at Royal Holloway, University of London.

David Tyfield is a lecturer at the Centre for Mobilities Research

(CeMoRe), Sociology Department, Lancaster University.

Elisa van Waeyenberge is a lecturer in the Economics Department at the

School of Oriental and African Studies, University of London.

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INTRODUCTION • A World Turned Right Way Up

KEAN BIRCH AND VLAD MYKHNENKO

Writing about neoliberalism in 2010 is a challenge. On the onehand, the credit crunch and banking crisis have exposed the faultlines in the neoliberal economic order that has been dominant forthe last three decades: Margaret Thatcher’s confident assertion that‘there is no alternative’ springs to mind here. On the other hand,the different impacts and implications of the recent economic crisesillustrate the diversity in the implementation and embeddedness ofneoliberalism in many countries, thereby suggesting that neo-liberalism is not (and never was) a single hegemonic system in thefirst place. Such a challenge, however, represents an opportunity tofurther our understanding of neoliberal economic order(s) and howthis order grew to such prominence and held sway over national andinternational policy for so long. According to David Harvey (2006),neoliberalism has failed even to come close to, let alone achieve, thegrowth rates of the golden age of Keynesianism (1960s), which raisesa serious question about how it has maintained legitimacy in theface of its own failed raison d’être – to ensure wealth for all throughmarket efficiency. Thus it is pertinent to consider the core contra-diction underpinning the seeming collapse of neoliberalism: theextent to which the current crisis is tied to the very foundations onwhich neoliberalism was built, namely the expansion of financecapitalism and the associated housing and stock market booms ofthe 1990s and 2000s.

There is a terrible irony in the fact that neoliberal policies ofprivatization, marketization and liberalization over the last thirtyyears have produced proceeds with a monetary value (€1.3 trillion)that is only twice the recent bank bail-outs by the US and Europeangovernments (see Hall 2008: 6), a fact that can be lost in the soul-searching of mainstream commentators. Furthermore, government

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guarantees for bank debts – at €6 trillion – dwarf the proceeds ofprivatization to such an extent that, should there be widespreaddefaults, our governments would have effectively not only givenaway the ‘family silver’, but paid someone handsomely to take it offtheir hands. Who then benefited from this economic order? We canpoint fingers at the bankers, as government have found it politicallyexpedient to do, but we have also to acknowledge that thefinancialization of the global economy has gone hand in hand withproperty booms that have effectively enrolled citizens in theexpansion of neoliberalism – a windfall largely limited to citizens inthe Global North, it must be stressed. For example, MatthewWatson (2008) argues that as individuals have been incorporatedinto the British housing market, which was (and still is) dependentupon ever-increasing house prices, they have been remade politicallyas ‘monetary conservatives’, more concerned with inflation thanwelfare spending. More generally, Stuart Hall (2003: 10) argues that‘a new neoliberal common-sense’ has ‘colonized’ civil society.

What is evident in this mess is that the conceit at the heart ofneoliberal thought has been exposed. The very idea that markets areself-organizing, efficient and liberating is no longer credible, butillustrates the extent to which neoliberalism – as shorthand formarket-like rule – is an economic, political and ideological projectpursued by certain groups (such as governments and corporations)to construct a reality that is perceived to be founded in the inherentproperties of economic markets. This circular reasoning hasreplaced any sense of what we ought to do to achieve democraticgoals and ambitions with a logic built on the perception of theinherently good and essential qualities of markets. Thus moralityand ethics have been turned right way up in response to the ‘naturallaw’ of economic exchange in which the rich can buy more freedomthan the poor. This book is an attempt to understand how this hashappened, how it has come undone, and what alternatives we canturn to now.

The Ideological and Historical Origins of Neoliberalism

The origins of neoliberalism as an ideology can be traced back to thelate 1930s when a group of liberal intellectuals met in Paris to discussthe threat posed not only by totalitarianism, such as NationalSocialism in Germany, but also by collectivist planning of the

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economy as in the British Keynesian state and the New Deal in theUSA. This meeting, held in 1938 and organized by Louis Rougier,led to the coining of the term ‘neoliberalism’ to update nineteenth-century liberalism by introducing the idea that governments play animportant role as the guardian of ‘free markets’ by securing the ruleof law (Turner 2007; Peck 2008). In part, this ‘new’ liberalism wasthe consequence of the incorporation of marginalist economicthought (see Fine, this volume) with critiques of equilibrium theory,both of which had characterized the emerging Austrian School ofeconomics. As such, economics is directly implicated in the two mainfoundational tenets of neoliberalism: first, in the view of von Misesthat ‘egoism is the basic law of society’ (quoted in Peet 2007: 73);and, second, in Hayek’s view that free markets lead to ‘spontaneousorder’ that solves the problem of economic calculation. In manyways, these two individuals – Ludwig von Mises (1881–1973) andFriedrich von Hayek (1899–1992) – represent the founding fathers ofneoliberalism, providing the theoretical backbone for the politicaland ideological claims made by others. In this sense, neoliberalismwas very much an ideological project, one that attempted to counterwhat neoliberal thinkers saw as the inherent totalitarianism ofcollectivist and state planning of the economy by drawing oneconomic theories which, in turn, posited the impossibility ofeconomic planning in the first place.

The Second World War and the emigration of Austrianeconomists helped to spread neoliberal thinking around the world asfigures like von Mises, Fritz Machlup and Michael Polanyi fledNazism. It was also during this time that Hayek wrote The Road to

Serfdom, published in 1944, in which he outlined the main caseagainst central planning and defended capitalism against the claimsthat it had led to fascism: in essence, the book upheld the idea thatmarket freedom came before democratic freedom because ‘onlycapitalism makes democracy possible’ (quoted in Turner 2007: 73).Following the war, neoliberalism was more formally established inintellectual networks such as the Mont Pelerin Society (MPS),founded in 1947. Bringing together several diverse strands ofneoliberal thought, including Austrian émigrés, British intellectualsfrom the London School of Economics (LSE) and University ofManchester, Americans from the Chicago School – includingMilton Friedman – and Germans from the Freiburg School, theMPS built on the work of the earlier meeting in Paris (Peck 2008).

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Two of the MPS’s aims are relevant for the discussions in this book:first, that the role of the state needs to be redefined; second, that aninternational order needs to be created to ensure internationaleconomic agreement (Plehwe and Walpen 2006: 33–4).

Implicit in the establishment of the MPS was the view that ideasmatter, playing an important role in determining the outcome ofevents as they circulate through government, universities, civilsociety and the media. Consequently, neoliberal thinkers and theirbusiness sponsors – such as Sir Antony Fraser – helped to foundnumerous organizations to promote neoliberalism, particularly thinktanks and business forums (see Miller; Birch and Tickell, thisvolume). Examples of the establishment of such neoliberal thinktanks include the Institute of Economic Affairs (IEA) in the UK(1955) and the Heritage Foundation in the USA (1973) – see thework of Carroll and Carson (2006) for a more thorough analysis.These ‘idea centres’ represent the emergence of a neoliberal politicalproject to counter Keynesian policy and government intervention inmarkets, incorporating a number of often seemingly diverse theoriesand ideas from across economics and political science. Mark Blyth(2002) demonstrates particularly clearly that the combination ofMilton Friedman’s monetarism with theories of rational expecta-tions, supply-side economics and public choice contributed to thebreakdown of the post-war consensus through the promotion of aneoliberal agenda and economic policies.

The motivation lying behind this attack on Keynesianism wasprimarily a concern with taxation and inflation, brought to wide-spread attention during the stagflation crisis of the 1970s when bothunemployment and inflation rose dramatically. Duménil and Lévy(2004: 23–4) attribute this ‘structural crisis’ to the falling rate ofprofit; that is, the declining return on capital invested in machinesand technology. Consequently the only way to increase profit was bycontrolling labour costs, which means that neoliberalism can be seenas a political project intent on restoring class power (Harvey 2005).The neoliberal political project was also enabled by the collapse ofthe Bretton Woods system in 1971 when the USA ended the con-vertibility of dollars to gold, ushering in a new era of free-floatingcurrencies and international capital flows (Hutton 1995). The 1970stherefore provided the political opportunity to push for a neweconomic project founded on neoliberal assumptions about economicefficiency, reduced state intervention and free markets.


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This economic project found its advocates in a number of newright-wing politicians around the world exemplified by MargaretThatcher (1979–90) in the UK and Ronald Reagan (1981–9) in theUSA, whose policies became known respectively as Thatcherismand Reaganomics. Other countries have followed suit by imple-menting neoliberal policies (see Swain, Mykhnenko and French, thisvolume), whilst some started even earlier than the UK and USA.For example, the ‘Chicago boys’ – Chilean economists trained at theUniversity of Chicago where Milton Friedman worked – helped thedictator Augusto Pinochet to privatize and deregulate the economyafter the coup that ended Salvador Allende’s government and life inSeptember 1973 (Harvey 2005). Although the spread of neoliberaleconomic policies around the world has been uneven, in that eachcountry has witnessed varying levels of ideological and politicaladherence to different economic policies (see Jessop, this volume),what has characterized them all has been an emphasis on five coreprinciples (Hall 2003; Hay 2004; Mudge 2008): privatization of state-run assets (firms, council housing et cetera); liberalization of trade ingoods and capital investment; monetarist focus on inflation controland supply-side dynamics; deregulation of labour and product marketsto reduce ‘impediments’ to business; and, the marketization of societythrough public–private partnerships and other forms of com-modification (see Tyfield; Lohmann; Shaoul, this volume). Theseprinciples are all meant to enable individual freedom throughrecourse to a ‘free’ market that is efficient in allocating resourcesacross society and the world because only the market can coordinateall the information signals from numerous agents (such as sellers andbuyers). As will be shown in several chapters in this book, suchassumptions are rightly castigated, having led to severe hardship formany people in society in many parts of the world.

Waves (and Waves) of Neoliberalism

It is useful to distinguish – as we have done above – between theideological, political and economic projects of ‘neoliberalism’ in orderto understand how it has come to be so dominant a political-economic discourse. To start with, neoliberal economic theories repre-sent an ideological project based on abstract concepts (e.g. rationalexpectations, utility maximization, free markets, et cetera) that assumesmarket efficiency and therefore underpins a re-conceptualization of

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the state’s role in the economy: that is, enforcing the ‘rule of law’ asopposed to owning and running businesses or welfare services (seeMacLeavy, this volume). As highlighted above, this form of discoursehas spread through global networks of neoliberal thinkers and (usuallycorporate) supporters that are positioned in specific sites around theglobe; for example, London (Miller, this volume) and Washington(Birch and Tickell, this volume). The subsequent incorporation ofneoliberal ideas into specific government policy more accuratelyreflects a political project allied to specific state-led strategies thatpromote neoliberalism through different processes characterized byprivatization, liberalization, marketization, deregulation and mone-tarism. These strategies, however, differ in their political motivationsand priorities, depending on where they are applied (Birch andMykhnenko 2009). Thus, Brenner et al. (2010) argue that these state-led projects are also context-specific in that the implementation ofneoliberalism is always embedded within and reworks existing‘institutional landscapes’ through processes of neoliberalization; that is,neoliberalization does not represent a single homogenizing process,but leads to variations across different places, as is evident in many ofthe later chapters.

It is therefore possible to identify different forms of neoliberalismalongside the differing impacts of neoliberalization not only in con-crete historical and social, political and economic terms, but alsogeographically, since neoliberalism operates in multiple scales(Larner 2003). For example, neoliberalism is evident in localprojects, national-state policies, and supranational institutions likethe World Trade Organization (WTO) and the World Bank (seevan Waeyenberge, this volume). Although there are differences inthe form that neoliberalism takes and in the responses to it (seeChatterton; Routledge; Shaoul, this volume) – especially on acountry by country basis (see Hinojosa and Bebbington, this volume)– this issue of variations in neoliberalism is an empirical questionthat needs to be teased out through careful research. Conceptually,however, it is possible to think about neoliberalism as a hegemonicpolitical-economic project, as many scholars have done. In par-ticular, Adam Tickell and Jamie Peck (2003: 166) argue thatneoliberalism is a process best described as ‘the mobilization of statepower in the contradictory extension and reproduction of market(-like) rule’, which can be split usefully into ‘roll-back’ and ‘roll-out’phases.


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What this means is that it is too simplistic to assume that neo-liberalism leads to the ‘hollowing out’ of the state because neo-liberalism involves the shifting of state intervention to new forms ofgovernance underpinned by a ‘logic of competitiveness’, including:‘active’ and flexible labour policies; new commodification regimessuch as intellectual property rights and carbon trading (see Tyfield;Lohmann this volume); fiscal austerity; and public spending onsupply-side inputs (e.g. education, infrastructure, et cetera). What isevident, according to Peck and Tickell (2002), is a shift in emphasisover time. For example, Thatcherism and Reaganomics represent a‘rolling-back’ of regulation, state ownership and welfare servicesduring the 1980s, driven, in large part, by a monetarist preoccupa-tion with inflation that encouraged different forms of privatization(Prasad 2006). This phase was motivated by ‘external’ pressures –that is, pressures not induced by neoliberalism itself – including the‘structural crisis’ of the 1970s and the extension of neoliberalism tothe Global South through the ‘Washington Consensus’ (Williamson1990): this ‘consensus’ promoted ‘reforms’ in Southern countries inpursuit of trade income to offset debt obligations. A subsequent shifttowards ‘roll-out’ neoliberalism, especially through marketization, isthen evident in the 1990s as Northern countries have sought to con-tain the ‘internal’ contradictions inherent in the neoliberal projectsuch as mass unemployment (Tickell and Peck 2003; see Jessop, thisvolume). In this latter phase, national political economies are recastas problematic in relation to the emerging global economy, leadingto a rescaling of governance as sub-national partnerships areencouraged to deliver on nationally or, increasingly, supranationallyset priorities and goals oriented around competitiveness (Peck 2001;van Apeldoorn 2008).

What we end up with are ‘race-to-the-bottom’ or ‘beggar-thy-neighbour’ strategies in which responsibility for the delivery ofpolitical priorities is shifted further and further downwards untilwhat results is a new model of citizenship in which societal rightsand responsibilities transform personal ‘deficiencies’ (such asunemployment) into ‘failures’ of the individual rather than society(see MacLeavy 2008). The encouragement of competition betweenindividuals (and localities) for government or private sector resourcesprovides one avenue through which the market state, already en-rolled as a facilitator in the ‘re-regulation’ and extension of markets,fosters new individualistic subjects for market rule (Hall 2003; Cerny

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2008). Individuals are constructed as rational subjects – encouragedto compete in flexible labour markets that depend onentrepreneurship, life-long learning and transferable skills (that is,employability) – by shifting responsibility for social justice, well-being and health outcomes from the state to the individual (seeMacLeavy, this volume). One particularly invidious example of howthis is enacted is in the expansion of consumer credit – and hencedebt – in Anglo-American countries, encouraged in large part bystagnation in real wages resulting from flexible labour markets andunemployment (Boyer 2000; Montgomerie 2007). Easy credit andincreasing levels of debt have left countless households in ruin as aconsequence of the current crisis. The responses of people fightingthis individualization and marketization of responsibility are diverse,and the dramatic impacts that impoverishment and disempower-ment have on individual health and achievement are in need offurther study. In this book, several contributors address these issuesdirectly by looking at the impact of alternative politics (see Shaoul,this volume) and alternative personal and community strategies (seeChatterton; Routledge, this volume) on people, countries and theworld.

Varieties of Neoliberalization: Poor Results and DivergentTrajectories

In the three decades since the election of the first ideologically com-mitted neoliberal government in May 1979, neoliberalism has gonetruly global, reaching every corner of the world and producingnumerous variants (see Jessop, this volume). Indeed, the end of theCold War and the collapse of Soviet power in 1989–91 even ledFrancis Fukuyama (1989) to declare that history had ended with anunqualified victory for free-enterprise capitalism and the totalexhaustion of viable systemic alternatives to Western liberalism.Before the advent of the current financial-economic crisis in August2007, the political ascendance and geographical spread of neo-liberalism had been greatly aided by the maintenance of dogmaticand rhetorical purity. Whilst persistently advocating maximumscope for the free play of market forces in economy and society,neoliberal ideologues were able to specify their own recommen-dations (termed ‘policy reforms’) aimed at achieving a free marketrevolution (see Swain et al., this volume).


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In 1989, John Williamson (1993: 1334) designed what hedescribed as a generally applicable ‘universal convergence pro-gramme’ comprising ‘the common core of wisdom embraced by allserious economists’. The proposed ten policy reforms included animposition of a tight fiscal discipline (with virtually no public budgetdeficit allowed); an end to subsidies and re-direction of publicexpenditure on basic health, education and infrastructure; tax cuts;financial liberalization; free-floating exchange rates; trade liberal-ization with a unified low tariff; openness to foreign direct investment(FDI); privatization; deregulation; and secure private property rights.Williamson dubbed his list of reforms a Washington Consensus because‘both the political Washington of Congress and senior members ofthe administration and the technocratic Washington of the inter-national financial institutions, the economic agencies of the USgovernment, the Federal Reserve Board, and the think tanks’ hadreached by then an explicit agreement that ‘prudent macroeco-nomic policies, outward orientation, and free-market capitalism’ hadto be urged on the rest of the world (Williamson 1990, 1993). TheWashington Consensus heralded a new order when, according to acritic:

Life used to be relatively simple for the peddlers of policy advice in thetropics. Observing the endless list of policy follies to which poor nationshad succumbed, any well-trained and well-intentioned economist couldfeel justified in uttering the obvious truths of the profession: get yourmacro balances in order, take the state out of business, give markets freerein. ‘Stabilize, privatize, and liberalize’ became the mantra of ageneration of technocrats who cut their teeth in the developing worldand of the political leaders they counselled. (Rodrik 2006: 973)

The Washington Consensus had its operational memory rootedin Chile’s neoliberal reforms under General Pinochet in the 1970s.By the 1980s, the Washington Consensus reforms spread acrossLatin America in a series of ‘structural adjustment’ packages aimedat ensuring that Latin America’s massive foreign debt to the Westwould be fully repaid; some of the consequences of and responses tothese reforms are addressed in the chapter by Hinojosa and Bebbing-ton. Assuming that all problems with Latin American, Soviet andindeed non-Anglo-American economies stem from ‘pervasive’government involvement and control over economic activity, pricesand international trade, and from ‘extensive’ public ownership ofproductive assets, the fundamental solution prescribed by neoliberal

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policy advisers was that of macroeconomic stabilization andstructural adjustment. With the collapse of the Berlin Wall, thestabilization programme first applied by Harvard economist JeffreySachs in Bolivia in 1985 was redesigned and expanded by his teamin Poland and Russia. This ‘shock therapy’ aimed at the wholesaletransition of centrally planned societies towards market-basedcapitalism. Back in 1990, Milton Friedman (1990: 7) personallyencouraged his followers in shock therapy by assuring them that all‘the talk about “the enormous costs of moving to a free-marketeconomy” is much too gloomy. There is no reason why total outputcannot start expanding rapidly almost immediately after thetotalitarian restrictions on people’s activities are removed.’

Whilst Latin American, East European and sub-Saharan coun-tries were fast liberalizing their ‘emerging’ and ‘transition’ economies,they had also been forced to undergo a radical process of slimmingdown, shrinking and re-inventing the state (see Jessop, this volume).The World Bank’s 1996 policy manifesto From Plan to Market drewthe contours of the neoliberal blueprint being peddled both in thetropics and near the Polar circle; the latter manifestations of WorldBank policy are described in the chapter by van Waeyenberge. TheWashington Consensus promised that the combination of stabiliza-tion, liberalization and privatization would bring ‘renewed growth’,and along with it prosperity, to the most remote corners of the globeby ‘the unleashing of markets – the basic enabling reform fromwhich all the potential benefits of transition [to free-marketcapitalism] follow’ (World Bank 1996: 7).

However, contrary to popular expectations, and despite the mostfar-reaching programme of deregulation and privatization in theworld’s history, the 1990s and 2000s turned out to be lost decadesfor most developing and transition economies. As the authors of theWashington Consensus have had to confess, the Latin Americandecades have been punctuated by several crises (including the 1994Mexican peso crisis and the 1999–2002 Argentine economic crisis),achieved disappointingly slow growth, and seen no improvement inthe region’s highly unequal income distribution (Kuczynski andWilliamson 2003). In the post-Soviet world, the ensuing ‘trans-formational depression’ lasted for six years on average across centraland eastern Europe and the former Soviet Union, ranging from twoyears in Poland to ten years in Moldova and Ukraine. In terms ofits scale, the deepest slump in output was suffered by Bosnia and


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Herzegovina (– 88 per cent), Georgia (– 75 per cent), Armenia (– 69per cent), and Moldova (– 68 per cent). Only four countries (theCzech Republic, Uzbekistan, Poland and Slovenia) managed milderrecessions, losing 15–20 per cent of GDP, whereas the scale ofdepression in the remaining economies in the region rangedbetween 30 and 60 per cent. The collapse of production also meantmassive job losses and the deprivation this brings. Large proportionsof the redundant labour force had to withdraw from economicactivity altogether, either migrating abroad or relying on informalsurvival strategies at home. Unemployment levels reached doubledigits in most transition economies, peaking around 20 per cent inrelatively successful Poland and Slovakia, and rising above 40 percent in the areas affected by civil strife and political instability. Allthe evidence based upon the broader human development indica-tors, including life expectancy, infant mortality, demographicgrowth, income distribution, headcount poverty and educationalattainment, suggest a very significant social cost to transition acrossthe region (Mykhnenko 2009).

In striking contrast with the radical purity of neoliberal ideology,the results and consequences of neoliberalization as a process havebeen rather messy and admittedly ‘unexpected’ for the mainapologists of reform (World Bank 2005: xi). Moreover, the economicand spatial impact of neoliberalization was very uneven. The trans-formation of Western capitalism in the Global North, as well asvarious transitions to capitalism in the East and South, havegenerated a great divergence in outcomes between the differentgeographical blocs of old and newly emerging capitalist states,between different individual countries, and between urban and ruralareas within those countries. In our previous work we illustrate howneoliberalism has produced variegated, hybrid and geographicallyspecific political economies in which universal economic tenets andpractices were married to national and regional concerns (Birch andMykhnenko 2009). We show how neoliberalism – as a state-ledproject – produced national varieties of neoliberalism in whichderegulation, privatization and trade liberalization were pursued fordifferent political reasons, in different ways and to different extents(see also Jessop, this volume). In turn, the pathway that wasundertaken by the Anglo-American liberal market-based states ledto the abandonment of old industries and the creation of a ‘neweconomy’, based upon finance and business services, and greatly

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facilitated by information and communication technologies (see alsoBoyer 2000, Hancké et al. 2007; and Tyfield; Shaoul, this volume).Financialization – a process of financial deepening of the increasing-ly global capitalist economy – was set to become both the culmina-tion and the beginning of the end for the neoliberal economic order.

Financialization and the New Neoliberal Order

As the formerly successful, coordinated market economies ofGermany and Japan were undergoing an acute crisis of accumu-lation, spending the 1990s in a series of attempts at upgrading theindustrial base, their Anglo-American liberal market counterparts(for the distinction, see Hall and Soskice 2001; Amable 2003) hadpursued finance as a new bedrock of competitive profit making. Yetthis new ‘structured’ finance was different from the centuries-oldpractice of manipulating and managing money, as it involved thecreation of complex debt instruments through ‘securitization’ (seeShaoul, this volume). Securitization was the key vehicle for theexplosive expansion of the financial intermediation since the break-down of the Bretton Woods system. It is described as the process ofturning non-marketable, non-tradable financial assets into tradablesecurities: for instance, claims on debt (such as government bonds),claims on ownership (such as ordinary shares), or ‘derivatives’ – awide rage of financial products whose value is derived from theactual or expected price of some underlying asset, which may be acommodity, a security, a currency, or indeed any economic variable.Used as a hedge to reduce risk or for speculation, derivatives can beexchange-traded as well as ‘over-the-counter’ (OTC) instruments,including futures contracts, forwards, options and swaps. Whilst themain market-traded derivatives are futures and options, the OTCtrades are off-balance-sheet, specific and customer-tailored instru-ments (such as asset-backed securities, collateralized debt obligationsor credit default swaps), involving seemingly esoteric practices suchas the pooling of assets, the tranching of liabilities and the creationof ‘special purpose vehicles’ ostensibly to reduce risk (see Moles andTerry 1997). The expansion of structured finance has beenfacilitated by low interest rates policies pursued by the world’s majorcentral banks, which encouraged excessive ‘leverage’ or gearing upthe debt to originate and distribute more derivatives at the fastestpossible pace (Mizen 2009).


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As early as 1988, the Anglo-American economies were leadingthe way in securitization as measured by the relative weight ofcapitalization of national security markets, with the UK and USAcombined taking a 37 per cent share of the global securities market.Yet with financial deregulation spreading across the globe, nationaland systemic differences in openness of capital markets were erodedand various surveys of the world of finance carried out since thenpointed to convergence as a long-term trend (Neal and Tilly 2003).At the peak of financialization in 2007, the ratio of global financialassets – the sum of the stock market capitalization, debt securitiesand bank assets – to global GDP reached 440 per cent. This ratiowas even higher for the USA (445 per cent), Japan (547 per cent)and the European Union (581 per cent), jumping to 900 per cent inIreland. Although the global openly traded financial assets wereworth $241.1 trillion in 2007, the size of the ‘shadow’ bankingsystem of OTC trade in derivates was even larger. Whilst theexchange-traded derivative financial instruments amounted in 2007to $26.7 trillion, the respective notional figure for global shadowyOTC derivatives stood at $595.3 trillion or 11 times (!) the world’sannual output (authors’ own calculations, on the basis of IMF 2009:statistical appendix tables 3–6).

The sheer volume and the range of various exotic financialinvestment products generated since the 1990s have led some criticalobservers to describe global finance capitalism as ‘an economicwonderland’ of illusionary, speculative ‘derivative castles built onsand’ (Cloke 2009). However, as Leyshon and Thrift (2007) pointout, the basis of finance capitalism has not been this spectacularsystem of speculation but rather a ‘capitalization of almost every-thing’, as financial capitalism fed on the most mundane ‘assetstreams’ and stable sources of income. Robin Blackburn (2008)provides further evidence that underneath the layer of speculativewizardry, financialization has indeed relied on the process of com-modification of every aspect of human life and the life course – babybonds, student loans, car loans, credit-card debt, health insurance,private pensions and, most importantly, residential mortgage loans(see also Lohmann, this volume). Focusing on mortgage capital,Saskia Sassen (2008) uncovers a whole new spatial frontier for globalfinance, which is now able through residential mortgage-backedsecurities to extract the smallest of resources that low- and moderate-income households in emerging as well as advanced market

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economies can command. Yet it is this extensive tapping into theeveryday resources of the US’s poorest households which haseventually led to the beginning of the world’s worst financial crisison record.

Conclusion: Collapse of the Global Neoliberal EconomicOrder?

The hollowing out of manufacturing in the USA and other Anglo-American economies, combined with declining or stagnant realwages, has resulted in the recomposition of corporate profits towardsfinancial intermediation and to the growing reliance of theseeconomies on low-priced imports, primarily from China (Harvey2005; Dunford 2009). As the greater part of tax revenues inadvanced capitalist economies originates in finance, the NorthAmerican, European and other governments of all political colourswere unable or unwilling to control the expansion of the financialsector. Yet the ever-increasing US trade deficit with the rest of theworld, and particularly with China, combined with signs of theUSA’s imperial overstretch in Iraq and Afghanistan, had an adverseimpact on the strength of the dollar, threatening the financialsector’s profits abroad. In a frantic attempt to stabilize the dollarand belatedly cool financial speculation geared towards mortgage-based securities, around the mid-2000s the US Federal Reservebegan to raise base interest rates. Between 2004 and 2006, USinterest rates rose from 1 per cent to 5.35 per cent, triggering aslowdown in the US housing market; the UK’s central bank waseven more aggressive in trying to restrict the money supply. As hasbeen argued elsewhere, those steady increases in interest rates led torising defaults among US holders of sub-prime mortgages in the lastquarter of 2006 and early 2007. The US sub-prime mortgagedifficulties triggered the credit crunch, the first phase of the crisis(August 2007–February 2008), resulting in the shutting down ofabout $24 trillion worth of credit lines. Growing insolvencies atoverstretched financial intermediaries in France (BNP Paribas), theUK (Northern Rock), the US (New Century Financial, Country-wide, Dillon Reed, Citigroup, MBIA), Switzerland (UBS) andGermany (IKB) led the crisis to unfold further as it entered itssecond phase (March–October 2008), with the collapse and ‘rescue’takeover of Bear Stearns, Wall Street’s fifth biggest bank. The third


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phase of the financial crisis, occurring from October 2008, beganwith the bankruptcy of Lehman Brothers and resulted in a full-blown global recession (Blackburn 2008; Gowan 2009; Mizen 2009).

With the financial sector placed firmly at the heart of globalfinancial capitalism, Western governments have been quick toabandon all the tenets of free and self-regulating markets, rushing tocommit themselves to full financial support of financial institutions,opening the era of massive bail-outs and stimulus packages. By mid-2009, the US government had committed $8.5 trillion to support itsbattered financial system, with $5.8 trillion earmarked for FederalReserve lending, credit guarantees and asset purchase schemes; $2trillion in other schemes; and $700 billion in the Troubled Asset ReliefProgramme, a new ‘public–private partnership’ aimed at buying ‘toxic’assets from banks. It is worth noting that the US government’scommitment to the financial sector amounted to two-thirds of its GDP.The size of the UK rescue package for banks was $2.12 (£1.22)trillion, or 87 per cent of the country’s GDP, with £585 billionallocated to asset protection; £300 billion to bank credit guarantees;£185 billion to central bank loans; £94 billion to bailing out fivebanking institutions (RBS-Royal Bank of Scotland, Lloyds TSB,HBOS-Halifax Bank of Scotland, Northern Rock and Bradford &Bingley); £50 billion to the Bank of England corporate debt scheme;and £10 billion to a working capital fund for small businesses.

In another striking move heralded by most financial com-mentators as ‘the end of the Thatcher era’, a host of governmentsfrom North and South pushed forward with massive Keynesian-stylefiscal stimulus packages (Rachman 2009). As the world’s economyhad slowed sharply in 2008 and was set to decline in 2009 by atleast 1.3 per cent, thus entering the first truly global recession sincethe Second World War, governments of the world’s twenty largeststates agreed to spend billions of dollars in tax relief and buildingprojects to stabilize the decline and stimulate economic growth, withthe US government pledging $937 billion; the UK $29 billion;Germany $103 billion; China $586 billion; and India $4 billion. Avast majority of developing, transition and even advanced capitalistcountries, however, have been unable to either fund or borrow fortheir own much-needed bank bail-outs, corporate rescues and fiscalstimulus packages, with several countries having to go cap in handto the IMF and EU monetary authorities (among them Iceland,Latvia, Hungary and Ukraine).

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A number of preliminary conclusions can be drawn from thiscrisis. The 2007–9 financial turmoil appears to be rather unique inat least four ways. First, geographically, it has broadened to includehouseholds, corporations and the banking sectors in both advancedand emerging capitalist countries. Second, this has been the largestcrisis in terms of capital loss. According to a recent estimate by theIMF, subject to a number of assumptions, the write-downs on US-originated assets to be endured by all holders since the outbreak ofthe crisis until 2010 could reach a total of around $4 trillion, two-thirds of which would be incurred by banks (IMF 2009: xi). Third,the sub-prime credit crunch has led to the demise or restructuringof several giants of the corporate world, including Lehman Brothers,Bear Stearns, Royal Bank of Scotland, Lloyds TSB, Citigroup, AIG,Fannie Mae, Freddie Mac, Bank of America, Northern Rock,Bradford & Bingley, Halifax-Bank of Scotland, Merrill Lynch, andAlliance & Leicester (see Klimecki and Willmott 2009). As aconsequence, the current financial crisis has highlighted a dramaticshift in banking’s centre of gravity, with potentially dramatic geo-political repercussions. In 1999, the world’s largest financial institu-tions were dominated by Anglo-American banks; the world’s toptwenty banks by market capitalization included eleven US-basedinstitutions (with Citigroup, Bank of America and Fannie Mae infirst, second and fifth positions respectively), four UK-based (withHSBC and Lloyds TSB as the world’s third and fourth largest), twoSwiss, two Japanese and one Spanish. By contrast, in 2009 just ahandful of the top twenty had their headquarters in the US or theUK. Amongst the top twenty banks, five were based in the People’sRepublic of China (with the Industrial & Commercial Bank ofChina, China Construction Bank, and Bank of China holding thethree top positions respectively); three were bailed-out US banks(JPMorgan Chase, Goldman Sachs and Wells Fargo); the restincluded only one British bank (HSBC), two Brazilian, twoCanadian, two Australian, one Japanese, one Spanish, one Swiss,one bailed-out French bank (BNP Paribas) and one bailed-outItalian bank (Unicredit) (Bernard et al. 2009).

Finally, in addition to the return of geopolitics, the decline of thepower of the Atlantic states and the dollar/Wall Street regime(Gowan 2009), the current crisis has undoubtedly severely damagedneoliberal ideology by revealing the intrinsic link between neo-liberalism as a state/class project and global financial capitalism


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(Wong 2009). To some, the crisis response of the major Westerngovernments has even embodied the natural progression of neoliberalmarket states into financial ‘activists’ – public entities which behavelike activist shareholders in the market (Caprotti 2009). Whilst it isperhaps too early to understand the full ramifications of the collapseof neoliberal economic order, it is hard to resist reminding ourselvesthat the neoliberal consensus of twenty years ago claimed that ‘Left-wing believers in “Keynesian” stimulation via large budget deficitsare almost an extinct species . . . an operational budget deficit inexcess of around 1 to 2 per cent of GNP is prima facie evidence ofpolicy failure’ (Williamson 1990). At the time of writing, when thegovernments in the Anglo-American world – especially in the UK,USA and Ireland – are set to reach budget deficits in the range of11 to 13 per cent, and busy trying to fund a Keynesian stimulationprogramme, there can hardly be more glaring evidence of neo-liberalism’s abject failure. As left-wing ideas are seemingly back infashion, this book may contribute to the search for viablealternatives.

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Leyshon, A. and Thrift, N. (2007) ‘The Capitalization of Almost Everything:the Future of Finance and Capitalism’, Theory, Culture and Society, Vol. 24,pp. 97–115.

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pedia of Business in Today’s World, 4 vols, SAGE, Thousand Oaks, CA. Neal, L. and Tilly, R. (2003) ‘Capital Markets’, in Mokyr, J. (ed.) The Oxford

Encyclopedia of Economic History, Oxford University Press, Oxford.Peck, J. (2001) ‘Neoliberalizing States: Thin Policies/Hard Outcomes’,

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pp. 3–43. Peck, J. and Theodore, N. (2007) ‘Variegated Capitalism’, Progress in Human

Geography, Vol. 31, pp. 731–72.Peck, J. and Tickell, A. (2002) ‘Neoliberalizing Space’, Antipode, Vol. 34, pp.

380–404.Peet, R. (2007) Geography of Power: the Making of Global Economic Policy, Zed

Books, London.Plehwe, D. and Walpen, B. (2006) ‘Between Network and Complex Organ-

ization: the Making of Neoliberal Knowledge and Hegemony’, inPlehwe, D., Walpen, B. and Neunhöffer, G. (eds) Neoliberal Hegemony: a

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April.Rodrik, D. (2006) ‘Goodbye Washington Consensus, Hello Washington

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Neoliberalization?’, in Peck, J. and Yeung, H. (eds) Remaking the Global

Economy, Sage, London.Turner, R. (2007) ‘The “Rebirth of Liberalism”: the Origins of Neo-liberal

Ideology’, Journal of Political Ideologies, Vol. 12, pp. 67–83.van Apeldoorn, B. (2008) ‘The Contradictions of “Embedded Neoliberal-

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PART ONE • THE RISE OF NEOLIBERALISM

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The argument of this chapter is that corporate lobbying organiza-tions are at the forefront of organizing and pursuing capitalist classinterests through the promotion of neoliberal agendas and the plan-ning of neoliberal projects (see Birch and Mykhnenko, this volume).These organizations exist to plan and implement policy, sometimesfor a wide range of ruling class fractions and sometimes for a muchnarrower ideological base, as a number of chapters in this book (forexample, Birch and Tickell; Jessop) will later show. Either way,corporate lobbying has been at the centre of efforts to expand andglobalize corporate power, to introduce and develop the ‘doctrine’ ofneoliberalism according to which, as David Harvey (2005) has put it,‘market exchange is an ethic in itself, capable of acting as a guide forall human action’. In this sense, neoliberalism is the ideology of theemergent transnational capitalist class which has planned and con-structed an architecture of global governance in response to threatsfrom national capital (Euroscepticism in the UK, for example), fromneoconservatives (internationalist American exceptionalists, forexample – see Diamond 1995) and from the Left.

However, the planning and implementation of the global archi-tecture of neoliberalism depended on the organization of interests. Itwas only possible to introduce neoliberal ideas in practice whenenough members of the ruling class were either won over or hadbecome indifferent or constrained enough to make opposition futile;it was only possible, in other words, by preparing the ground. Thishas been a long-term process, as will be outlined in this chapter, andhas depended on a battle of ideas, certainly, but also on a battle toput certain ideas into practice, to win certain conflicts and to buildconcretely on these victories. It is certainly not the case that this wasdone in an abstract way, in total divorce from national and global

1 How Neoliberalism Got Where It Is: Elite Planning,Corporate Lobbying and the Release of the Free Market

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economic conditions. But nor was it the case that the economicconditions of the mid-1970s inevitably produced neoliberalism. Itdepended on the existence of a relatively coherent if inchoate andevolving set of ideas, an emergent class ideology to which increasingfractions of the ruling class could be won over. If the neoliberals hadto invent on the spot all the ideas and the concrete political victoriesthey had won by the 1970s, and then practically build on them, theywould have tried – but they would have been acting in (different)circumstances not of their choosing.

As might be apparent from this brief discussion it is my argumentthat the question of ideas is important in historical development asdiscussed elsewhere in this book (by Birch and Tickell, for example).The concept of hegemony is useful here, though it is important tospecify that the ‘ruling ideas’ referred to do not necessarily becomethose of subordinated classes. Rather I refer to hegemony as theprocess by which ruling class fractions are able to exert leadershipover closely related fractions and to forge ruling class unity onparticular questions, even if only fleetingly. Of course this unity neednot be total and may fracture quickly, as arguably has been the casewith the ruling class ‘realist’ opposition to the invasion of Iraq in2003 and the peeling off of other elements of the ruling class whenIraq turned out not to be a cake walk. The other obvious way inwhich ruling class consensus is fractured is when ‘experience 1’ (asEdward Thompson called it) walks in ‘without knocking’ (Thompson1978: 201). I refer of course to the financial crisis, which has forcedthe entire apparatus of bankers, financiers, economists, politicians,regulators, journalists and other ‘experts’ on such matters tohurriedly rearrange their analysis of global finance (see Shaoul, thisvolume). A series of splits quickly emerged to be followed byregrouping and ideological projects aimed at defending the castle ofcapitalism slightly further up the hill.

All of this does not emerge spontaneously from the economic cir-cumstances in which the capitalist class find themselves. They needto discuss and debate, to wheel and deal to come to a view on theirresponse. All of this is accomplished in a myriad of social circles andinstitutional locations, from the golf course to the gentleman’s club,but is most obviously institutionalized in the elite policy planningorganizations, the think tanks and the class-wide corporate lobbygroups that both have distinct national characteristics – as I willshow in relation to the UK – and cut across national borders in the


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extension of global corporate power. Sidney Blumenthal (2004: xix)notes in the introduction to The Rise of the Counter Establishment thathis aim is to advance the argument that ‘ideas themselves havebecome a salient aspect of contemporary politics’. He also writesthat at the heart of what he calls the ‘counter-establishment’ ‘is anintellectual elite . . . attached to the foundations and journals, thinktanks and institutes’ (ibid.: xx).

Putting the Architecture in Place

As we will see, the architecture for elite global policy planning wasconstructed by means of lobby groups, think tanks, research insti-tutes, corporate-sponsored foundations and so on. Internationalgroupings emerged gradually over the course of the twentiethcentury, starting in 1920. In general, they developed in line with thethree waves of business activism which can be identified in both theUS and the UK in the twentieth century (Miller and Dinan 2008).

Elite policy planning groups have a long pedigree. One of theearliest groups – set up in 1919 – was the Royal Institute for Inter-national Affairs (RIIA), based in London and often called ChathamHouse, the name of the building in which the Institute is housed. Inthe US the Council on Foreign Relations (CFR) – created in 1921– performed a similar function. Both appear to have emerged froman organization called the Round Table, set up to pursue a world-wide ‘Anglo-Saxon brotherhood’ uniting the empire into one state.This project was associated with imperial propagandist Lionel Curtisand other prominent writers, administrators and politicians (Mac-kenzie 1986). Both the RIIA and the CFR remain key establishmentorganizations today. For example, the CFR is the central upper-class foreign policy think tank in the US, whilst the RIIA has around1,500 individual members and 267 corporate members (RIIA,undated).

These attempts in the UK and the USA (see Birch and Tickell,this volume), being largely successful at the national level, thenopened up a window for the implementation of new structures ofglobal governance. Such organizations, although set up in the earlypart of the twentieth century, remain important players in nationaland global decision making. Furthermore, the process ofglobalization was activated by the conscious and calculated lobbyingand long-term policy planning carried out in organizations and

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networks like the Mont Pelerin Society (MPS), which aimed to winthe ideological battle, and think tanks like the British Centre forPolicy Studies and the Adam Smith Institute, along with theAmerican Heritage Foundation and American Enterprise Institute,which aimed to put those ideas into practice (see Birch and Tickell,this volume).

The MPS, itself an ideological backlash, began on the slopes ofMont Pelerin above Lake Geneva in Switzerland. It illustrates theinternational and global dimensions of elite planning and policymaking. In the company of a ‘tiny band of economists, philosophersand historians’, the MPS was founded in 1947. As one of its Britishacolytes, Ralph (Lord) Harris, recalled, it had the ‘war aim’ ofreversing ‘the tide of collectivism sweeping across Europe after 1945from the Soviet Union westward to Britain already being convertedinto a socialist laboratory’ (Harris 1997). Their intent was the sameas those who had met in Dean’s Yard in London in 1919 to foundthe first class-wide propaganda organization (National Propaganda),namely to undermine popular democracy in the corporate interest.Their intellectual bellwether, Friedrich von Hayek, declared: ‘Wemust make the building of a free society once more an intellectualadventure, a deed of courage’ (cited in Harris 1997). The strategywas not to convince the public, who in the view from Mont Pelerinwere mere followers of their betters, but to convince society’s intellec-tuals, who were perceived to have been won over by socialism: ‘Oncethe more active part of the intellectuals have been converted to a setof beliefs, the process by which these become generally accepted isalmost automatic and irresistible’ (cited in Harris 1997).

The MPS sought to assemble at ‘agreeable’ venues around theworld a ‘growing number of carefully vetted’ members to meet in‘private conclave’ every year or two (Harris 1997). Like contem-porary professional lobbyists, these shock troops in the battle forideas ‘eschewed publicity’, preferring to work amongst the intellec-tuals and through sympathetic institutes and other influential backrooms. The result was a very wide range of think tanks across theworld.

Elite Planning and the Rise of Thatcherism in Britain

In the UK one of its early manifestations was the creation of theInstitute for Economic Affairs (IEA) in 1955. The decision to refrain


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from overt propaganda or direct political action was taken at thefirst meeting of the MPS:

The group does not aspire to conduct propaganda. It seeks to establishno meticulous and hampering orthodoxy, it aligns itself with noparticular party. Its object is solely, by facilitating the exchange of viewsamong minds inspired by certain ideals and broad conceptions held incommon, to contribute to the preservation and improvement of the freesociety. (Hayek, cited in Cockett 1994: 116–17)

The influence of Mont Pelerin has been extremely significant.Within a generation their ideas had been adopted by right-wingpolitical movements everywhere and after a further 10–15 yearsthey had also successfully neutralized what was left of parties set upto represent the common interest. On her election in 1979 MargaretThatcher elevated the head of the IEA to the House of Lords. ‘Itwas primarily your foundation work’, wrote Thatcher in a letter ofthanks, ‘which enabled us to rebuild the philosophy upon which ourParty succeeded in the past’ (quoted in Cockett 1994: 173). The IEAwas the first of what would eventually become more than a hundredfree market think tanks around the world.

The IEA was set up by Anthony Fisher in 1955. He was achicken farmer who had gone to the US and discovered batteryfarming. With the money he made introducing intensive chickenfarming to the UK he intended to go into politics. However, afterreading The Road to Serfdom and discovering that Hayek worked atthe LSE, he promptly made contact. Hayek inducted Fisher into theMont Pelerin Society and advised a different course. According toFisher’s daughter, ‘Hayek said “Don’t go into politics. You have toalter public opinion. It will take a long time. You do it through theintellectuals”’ (BBC 2006). So Fisher set up the IEA and at aConservative Party meeting in East Grinstead met Ralph Harris,who would run the new organization. Harris was joined by anothereconomist, Arthur Seldon, and they began the task of counteringsocial democracy. They gained valuable allies a decade later whenWilliam Rees Mogg, the newly appointed editor of The Times, askedPeter Jay, then a civil servant at the Treasury, to become ajournalist. Jay was sent to Washington and there he came across theChicago School of Mont Pelerin economists which included MiltonFriedman. Jay was converted and The Times under Rees Moggbecame a key propaganda outlet for market fundamentalism. Butbefore the shift to the right came the events of 1968: the student


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uprising in France and the demonstrations against the Vietnam Warin Britain. Revolution and change were in the air.

Post-1968 blues and the rise of ThatcherEven before the wave of protests in 1968, the lobby group Aims ofIndustry was lamenting that ‘capitalism in Britain has, for manyyears, been intellectually on the defensive’ (Ivens 1967: 7). In theaftermath of the student revolt of 1968 and the rise of radicalism inthe UK and across the West, the established propaganda organiza-tions of capital – such as the Economic League and Aims ofIndustry – were joined by other pro-corporate groups. This periodwas the genesis of the third wave of corporate political activism, andwas mirrored in the US at almost exactly the same time. In Britain,the Institute for the Study of Conflict (ISC) was created in 1970 withmoney from, amongst others, the CIA and big business. Two yearslater Nigel Lawson, a former editor of The Spectator who would laterbecome Chancellor of the Exchequer under Thatcher, penned apamphlet focused on ‘Subversion in British Industry’. Lawson hadbeen approached to write the pamphlet by Brian Crozier, thedirector of the Intelligence-supported ISC, who had been impressedby a Lawson piece in The Times which in Crozier’s view ‘showed heunderstood the situation’ (Crozier 1993: 106). They printed only 30copies of the pamphlet as ‘the report was not for the wider public:the target audience was industry itself’ (ibid.). Previously, and withhelp from the Economic League and Aims of Industry, Crozier hadmanaged to convert John Whitehorn of the CBI to the neoliberalcause. Whitehorn penned a memo appealing for more businesssupport for the ISC and its collaborators, which also includedextreme anti-democratic organizations like Common Cause Ltd andIndustrial Research and Information Services Ltd (Ramsay 1996).

During 1971 the President and Director General of the CBI had talkswith a number of heads of companies who are worried about subversiveinfluences in British Industry . . . they have also been in touch with anumber of organizations which seek in their different ways to improvematters. . . . Their objectives and methods naturally vary; and we see nostrong case to streamline them or bring them together more closely thanis done by their present loose links and mutual cooperation. (Quoted inLashmar and Oliver 1998: 166)

Appealing for the necessary funding from business, the memo notedthat the ISC


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plans to take an increasing interest in the study of subversion at home,and has a research project on the drawing board on conflict in Britishindustry to be carried out, if finance is forthcoming, through case studiesof conflicts in the docks, shipbuilding, motor industry, and construction.(Ibid.)

Money was forthcoming and the ISC produced a special report on‘sources of conflict in British Industry’, published just before the 1974election. Naturally this was not presented as a report funded bybusiness and it had its effect. Published with what Crozier describesas ‘unprecedented publicity’ in The Observer, the report was yetanother attempt by corporate and intelligence interests to interferewith the democratic process (Crozier 1993: 108). The ISC’s partnerin subverting democracy, Aims of Industry, was also active in the1974 election campaign, spending £500,000 on anti-Labouradvertising – including one advertisement with Stalin behind asmiling mask (Dorril and Ramsay 1991: 230). The ISC was joined byother radical right-wing organizations in quick succession, from theCentre for Policy Studies (1974) and the Freedom Association (1975)to the Adam Smith Institute (1976). The ferment of free market ideasincreased as these networks expanded. At the centre of thisintellectual assault was the Hayekian obsession with extending freemarkets and, by association, corporate power. The political activistsinvolved came directly from the circles nurtured by Mont Pelerin.

Enter the Mad Monk: the Thatcherite victoryKeith Joseph ‘would do more than any other politician to developthe ideas behind Thatcherism’; he was instrumental in setting up theCentre for Policy Studies in 1974 to accomplish this task. Unlike theIEA, the proposed centre was to be self-consciously political – asJoseph put it, ‘My aim was to convert the Tory party’ (quoted inCockett 1994: 237).

Joseph was joined at the CPS by John Hoskyns, a systems analyst,and Norman Strauss, a marketing executive for Unilever. Hoskynsspent over a year figuring out what was wrong with Britain andrepresenting it all in diagrammatic form. The problem was thateverything seemed to be caused by everything else. NeverthelessJoseph introduced Hoskyns and Strauss to Thatcher, whose interestprompted them to do more work on their model: ‘As they workedsome of the things that Hoskyns had put in his diagram seemed tobecome more important than others. But one thing would come to


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dominate their thinking’ (BBC 2006). After all the scribbling itturned out that the trade unions were to blame and they had to bedefeated.

The intellectual battle for market fundamentalism began to pickup steam as the alleged threat from the trade unions and the Leftpersisted. The IEA sponsored a new think tank called the SocialAffairs Unit (SAU), which was run by Digby Anderson, a far-rightsociologist and Mont Pelerin member. Anderson had beenencouraged by both Michael Ivens of Aims of Industry and ArthurSeldon of IEA in establishing the SAU. As Cockett notes (1994), theemergence of the SAU in 1976 marked the arrival of the last of thethink tanks which were key to the promotion and ‘practical imple-mentation’ of Thatcherite market fundamentalism, especially in theform of privatization and deregulation.

The move towards the privatization of national assets and thederegulation of service provision in state institutions was not sparkedby a simple decision at the centre of government. Privatization ofthe utilities was not mentioned in the 1979 Conservative manifesto(Thatcher 1993: 667–8) and was not really an issue in the 1983election campaign (Wiltshire 1987). Deregulation was the objectiveof key currents in the Conservative Party and also of certain businessinterests who were in a position to take advantage of it. Thelobbying campaign for deregulation of NHS services was by allaccounts extremely effective and had already started by the time ofthe 1978 Conservative Party conference. Industry trade associationsmet with the Minister of Health in October 1979, only five monthsafter the Conservatives’ election victory. However, alongside thepromotion of specific Thatcherite policies, the new breed of thinktanks, research institutes and their backers also directed theirattention to subverting the Labour Party.

The threat of the Left: targeting the Labour PartyBy itself the victory of Thatcherism was not enough, since theLabour Party still presented a threat as far as the business classeswere concerned. Unlike the US, where the Democratic Party hadlong since been pro-business, the British business lobby and theirallies in the worlds of intelligence, government and the military fore-saw a longer-term struggle. One aim was the transformation of Britishsociety so that business would be free to do what it wanted.Government would simply be a mechanism for allocation of resources


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to business. Even at this stage, however, few of them saw thatgovernment might become like a business. A second aim, on whichUS-based business and intelligence circles were especially keen, wasto draw the sting of socialism in the Labour Party so that it was nothreat to business interests. Both of these aims were largely accom-plished in a remarkable period of political turmoil between 1979and 1997.

Neutering the Labour Party was arguably a world-historicalaccomplishment, undertaken not simply by business, but by thealliance it forged with government and intelligence agencies in theUS and UK. A whole network of Atlanticist foundations, think tanksand front groups was at work in the trades unions, the media andacademia to turn the left-leaning elite towards the US and awayfrom social democracy, suspicion of big business, and opposition toUS foreign policy.

The Atlanticist tendency within Labour was not new. But thesplit in the party in the late 1970s, which culminated in the creationof the Social Democratic Party (SDP), was encouraged andexacerbated by US-linked organizations often connected with theCIA. The US funded social democrats because this was a means ofensuring that European governments ‘continued to allow Americancapital into their economies with a minimum of restrictions’ (Ramsay2002: 33). But, for some sections of the movement for therestoration of corporate power, the Labour Party was simply notsocial-democratic enough. It was seen as in the grip of the Far Left,and indeed was said to be ‘thoroughly penetrated’ by the KGB,according to right-wing activists like Brian Crozier (1993: 147).Crozier ‘had long nursed the idea’ that the solution to the problemof a ‘subversive opposition’ which ‘might come back to power couldonly lie in the creation of a non-subversive alternative party ofgovernment’ (ibid.).

The interest of corporate-funded think tanks and right-wing USfoundations in an alternative to Labour was clear. But the historybooks neglect to mention much in the way of trans-Atlantic connec-tions for the Gang of Four who split from the Labour Party to formthe SDP, and their co-conspirators. They often miss out the well-known links of Shirley Williams with the right-wing DitchleyFoundation, or those of Robert Maclennan, a founder of the SDP,with the Atlantic Council, a pro-NATO policy group. Indeed, allfour leaders of the SDP had been career-long members of the


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American tendency in Labour. When the SDP merged with theLiberals to form Social and Liberal Democrats, ‘one of the authorsof the proposed joint policy statement was seconded to the job byhis employer [CSIS] a propagandizing Washington foreign policythink tank much used by successive American administrations inpursuit of its foreign policy goals’ (Easton 1996).

More important are the connections of two of the other founders,Stephen Haseler, an academic at the City of London Polytechnic,who along with fellow lecturer Douglas Eden (a US national) formedthe Social Democratic Alliance (SDA) and issued ‘a string ofalarmist reports about the inroads being made into the Labour Partyby the Left’ (Ramsay 2002: 35). Haseler had written a bookcondemning The Death of British Democracy in 1976. The SDAattracted the attention and the financial help ‘on a small scale’ ofBrian Crozier, the Intelligence-connected spook and corporateactivist. As he notes, the ‘true story of its prehistory has not . . . beentold’ (Crozier 1993: 147). Crozier admits that he already knew bothHaseler and Eden, the latter from early meetings of the extremistNational Association for Freedom. The three met at Crozier’s officein the Institute for the Study of Conflict – hardly an auspiciousmeeting place for members of the Labour Party (ibid.: 147–8).Haseler later worked for the right-wing, corporate-funded HeritageFoundation and used Heritage money to set up the Institute forEuropean Defence and Strategic Studies, intended to challengeCND in the 1980s (Ramsay 2002: 36).

Once the SDP was formed, several Labour MPs on the right ofthe party who had decided to join the SDP voted for Michael Footin the leadership contest against the more right-wing Denis Healey.Their votes ensured Foot’s victory and were intended as the deathknell for the Labour Party. ‘It was very important’, one of themwrote, that they ‘destroyed’ the Labour Party (Neville Sandelson,quoted in Ramsay 1998: 92). The creation of the SDP not only splitthe anti-Tory vote at the 1983 election, but led to the defeat of theLabour Left in the local councils in the mid-1980s and, before that,the miners’ strike in 1984–5.

Even after these victories, the Atlanticists feared that their job wasnot done. Crozier’s view was that the SDP project had beenconfounded by Roy Jenkins’s ‘unwillingness’ to ‘use the party for thepurpose for which it had been created’ and play the role in historyallotted to him by the machinations of Crozier, Eden and Haseler


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(Crozier 1993: 149). Instead of attempting to ‘split the LabourParty’, he tried to attract Tory votes.

And so the problem of Labour – or rather the problem of popu-lar democracy – remained on the agenda. In order to complete theirproject, the neoliberals needed to evacuate any meaningful contentthat democracy might have. They say this quite openly. RalphHarris, reflecting on the history of the Mont Pelerin Society and thesubsequent founding of the Institute of Economic Affairs, spells itout: ‘I now express our remaining war aim as being to deprive(misrepresentative) democracy of its unmerited halo’ (Harris 1997).

Global Elite Planning

Such attacks on democracy are not limited to national politics. Infact, the last few decades have witnessed an increasing globalizationof elite planning. Understanding how global capital has managed toexercise such power and influence requires an appreciation of therole of transnational business lobbies and policy planning groups.The most significant of these are the International Chamber ofCommerce; the Bilderberg Group; the World Economic Forum;and the Trilateral Commission. All four are run by and for thebiggest transnational corporations and often directly by their CEOsor other board members.

Two of these groups, the Trilateral Commission and the Bilder-berg Group, are shrouded in mystery and are a conspiracy theorist’sdream. But these are neither fictions nor are they entirely secret.The Bilderberg Group was reported in the New York Times as earlyas 1957, and in 1964 it issued a press statement at the conclusion ofits meeting (Domhoff 1971: 302–3). All four represent policyplanning, networking and co-ordinating groups that operate at thetransnational level in the pursuit of a free market agenda.

International Chamber of Commerce (1920)The International Chamber of Commerce (ICC) was formed veryearly on, in 1920/1. Although it was headquartered in Paris, themain impetus for its foundation came from ‘the experience of thebusiness men of the United States in building up their greatNational Chamber of Commerce’ (Keppel 1922: 189–210). At thattime the ICC’s membership was made up of National Associationsof Business, rather than direct company membership. It was one of


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the earliest lobby groups to campaign to harmonize rules forbusiness internationally. For example, among the 21 resolutionsunanimously adopted at the 1921 London congress of the ICC wereopposition to ‘double taxation’ on international trade, ‘removal ofobstacles to commerce’ and cooperation on standardization, urgingthe principle of ‘free export’, moderation in tariffs and ‘internationalprotection of industrial property, including trade marks’ (Keppell1922: 197–8), reflecting more recent concerns evident in theestablishment of the WTO (see Tyfield, this volume).

Today the ICC is at the forefront of corporate lobbying againstregulation. It is the largest international lobby group representingpure corporate interests – as opposed to being a civil society bodyor a policy planning forum like the others noted below. It has some7,000 members from over 130 countries.

The ICC has a record of ‘massive lobby offensives’ to influencethe WTO. Notably, the ICC starts from a basis of having the‘closest links to the WTO secretariat’ through the interchange ofpersonnel between GATT/WTO, multinational corporations andthe ICC. The Director General of GATT during the Uruguayround, which led to the creation of the WTO, was Arthur Dunkel,who later became a WTO dispute panellist, a board member atNestlé and the Chair of the ICC working group on internationaltrade and investment, in which role he heads the ICC lobbying ofthe WTO (Balanya et al. 2003: 137–8). These close connections arereplicated time and again.

Bilderberg (1957)The Bilderberg Group is one of the most secretive elite policyplanning assemblies. It held its founding meeting in 1952 at theBilderberg Hotel in Oosterbeek in the Netherlands, funded by boththe CIA and the Dutch/British corporation Unilever. Bilderberg asa group has a more liberal history, being not simply a lobby groupfor global capital, but a policy planning and discussion group whichalso included political elites and even key representatives of organ-ized labour (though union representation has declined in recentyears) (Carroll and Carson 2003). Nevertheless it has been a venuefor the exercise of soft power by most of the largest global corpora-tions, including British American Tobacco, BP, Shell, Exxon, IBM,Rio Tinto, General Motors and others (Balanya et al. 2003: 145).

Bilderberg is neither a prototypical world government nor an


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incidental discussion forum. Because of its more deliberativeapproach Bilderberg has managed to foster elite consensus. Whenconsensus is reached the participants have ‘at their disposal powerfultransnational and national instruments for bringing about’ theirdecisions (Thompson 1980: 157). Indeed their meetings have ‘helpedto ensure that consensual policies were adopted by the transnationalsystem of the West’. However, in recent years the group’s strategyhas increasingly aligned with neoliberal reform agendas (ibid.).

At the centre of the Bilderberg Group are the key networkers,many of whom are also active in the other global networks discussedhere. Etienne Davignon, for example, was on the steering group in1997. A former European Commission Vice-Chair, Davignon hasalso been linked to the Trilateral Commission and through Director-ship of Société Générale de Belgique to the European Round Tableof Industrialists (ERT). In fact, Davignon was present at theinaugural ERT meeting when he was an EU commissioner. Davig-non has also been a director of BASF, Fina and Fortis, all politicallyactive TNCs.

A former delegate at Bilderberg conferences notes how these get-togethers relate to the other elite networking venues and events:

Bilderberg is part of a global conversation that takes place each year ata string of conferences, and it does form the backdrop to policies thatemerge later. There’s the World Economic Forum at Davos in February,the Bilderberg and G8 meetings in April/May, and the IMF/WorldBank annual conference in September. A kind of international consensusemerges and is carried over from one meeting to the next. . . . Thisconsensus becomes the background for G8 economic communiques; itbecomes what informs the IMF when it imposes an adjustmentprogramme on Indonesia; and it becomes what the President proposes toCongress. (Armstrong and McConnachie 1998, cited in Balanya et al.2003: 146)

The former Labour Foreign Secretary, Denis Healey, writes inhis memoirs how Bilderberg conferences were the most valuable ofall the events that rising politicians on the moderate left were invitedto attend (surpassing the CIA-funded Congress for Cultural Free-dom) (Healey 1989: 195). The level of debate and the quality of theinformal contacts made at Bilberberg were useful throughout apolitical career. Healey revealed to a journalist (it is rare forBilderbergers to allow themselves to be quoted on the record aboutthe organization) that:


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We make a point of getting along younger politicians who are obviouslyrising, to bring them together with financiers and industrialists who offerthem wise words. It increases the chance of having a sensible globalpolicy. (Ronson 2001: 299)

Another Bilderberg steering committee member revealed thatthose invited to the conferences are expected to ‘sing for theirsupper’. In 1975 Margaret Thatcher was embarrassed when this waspointed out to her over dinner. The next day ‘she suddenly stood upand launched into a three-minute Thatcher special . . . the roomwas stunned . . . as a result of that speech David Rockefeller andHenry Kissinger and the other Americans fell in love with her. Theybrought her over to America, took her around in limousines, andintroduced her to everyone’ (ibid.: 297).

The key difference between Bilderberg and the ICC is in therange of non-business invitees. These are generally globalizingbureaucrats, politicians and sometimes representatives of NGOs andtrades unions, who can either be relied upon to agree or havepotential for co-option into the neoliberal agenda. The presence ofpeople with a past involvement in radical politics is an indicationthat these are people that the corporations can do business with,literally and metaphorically. For example, former Green Partyactivist Jonathon Porritt has attended.

World Economic Forum (1971)The World Economic Forum (WEF) was set up in 1971 and meetsannually at Davos in Switzerland. The Davos event is much lesssecretive than Bilderberg meetings as well as being larger. The WEFannounces that it includes ‘1,000 top business leaders, 250 politicalleaders, 250 foremost academic experts from every domain andsome 250 media leaders [who] come together to shape the globalagenda’ (quoted in Balanya et al. 2003: 148). The meeting aims tocreate a ‘unique atmosphere’ which facilitates ‘literally thousands ofprivate discussions’. According to long-time Trilateral Commissionparticipant and academic Samuel Huntington, ‘Davos peoplecontrol virtually all international institutions, many of the world’sgovernments and the bulk of the world’s economic and militarycapabilities’ (cited in Drezner 2007).

The WEF claims credit for launching the Uruguay round ofGATT which culminated in the creation of the WTO, the mostrecent institution to join the International Monetary Fund (IMF)


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and World Bank as the institutions of global economic governance.Since 1999 growing numbers of protesters have turned up only tobe repelled by Swiss riot police. In recent years the number ofcelebrities making an entrance as part of their ‘goodwill’ missionsor to lobby the powerful has increased, with Davos playing host toAngelina Jolie, the film star, and the ubiquitous Bono of U2 in2006.

Trilateral Commission (1973)The Trilateral Commission was launched in 1973 by an informaltransnational planning body of ‘unprecedented standing andorganizational and ideological sophistication’ led by members of theBilderberg Group, including David Rockefeller and ZbigniewBrzezinski (van der Pijl 1989: 259).

A first common task was demarcated, the dismantling of thedemocratic welfare states, which were judged to enhance the struc-tural power of the working class, and thus to be incompatible withthe long-term aims of capitalism. (Ibid.)

This message has been at the centre of its pronouncements since1973. In 1999, for example, it recommended that ‘Europe mustbecome more competitive by deregulating labour markets andstreamlining burdensome welfare systems’ (ibid.). This has been thestrategy of the European Commission and the neoliberal govern-ments of Europe since then. Key support for this agenda has comefrom the UK, along with Spain (under Aznar) and Italy (underBerlusconi). Latterly, from 2005, Angela Merkel joined the club ofenthusiastic liberalizers and deregulators. The EU strategy isexpressed in the Lisbon Agenda, issued at the conclusion of the EUintergovernmental summit in 2000. The strategic goal set by theLisbon Summit was for the EU ‘to become the most competitiveand dynamic knowledge-based economy in the world capable ofsustainable economic growth with more and better jobs and greatersocial cohesion’ (CEC 2001). However, in order to achieve this goal,the strategy recommends the dismantling of the European socialmodel embedded in different national welfare states.

Conclusion: the Battle of Ideas

The neoliberals understood the necessity of winning the battle ofideas but it was the Adam Smith Institute and associated groups


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which understood the vital importance of putting ideas into practice.In 1988 Madsen Pirie of the ASI wrote:

The successes achieved by the new-style politics allowed for the rise ofthe attractive but erroneous view that the work of lonely scholars, theiracolytes and their advocates had finally paid off. And brought results inits train. That these results had not come in the earlier administrationswhich attempted them was put down to a wrong climate or wrongpersonnel. In fact, it was wrong policies. It was the policy engineers,coming in the wake of the pure scientists of politics and economic theory,who made the machines which made events. The ideas had beensufficient to win the intellectual battle, but this was not enough. Men andwomen with spanners in their hands and grease on their fingers had firstto devise the ways in which the ideas of pure theory could be turned intotechnical devices to alter reality. The idea at the core of micropolitics isthat creative ingenuity is needed to apply to the practical world ofinterest group politics the concepts of free market theory. (Pirie 1988:267)

This approach was certainly a contrast to that outlined byKeynes at the end of his great work The General Theory. He closed thebook by noting that ‘I am sure that the power of vested interests isvastly exaggerated compared with the gradual encroachment ofideas’ (Keynes 1936: 383). Hayek had specifically singled out thispassage for praise in his opening address to the first Mont Pelerinmeeting. Both economists differed, then, from the disciples of MontPelerin who thought that ideas alone were not enough. On thispoint Pirie was much closer to the practical ideas of Karl Marx whofamously wrote in the German Ideology that:

We do not set out from what men say, imagine, conceive, nor from whatmen as narrated, thought of, imagined, conceived, in order to arrive atmen in the flesh. We set out from real active men, and on the basis oftheir real life process we demonstrate the development of the ideologicalreflexes and echoes of this life process. The phantoms formed in thehuman brain are also, necessarily, sublimates of their material lifeprocess, which is empirically verifiable and bound to material premises.Morality, religion, metaphysics, all the rest of ideology and their corres-ponding forms of consciousness thus no longer retain the semblance ofindependence. They have no history, no development; but men, develop-ing their material production and their material intercourse, alter, alongwith this their real existence their thinking and the products of theirthinking. Life is not determined by consciousness, but consciousness bylife. (Marx and Engels 1976: 40–1)


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Perhaps strangely, Pirie and his colleagues at the ASI seemed toshare with classical Marxism the idea that it is ideas in practicalstruggle that change things rather than ideas in the abstract.Certainly it was at the core of their mission to take forward the ideasoutlined by the Mont Pelerin Society and its various offshoots (IEA,CPS, et cetera) and put them into practice.

This they did to some effect. Of course this was hedged aboutwith all sorts of contradictions and reversals. It should also be notedthat the neoliberals, as we now call them, did not have a clearblueprint either for the path ahead or for the ultimate destination.They certainly wanted to ‘restore’ class power, as David Harvey(2005) puts it. Of course those who criticize Harvey for the use ofthe phrase, because of its implication that they had ‘lost’ classpower, are right in the sense that social democracy still entailed classinequality and capitalist class power – in particular the specifically‘capitalist’ state as Ralph Miliband (1973) put it in the 1970s. But itis correct to say that the impact of the neoliberal onslaught diddeliberately undermine the sources of opposition – most notably intheir attempts to destroy the trade union movement and the BritishLabour Party – and undermined the potential of ‘bourgeois democ-racy’ to return critics of the market. In this respect it is a restorationof power, taking back most of the gains made by the trade unionmovement and the forces of popular democracy, minimal thoughthey might be argued to be. In addition, though, they made it theirbusiness to help both themselves and their class allies to becomemuch wealthier both in absolute and relative terms.

The role of ideas in all of this is pre-eminently in fostering rulingclass consensus and unity, in brokering agreement and trade-offs.This is important as it allows seemingly far-flung allied fractions tosing from the same hymn sheet. But it also informs the lines takenfurther down the communication chains, when lobbyists and PRpeople work on the ideas to try to find ways to make them palatableto the rest of us. In this way the ideas of the ruling class aredisseminated across the society. While they may not, and most oftendo not, command the consent of the governed – and certainly nottheir agreement – they are in reality the ‘ruling ideas’. It doesrequire ‘an enormous engine of indoctrination’ (Miliband 1973) tomanufacture, distribute and reproduce such ideas, but it does notrequire that everyone believes and accepts them, only that enoughpeople are misled and comply, and not enough rebel.


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Opinion 1880–1960, Manchester University Press, Manchester.Marx, K. and Engels, F. (1976) The German Ideology. In Collected Works,

Lawrence and Wishart, London, Vol. 5, pp. 19–539.Miliband, R. (1973) The State in Capitalist Society, Quartet, London.Miller, D. and Dinan, W. (2008) A Century of Spin, Pluto, London.Nace, T. (2003) Gangs of America: the Rise of Corporate Power and the Disabling of

Democracy, Berrett-Koehler Publishers, Inc., San Francisco CA.Pirie, M. (1988) Micropolitics: the Creation of Successful Policies, Wildwood House,

London.Ramsay, R. (1996) ‘The Clandestine Caucus: Anti-Socialist Campaigns and

Operations in the British Labour Movement since the War’, Lobster,Special Issue, <http://www.lobster-magazine.co.uk/issuetcc.php>.

—— (1998) Prawn Cocktail Party: the Hidden Power behind New Labour, Vision,London.

—— (2002) The Rise of New Labour, Pocket Essentials, Harpenden, Hertford-shire.

Ronson, J. (2001) Them: Adventures with Extremists, Picador, London.Royal Institute of International Affairs (RIIA) (undated) ‘Background’,

<http://www.riia.org>.Thatcher, M. (1993) The Downing Street Years, Harper Collins, London.Thompson, E. P. (1978) The Poverty of Theory: an Orrery of Errors, Merlin Press,

London. Thompson, P. (1980) ‘Bilderberg and the West’, in Sklar, H. (ed.) Trilateral-

ism: the Trilateral Commission and Elite Planning for World Management, SouthEnd Press, Boston MA.

van der Pijl, K. (1989) ‘The International Level’, in Bottomore, T. andBrym, R. (eds) The Capitalist Class: an International Study, Harvester Wheat-sheaf, London.

Wiltshire, K. (1987) Privatisation: the British Experience, Longman Cheshire,Melbourne.


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2 Making Neoliberal Order in the United States

KEAN BIRCH AND ADAM TICKELL

A recurrent theme of this book is that neoliberalism has received anenormous amount of attention and criticism recently as thedominant political-economic project of our era – and simultaneouslydissected as a concept used to explain how for at least 30 years the‘free’ market has driven policy making around the world. Referencesto neoliberalism seem almost ubiquitous nowadays, while the termhas been associated, broadly speaking, with a wide range of socialmeanings and connotations, economic projects and policies, politicalvisions and so forth. This book’s introduction and later chapters byJessop, Fine, MacLeavy, and Swain et al. refer to just some of thesediverse aspects of neoliberalism, raising a number of critical ques-tions about how we define the concept, how we identify its divergentand historically contingent characteristics, and how we understandits rise and evolution as the dominant economic order of the last fewdecades.

Neoliberalism is often used loosely as a critical synonym forcorporate globalization and other ‘bad stuff’ that has resulted fromthe supposedly unfettered triumph and global spread of free marketssince the 1970s. However, considering that the extension of freemarkets is historically and politically contingent (Prasad 2006), it isnecessary to explore the historical and political context ofneoliberalism as an economic order in more detail. That is preciselywhat we seek to do in this chapter. There is clearly a danger herethat underspecified conceptions of neoliberalism are invoked acrossan array of contexts (from American conservatism, say, torestructuring in Eastern Europe), leading to an extremely elasticusage of the term that loses purchase on its specific social, politicaland, as crucially, geographical manifestations (Larner 2003). Toooften, neoliberalism seems to have a nebulous, atmospheric status –

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somehow floating above the heads of political agents and pre-determining the structure and behaviour of their actions, the organ-izations they work in, and the institutional environment in whichthey operate. This runs the risk, as mentioned by Swain et al. laterin this volume, of naturalizing neoliberalism as ‘out there’ and readyto be implemented, implying not only a universal reach, but also amonolithic notion of ‘natural’ (and somehow moral) order andpolitical inevitability.

In this chapter we want to call attention to some of the specifi-cities of the American form(ation) of neoliberalism, which is oftenmisconstrued as a paradigmatic or more pristine form of thisglobalizing phenomenon (Peck 2004). This means exposing some ofthe connections between the ascendant neoliberal order and the riseof the conservative movement in the United States over the past fewdecades. As mentioned, it is important to problematize the rathersimplistic equation that neoliberalism equals conservatism. This said,it is evident that conservatism is deeply entwined with the notion ofa neoliberal ‘common sense’ both explicitly and implicitly, especiallyin terms of the historical disjunctures with and crises in the politicalstructures and state practices of Keynesianism-welfarism, whichconstitute conservatism’s legitimating narrative and correspondingpolitical strength. As Jessop and MacLeavy outline in later chapters,this previous political-economic reality (Keynesianism) had beencharacterized, at least in some countries, as a form of AtlanticFordism in which the underlying tensions between capital andlabour were subsumed in a consensus model of growth thatgradually broke down during the 1960s and 1970s. In the UnitedStates, the ascendancy of neoliberalism and the concurrent rise ofthe conservatism movement tore down this reality, yet the tensionsand contradictions in this new order have largely strengthenedrather than destabilized it. Thus Wendy Brown (2006) argues thatdespite these tensions between neoliberalism and conservatism in theUSA, the former provided the manure – to steal a turn of phrasefrom Alvin Gouldner – from which the new conservative movementcould bloom. Here the insertion of neoliberalism as the solution tothe specific problems faced by the crumbling post-war order offereda ready-made, and even radical, political-economic agenda whichcould restore the moral power of state practices in conservative eyes.

Our concern in this chapter, then, is to draw attention to thecontingent relationship between neoliberalism and political context

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by focusing on the conservative movement in the United States.However, we do not want to fall into the trap of naturalizingneoliberalism as an expression of the new conservatism, or viceversa. Following the argument made by Larner (2005: 11) that weneed to avoid the assumption ‘that there is a necessary relationshipbetween the two’, we focus squarely on the relationship betweenneoliberalism and the conservative movement as a political project;in this way we wish to position neoliberalism within the broaderreading of US politics rather than treating it as some backgroundatmosphere or conceptual explanans. Thus the politics of neoliberal-ism is as much the problematic as is the neoliberalization of politics.In so doing we recognize that neoliberalism as we visualize it hereis an abstraction, one that is realized in a multitude of different waysand through specific institutional formations, political projects,policy trajectories and so on (see Prasad 2006). It is a method-ological fact of life that neoliberalism can only be encounteredthrough such contingent, conjunctural and concrete formations:there are only hybrid manifestations of neoliberalism, it does notoriginate in a singular time or space, nor is there a pristine essentialcentre or starting point from which to theorize the political diffusionand development of the neoliberal project (Peck 2004). In order touncover the structure of neoliberalism, this chapter draws on thefindings of a project undertaken by Adam Tickell and Jamie Peckexploring policy elites and think tanks in the USA, part of a broaderresearch project looking at the political and historical geographies ofneoliberalism (see also Peck and Tickell 2007). Below we outline therise of the ‘neoliberal-conservative’ movement in the USA, theinfluential positioning of neoliberalism in ‘centres of persuasion’ inthe USA, and the political-economic hegemony that this hasenabled, especially in informing and making a neoliberal-conserva-tive order.

The Politics of Neoliberalism: the Rise of the ConservativeMovement

In undertaking the dissemination of neoliberal ideas that are designedto shape events and policies, neoliberal thinkers have always soughtto enrol political and national-state actors (such as governments andpolicy makers) in their project, alongside internationalizing theirideas to extend particular political and legal regimes worldwide (as


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in the case of private property rights). According to Mudge (2008:706), the ‘intellectual face’ of neoliberalism is tied intrinsically to amoral and political project ‘articulated in the language ofeconomics’ that emphasizes the moral benefits of free markets as anecessary condition for free and democratic societies. In contrast tothe laissez-faire perspective of nineteenth-century liberals so ablydissected by Karl Polanyi (2001 [1944]), the neoliberal project hasthereby, and necessarily, sought explicitly to reconstitutestate–market relations, what Tickell and Peck (2003: 166) call the‘mobilization of state power in the contradictory extension andreproduction of market(-like) rule’. Thus neoliberalism is notnecessarily based on the idea of less government or less politics;rather, neoliberalism is conceived in terms of different forms of stateintervention and political engagement, across all scales. What thisindicates is the necessary relationship between neoliberalism andpolitical movements and, furthermore, the need to establish centresof political and intellectual persuasion to facilitate this ongoinginteraction.

Thinking about the political context in which neoliberalism arosein the United States means that it is necessary to consider the con-current rise of the conservative movement and why neoliberalismand conservatism are often conflated. However, as with neoliberal-ism, the ambiguities and contradictions inherent in identifying a

conservative movement entail a more nuanced appreciation of thepolitical and moral diversity that has coalesced in modern Americanconservatism (see Hodgson 1996). In her history of the movement,Roads to Dominion, Diamond (1995) argues that there are three majorstreams running through the new conservative coalition, comprisinganticommunism, traditionalism and (the closest neoliberal variant)libertarianism. Each of these right-wing groupings has differentpreoccupations, motivations and strategic goals, which raises thequestion of how this medley of intellectual strands has managed toforge such a powerful, let alone coherent, political movement.

In outlining the differences between the strands of conservativethought, Diamond (1995) argues that the anticommunist faction wassplit between mass-level patriotism and a largely metropolitan,intellectual elite of Cold War Warriors concerned for the most partwith US global hegemony and Soviet containment. The latter hadtheir roots in Trotskyist internationalism, especially with people likeIrving Kristol who helped found the journal The Public Interest in


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1965. Whilst the collapse of the Soviet bloc might have curtailed thisstrand of conservatism, we can see the anticommunism lineage inthe more recent neoconservative Project for the New American Century

and subsequent neoconservative dominance of foreign policy in theGeorge W. Bush regime, with the likes of Richard Perle and PaulWolfowitz taking a leading role in the pursuit of the invasion of Iraqin 2003, or the ‘endgame of globalization’ as Neil Smith (2006) putsit.

In contrast to the global and military orientation of anticom-munism and neoconservatism, the traditionalist faction of theconservative movement is most obviously aligned with Christianfundamentalism and the ‘New Right’ (Diamond 1995). TheseCultural Warriors represent a clearly ‘moralistic’ – as opposed tomilitaristic – faction, concerned with the regulation of society andsocial norms through ‘moralized state power’ (Brown 2006: 697).What is striking is the distinct, and inward-looking, national anddomestic concern with creating a ‘moral society’, illustrated by thecontinuing opposition by traditionalist conservatives to abortion,same-sex marriage and other ‘cultural’ issues that, as the journalistThomas Frank argues, have been manipulated by conservativepoliticians to appease middle America (see Frank 2006, What’s the

Matter with America?).The final faction comprises libertarians whose concern with

liberty led to the valorization of free markets and opposition to stateintervention, especially the redistribution of wealth (Diamond 1995).Gradually, however, this faction has shifted from an adherence tonineteenth-century laissez-faire towards modern-day neoliberal con-cern with the state-mobilized extension of market rule. Thistransformation of the libertarian faction resulted from an alliancewith business and corporate interests more concerned with deregu-lation and lower taxes than with individual liberty (Rampton andStauber 2004). Consequently this wing of the conservative move-ment has become highly concentrated in think tanks and researchinstitutes funded by business and deeply embedded in policy-makingcircles as it seeks to peddle its wares in the ‘marketplace for ideas’(Ricci 1993).

These factions of the conservative movement do not by any meanssee eye-to-eye on all issues, nor can any faction be unequivocallyassociated with neoliberalism as a form of market-like rule. WhilstGodfrey Hodgson (2004: 37) suggests that it was the anticommunist


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faction centred on William Buckley and the National Review thatmanaged to unite the religious and libertarian right by constructingan overlapping fear with external and internal ‘communist’ threatsto the US, others have suggested the need for a more nuancedanalysis, especially when factoring in neoliberalism. On the onehand, what the three conservative factions all shared was anantipathy towards state intervention except in specific domains: so,traditionalists seek the state enforcement of ‘morals’; libertariansseek state enforcement of private property and support for businessinterests; and anticommunists seek the state expansion of themilitary-industrial complex and US hegemony (Diamond 1995).Thus the complaint of ‘too much government’ and state interventionresolves itself into a concern with certain types of government andcertain types of state intervention, rather than a problem with thestate per se. On the other hand, however, this analysis does notexplain how the state was transformed from a largely redistributive,Keynesian welfare system to an authoritarian neoliberal-conserva-tive order.

In order to understand this transformation it is important to turnour attention to the central role played by ideas – and not justinterests – in the concurrent rise of neoliberalism and conservatismduring the 1970s, their consolidation during the 1980s and theirembedding in the mid-1990s (Peck and Tickell 2002). We are notsuggesting that ideas are ephemeral; instead we would argue thatthey have a material basis in the specific political context andgeographies in which they arise (such as neoliberal-conservativethink tanks), in which they spread (such as elite policy circles), and,crucially, how they engender hegemonic discourses (linking marketfailure with government interference, for example, which thereforelegitimates the usurpation of state power by conservatives).

So in contrast to Hodgson’s (2004) claim above about the impor-tance of anticommunism, we want to focus on how neoliberalismprovided the conservative movement with the glue that could bindtogether the often disparate interests of the different conservativefactions and thereby provide the impetus for the rise of neoliberal-conservatism in the USA from the 1970s onwards. According toBrown (2006), neoliberal ideas and their intellectual proponentsprovided the means to break the link between political rights andcitizenship and the idea of the common or public good. She arguesthat the specific governmental rationality of neoliberalism prepared


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the ground for modern conservatism’s anti-democratic project byde-politicizing social problems, converting them into ‘individualproblems with market solutions’ (ibid.: 704). In this way and, as LisaDuggan (2003) also argues, through the neoliberal valorization andestablishment of the market as the central organizing institution insociety – in itself an active achievement rather than a natural stateof affairs – economic issues could be separated from political andcultural areas of life. In turn the political context of neoliberalism –its successive political-economic expansion under Reagan, BushSenior and Bush Junior – has been dependent upon the politicalsuccess of the conservative movement. Thus, in this context, we cansay that neoliberalism is inextricably tied to the conservativemovement, creating what we consider as a neoliberal-conservativeorder. We look at how this has been achieved in the rest of thechapter.

Making the Neoliberal-Conservative Order

Analysing the political context of neoliberalism creates a number ofnon-trivial methodological challenges. There are, for example,multiple ways of approaching this empirically, including focusing onnational transformations or case studies (see Miller, this volume);drawing insights from comparative studies (Hinojosa and Bebbing-ton, this volume); studying specific institutions and policies (vanWaeyenberge, this volume); and, researching new subjectivities,governmentalities and agencies (MacLeavy, this volume). We canlearn something important from all of these approaches, whether itis the differences in particular national varieties of neoliberalismentailing specific state strategies (see Birch and Mykhnenko 2009) orthe particular ideological, theoretical and political underpinnings ofinstitutional change (see Blyth 2002).

Here our empirical focus is on political and policy elites. Thisemphasis is informed by both pragmatic and theoretical concerns.On the one hand, pragmatically it allows us to conduct in-depthinterviews with policy insiders that we know something about andpeople whom our age, professional status, ethnicity and genderallow us to relate to easily. Furthermore, following initial access towhat are very tight elite circles, we have discovered that we cancover a lot of ground through referrals within the network. Thisenables us to have conversations concerning both policy specifics


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and broad intellectual and political currents with agents directlyinvolved the process of neoliberalization in different ways and atdifferent times. On the other hand, theoretically it enables well-informed discussions of the formation of neoliberal-conservativeprojects and programmes – which were and are, of course, ‘made’rather than found or rediscovered – often with some of the originalarchitects or protagonists. These agents of neoliberal-conservatismcan be afforded a degree of ethnographic complexity through thismethod, rather than invoking them as cardboard cutouts in somegrand conspiracy story. Further, first-hand disclosures concerning theneoliberal ‘war of position’ are articulated by the actors themselves,allowing different narrations to be held up against other insideraccounts, as well as those of external actors within the process.

‘Centres of persuasion’Situating our analysis of neoliberal ‘centres of persuasion’ (such asthink tanks) within an American political context enables us toidentify the ‘essential’ and ‘necessary’ characteristics of the neo-liberal project while, at the same time, having inescapably to con-front the reality that every such project is by definition a hybridstructure, reflecting in a profound way the qualitatively differentpolitical histories, institutional cultures and constitutional settlementsof different countries. Moreover, this means that it cannot be aneither/or question about whether to focus on the essence or thehybrid: one must take account of both. What this enables us to dois focus on what the agents of neoliberal transformation actually dowhen they cluster in very close proximity to the state apparatus thatthey ostensibly abhor, as opposed to focusing on what their rhetoricmight suggest they do. This ultimately allows us to get a sense of thelocal and transnational constitution of the ‘centres of persuasion’ likeWashington DC and their distinctive, varied and diverse dynamicsas agglomerations of policy-making elites.

What is evident from the off is that neoliberalism has beenactively promoted as an intellectual mission from its inception as autopian vision in 1938 through a number of intellectual centres (seeBirch and Mykhnenko, this volume). In spreading the word andconvincing others, these centres of persuasion have been ablysupported by conservative business interests, foundations andindividuals in networks such as the Mont Pelerin Society (MPS) –established in 1947 – and ‘independent’ research organizations such


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the American Enterprise Institute (AEI), which was set up in 1943but grew significantly during the 1970s (Ricci 1993: 160). However,as would be evident from the plethora of nationally and inter-nationally based initiatives undertaken and promulgated by neo-liberal intellectuals, neoliberalism was a composite, transnationalconstruction from the start. However, no matter how cohesive andcoherent neoliberalism may look now, its emergence and dissemina-tion were not inevitable and it has never been a unilinear andsingular project, even in the United States.

If the work of Friedrich von Hayek represents a more Europeanstrand within what we now understand to be the neoliberal project(see Birch and Mykhnenko, this volume), the American strand wasclosely associated with his fellow MPS member Milton Friedman,who not only won the Bank of Sweden Prize two years after Hayekbut also had a more visible public presence in his role as a Wall Street

Journal editorial writer. The US and increasingly global audience forFriedman’s monetarist arguments subsequently expanded in thecontext of the 1970s oil crisis when inflation emerged as a key policyproblem, although the extent to which monetarist ideas weresuccessfully (and deliberately) built into policy making is debatable(Prasad 2006). The public and visible side of these neoliberal ideaswas strengthened in the 1970s with the establishment of new centresof persuasion such as the Heritage Foundation. Heritage was set upin Washington DC in 1973 by Ed Feulner as a counterweight to theformidable array of ‘liberal’ policy institutions that had been con-structed around the New Deal settlement. As a senior officer in aconservative think tank explained:

But in 1973, if you go back, there were several things that kind ofhappened about the same time. . . . The Republican Study Committeewas formed in the House of Representatives, which was the conservativegroup, and it was basically them sort of recognizing that they didn’thave the resources available to them that the majority did – and it wasmuch more skewed in the 70s than it is today. It’s a little bit morebalanced, I think, in how they divide up the resources. Not only did younot have, I mean you didn’t have committee staff, you didn’t havecontrol of the agenda, it went all the way down the line. So I think theyreally felt, you know, beleaguered and they decided – and I’m not sureif it was Phil Crane or who exactly came up with the idea, whether itwas Ed Feulner . . . but they should pool a little bit of their officeresources to finance this operation and try to get a little bit ahead of thecurve. I mean, at the time they said that they were just sort of catching


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the grenades and they felt like they needed to throw a few of them.(February 2005)

What is evident here is that the establishment of neoliberal centresof persuasion was deeply bound up with and embedded in thebroader conservative movement. For example, the cross-fertilizationof organizations and groups such as the Heritage Foundation, theRepublican Study Committee and the American Legislative ExchangeCouncil, all established in 1973, can be seen as a response to theperceived threat that neoliberals and a new breed of conservatives sawin the Democratic dominance of the policy agenda. Furthermore, thiswas a time when ‘real conservatives’ were beginning to break awayfrom the then dominant pragmatist perspective that surrounded theNixon administration and the Republican establishment.

As with the earlier intellectual networks and power centres suchas the MPS there were – and still are – at a superficial level organ-izational similarities between different neoliberal-conservative thinktank communities in places like Washington DC and elsewhere(London, for example). However, it is also notable that the Americanthink tank community is located within distinct state and classformations that set it apart from other places. The USA has anextraordinarily deep and complex think tank community character-ized by several key features. First, there is an extensive functional-institutional division of labour within the think tank community, onthe one hand, and between think tanks and political parties, on theother (Ricci 1993). For example, the initial orientation of theAmerican Enterprise Institute (AEI) was ostensibly independentresearch rather than policy making, contrasting with the HeritageFoundation which was from the off – and still is – explicitly con-cerned with directly influencing policy makers (Beder 2006; Peet2007). At the same time, US political parties are heavily reliantupon these think tanks and policy entrepreneurs for forming anddeveloping their specific party policies, because the Republican andDemocratic parties lack a centralized party structure on which theycan draw instead (Ricci 1993). Second, the US neoliberal-conserva-tive movement represents quite diverse political and ideologicalpositions within the broad spectrum of conservative, free enterpriseand small government ideologies that are held together by what oneinformant described as a ‘leave us alone coalition’. Third, the thinktank community has a broad geographical reach, albeit charac-terized by a concerted clustering around various arms of the state


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reflecting the US constitutional settlement’s institutional and geo-graphical division of powers. Finally, the financial resources that theUS think tank community can draw on are considerable, especiallyfrom the business community and wealthy benefactors including theSarah Scaife Foundation, John M. Olin Foundation, Koch FamilyFoundation and Joe Coors (Beder 2006).

By way of contrast, the UK think tank community is smaller,sporadically influential and grafted onto a highly centralized statestructure with little representation outside of London (Peck andTickell 2007). The UK community is characterized by a relativelysimple division of labour with an overwhelming focus on medium-range policy making rather than the more long-term and direct-to-public efforts in the USA. There is also a narrower ideologicalspectrum in the UK, although the ascent of New Labour has led toan increase in purportedly centre-left think tanks (such as Demos,the Institute for Public Policy Research, the Smith Institute andCompass). Despite these differences between the two sides of theAtlantic, and in slightly more abstract terms, we can still see somesimilarities between the US and UK think tank communities.Furthermore there is a long history of familiar and far-reachingcontact between these two geographical sites of neoliberalpersuasion that stretches back to the 1950s and 1960s and continuestoday. In general both centres of persuasion are oriented towardscosmopolitan decision making and intellectual elites that areclustered around the state apparatus and provide active mediation,translation and ad hoc or post hoc rationalizations of specific neoliberalpolicy projects.

Political-economic hegemonyAfter Gramsci, we can conceive of the neoliberal-conservative thinktank communities in the USA described in the previous sectionalong with the associated networks of policy elites and policy entre-preneurs as the organic intellectuals of the ascendant neoliberal order.Whilst Gramsci (1971) remarked that ‘all men are intellectuals’ healso pointed out that ‘not all men have in society the function ofintellectuals’. By this he meant that intellectuals play important rolesin capitalist social formations, particularly during periods of crisiswhen they are ‘deputized’ to provide the direction and medium-term coherence needed by the dominant classes. Gramsci ascribes tointellectuals a role as ‘the thinking and organizing element of a


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particular fundamental-social class’, which means that they are‘distinguished less by their profession’ and more ‘by their function indirecting the ideas and aspirations of the class to which theyorganically belong’ (Introduction by Hoare and Smith in Gramsci1971: 3).

In relation to the US neoliberal-conservative movement centredin Washington DC, this means that the think tanks at the forefrontof neoliberal-conservative proselytizing, funded by business and the‘capitalist classes’, have provided and continue to provide theintellectual and institutional shell for the propagation of neoliberaland conservative organic intellectualism. As some have describedthem, they are in this sense ‘universities without students’ in whichthe making of ‘expertise’ and ‘experts’ is as important as the ideasthat they actually produce (Ricci 1993). This is a special concern forthe movement because of the perceived marginalization, if not out-right exclusion, of conservatives from US university campuses asevident in initiatives such as Campus Watch.

The proliferation of neoliberal and conservative think tanks sincethe mid-1970s created an alternative structure for conducting muchof the preparatory work on a whole series of strategically significantprojects (privatization of state-owned industries and pensions; the‘reform’ of tax, tort and welfare policies; labour market re-regula-tion; trade liberalization, et cetera). These projects not only severelydamaged the New Deal settlement and institutional remnants of the1960s equity movements (civil rights, women’s liberation, andothers), but also enable the ‘rhetorical separation of the economicfrom the political and cultural’, thereby destroying the economicrationale for the redistribution of power and resources (Duggan 2003:xiv). However, the political-economic dominance of a neoliberalvision does not mean that organic intellectuals lose their relevance –quite the contrary, as this interviewee explains:

Most of the intellectual work has been done. Privatizing social security,individual savings accounts, school choice, tax reform – lower taxes,simpler taxes, tax income one time – deregulate telecommunications,power, all of this stuff has been thought out. Now all we’re having fightsabout, [is] who gets to go first. . . . There’s not a lot of work for publicintellectuals to do, except to popularize what’s already been thought up,so, does there get to be another von Mises, or Friedman or whatever? . . .Adam Smith kind of thought it up and the Constitution wrote it down. . . we don’t need some new big idea.


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Bush’s list of things he’s trying to do is the list I gave him, it’s theMovement’s. . . . With the exception of the war, Bush’s agenda is theMovement’s agenda. That’s why we’ve supported him. Bush’s agenda isreform social security, school choice, cut taxes, support free trade, tortreform. Okay, we’ve just got to keep moving on that stuff. So basically,think tanks will have to do a lot of repetition and a lot of coming up withnew arguments – you know, here’s a new crisis. (Director, conservativepolicy advocacy group, April 2004, emphasis added)

So we have to be absolutely clear in our analysis that neoliberalintellectuals do not simply fit into the political-economic process asthe converters of pristine, theoretical ideas into concrete policyprogrammes; this view is deeply problematic since it assumes aunilinear process of advocacy and acceptance. Rather, as in thepast, what happens now is that political legitimacy and govern-mental experimentation and think tank rationalizations proceedhand-in-hand through a dialectical process of mutual exchange andpersuasion – as this senior staffer explains:

Not that we can give them [politicians] orders; the only thing that wereally have at our disposal is moral suasion, that’s it. . . . In politics whatmatters most of all is have you got money and can you deliver votes. Wehave neither. We have to rely just on nagging, pestering and telling them,‘That’s the wrong thing to do; this is the right thing to do.’ Sometimesthat works and sometimes it doesn’t, but that’s really where our power,such as it is, comes from. (April 2004)

Consequently these are not projects that are born solely in ivorytower contemplation; in many respects, the ‘practical’ side of theneoliberal project is framed within a narrative that is implicitlyflexible yet is underpinned by a programmatic logic.

As such, the Gramscian view that intellectuals are mediators inthe process of social transformation and struggle retains its con-ceptual relevance. Think tanks and associated policy elites representorganic intellectuals that are, to use Hayek’s felicitous phrase,‘second-hand dealers in ideas’ helping to translate neoliberal-conservative precepts into feasible policy proposals, often working inclose conjunction with state policy makers while, at the same time,seeking to influence the general climate in which elite policyformation is undertaken. Neoliberal-conservative intellectuals arethus not concerned explicitly with engendering a mass movement assuch; instead the mediation of ideas occurs in a very close physical


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and political proximity to elite policy makers, as this senior econo-mist from a US think tank explains:

It would depend on each issue, but certainly in terms of what I do on taxpolicy, if I could just control who was in ten positions in this town I coulddeclare victory, or if I couldn’t declare victory at least I’d know that badthings wouldn’t happen. So it really is – there’s a very narrow group ofkey people and those are the ones you focus the most on, because it’sdesperately important for them to understand and to get things right;then you could have hundreds – or even thousands, depending on howwide your outer circle – of other people that are helpful to educate them,influence them and so on and so forth. But if you don’t have the corepeople in the centre – the Treasury Department, the White House, theTax Rate Committee, the Leadership and Congress – if you don’t havepeople in those positions who understand what the right thing to do is,then you’re in real trouble. (Washington DC, April 2004)

Although think tanks and policy entrepreneurs have a profoundlysymbiotic relationship with the political class, they are often disdain-ful – even distrustful – of politicians themselves, operating as a kindof intellectual conscience, while seeking to keep medium- and long-term objectives in view. For example, while politicians declarevictories all the time, the demeanour of the intellectuals within theneoliberal-conservative think tank community is typically sceptical,restless and somewhat pessimistic:

What you’re doing is you’re trying to fence off what is acceptable policyfrom politicians who spend maybe 5 per cent of their day thinking aboutpolicy. Some of them come to office with strongly held ideas, and theymight know a lot, but the average politician is just a politician. They’remostly in it because they just have personal ambition, they happen to bea good speaker, or charismatic but they don’t have any. . . . There’snothing more there. They’re not venal necessarily, though some of themmight be. (Senior economist, conservative think tank, Washington DC,April 2004)

As intellectual strategists in an endless war of position, theseactivists always have one eye on the political horizon, concerned thatthe enemy is not only the ‘other team’ but also the pragmatists andmoderates within their own neoliberal-conservative movement.Amongst these neoliberal cadres in the USA, special contempt isreserved for socially moderate and pragmatic Republicans and free-spending Congressional leaders. Overall what we find is that thereis a mixture of opportunism, reaction and tactical behaviour,


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blended with a strong sense of strategic direction exemplified by thissenior staffer:

You have to get a gift from your enemies. Jimmy Carter created RonaldReagan. Bill Clinton, with the Democratic majority in Congress, createdthe conditions for a Republican landslide in 1994. Once the enemies, soto speak, create the conditions, it’s then the job of groups like Heritageand CATO and AEI and others, along with various and sundry fellowtravellers on the Hill and elsewhere, it’s then our job to sort of channelthat discontent in a productive way. So, leading up to the 1980 election,it wasn’t just that we were putting together the Mandate book, becausethat’s almost like upping the horses out of the barn and you want to showthe horse galloping in a certain direction. . . . We’re saying, ‘These arethe banks of the river. The river is going to that sea, which is a wonderfulplace to be. We don’t want the river to go over its banks and wander offin that direction.’ (April 2004)

Conclusion

The neoliberal-conservative movement, along with its organicintellectuals represented by the think tanks and policy entrepreneurspushing free market ideas and policies, has been ascendant fornearly three decades, something which US conservatives, whenpressed, will occasionally concede. However, whilst they admit thatthings may have flowed in their direction for some time, they stillemphasize that the risks of the river bursting its banks are everpresent – in the form of the Iraq War, healthcare reform, socialsecurity and so on – which means that the think tank communityspends a great deal of time fretting about these risks, while seekingto keep in focus its own strategic objectives. More recent events,particularly the financial crisis starting in 2007 and election ofBarack Obama in 2008, have meant that the neoliberal-conservativemovement has been pushed onto the back foot.

This is not to suggest that neoliberal ideas are suddenly off theagenda since they remain deeply embedded (see Peck et al. 2009),but rather that the recent faux-Keynesian interventions in theeconomy to prop up failing financial institutions have made veryvisible the contradictory tensions in the neoliberal-conservativemovement that were once hidden by the separation of the economicfrom the political and cultural. It is increasingly evident that boththe market model propagated by neoliberal intellectuals and the


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relationship between the conservative political movement andneoliberal projects has left a large proportion of American citizensfinancially and, therefore, socially insecure. Thus it is no longerobvious that neoliberal ideas will be able to obfuscate the relation-ship between economic and political domains as they once did(Duggan 2003; Brown 2006).

However, what remains on offer from the neoliberal-conservativeorder is, of course, the utopian vision of a free market society inwhich a minimalist state functions only to secure individual libertyand the law of contract. Such utopian visions retain their strengthbecause, even though they are by definition manifestly unattainable,they nevertheless provide a strong sense of strategic direction. Theextent to which this vision and strategic direction are threatened bythe current economic crisis, exposing the fractures in the neoliberal-conservative order, must remain an open question. What mayensure these fissures widen further is the ongoing critique of neo-classical economics and the failure of mainstream economists topredict, alleviate or respond to the collapse of global financialmarkets (see Fine, this volume). Furthermore, the need for govern-ment support of collapsing banks, financial institutions and privateenterprise weakens the minimalist state arguments put forward byneoliberal think tanks over the last thirty years and more. At thesame time the idea of spreading liberty through property has beendealt a severe blow by the sub-prime mortgage crisis and the erosionof the ‘wealth effect’ that this entails (see Brenner 2002). Never-theless, the neoliberal-conservative movement has always been at itsmost dogged when faced with a new political enemy; thisreactionary instinct is all too obvious in the current opposition toObama’s healthcare plans, which illustrates the extent to which theneoliberal-conservative movement is still alive and kicking, even if ithas lost the dominance it held all too recently.

AcknowledgementsWe would like to thank Jamie Peck and Vlad Mykhnenko for theircomments on an earlier draft of this chapter.


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References

Beder, S. (2006) Suiting Themselves: How Corporations Drive the Global Agenda,Earthscan, London.

Birch, K. and Mykhnenko, V. (2009) ‘Varieties of Neoliberalism? Restruc-turing in Large Industrially-Dependent Regions across Western andEastern Europe’, Journal of Economic Geography, Vol. 9, pp. 355–80.

Blyth, M. (2002) Great Transformations: Economic Ideas and Institutional Change in

the Twentieth Century, Cambridge University Press, Cambridge.Brenner, R. (2002) The Boom and the Bubble: the US in the World Economy,

Verso, London.Brown, W. (2006) ‘American Nightmare: Neoliberalism, Neoconservatism,

and De-Democratization’, Political Theory, Vol. 34, No. 6, pp. 690–714.Diamond, S. (1995) Roads to Dominion: Right-wing Movements and Political Power

in the United States, Guildford Press, London.Duggan, L. (2003) The Twilight of Equality: Neoliberalism, Cultural Politics, and the

Attack on Democracy, Beacon Press, Boston MA.Frank, T. (2006) What’s the Matter with America? The Resistible Rise of the American

Right, Vintage Books, London.Gramsci, A. (1971) Selections from the Prison Notebooks of Antonio Gramsci, trans.

and ed. Q. Hoare and G. N. Smith, Lawrence and Wishart, New YorkNY.

Hodgson, G. (1996) The World Turned Right Side Up: A History of the Conservative

Ascendancy in America, Houghton Mifflin, Boston MA.—— (2004) More Equal than Others: America from Nixon to the New Century,

Princeton University Press, Princeton NJ.Larner, W. (2003) ‘Guest Editorial: Neoliberalism?’, Environment and Planning

D, Vol. 21, pp. 509–12.—— (2005) ‘Neoliberalism in (Regional) Theory and Practice’, Geographical

Research: Journal of the Institute of Australian Geographers, Vol. 43, No. 1, pp.9–18.

Mudge, S. (2008) ‘What Is Neo-Liberalism?’, Socio-Economic Review Vol. 6,No. 4, pp. 703–31.

Peck, J. (2004) ‘Geography and Public Policy: Constructions ofNeoliberalism’, Progress in Human Geography, Vol. 28, pp. 392–405.

—— (2008) ‘Remaking Laissez-Faire’, Progress in Human Geography, Vol. 32,pp. 3–43.

Peck, J. and Tickell, A. (2002) ‘Neoliberalizing Space’, Antipode, Vol. 34, pp.380–404.

—— (2007) ‘Conceptualizing Neoliberalism, Thinking Thatcherism’, inLeitner, H., Peck, J. and Sheppard, E. (eds) Contesting Neoliberalism: Urban

Frontiers, Guildford Press, London.Peck, J., Theodore, N. and Brenner, N. (2009) ‘Postneoliberalism and Its

Malcontents’, Antipode, Vol. 41, pp. 1236–58.


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Peet, R. (2007) Geography of Power: the Making of Global Economic Policy, ZedBooks, London.

Polanyi, K. (2001 [1994]) The Great Transformation, Beacon Press, Boston MA.Prasad, M. (2006) The Politics of Free Markets: the Rise of Neoliberal Economic

Policies in Britain, France, Germany and the United States, University of ChicagoPress, Chicago IL.

Rampton, S. and Stauber, J. (2004) Banana Republicans: How the Right Wing is

Turning America into a One-Party State, Robinson, London.Ricci, D. (1993) The Transformation of American Politics: the New Washington and

the Rise of Think Tanks, Yale University Press, New Haven CT.Smith, N. (2006) ‘The Endgame of Globalization’, Political Geography, Vol.

25, pp. 1–14.Tickell, A. and Peck, J. (2003) ‘Making Global Rules: Globalization or Neo-

liberalization?’, in Peck, J. and Yeung, H. (eds) Remaking the Global

Economy, Sage, London.


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In other chapters (those by Birch and Mykhnenko; Jessop; Loh-mann; and Shaoul), we see that neoliberalism has radically restruc-tured the global economy. This chapter focuses on one key aspect ofthis process, namely the striking rise to prominence of globalintellectual property rights (IPRs), particularly the Trade-RelatedAspects of Intellectual Property Rights agreement(s) (TRIPs) of theWorld Trade Organization (WTO).

TRIPs, which came into effect on 1 January 1995, is one of themost important neoliberal developments in global economic regula-tion. Not only does it bring together key neoliberal designs regardingboth globalization and the construction of a knowledge-based economy(KBE), it is also a singular historical event, representing the construc-tion of public international law by, and in the exclusive interests of,a tiny handful of transnational corporations (TNCs). Furthermore,this exceptional coup of international economic regulation wasachieved against broad-based and concerted opposition.

As such, understanding TRIPs – what it is, how it came to besigned, whom it benefits and how – offers a unique opening to under-standing the broader historical project of neoliberalism outlined byBirch and Tickell amongst other contributors to this book. It also,therefore, opens up an important perspective regarding the currentcrisis, in particular by following developments within the life sciences,which have been particularly important but not obvious players inneoliberalism.

Neoliberalism and the Primitive Accumulation of KnowledgeProduction

Neoliberalism emerged as the dominant political force in the GlobalNorth around 1980, in the context of the crisis of the Keynesian

3 Neoliberalism, Intellectual Property and theGlobal Knowledge Economy

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welfare/warfare state model of capitalism (see Birch and Mykhnenko;Jessop, this volume). Two points must be noted in order tounderstand the central role of IPRs in the neoliberal project, relatingto the two aspects of neoliberalism as both a political project torestructure the global economy and a political ideology providing aunifying vision for disparate political interests.

First, regarding the global economic restructuring, we must firstconsider the nature of the political economic crisis from which neo-liberalism emerged triumphant. A capitalist economy must expandcontinually if it is not to collapse, a consequence of the dynamics ofself-interested investment upon which it depends. The dynamics ofa capitalist economy and the production of profit must both beunderstood as being dependent upon the spread and intensity ofcapital in any given society. Only in this way can we explain howthe apparent exchange of equivalents can produce a profit – asurplus of monetary value at the level of the economy as a whole(Fine and Saad-Filho 2004). ‘Capital’ here refers to a social relation,namely that of waged labour employed in the production ofcommodities to be sold for a profit. The ever-increasing penetrationof the capital relation into a society is only possible given political-economic settlements (established through political struggle) thatcreate a social possibility space for capital’s expansion by excludingand displacing its costs to other spaces (such as the Global South)and times (that is, the future) (Jessop 2000).

Periods of ‘normal’ growth are merely those in which politicalacceptance for a given round of capital penetration into society hasalready been broadly established through prior struggle. Yet, con-versely, the inexorable growth of a capitalist economy entails that itmust, in time, come to push at these very political boundaries thathave protected it, with a crisis of profitability that elicits capitalistpolitical efforts to expand these boundaries yet deeper into sociallife. This includes the private appropriation of resources previouslyheld in common so that these can be exploited for profit, a processcalled ‘primitive accumulation’ (Marx 1999; Arrighi 1994; Harvey2003) that Lohmann illustrates in relation to carbon trading in thenext chapter.

Finance plays a crucial role in this process (see Shaoul, thisvolume). For example, since the 1970s crisis of industrial profit-ability, investment has been redirected increasingly to the financialsector, which promised higher profits. The resultant ‘financializa-

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tion’ of the economy concentrates both economic and political powerin the hands of finance, allowing it both to enforce the radicalrestructuring of the economy in order to return industries to profit-ability (in the face of labour unrest) and to change economicregulation in order to incubate new industries and opportunities forprofit.

Which social spheres are targeted for the further expansion ofcapital is clearly a contingent matter of what seems most promisingat the time, particularly to this newly dominant financial sector (seeLohmann, this volume). It is also a matter of political power asregards what sectors of the society could be forced to acceptmarketization, conditioned by the existing penetration of capital. Inthe case of the neoliberal project, the opportunities for expansion ofcapital were two-fold (cf. Jessop, this volume, on time-space distan-tiation and compression). First, and most obviously, capitalistrelations of production could spread extensively to societies as yetnot fully integrated into the global capitalist market, as perglobalization. Second, however, the intensity of the capital relationin societies whose economic relations were already dominated bycapital could also increase through subsuming further socialpractices. It is this latter process in particular that may be sum-marized under the heading of the KBE regarding the marketizationof knowledge production.

This can be seen in two different ways. First, with the maturity ofexisting technologically advanced industries, capital tends to searchout new investment possibilities, as revealed by the contemporaneousprogress of both science and technology. These new technologiesafford manipulation of material reality in novel ways in order to createprofitable commodities and thus open up an entirely new sphere ofsocial reality into which capital can expand (Arrighi 2005: 35–7).

The two novel technologies of greatest significance in theneoliberal age have clearly been information and communicationtechnologies (ICTs) and biotechnology. ICTs are obviously relatedto a knowledge economy, allowing for the significant growth oflabour that is dependent on information manipulation and technicalknowledge, as well as facilitating global production networks and‘flexible’ production processes. Biotech has yet to penetrate theeconomy to the same extent, but it is also implicated because it isexceptional in the level of scientific sophistication it presupposes asa factor directly involved in the innovation of new products.


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Second, the Keynesian period had already also seen the expan-sion of capital relations not only into industry but also into the‘culture industries’ (Adorno 2000), with oligopolies controlling allmajor cultural outputs. The intensification of capital in thesesocieties thus had to extend into spheres of social life, held incommon to date, even more removed from the daily materialreproduction of society. Expansion into the relations of productionof knowledge has obvious complementarities with other tendencies ofthe growth of the economy.

The connection between neoliberalism and the KBE, however,goes beyond this. For, third, neoliberalism as an ideology also hasparticular conceptual resonance with the drive to privatize andmarketize the creation of scientific knowledge (Mirowski 2008).Neoliberal ideology, following Hayek, is based on the analysis of themarket not merely as the most efficient coordination mechanism foreconomic activity. Rather it is this because it is also the best mechan-ism for the optimal societal aggregation of the limited information ofindividual market participants, while maximizing human (negative)liberty. The market is thus not merely an economic phenomenon butalso, and primarily, an epistemic one, necessarily trumping the decision-making capabilities of government, that is, decisions based on the(similarly) limited information available to the individuals inpositions of authority.

A central concept of neoliberal political ideology is thus the‘marketplace of ideas’ as Miller and Birch and Tickell demonstratein the preceding chapters. The phrase has two interrelatedconnotations. On the one hand, it signifies that the primary virtuesof the market are epistemic and that the knowledgeable governanceof society should be left to the market. On the other, it alsoprivileges a conception of science, and indeed society, in which ideasshould compete with each other in a proper market.

In these two respects, then, neoliberalism has been centrally con-cerned with the marketization of the production of knowledge on aglobal (or ‘universal’) scale. For functioning capitalist commoditymarkets to be possible, however, private property rights must first beinstituted in that resource – that is, IPRs for markets of knowledge.In the present case, all these various trends converged in the‘globalized construction of knowledge scarcity’ (May 2006: 53) thatis the TRIPs agreement.


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What is TRIPs? Effects and Significance

TRIPs is one of the founding treaties of the WTO, following thepost-war General Agreement on Tariffs and Trade (GATT). Itestablishes for the first time globally harmonized minimum stan-dards for IPRs. TRIPs thus institutes major changes in IPR laws,especially in developing countries, but three stand out:1

1 A world-wide harmonization and strengthening of IPRs, whichcan be enforced through the powerful machinery of the WTO(Preamble, Article 7);2

2 The compulsory extension of the scope of prima facie patentabilityto all commercially exploitable products and processes (Article27). This changes common practice amongst developing countriesto exclude from patentability pharmaceutical, medicinal or foodproducts in particular; and

3 The compulsory extension of patentability to all micro-organismsand all ‘non-biological and micro-biological processes’ ‘for theproduction of plants or animals’ (Article 27(3)). The latter, there-fore, includes all genetically modified plants and animals.

The effects of these changes are legion – though we may noteimmediately a clear focus upon the life sciences where they are most

controversial – and have been judged to be overwhelmingly negativeby numerous commentators. A non-exhaustive list includes thefollowing.

First, by imposing patents on medicines necessary for treatmentof diseases affecting large sections of the developing world, such asAIDS or tuberculosis, costs of these drugs are inflated beyond thefinancial means of most patients (Drahos and Mayne 2002).Second, by setting up IPR regimes in developing countries withrich resources of biodiversity, ‘bioprospecting’ (or ‘biopiracy’,depending upon your perspective) is encouraged, in which privateenterprises from the Global North appropriate common resourcesof the Global South. This process is particularly facilitated bygenetic engineering techniques, which allow even insignificantgenetic modification of these plants to be patented (Drahos andBraithwaite 2002; Shiva 1998, 2001). Third, Northern businessesalso exploit the traditional medicinal knowledge as pointers for


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further research, and can patent the resulting knowledge (Dutfield2003; Shiva 1998). Fourth, through the substitution of traditionalcrops and farming methods by patented, genetically modified crops,issues of social displacement and food security for billions of theworld’s peasantry arise (Shiva 1998, 2001). Last, but by no meansleast, the economic case for TRIPs is strikingly absent. First, asregards its effects on economic growth, there is almost unanimity inthe economic literature that TRIPs shifts the balance of economicgains significantly in favour of developed economies, particularlythe United States, and away from developing countries (at least inthe ‘short term’), thus exacerbating global inequalities in economicdevelopment.3 Indeed, one widely respected, and generally pro-TRIPs, analysis concludes that ‘blind faith’ is the only basis for therest of the world outside the United States to accept TRIPs (Maskus2000: 190).

Even within the developed economies, including the US, the casefor TRIPs was both spectacularly weak and dependent upon forgingfrom scratch a conceptual connection between IPRs and free globaltrade. As regards the latter issue, this involved a wholesale redefini-tion of the nature and purpose of patents. Patents are (temporary)monopoly rights regarding the exploitation of various ‘intellectual’resources. As such, they have traditionally been treated as directlyopposed to free and open markets. Portraying patents as a centralissue for the global opening of trade was thus an extraordinaryconceptual sleight of hand.

Furthermore, patents have generally been legitimated as necessaryincentives for individuals to engage in the risky and uncertain processof technological invention. Conversely, the argument for TRIPs wasthat scientific research would not be developed into profitablecommodities without patents – a concern with innovation rather thaninvention. This opens the economic case for TRIPs to the objectionthat IPRs are a relatively unimportant mechanism for the transla-tion of scientific research into innovation in the vast majority ofindustries (Mansfield 1986). Furthermore, literature on this empiricalclaim – which was still ‘emergent’ in 2003, some 10–15 years afterthe TRIPs negotiations (Cohen and Merrill 2003: 3) – shows thatthere are few ‘robust conclusions’ for patent policy regarding itsconnection to innovation (Jaffe 2000: 531, 554) and that, if anything,strengthening patents has had distinctly negative effects on innova-tion in the US (Jaffe and Lerner 2006).


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TRIPs thus effects momentous and contested changes to globaltrade rules in the absence of any credible economic case. Yetamazingly ‘probably less (sic) than 50 people were responsible forTRIPs’ (Drahos and Braithwaite 2002: 10, quoting a senior UStrade negotiator). Furthermore, these people were representatives ofprivate businesses, mostly based in the US, with significant interestsin IPRs, not politicians or national trade diplomats who actuallysigned the agreement. Thus ‘in effect, twelve corporations madepublic law for the world’ (Sell 1999: 171).

These companies together formed the Intellectual Property Com-mittee (IPC) in March 1986 to coordinate their political lobbying forTRIPs. Regarding patents, the American pharmaceutical TNCs(henceforth ‘Big Pharma’) dominated, particularly Pfizer, while forcopyright it was the IT and recording industries, particularly IBM.These companies stood to profit enormously from TRIPs; and,indeed, the economic rationale for TRIPs (though not its justifica-tion) is only apparent for these agents. The IPC’s control of the USTrade Representative (USTR) was almost total. For instance, theIPC drafted memos that were then circulated as government policy.Furthermore, while those behind TRIPs managed to get ‘95 percent’ of what they were after (Drahos and Braithwaite 2002, quotingthe Chairman of the IPC), this was also in the face of strikingopposition, particularly from the large developing countries, Indiaand Brazil, that stood to lose out significantly. Yet eventually thisopposition was neutralized, not least through the deployment ofthreats from the USTR that these countries would be subject toAmerican penalties and tariffs for their ‘restrictive’ trade practices.In these circumstances, the only alternative was a multilateralagreement that could at least provide a forum for some arbitrationof these disputes.

It is clear, therefore, that TRIPs represents the deployment ofexceptional political power. Yet this cannot be explained purely interms of strong corporate interests getting their will, as comparisonwith parallel neoliberal measures of global regulation reveals. Thenegotiations for global rules on financial investment (the Trade-Related Investment Measures agreement, TRIMs) and on trade inservices (General Agreement on Trade in Service, GATS) were bothmuch less successful for their corporate protagonists, despite havingsignificant backing from powerful industrial and financial sectors(Sell 2003).


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The US Life Sciences Patent Coalition

How, then, did US Big Pharma come to assume such dominanceover national trade policy, which in turn had unique politicalleverage on the global stage, so as to implement a global law in itsexclusive interest? Unpicking this history provides important insightsinto neoliberalism. In particular, this analysis reveals the centralityof TRIPs to neoliberalism and the structural enablement uponwhich the signing of TRIPs depended. It thus identifies the lifesciences as crucial players in the development of neoliberalism as aconcrete political project; players that will, in turn, be important inits current crisis and what emerges from it.

First, in 1979/80 there was a reversal in the global balance ofpower towards the US and away from the Global South, which hadbeen growing in influence through the 1970s. This turnaround wasprimarily due to a shift in the balance of class forces within theGlobal North, towards the political dominance of finance capital –in other words, financialization, as described above and elsewhere inthis book (by Shaoul, for example). In particular, the 1979/80 hikein interest rates by the Federal Reserve following the dollar crisistriggered by the Iranian Revolution ended nearly a decade of cheapcredit to developing countries, which suddenly found themselvesunder debt bondage to Wall Street, and signalled a new era inpolicy in which the demands of finance would be paramount. Withthe collapse of the Soviet Union in the late 1980s, American powergrew yet further (its triumph greeted by now famously prematuredeclarations of the ‘end of history’), and it was in these circum-stances that developing country resistance to TRIPs was finallysquashed in 1989. As such, the effectively unassailable power of theUS at this particular historical conjuncture can only be understoodin the context of the political-economic structural enablement of thecrisis of Keynesianism and the emergence of a financialized neo-liberalism (see Jessop; Shaoul, this volume).

But how did one industry come to have such influence over USnational trade policy? To understand this process, we must look notonly at Big Pharma’s success regarding TRIPs but also regarding itssteady accumulation of power within the US itself, includingdomestic patent reform. This latter process, however, is a historythat incorporates not just Big Pharma but also two other key sectors:the emergent biotechnology firms and the life science departments


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of (leading) US universities. During the early 1980s, these threesectors found themselves converging into a broad-based and single-issue political coalition in favour of domestic patent reform (Tyfield2008). As this coalition grew in political influence, it acted as aspringboard and background for the further efforts of Big Pharmaregarding global patents. Indeed, through its domestic connectionwith biotech and life science research, not least in the minds ofWashington policy makers across both major parties, Big Pharmacould plausibly cast itself as a uniquely important national asset –and one besieged by weak international patent rights.

The importance of this connection cannot be underestimated. BigPharma was not alone in the late 1970s in facing problems ofprofitability. Political demands from this industry for strongerpatents could easily have been rejected by a generally pro-free-tradeCongress as the protectionist demands of a mature, if not declining,industry (cf. Republican objections to the current bail-out of theautomotive sector). Yet the pharmaceutical industry’s demands weremet with unparalleled and bipartisan support (Slaughter andRhoades 2002) because Big Pharma could depict them as thedemands also of the ‘technology of the future’ (biotech), which wouldresolve the current crisis of profitability, and a crucial national asset(molecular biology research).

Let us briefly consider how these three sectors converged into apro-patent coalition. First, in the late 1970s Big Pharma was, likemost industries at the time, facing a significant profitability crisis.This was due in part to ever-increasing R&D costs – not only aresult of a dwindling pipeline for new products but also increasingregulatory costs following the thalidomide scandal – and in part togrowing competition within the industry, including from genericdrug manufacturers from developing countries.

The recouping of R&D investment in the pharmaceuticalindustry, however, is unique in its dependence upon patents. Inparticular, drugs are often relatively straightforward and inexpensiveto reverse engineer, meaning that trade secrets and know-how arenot always effective in preserving monopoly innovation rents, whilemuch of the huge R&D expense is spent on regulatory trials thatyield no easily appropriable advantage. While it remains unclearwhether Big Pharma needs strong patents to be financially viable,their attraction is plain. It follows that the pharmaceutical industryin particular was the most likely industry to lobby hard for stronger


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patents. Furthermore, as regards TRIPs, the growing R&D expensesalso meant that costs could only be recouped through internationalsales, which would need commensurate international patent cover-age. Note, however, that the United States market remains over-whelmingly dominant (at 68 per cent of global pharmaceuticalrevenues of Big Pharma in 2005) while developing countries are lessthan 10 per cent, focused in Latin American, Eastern Europe andthe Asian newly industrializing economies (PhRMA 2005).

Second, ‘biotech’ refers primarily to the biological applicationsthat involve genetic manipulation. Such work follows from a num-ber of scientific breakthroughs in recombinant DNA (rDNA) tech-niques in the 1970s. This work was not carried out with commercialapplications in mind but in the context of the contemporaneouseconomic crisis and the historical experience of the economic impactsof previous breakthroughs in such fields as organic chemistry andelectromagnetism. These scientific results were quickly latched uponas the obvious ‘next step’ by financiers.

Patents, and patent reform, were seen to be crucial for thisfledgling industry. Biotech is exceptional in the direct involvement ofbasic science in commercial applications. Such science, as abstractknowledge relatively disembodied from technical know-how, is rela-tively easily appropriated by competition. Biotechnology start-upshave R&D expenditures commonly as high as 50 per cent of sales,so that such threats of imitation jeopardize the whole business plan(Dutfield 2003: 153). The added security of patents over tradesecrets was thus enormously attractive to biotech start-ups, matchingBig Pharma’s interests.

For patenting to be possible in biotech, however, two particularchanges in US law seemed to be necessary. First, it was unclear thatbiological materials were patentable at all, given restrictions onpatenting scientific discovery rather than invention. Second, given thelocation of this biotechnological research in university departments,the illegality of the patenting, and hence private appropriation, of theresults of publicly funded basic science research was a major problem.4

This leads to the university molecular biology research groupswhere this basic science was being conducted. By the late 1970s, thebudgets of American universities were under considerable strain, likeKeynesian welfare spending more generally. Purely from the per-spective of seeking to continue existing research projects, therefore,American universities found themselves compelled ‘to compete


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increasingly for external dollars that were tied to market-relatedresearch’ (Slaughter and Leslie 1997: 8). Biotechnology was unsur-prisingly the focus of this move, given the striking scientific break-throughs of the period. Furthermore, the percentage of federalresearch funds devoted to the life sciences was large and growing, sobiological research was plausibly presented as a national competitiveasset ripe for commercial exploitation.

Amongst biology faculties, while there were mixed reactionsregarding the embrace of commerce, there was widespread acknow-ledgement of the possibilities of funding their research in this way.Furthermore, we have seen how patents were (seen to be) a crucialfactor for this to be possible in biotech. Indeed, as Kenney notes(1986: 257), it was the universities who had most interest in patentreforms as trade secrets were unavailable to them, not themselvesbeing businesses.

There was thus a clear prima facie compatibility of interests regard-ing domestic patent reform from these three parties: Big Pharma,biotech, and universities. Yet this alone does not explain how over-whelming bipartisan political support was forthcoming for thereforms demanded, if only because this discounts the high degree ofcontroversy that accompanied (and in some cases, still besets) thesechanges in each case. For instance, regarding biotechnology, in thelate 1970s rDNA experiments generated a great deal of public con-cern, and legislation regarding their strict regulation was beingnegotiated by parliamentary committees (in both the US and theUK) with the full expectation of uncomplicated passage into law.Similarly, the increasing penetration of commercial interests intoacademia continues to elicit grave anxiety regarding the effects onthe open circulation and criticism of results, the direction of researchagendas and the more generalized public trust in science. Yet in eachcase, these objections were suddenly swept aside in 1979/80. Forinstance, all legislative discussion of regulation for rDNA experimentssimply evaporated between 1978 and 1982 (Wright 1994). Similarly,while moves to allow university patents in the 1970s were completelyunsuccessful and rapidly defeated, in 1980 the Bayh-Dole Act,allowing just such patenting, was passed by an overwhelmingbipartisan majority – with biotechnological pharmaceuticals theprimary argument behind the legislation.

Indeed, 1979/80 is a clear watershed for the fortunes of all threeplayers. First, as regards Big Pharma, the profitability of the industry


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took off from 1980, rising to make it the single most profitableindustry in the US economy by the turn of the century. In the midstof a downturn in 2003, the ten Big Pharma firms in the Fortune 500list of largest US companies accumulated a profit that exceeded theaggregated profits of all the other 490 companies combined.

Second, regarding biotech, the public listing of a biotech com-pany, Genentech, on the New York Stock Exchange in 1980 wasnot only the first such listing, but also one of the most successfulever, with the fastest rise in the history of the New York market. Yetbiotech was still a fundamentally risky technology and Genentechitself was far from profitability. Similarly, the legal framework forbiotech was transformed from 1980, not only through the Bayh-Dole Act, but also case law confirming the patentability of bio-technological commodities (Diamond vs. Chakrabarty), the creation of aspecialist patent court in 1982 that has made US law much morepro-patent, and a series of laws supporting the university-industrycomplex of biotechnology (Slaughter and Rhoades 2002).

Finally, following these legal changes, university patenting hasballooned since 1980, with particularly striking growth in the lifesciences. Patents granted to universities more than doubled in1979–84, and again in 1984–9 and 1989–97 (Mowery et al. 2001),and these have been disproportionately concentrated in biologicalclasses represented in 49.5 per cent of all university patents in theearly 2000s (Owen-Smith and Powell 2003). At Columbia andStanford universities, both major protagonists and beneficiaries of thechanges, by 1995 biomedical patents accounted for more than 80 percent of their substantial licensing revenues (Mowery et al. 2001: 107).

In short, therefore, the privatization through strong patents ofsuch biological research suddenly became an acceptable change, ifnot an urgent priority, at exactly the time of the neoliberal counter-revolution. For it was the structural demands of the global capitalistpolitical economy – with the US at its centre, so that these demandswere most effective there – for a new round of capital expansion thatenabled the formation of this coalition. Financialization after 1980gave political power to finance capital and its favoured investments,the most important being biotech, to amend economic regulation toits advantage. Without this changed context, given that the initialdemands of each party were prima facie weak and greatly contested,the patent coalition’s demands were unlikely even to stumble tosuccess, let alone stride through virtually unopposed. Simply by pur-


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suing its own disparate interests, however, the US life sciences patentcoalition has been a crucial agent in the history of neoliberalism anda key player in neoliberal processes of primitive accumulation,creating a global IP regime that especially covered the life sciences,the industries for which such IPRs are most controversial.

In short, TRIPs has almost nothing to do with innovation (which isitself usually uncritically valued positively) and its implementationsimply cannot be understood if it is treated as such. In fact, strongpatents undermine the development of innovation capacity in mostdeveloping countries and, indeed, even in the United States itself.Rather, TRIPs is a legislative measure to enforce the primitiveaccumulation of knowledge production on a global scale.

Conclusion: Post-TRIPs Developments and the Current Crisis

The recent history of the political efforts to create a globalized, neo-liberal knowledge-based (bio-)economy does not conclude, unfor-tunately, with the signing of TRIPs in 1994. This has beensomething of a surprise to many of the developing countries whofinally submitted to signing TRIPs, for while they viewed it as theuppermost limit of their efforts to harmonize global IPRs, thosebehind the agreement saw it instead as merely the first step. TRIPssets only minimum IP standards, leaves open to the discretion ofnational governments the actual form of many intellectual propertylaws, and includes a number of provisions that provide limitedflexibility for developing countries. For instance, compulsory licensingof drugs for national health emergencies is permitted.

Almost as soon as TRIPs was signed, therefore, moves were beingmade to start a new round of negotiations both to strengthen IPRsand to remove the flexibilities of the TRIPs agreement; so-called‘TRIPs-plus’ provisions (Sell 2007). However, growing outrage acrossthe world about the effects of TRIPs on access to essential drugs indeveloping countries had altered the political debate. The firstsignificant alteration to TRIPs was thus the 2001 Doha Declaration,which confirmed that TRIPs could not be used to prevent thetackling of public health emergencies – a move, thus, in the oppositedirection to TRIPs-plus.

Instead, therefore, TRIPs-plus efforts have been pursued notthrough the WTO but WIPO (World Intellectual Property Organ-ization) and bilateral trade agreements, mostly between the US or


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the EU and developing countries. As regards the latter, TRIPs-plus(and even US-plus) intellectual property provisions have beenimposed upon various developing countries (especially in the MiddleEast and Latin America) through trade agreements, especially freetrade agreements and bilateral investment treaties. The goal for suchnegotiations is explicitly the global harmonization of IP law at thehighest possible standard.

Regarding WIPO, this global harmonization is pursued throughthe provision of ‘objective’ technical assistance to developingcountries trying to establish effective intellectual property regulators.The education, technical assistance and even socialization of thesefledgling bureaucracies that is provided by Geneva-based WIPOnecessarily instils a model of intellectual property that both high-lights the supposed benefits of IP, to the complete neglect of itsdownsides, and does so in a way that reflects the benefits of IP to adeveloped economy (Drahos 2007). Furthermore, given the vastlysuperior information-handling capacity of Global North patentagencies, most developing countries simply copy their decisions, asthey have come to trust them during their training.

The drive towards the global privatization of knowledge produc-tion through globally harmonized IPRs has thus continued apace todate, reflecting the continued neoliberal dominance. But just as thecoup of TRIPs was dependent upon the rise of neoliberalism andthe backing of biotech by finance capital, one may also expect thatthe current crisis of finance and neoliberalism will also have signifi-cant repercussions for the future trajectory of international IPRnegotiations and biotech, and vice versa.

The following trends in particular suggest great changes arelikely. First, regarding biotech, the widespread dependence of firmsin this sector upon the backing and confidence of finance, particu-larly venture capital, will almost certainly entail that the financialcrisis will have significantly negative effects for many biotech firms.Many, if not most, biotech firms have remained viable throughoutthe past 30 years only because of continued financial support, oftenin the face of continued disappointment with no imminent prospectof achieving profitability. With the bursting of the financial bubbleupon which these companies have depended, they too are mostlikely to fail. Whether this completely undermines the promissoryimaginary of the knowledge-based economy is clearly unforeseeable,but it is certainly not inconceivable.


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Second, regarding TRIPs-plus global harmonization, with thecollapse of the American economy and its significant geopoliticalweakening (as in Iraq and Afghanistan), the primary agent behindsuch moves has been much diminished. The EU too must beacknowledged as a major protagonist of TRIPs-plus, but it is in nobetter shape. Furthermore, the stalemate of the current WTOround, clear moves towards national industrial and financialprotectionism across the developed world, and the growing globalpower of the so-called BRICs (Brazil, Russia, India and China),most of which are themselves opposed to stronger harmonized IPRs,all suggest that the chances of such a multilateral TRIPs-plus agree-ment are now slim indeed. Finally, climate change is also generatingheated demands from developing countries, particularly China andIndia, for concerted technology transfer that could involve asignificant weakening of global IPRs.

The prospects for the globalized KBE have thus been dramaticallydiminished by the current crisis. In particular, the balance of powerseems to be in the process of a seismic shift away from financecapital, hence undermining the ongoing primitive accumulation ofglobal knowledge production upon which the broader neoliberalproject depends. Whatever happens, the fortunes of neoliberalismwill be observable to a large extent in the transformations that takeplace within the life sciences.

AcknowledgementsThis chapter draws on a previous published article: Tyfield, D. (2008)‘Enabling TRIPs: the Pharma-Biotech-University Patent Coalition’, Review of

International Political Economy, Vol. 15, No. 4, pp. 535–66. Any overlaps in thischapter are reprinted with permission of the publisher (Taylor and FrancisLtd, http://www.tandf.co.uk/journals).

Notes

1 For an in-depth discussion of the provisions of TRIPs, see Blakeney(1996) and May (2000: Chapter 3).

2 This is achieved through the ‘national treatment’ and ‘most favourednation’ clauses, which respectively ensure the equal treatment of all co-signatories as for domestic businesses and for trading partners with thebest access to the domestic market.

3 For example, Drahos and Braithwaite (2002), Maskus (2000), May(2000), May and Sell (2006: 185 et seq.).


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4 In fact, such patenting was not completely prohibited, but was allowedonly after a laborious administrative process in which special approvalwas granted to patent (Slaughter and Rhoades 2002: 85).

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Blakeney, M. (1996) Trade Related Aspects of Intellectual Property Rights: a Concise

Guide to the TRIPs Agreement, Sweet and Maxwell, London.Cohen, W. and Merrill, S. (eds) (2003) Patents in the Knowledge-Based Economy,

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Knowledge, Access and Development, Palgrave Macmillan, Basingstoke.Dutfield, G. (2003) Intellectual Property Rights and the Life Science Industries: a

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ment Science, Vol. 32, pp. 173–81.Marx, K. (1999) Capital, abridged by D. McLellan, Oxford University Press,

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—— (2006) ‘The Denial of History: Reification, Intellectual Property Rightsand the Lessons of the Past’, Capital and Class, Vol. 88, pp. 33–56.

May, C. and Sell, S. (2006) Intellectual Property Rights: a Critical History, LynneRienner Publishers, Boulder CO and London.

Mirowski, P. (2008) ‘The Viridiana Jones Chronicles’, Knowledge Rules SSRCBlogs, <http://www.ssrc.org/blogs/knowledgerules/author/ pmirowski/>.

Mowery, D., Nelson, R., Sampat, B. and Ziedonis, A. (2001) ‘The Growthof Patenting and Licensing by US Universities: an Assessment of theEffects of the Bayh-Dole act of 1980’, Research Policy, Vol. 30, pp. 99–119.

Owen-Smith, J. and Powell, W. (2003) ‘The Expanding Role of UniversityPatenting in the Life Sciences: Assessing the Importance of Experienceand Connectivity’, Research Policy, Vol. 32, pp. 1695–1711.

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Entrepreneurial University, Johns Hopkins University Press, Baltimore MDand London.

Slaughter, S. and Rhoades, G. (2002) ‘The Emergence of a CompetitivenessResearch and Development Policy Coalition and the Commercializationof Academic Science and Technology’, in Mirowski, P. and Sent, E.-M.(eds) Science Bought and Sold, Chicago University Press, Chicago IL.

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4 Neoliberalism and the Calculable World:the Rise of Carbon Trading

LARRY LOHMANN

Neoliberalism can be a vague, even incoherent concept when itbecomes entangled in the false dichotomies between market andstate that are habitually thrown up by its adherents, as noted in theintroduction to this book and a number of other chapters. It is oftensaid, for example, that neoliberalism promotes free markets andreins in the state; yet, as Karl Polanyi (2001 [1944]) pointed out longago, laissez faire itself is an interventionist state project (‘laissez fairewas planned; planning was not’) (see also MacLeavy, this volume). Itis said, too, that neoliberalism looks to economic growth rather thanthe state to solve many social problems; yet the quantifiable entitycalled ‘the economy’ was created in the twentieth century largely byreorganizing and redistributing knowledge and embedding newpractices of description and calculation in governmental practice, andcan at no point be sharply marked off from official coercion, statecorruption and ‘non-economic’ institutions (Mitchell 2002; see Swainet al., this volume). Similarly, the neoliberal attempt to simulateefficient market outcomes by deploying cost–benefit analysis inpolicy making depends on calculation and regulation undertaken bythe state (Lohmann 2009).

Nowhere is the state/market dichotomy more misleading than inthe analysis of one of the last, most ambitious manifestations of neo-liberalism – the carbon markets that began to emerge in the 1990sas the main international policy response to climate change. Whilecarbon markets are typically defended using neoliberal rhetoric –‘What is the best way to tackle climate change? If we have a globalcarbon price, the market sorts it out’ (Scott 2008: 25); ‘Carbontrading is seen as a market-based alternative to either direct taxationor a “command and control” approach’ (Milner 2007: 13) – thecommodity in which the biggest carbon markets trade owes its very

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existence to government fiat and regulation. In tracing the causes ofthe havoc carbon markets are in the process of creating andabetting, it is useful to look beyond the misleading market/state,choice/coercion, efficiency/inefficiency dualisms commonly used tojustify them. This chapter focuses instead on the power dynamicsimplicated in abstraction, commensuration and commodification asthe features of the neoliberal approach to climate change that willmost repay study, in a similar fashion to Tyfield’s analysis of theknowledge-based economy in the previous chapter. In so doing, Ihope to provide an introduction to one of neoliberalism’s potentiallygreatest class projects: the attempt to privatize the climate itself.

What is Carbon Trading?

First proposed in the 1960s, pollution trading was developed by USeconomists and derivatives traders in the 1970s and 1980s andunderwent a series of failed policy experiments in that countrybefore becoming the centrepiece of the US Acid Rain Programmein the 1990s at a time of deregulatory fervour. In 1997, the BillClinton regime successfully pressed for the Kyoto Protocol tobecome a set of carbon trading instruments (Al Gore, who carriedthe US ultimatum to Kyoto, later became a carbon market actorhimself). In the 2000s Europe picked up the initiative to become thehost of what is today the world’s largest carbon market, the EUEmissions Trading Scheme (EU ETS) – although under BarackObama the US may soon take over that position. Carbon marketsnow trade over US$100 billion yearly, and are projected to rival thefinancial derivatives market, currently the world’s largest, within adecade. Pioneered by figures such as Richard Sandor of the ChicagoBoard of Trade and Ken Newcombe, who relinquished leadershipof the World Bank’s carbon funds to become a carbon trader atfirms such as Goldman Sachs, carbon markets have recently becomea magnet for hedge funds, banks, energy traders and otherspeculators.

Carbon trading treats the safeguarding of climatic stability, or theearth’s capacity to regulate its climate, as a measurable commodity.After being granted or auctioned off to private firms or otherpolluters, the commodity can then be allocated ‘cost-effectively’ viamarket mechanisms. Obviously, the commoditized capacity inquestion was never produced for sale. Rather than being consumed,


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it is continually re-used. Although difficult to define or even locate,the capacity forms part of the background ‘infrastructure’ for humansurvival. Framing it as a commodity, moreover, involves complexcontradictions and blowbacks (Lohmann 2009). Current efforts toassemble carbon markets are likely, when carried beyond a certainpoint, to engender systemic crises. The earth’s climate-regulatingcapacity is thus a quintessential Polanyian ‘fictitious commodity’.Accordingly, illuminating comparisons and contrasts can be drawnwith Polanyi’s original ‘fictitious commodities’ of land, labour andmoney, as well as with other candidates for ‘fictitious commodity’status that have been proposed since, including knowledge, health,genes and uncertainty (see Tyfield; Jessop, this volume).

The attempt to build a climate commodity proceeds in severalsteps (see Box 4.1). First, the goal of maintaining the earth’s capacity

NEOL IBERAL ISM AND THE R ISE OF CARBON TRADING

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Box 4.1 Carbon Market Construction in Brief

Step 1The goal of overcoming fossil fuel dependence by entrenching anew historical pathway is changed into the goal of placingprogressive numerical limits on emissions (cap) →

Step 2A large pool of ‘equivalent’ emissions reductions is createdthrough regulatory means by abstracting from place, technology,history and gas, making a liquid market and various ‘efficiencies’possible (cap and trade) →

Step 3Further tradeable emissions reductions ‘equivalents’ areinvented through special compensatory projects, usually inregions not covered by any cap, for additional corporate costsavings, and added to the commodity pool for enhanced liquidityand further ‘efficiencies’ (offsets) →

Step 4Project bundling, securitization, financial regulation, ratingagencies, ‘programmatic CDM’ et cetera add new layers ofobscurity and complexity.

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to regulate its climate is conceptualized in terms of numerical green-house gas emissions reduction targets. Governments determine –currently more on explicitly political rather than climatologicalgrounds – how much of the world’s physical, chemical andbiological ability to regulate its own climate should be enclosed,‘propertized’, privatized and made scarce. They then give it out (or,sometimes, sell it) to large polluters, before ‘letting the marketdecide’ on its final distribution (Lohmann 2005; Lohmann 2006).

Making climate benefits and disbenefits into quantifiable ‘things’opens them up to the possibility of exchange. For example, onceclimate benefit is identified with emissions reductions, an emissionscut in one place becomes climatically ‘equivalent’ to, and thusexchangeable with, a cut of the same magnitude elsewhere. Anemissions cut owing to one technology becomes climatically equiva-lent to an emissions cut that relies on another. An emissions cut thatis part of a package that brings about one set of social effectsbecomes climatically equivalent to a cut associated with another setof social effects. Where emissions permit banking is allowed, anemissions cut at one time becomes climatically equivalent to a cutachieved at another. Once all these identities are established, itbecomes possible for a market to select for the emissions reductions(and, ipso facto, the climate benefits) that can be achieved mostcheaply.

At first glance, these equivalences may seem uncontroversial.Market proponents tend to repeat, with the air of someone airing atautology, that (for example) ‘a carbon dioxide molecule released inSamarkand has the same climatic effect as one released in San-dusky’. A moment’s reflection will show, however, that, in producingsuch equivalences, carbon traders are already drifting away from theclimate problem. That problem consists mainly of the challenge ofinitiating a new historical pathway that leads away from dependenceon fossil fuels, which are by far the major contributor to human-caused climate change. Once taken out of the ground and burned,coal, oil and gas add to the carbon burden cycling between theatmosphere and the oceans, soil, rock and vegetation. This transferis, for human purposes, irreversible: once mined and burned, fossilcarbon cannot be locked away safely underground again in the formof new deposits of coal, oil or gas, or in the form of carbonate rock,for millions of years. The transfer is also unsustainable: there issimply not enough ‘space’ in above-ground biological and geological


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systems to park safely the huge mass of carbon that is coming out ofthe ground without carbon dioxide building up catastrophically inthe air and the seas. As biologist Tim Flannery (2005: 8) puts it,‘There is so much carbon buried in the world’s coal seams [alone]that, should it find its way back to the surface, it would make theplanet hostile to life as we know it.’ Most unmined coal, oil and gas,in other words, is going to have to stay in the ground. Accordingly,industrialized societies, currently ‘locked in’ (Unruh 2000) to fossilfuels, need instead to ‘lock in’ non-fossil energy, transport, agricul-tural and consumption regimes within at most a few decades.Because this shift is structural, the first steps need to be undertakenimmediately to minimize future dangers and costs.

It follows that short-term actions can be assessed for their climaticeffectiveness only by determining the part they play in a longer-termshift away from reliance on fossil fuels. For example, the choice oftechnology used in making a short-term billion-tonne emissions cutwill make a large difference to long-term climatic outcomes. If thetechnology is one that reinforces overall societal addiction to fossilfuels, it will be more climatically damaging than one which contri-butes toward a pathway that keeps most remaining fossil fuels in theground. Similarly, a billion-tonne reduction in one place may havesocial effects which have a different impact on long-term fossil fueluse (and thus on future reductions) than a supposedly ‘identical’billion-tonne reduction in another place. Workable climate solu-tions, in short, are embedded in future history.

A commodity approach, by contrast, abstracts from where, how,when and by whom the cuts are made, disembedding climate solu-tions from history and technology and re-embedding them inneoclassical economic theory, trade treaties, property law, riskmanagement and so forth. For example, carbon trading gives equalweight, on the one hand, to emissions-reduction technologies thatare likely to result in unquantifiable but important ‘spillovers’(Frischmann and Lemley 2006) leading to radically lessened long-term dependence on fossil fuels, and, on the other hand, totechnologies lacking such effects – as long as both achieve the samenumerical emissions reduction over the short term in a particularlocality. While carbon trading encourages ingenuity in inventingmeasurable ‘equivalences’ between emissions of different types indifferent places, it does not select for innovations that can initiate orsustain a historical trajectory away from fossil fuels (the effectiveness


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of which is less easy to measure). Indeed, once the carboncommodity has been defined, merely to weigh different long-rangesocial and technological trajectories or evaluate and ‘backcast’ fromdistant goals is to threaten the efficiency imperative.

A commodity approach also functions to detach the globalwarming problem from climatological uncertainties and indeter-minacies. This is because the sum of fungible greenhouse gaspollution rights that governments create and distribute for purposesof trade are implied to approach, in principle if not in practice, aneconomically optimal, ‘climatically safe’ level of overall greenhousegas pollution. As work by the Harvard economist Martin Weitzmanand others suggests, this move engenders a degraded conception ofthe climate problem: the commensuration process inherent in multi-equation, computerized integrated assessment models that aggregateeconomic growth with simple climate dynamics heightens systemichazards by ‘presenting a cost–benefit estimate for what is inherentlya fat-tailed situation with potentially unlimited downside exposure asif it is accurate and objective’ (Weitzman 2009: 18).

Disembedding and Re-embedding: a Second Stage

The disembedding/re-embedding process inherent in carbon tradingthen ramifies and proliferates through a succession of further acts ofcommensuration and abstraction. After the state creates a divisible,tradeable commodity whose ‘efficient’ allocation in the form ofpollution rights can become a coherent, ‘apolitical’ programme foraction (‘cap and trade’), its status as asset, grant, or financial instru-ment is engineered to fit various accounting standards (MacKenzie2009). Grants of pollution rights are made to industrialized countries(under the Kyoto Protocol) or private firms or other polluters (underthe EU ETS), according to their existing pollution levels. Underpressure from industrial lobbying efforts and measurement difficulties,these grants are often more generous than the polluters need to covertheir existing level of emissions. Corporations receiving EU ETS grantsare then allowed to pass on to their customers the nominal marketcost of the asset they have received for free (auctioning may becomemore common in the future, but so far has not been widespread). Inthis way, the bulk of the earth’s carbon-cycling capacity is in effectmade into property and distributed to the industrialized North, andin particular to the heaviest corporate polluters.


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A second class of measurable, climate-benefit units called ‘offsets’is then developed to be pooled together with ‘reductions’ for further‘efficiency’ gains. These offsets are manufactured by special projectsrequiring special expertise, most located in the Global South, thatare claimed to result in less greenhouse gases accumulating in theatmosphere than would be the case in the absence of carbon finance,such as tree plantations (which are supposed to absorb carbondioxide emissions) or fuel switches, wind farms and hydroelectricdams (which are argued to reduce or displace fossil energy). Schemesfor generating still more saleable greenhouse gas pollution licences –including projects involving agrofuels, biochar, nuclear energy, forestconservation and the capture, liquefaction and storage of carbondioxide from coal-fired power plants – are also under consideration.Such ‘project-based’ credits, no matter what their origin, aredesigned to be fungible with the emissions allowances created anddistributed by governments in the industrialized North. Indeed, inan act of commensuration-by-fiat, the Kyoto Protocol stipulated inArticles 3 and 12 that these offset credits are emissions reductions,thus legislating into existence a new, abstract, non-situated, omnibuscategory of reductions/offsets. It thus helped open a niche for a newcorps of specialists and consultants – analogous to the ‘quants’ whohelped develop advanced financial derivatives – to seek profitsworking out the needed commensuration procedures. Such ‘carbonquants’ produce calculations claiming, for example, that reducingcarbon emissions from a power plant in Britain is ‘the same as’building a wind farm in India or Brazil because the wind farmdisplaces fossil fuel use.

Since the carbon dioxide resulting from fossil fuel combustion isonly one of many greenhouse gases, it is possible to create still moreequivalences, making possible yet further supposed ‘efficiencies’ inattaining any particular cap. In the 1990s, the IntergovernmentalPanel on Climate Change (IPCC) devised a new abstraction called‘global warming potential’ that commensurates an entire basket ofclimate-forcing gases according to how they compare to carbondioxide in their climate impact. That ultimately enabled corpora-tions to arrange to make spectacular savings in meeting emissionstargets under the EU Emissions Trading Scheme. Instead of cuttingits own carbon dioxide emissions, for example, the German-basedgenerating firm RWE could plan on investing in United Nations-certified ‘offset’ projects destroying small amounts of nitrous oxide (a


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greenhouse gas stipulated to be 298 times more powerful thancarbon dioxide over a 100-year time horizon) at factories in Egyptand South Korea and even smaller amounts of HFC-23 (a climate-forcing gas with a ‘global warming potential’ set at 14,800 times thatof carbon dioxide over a 100-year horizon) at chemical plants inChina (Lancaster 2007; Forster et al. 2007). RWE could also explorethe possibility of buying carbon credits from projects that wouldcapture and burn methane (yet another greenhouse gas stipulated tobe more harmful than carbon dioxide, especially over the short term)from landfills and coal mines in China and Russia. Commensuratingall these gases was hard work, since they vary in their effects alongmany different axes and time scales. In one reflection of theuncertainties and disputes involved, in 2007 the IPCC increased the100-year factor for HFC-23 by over 23 per cent, enabling at akeystroke the production of millions of tonnes more carbon credits.

Using offsets to achieve increased liquidity and efficiency dis-tances carbon markets from the global warming problem not onlybecause it ignores the importance of achieving a transition awayfrom fossil fuels, but also because it tends to suppress, in a class-and culturally biased way, concrete practices likely to play a signifi-cant part in those solutions. Carbon offset accounting necessarilyframes the political question of what would have happened withoutcarbon projects as a matter of expert prediction in a deterministicsystem, while at the same time framing (usually wealthy) projectproponents non-deterministically, as free decision makers whoseinitiatives are capable of changing ‘business as usual’. Activists inMinas Gerais, Brazil called attention to this contradiction early onwhen they contested an attempt by a local charcoal and pig ironcompany, Plantar, to get carbon credits for the environmentallydestructive eucalyptus plantations it had established on seized land:‘The argument that producing pig iron from charcoal is less badthan producing it from coal is a sinister strategy. . . . What we reallyneed are investments in clean energies that at the same timecontribute to the cultural, social and economic well-being of localpopulations’ (FASE 2003). After insisting that ‘the claim that withoutcarbon credits Plantar . . . would have switched to coal as an energysource is absurd’, the activists went on to characterize the accountingprocedure as a ‘threat’: ‘It is comparable to loggers demandingmoney, otherwise they will cut down trees’ (Suptitz et al. 2004: 2).

Typically, offset income supports conventional developments that


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harm local low-carbon livelihoods and sources of agriculturalknowledge while at the same time doing little if anything for localtransitions to a non-fossil society. In the mountainous river valleys ofUttaranchal, India, for example, scores of dam projects in line to bepart-financed through selling carbon credits to Northern industryare damaging local low-carbon irrigation systems. In China, 763hydroelectric dams have applied or are planning to apply to theUnited Nations to be allowed to sell more than 300 million tonnesof carbon dioxide pollution rights to Northern industry through theKyoto Protocol’s Clean Development Mechanism, yet they do notreplace fossil-fuelled generation, but merely supplement it, and werearguably going to be built anyway (McDonald et al. 2009). InNovember 2008, the US Government Accountability Office warnedthat such carbon projects can allow industries in the North ‘toincrease their emissions without a corresponding reduction in adeveloping country’ (USGAO 2009: 13).

Nigeria’s oil-extraction zone offers another good example ofcarbon markets’ tendency to encourage private corporations andtechnical experts to expend ingenuity on inventing novel, geo-graphically far-flung market ‘equivalents’ for emissions reductionsrather than finding ways to implement a structural shift away fromfossil fuels. For 50 years, energy companies operating in the NigerDelta have burned off the great bulk of the methane they find inunderground oil reservoirs. Although methane is a valuable fuel, itis cheaper for corporations such as Shell and Chevron simply toflare it on site than to use it in power plants or re-inject it under-ground. As a result, local people are subjected to continuous noise,light and heat, acid rain, retarded crop yields, corroded roofs, andrespiratory and skin diseases (Osuji and Avwiri 2005). Althoughflaring is prohibited by law in Nigeria (in 2005 the Nigerian FederalHigh Court confirmed that gas flaring was illegal and a grossviolation of human rights), oil companies have so far contentedthemselves with paying penalties for non-compliance. In thiscontext, one focus of local and international environmental activismis simply to insist on the rule of law. The Clean DevelopmentMechanism, however, takes breaches of the law in Nigeria as the‘baseline’ for carbon accounting. The Italian oil corporation Eni-Agip, for example, plans to buy some 1.5 million tonnes per year ofcheap carbon dioxide equivalent pollution rights from a project atan oil-gas installation at Kwale that was registered with the UN in


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November 2006 (UNEP 2009). Eni-Agip and its validator, theNorwegian consultant DNV, claim that the project will be reducingemissions by putting gas which would otherwise be flared toproductive use (although it is difficult to verify whether the gas inquestion will come from oil wells or dedicated gas extraction opera-tions also present in the region, whose production is not flared). Thecore of the calculation is that

whilst the Nigerian Federal High Court recently judged that gas flaringis illegal, it is difficult to envisage a situation where wholesale changes inpractice in venting or flaring, or cessation of oil production in order toeliminate flaring will be forthcoming in the near term. (DNV 2004: 11)

Accordingly, the project creates a new incentive for the Nigerianauthorities to replace legal sanctions with prices and the rule of lawwith markets for environmental services. It would be difficult toimagine a purer expression of neoliberal doctrines. Isaac Osuoka,the joint coordinator of the Gulf of Guinea Citizens Network,believes that ‘carbon trading reflects one of the worst forms ofneoliberal fanaticism and attempts at re-legitimating corporate ruleexperienced in the past decades’ (Osuoka 2009: 16).

Current proposals to allow industrialized countries and theircorporations to compensate for continued fossil fuel use by pressingmillions of hectares of land in the Global South into service as bioticcarbon stores or dumps further highlight carbon offsets’ tendencytoward regressive redistribution. In one proposed scheme, REDD(Reducing Emissions from Deforestation and Degradation), billionsof dollars would be invested in acquiring and preserving carbon inthe world’s native forests, which would then be traded forpermission to continue greenhouse gas pollution elsewhere. Landgrabs have already begun in central Africa, Indonesia and PapuaNew Guinea in order to feed the expected need for forested land ofthe US’s proposed carbon trading system under the Waxman-Markey Act. State forestry departments, conservation organizations,local authorities, indigenous communities or logging or plantationcompanies would serve as onsite security staff for this global carbonwarehouse. REDD advocates include ex-World Bank chiefeconomist Nicholas Stern, who sees it, tonne for tonne, as one of thecheapest ways of keeping carbon dioxide molecules out of theatmosphere; Wall Street firms such as Merrill Lynch (now owned byBank of America), which see high potential in trading such new


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‘carbon assets’; the Food and Agriculture Organization, whichwelcomes it as an opportunity to expand its political role; and, oftenin the forefront, carbon consultants, forest scientists, technicians andmaster planners with careers in forest conservation, who are workingon the ground in countries such as Indonesia to secure localauthorities’ consent to the schemes. The large sums of moneypotentially on offer have split indigenous peoples’ movements, someof whom see REDD as an opportunity for advancement, others ofwhom see it as an enclosure movement; and environmentalists, whodivide between large, Washington-based proponents such as Con-servation International and The Nature Conservancy and less well-funded opponents who see REDD as disempowering forest peoplesin favour of acquisitive corporations and state agencies (Griffiths2008) (see the chapter in this volume by Hinojosa and Bebbingtonfor other examples of tensions in civil society movements). Althoughits role and political nature are often misunderstood by traders andactivists alike, commensuration is again central to this struggle: fortrading to be possible, emissions arising from the combustion offossil carbon must be made quantitatively comparable with treecarbon. This becomes an endless task due to the different rolesplayed by fossil and biotic carbon in the climate system, as well asuncertainties and unpredictabilities in forest carbon absorption,which are being exacerbated by global warming itself (Philips et al.2009; Lindroth et al. 2009).

Finance and Securitization

A final step in the carbon markets’ abstraction from the climateproblem comes with securitization, which Shaoul discusses moregenerally in a later chapter. Financial market actors have alwaysbeen prominent in the carbon trade and today dominate the buyers’side of the credit market. Among the financial institutions that haveset up desks to speculate in carbon permits are Deutsche Bank,Morgan Stanley, Barclays Capital, Rabobank, BNP Paribas Fortis,Sumitomo, Kommunalkredit, and Cantor Fitzgerald. JP MorganChase has snapped up the carbon offset firm Climate Care; CreditSuisse has acquired a stake in the troubled carbon consultancy andaccumulator EcoSecurities; and Goldman Sachs has announcedplans to buy Constellation Energy’s carbon trading business. By2008 there were about 80 carbon investment funds set up to finance


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offset projects or buy carbon credits, most oriented more towardsspeculation than towards helping companies comply with regulatedcarbon caps.

Trading companies are also active, including Vitol, a majorenergy-market speculator, and while ENRON, an early enthusiastfor the Kyoto Protocol carbon market, is no longer in business,some of the firm’s ex-staff have moved into the carbon sector.Before the financial crash, even certain industrial companies, such asArcelor Mittal (the world’s largest steelmaker), opened departmentsspecifically to seek profits in the carbon trade, just as companiessuch as General Electric opened finance divisions in the 1990s(Cleantech 2008; see Shaoul, this volume). As with financial deriva-tives, a host of specialized new institutions have also been set up thatdeal in the commodity, with names like Sindicatum Carbon Capital,NatSource Asset Management, New Carbon Finance, Carbon Capi-tal Markets, Trading Emissions plc, South Pole Carbon AssetManagement, Noble Carbon, and so forth.

One of the tasks of such firms is to bundle together various typesof small offset projects for buyers. With increased investment,securitization is likely to follow. Already in November 2008, CreditSuisse announced a securitized carbon deal that would bundletogether carbon credits from 25 offset projects at various stages ofUN approval, sourced from three countries and five projectdevelopers. The bank then split these assets into three tranches,allegedly representing different risk levels, before marketing them toinvestors. In this way, products which already had only the mosttenuous relation to the climate problem they were designed totackle, and had been further disconnected from underlying valuesthrough a cascade of contested commensuration processes, weretransformed through yet further disaggregation and reassembly.Evaluation of such securities, whether by credit rating agencies orregulators, is certain to be even more challenging, and even lessamenable to modelling, than was the evaluation of the mortgage-backed securities that played such an important part in the onset ofthe financial crisis. If carbon permit products are ‘toxic’ to climatechange mitigation policy, they may prove to be no less so tofinancial stability, given the projected trillion-dollar scale of themarket. The dangers of what Friends of the Earth analyst MichelleChan calls ‘sub-prime carbon’ are obvious (Chan 2009).

In so far as it is aimed merely at improving carbon market


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practice rather than at fossil fuel use, and relies on a theory–practicedualism, regulation tends to become yet another moment in theneoliberal disembedding/re-embedding process, adding furtherlayers of attempted calculation to an unstable structure and furtherconcealing the problematic nature of the underlying abstractions. Acase in point is the continuing attempt of the Clean DevelopmentMechanism’s Executive Board and government regulators in variouscountries to tackle the riddle of ‘additionality’ in offset markets (thatis, how to prove that a project goes beyond business as usual), towhich, as carbon trader Mark Trexler noted years ago, there is nocorrect answer (Trexler 2006). Constantly manufacturing andreaffirming the notion that offset projects’ shortcomings are dueeither to imperfect methodology or incorrect implementation, tenyears of regulatory effort have only further skewed the politicaleconomy of the offset markets in favour of corporations locked intofossil fuel use, since it is only they who have the resources necessaryfor navigating the regulatory mazes that the additionality debate hasmade ever more intricate. Ironically, of course, this is an effectwhich, logically speaking, should itself enter into calculations ofcarbon saved and lost – one more example of the ‘moving horizon’characteristic of the market-environmentalist project of ‘internalizingexternalities’. The recent establishment of a private carbon ratingagency, as well as proposals for ‘programmatic’ and ‘sectoral’carbon credits, which would help sidestep impossible ‘additionality’requirements, reflect a continuing commitment to ‘better calcula-tion’ in the face of irresolvable tensions between the needs for high-volume, predictable carbon credit output and for market credibility.

Conclusion

Like the neoclassical shibboleths (the efficient markets hypothesis,rational expectations and the like) that have so picturesquely cometo grief during the financial crisis (see Fine, this volume), the carboncredit prices flashing on electronic screens in trading rooms on WallStreet or in the City of London reflect a complex political move-ment to reorganize and redistribute knowledge and power. Spellingout another notable chapter in the political history of commen-suration (Espeland and Stevens 1998), they form a part of one ofneoliberalism’s last and greatest class projects: the attempt toappropriate the climate itself. Carbon trading thus takes its place


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alongside other movements of recent decades that have inventednew possibilities of accumulation through the creation of freshobjects of calculation and the intensified commodification of some ofthe more hidden aspects of the infrastructure of human existence.Examples include attempts to expand credit by mathematizing andprivatizing an unprecedented variety of uncertainties throughderivatives markets (Lohmann, forthcoming; see Birch andMykhnenko; Shaoul, this volume), to privatize creativity throughglobal intellectual property rights (Frischmann and Lemley 2006),and to transform health, health care and even biological species intomeasurable, tradeable commodities (see Tyfield, this volume).

All these efforts to appropriate involve abstraction and commen-suration as part of wider processes involving deregulation, bankingand land law, treaty negotiation, structural adjustment, police work,mapping, resource seizures, export subsidies and so on. This abstrac-tion and commensuration can never be completed any more thanpolitics or the evolution of a language can be completed. As Mitchell(2002) observes, internalizing all externalities would make exchangeimpossible. Ideals of calculability, continually being developed andundermined in the course of attempts to carpenter together newstructures of property and trade, are part of conflicted processes thatcan generate both profits and crisis. The largely unchecked pursuitof liquidity in risk markets, furthered by the achievements of quants,led in the end to a financial stampede for the exits and a drying upof liquidity, and may eventually do the same in the carbon markets.An unrestrained quest to ‘internalize’ the benefits of innovation leadsin the end to the sapping of innovative forces and resources(Frischmann and Lemley 2006). Cost–benefit analysis’s attempt toisolate an uncontroversial basis for social choice in the calculation ofindividual preferences itself generates heightened controversy.Headlong attempts to implement ‘market solutions’ for globalwarming end up exacerbating the climate crisis as well as socialdislocations of diverse kinds and wide geographical reach.

The troubled trajectory of such initiatives hints at the continuingrelevance of earlier traditions of crisis analysis: Polanyi’s (2001[1944]) observation that the complete commodification of landwould result in the ‘demolition of society’; Marx’s descriptions of the‘contradictions’ of capitalism; Keynes’s warning about finance’s‘fetish of liquidity’ that ‘there is no such thing as liquidity of invest-ment for the community as a whole’ (Keynes 2008 [1936]). Yet, as


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this chapter’s sketch of carbon trading has suggested, analyticalspace must also be made for newer concepts such as Michel Callon’s‘overflows’ (Callon 1998), Timothy Mitchell’s (2002) treatment ofthe theory/practice divide as a mode of modern power, and sciencestudies scholars’ emphasis on non-human agents, whether therecalcitrant rainforest trees now being pressed into service as carbonstores or the ‘black swans’ and ‘monsters’ of non-linearity nowroutinely referred to by both financial analysts and climatologists.Study of the arcane particularities of manifestations of neoliberalismsuch as carbon trading can both inform and transform analyses ofcontemporary politics generally. As Lydgate famously observed inMiddlemarch, there must be a ‘systole and diastole in all inquiry’aimed at ‘continually expanding and shrinking between the wholehuman horizon and the horizon of an object-glass’.

The unfolding disaster of carbon trading prefigures thedisintegration of the picture of a thoroughly calculable world towhich neoliberalism clings more stubbornly than any state socialistproject of the past. The important question is how this disintegrationis to be effected politically. What sort of alliances can be fashionedamong, for example, grassroots resisters of offset projects in theSouth, environmental justice movements battling fossil fuel extractionand pollution, and a Northern public frustrated at the largesse beinglavished by their governments and the United Nations on thecreation of yet another dysfunctional speculative market? Theanswers are not yet clear, but here as elsewhere the fall of neo-liberalism will be something to be achieved through patient move-ment building and a long series of political struggles, not somethingautomatically given by the mechanics of yet another crisis.

References

Callon, M. (1998) ‘An Essay on Framing and Overflowing: EconomicExternalities Revisited by Sociology’, in Callon, M. (ed.), The Laws of the

Markets, Blackwell, Oxford, pp. 244–69.Chan, M. (2009) Subprime Carbon? Rethinking the World’s Largest New Derivatives

Market, Friends of the Earth, Washington, March.Cleantech Investor (2008) ‘ArcelorMittal Clean Technology Venture Capital

and Carbon Fund’, Cleantech Magazine, September.Det Norske Veritas (DNV) (2004) ‘Clean Development Mechanism Project

Design Document Form for Recovery of Associated Gas that WouldOtherwise be Flared at Kwale Oil-Gas Processing Plant, Nigeria’,


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<http://www.dnv.com/focus/climate_change/upload/final%20pdd-nigeria%20ver.21%20%2023_12_2005.pdf>.

Espeland, W. and Stevens, M. L. (1998) ‘Commensuration as a SocialProcess, Annual Review of Sociology, Vol. 24, pp. 312–43.

FASE et al. (2003) ‘Open Letter to Executives and Investors in the PrototypeCarbon Fund’, Espirito Santo, Brazil, 23 May.

Flannery, T. (2005) ‘Monstrous Carbuncle’, London Review of Books, Vol. 27,No. 1, 6 January.

Forster, P., Ramaswamy V. et al. (2007) ‘Changes in AtmosphericConstituents and in Radiative Forcing’, in Intergovernmental Panel onClimate Change, Working Group 1, ‘IPCC Fourth Assessment Report’,Cambridge University Press, Cambridge.

Frischmann, B. and Lemley, M. (2006) ‘Spillovers’, Columbia Law Review,Vol. 107, No. 1, pp. 257–301, <http://www.columbialawreview.org/assets/pdfs/107/1/Frischmann-Lemley.pdf>.

Griffiths, T. (2008) Seeing ‘REDD’? Forests, Climate Change Mitigation and the

Rights of Indigenous Peoples and Local Communities. Update for Poznan (UNFCCC

COP 14). Forest Peoples’ Programme, Moreton-on-Marsh, 3 December.Keynes, J. M. (2008 [1936]) ‘Speculation, Cyclicality and the Euthanasia of

the Rentier’, in Erturk, I. Froud, J. et al. (eds) Financialization at Work: Key

Texts and Commentary, Routledge, London.Lancaster, R. (2007) ‘Mitigating Circumstances’, Trading Carbon, December.Lindroth A. et al. (2009) ‘Storms Can Cause Europe-Wide Reduction in

Forest Carbon Sink’, Global Change Biology, Vol. 15, No. 2, pp. 346–55.Lohmann, L. (2005) ‘Marketing and Making Carbon Dumps:

Commodification, Calculation and Counterfactuals in Climate ChangeMitigation’, Science as Culture, Vol. 14, No. 3, pp. 203–35.

—— (2006) Carbon Trading: a Critical Conversation on Climate Change, Privatization

and Power, Dag Hammarskjold Foundation, Uppsala.—— (2009) ‘Toward a Different Debate in Environmental Accounting: the

Cases of Carbon and Cost-Benefit’, Accounting, Organizations and Society,Vol. 34, Nos 3–4, pp. 499–534.

—— (forthcoming) ‘Uncertainty Markets and Carbon Markets: Variationson Polanyian Themes’.

MacKenzie, D. (2009) ‘Making Things the Same: Gases, Emission Rightsand the Politics of Carbon Markets’, Accounting, Organizations and Society,Vol. 34, Nos 3–4, pp. 440–55.

McDonald, J., Hanley, C. and McGroarty, P. (2009) ‘China Dams RevealFlaws in Climate-Change Weapon’, Associated Press, 29 January.

Milner, M. (2007) ‘Global Carbon Trading Market Triples to $30b’, The

Guardian, 3 May, <http://www.guardian.co.uk/environment/2007/may/03/business.climatechange>.

Mitchell, T. (2002) Rule of Experts: Egypt, Technopolitics, Modernity, University ofCalifornia Press, Berkeley CA.


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Osuji, L. C. and Avwiri, G. O. (2005) ‘Flared Gases and Other PollutantsAssociated with Air Quality in Industrial Areas of Nigeria: an Overview’,Chemistry and Biodiversity, Vol. 2, No. 10, pp. 1277–89.

Osuoka, I. (2009) ‘Paying the Polluter? The Relegation of Local CommunityConcerns in “Carbon Credit” Proposals of Oil Corporations in Nigeria’,MS, April.

Philips O. L. et al. (2009) ‘Drought Sensitivity of the Amazon Rainforest’,Science, Vol. 323, No. 5919, pp. 1344–7.

Polanyi, K. (2001 [1944]) The Great Transformation, Beacon, Boston MA.Scott, M. (2008) ‘Market Meltdown? Carbon Trading Is Just Warming Up’,

Independent on Sunday Business, 27 July, <http://www.independent.co.uk/news/business/analysis-and-features/market-meltdown-carbon-trading-is-just-warming-up-877996.html>.

Suptitz, A. P. L. et al. (2004) ‘Open Letter to the Clean DevelopmentMechanism Executive Board’, Minas Gerais, Brazil, 7 June.

Trexler, M. (2006) ‘A Statistically Driven Approach to Offset-Based GHGAdditionality Determinations: What Can We Learn?’, Sustainable

Development, Law and Policy, Vol. 6, No. 2, pp. 30–40.United Nations Environment Programme (UNEP) Risoe Centre (2009)

‘CDM Pipeline’, UNEP, Risoe, Denmark, <http://www.cdmpipeline.org>.

United States General Accounting Office (GAO) (2009) ‘Climate Change:Observations on the Potential Role of Carbon Offsets in Climate ChangeRegulation’, GAO, GAO-09-456T, Washington DC, 5 March.

Unruh, G. C. (2000) ‘Understanding Carbon Lock-In’, Energy Policy, Vol. 28,No. 12, pp. 817–30.

Weitzman, M. (2009) ‘On Modeling and Interpreting the Economics ofCatastrophic Climate Change’, The Review of Economics and Statistics, Vol.91, No. 1, pp. 1–19, <http://www.economics.harvard.edu/faculty/weitzman/files/REStatFINAL.pdf>.


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A neoliberal perspective came to dominate the analytical and policyagenda on international development during the 1980s. It displaceda brief focus on poverty reduction which had emerged during the1970s and which had combined with a general appraisal of the needfor the state to intervene to correct market imperfections. TheWorld Bank played a crucial role in the promulgation of theneoliberal order in the Global South, and the rise of policy-basedlending – through such instruments as Structural Adjustment Loans(SALs) – abetted this new trend.

By the mid- to late 1990s, however, the Bank faced mountingcriticism of the policies promoted through its adjustment packages. Itsought to deflect some of this through a discursive shift, away fromthe Washington Consensus and towards comprehensive developmentwith a more holistic approach. Development was, again, to be under-stood as a transformation of society requiring a broader approachthan was offered through the Washington Consensus. This reflectedan attempt to propel the analysis beyond a bias towards stabilizationand price incentives, now to include such phenomena as persistentmarket failures and the importance of non-market institutions (seevan Waeyenberge 2006; Fine 2009; also Swain et al., this volume).Further, the principle of conditionality that underlay the structuraladjustment era seemed itself in need of adjustment. Conditionalitywas redefined, away from the traditional model based on finance inreturn for the promise of policy reform and towards a new formwhere the disbursement of funds became conditional on what hadalready been achieved in terms of policy reform (‘selectivity’ orperformance-based aid). This shift combined with the Bank’scelebration of its self-assigned knowledge role in development.

This chapter seeks to examine the implications of these changes

5 Tightening the Web: the World Bank and Enforced Policy Reform

ELISA VAN WAEYENBERGE

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for the ways in which the Bank regulates the policy space in low-income aid-recipient countries. It subjects ‘selectivity’ as the newpractice of conditionality to close scrutiny, and exposes a stringentcontradiction between the Bank’s projected move forward, at least atthe rhetorical level, from the Washington Consensus and the persis-tent promotion of a set of neoliberal practices in its operational deal-ings with low-income countries. The chapter reveals how through‘selectivity’ and the exercise of the Bank’s knowledge role, a tight yetless visible web of control, characterized by a continuing neoliberalbias, has continued to frame policy making in low-income countries.This is despite the ubiquitous and oft-reiterated commitment to‘ownership’ and ‘partnership’ principles. Further, the chapter assesseswhether the initial response by the World Bank to the current finan-cial and economic crisis could possibly hint at a substantial change ofcourse, away from the basic tenets of the neoliberal paradigm.

From Structural Adjustment to Performance-Based Aid

The stature and position of the World Bank in development becamesignificantly amplified during the 1980s as the organization’s involve-ment in SALs rapidly expanded. With SALs, the Bank providedprogramme instead of project finance in return for the promise, oron the condition of, a set of policy reforms. These policy reformstypically embodied what came to be known as the Washington Con-sensus and, in essence, sought to eliminate all obstacles to a ‘perfectmarket’ as the presumed optimal path to efficiency and growth (seeBirch and Mykhnenko, this volume).

Yet as the share of policy-based lending in total World Banklending had increased from 7 per cent in 1980 to 26 per cent by theend of the 1980s, criticism of ‘adjustment’ started to mount. Concernregarding adjustment’s pernicious economic and social consequenceswas expressed by a broad range of actors, including United Nationsagencies, civil society, academia, and increasingly, the Bank’s secondlargest shareholder, Japan. A number of problematic issues wereraised, including the negative effect on investment rates; theambiguous effects on the external account; declining real wages;falling public provisioning; et cetera. The Bank itself was faced by thedeclining performance of its loans portfolio, with the percentage ofsatisfactory adjustment lending operations in its own evaluationsfalling to just over 60 per cent by the end of the 1980s.

THE WORLD BANK AND ENFORCED POL ICY REFORM

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Nevertheless, the Bank was not willing to admit that funda-mental failures characterized its programmes as projected catalystsfor growth and poverty reduction. By the mid-1990s, after morethan fifteen years of experience with adjustment lending and muchdebate inside and outside the Bank, the notion emerged within theinstitution, evident in its 1994 report on Africa (World Bank 1994),that adjustment had promoted ‘sound’ policies, but had notnecessarily produced very strong results in terms of growth orpoverty reduction. For the Bank, implementation problems hadcaused inadequate economic performance, and local ‘ownership’of its reform programme became a perceived precondition forsuccess.

Following this, the ambition to exercise greater selectivity in theallocation of aid gained currency. Instead of imposing conditions tobe achieved in response to the receipt of loans, loans becameconditional on what was achieved beforehand. Under Performance-Based Allocations (PBA) of aid, the conditionality accompanying theaid flow no longer reflected the flow of reforms, but the state of thepolicy and institutional environment. Donors would set conditionsthat identified environments judged beneficial for growth anddevelopment, and aid would be allocated accordingly.

The idea of making loans conditional on what was alreadyachieved in terms of policy/institutional reform combined with anemphasis on a more advisory role for donors. A country not yetcharacterized by an ‘appropriate’ environment would become arecipient of ‘aid skills’ or advice rather than of aid money. TheBank’s flagship report on aid, Assessing Aid (World Bank 1998a: 4),explained: ‘Aid can nurture reform in even the most distorted en-vironments – but it requires patience and a focus on ideas, notmoney.’

As such, aid assumed a dual role: the provision of loans andgrants, or financial aid, for countries with ‘appropriate’ policyenvironments, while non-lending services, or non-financial aid, wouldbe used strategically to support the emergence of sound policies andgood governance in ‘poor’ policy environments. The ‘pedagogical’role of the donor community and of the World Bank, in particular,received a special emphasis. This tallied well with an issue we returnto below: an increasingly formal emphasis on the Bank as a ‘know-ledge bank’ – a notion enthusiastically promoted by James Wolfen-sohn, then World Bank president.


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Inside Performance-Based Aid (PBA)

The World Bank’s PBA (or ‘selective’ allocation) system proceeds onthe basis of the Country Policy and Institutional Assessment (CPIA).1

The latter is a World Bank staff assessment which measures acountry’s performance on a set of macroeconomic, structural, socialand governance criteria. The CPIA score feeds into an allocationformula for World Bank aid that is sixteen times more sensitive to


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Box 5.1: CPIA Criteria

A. Economic Management1. Macroeconomic Management2. Fiscal Policy3. Debt Policy

B. Structural Policies4. Trade5. Financial Sector6. Business Regulatory Environment

C. Policies for Social Inclusion7. Gender Equality8. Equity of Public Resource Use9. Building Human Resources

10. Social Protection and Labour11. Policies and Institutions for Environmental Sustainability

D. Public Sector Management and Institutions12. Property Rights and Rule-Based Governance13. Quality of Budgetary and Financial Management14. Efficiency of Revenue Mobilization15. Quality of Public Administration16. Transparency, Accountability and Corruption in the

Public Sector

Source: World Bank (2006).

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changes in policy/institutional variables than to changes in incomeper capita (as a proxy for poverty).2 As a result, the quality of institu-tions and policies of a country, measured against a uniform idealmodel captured in the CPIA matrix, strongly prevails over needs-based criteria.

The CPIA currently consists of 16 criteria, which are rated on ascale of 1 to 6 by World Bank staff (see Box 5.1). The criteria arecompiled in four clusters and the average of these four clustersconstitutes the CPIA score. The CPIA questionnaire that is used bystaff to attribute scores carries specific instructions (‘narrativeguidelines’) for each rating level (1 to 6) of each criterion.

Since 2000, the annual CPIA questionnaires have been in thepublic domain and, since 2005, the annual CPIA scores aredisclosed for IDA-eligible countries. While the official reason fordisclosure, initially only of the CPIA method and, later on, also ofits scores, has been the World Bank’s aspiration to operate in amore transparent way, it also indicates a continuing attempt by theBank to strengthen its function as a ‘norm setter’ in the broaderdevelopment community (see also Herman 2004).

In this manner, the World Bank has successfully promoted itsPBA system across the donor community. Both the AfricanDevelopment Fund and the Asian Development Fund use a verysimilar, but independently estimated CPIA, and the allocationprocesses of Dutch and British aid formally draw on the Bank’sCPIA scores. In addition, the Debt Sustainability Framework, theframework newly formulated by the International FinancialInstitutions (IFIs) and also used by other creditors and fora such asthe Paris Club, has the CPIA at its core in determining debt distressthresholds (see Oddone 2005).

Further, in an attempt to marry the CPIA-steered selectivityframework to the recognition of the importance of ‘ownership’ forthe developmental effectiveness of aid programmes, the World Bank,together with the IMF, introduced a new ‘negotiation’ framework in1999, the Poverty Reduction Strategy Paper (PRSP). The PRSPallegedly provides a ‘country-owned’ policy framework for povertyreduction and seeks to facilitate coordination between variousdonors. Drafting a PRSP, however, pre-conditions access to theconcessionary resources of the IMF through its Poverty Reductionand Growth Facility (PRGF) and to the aid programme of theWorld Bank, as well as eligibility for further debt relief. Once


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completed, the PRSP is reviewed jointly by World Bank and IMFstaff, who advise their respective Executive Boards on whether thePRSP is a sufficient basis for concessional lending and/or debt relief.The process of producing a PRSP is to be repeated every threeyears and PRSPs are currently on the agenda of just over sixty low-income countries.

A substantial literature exists critically assessing the PRSP exercise.It conveys a broad consensus denouncing the insufficient depth andbreadth of the participatory process in the PRS initiative and itsambiguous repercussions for ownership. A concomitant lack ofdiversity in the policies encapsulated in the various PRSPs has beendenounced and the striking recurrence of policy imperatives such astrade liberalization, privatization, investment deregulation and fiscalstringency has been observed (WDM 2005). The PRS process appearsmore as a mechanism, or framework, through which anti-povertyefforts in national policy processes across low-income countries can bestreamlined, rather than as a genuinely country-owned framework ofengagement between debtor and creditor countries.

Indeed, the PRS process seems to have provided an opportuneconduit for the donors’ and, in particular, the World Bank’sknowledge agenda, as the PRS process implies a far-reaching‘capacity-building’ enterprise that targets various segments of society(including the executive branch of government, Parliament, regionaland municipal governments, and civil society organizations) andpermits the IFIs to assume an important role (see IDA/IMF 2002:22). The CPIA plays a special role in this ‘streamlining’ exercise,conditioning the scope for alternative development and povertyreduction strategies, as it is expected that the implementation ofPRSP policies will be reflected in the country’s CPIA ratings (IDA2002). This reveals an implicit assumption that PRSP policies arenecessarily in line with the imperatives embedded in the CPIA.Moreover, in World Bank practice, the CPIA serves as a filterbetween a country’s PRSP and its operational translation intospecific aid strategies (see World Bank 2005: 23).

Beyond the Washington Consensus in World Bank AidPolicies?

According to World Bank staff, the CPIA criteria include ‘a widerange of what is generally accepted as important for development’


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(Gelb et al. 2004: 19). However, closer scrutiny of the criteria consti-tuting the CPIA reveals how the assessment’s matrix imposes an a-historical policy and institutional straitjacket on poor countries, andremoves the possibility for the exercise of strategic discretion in thedesign of development policies.

The economic core of the CPIA builds on familiar neoliberalprecepts in line with the Washington Consensus (low inflation;budget surplus; no restrictions on trade and capital flows; et cetera).These economic imperatives are augmented with a set of social andgovernance concerns (see Box 5.1). Yet the ‘social’ and the ‘institu-tional’ are added onto the ‘economic’ without reflection upon thesocial and institutional dimensions of the latter. In line with orthodoxunderstandings of the economics discipline, the social and/orinstitutional remain in the margin of the economic, and are addressedex-post or separately through recourse to specific institutions/policies(e.g. targeting, safety nets, ‘governance’ measures). The ‘economic’agenda promoted through the CPIA is, nevertheless, intrinsically‘social’ as well as ‘institutional’.

This has a number of contradictory implications. The socialcriteria rated in the CPIA, apart from being added ex-post, areconstrained, and often negatively affected, by the economicimperatives defended in the economic core of the CPIA question-naire. For instance, the various specifications of good policy in thearea of building human resources or social protection sit awkwardlywith the stringent fiscal and monetary order embodied in theeconomic management cluster. The reality of the trade-offs betweenthese different imperatives is ill-appreciated in the design of thequestionnaire. The social remains subordinate to the economicimperatives of ‘stability’, ‘balance’, and private (and foreign) sectorpromotion.

Further, the relationship to development or growth (and thus aidproductivity) of the governance issues incorporated in the CPIA isill-understood. Governance was added onto the World Bank’sagenda in the late 1980s and evolved into a fully-fledged agendaitem over the next decade. The Bank has sought to restrict itself tothe ‘economic’ dimensions of governance. In practical terms, and asis reflected in the CPIA governance cluster, this has implied anemphasis on public sector management; accountability; trans-parency and information; the legal framework for development(including the establishment and protection of private property


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rights); participation in programme and project design; and controlof corruption and military expenditure (World Bank 2006). TheBank’s promotion of these governance features rests on a particularmodel of the role of the state. However, in as much as the under-lying model of the state is ill-suited to the context of developingcountries, its derivative governance prescriptions will be misguided.

The view of the role of the state with which the World Bank’sgovernance agenda tallies is comprehensively depicted in the 1997World Development Report, The State in a Changing World (WorldBank 1997). The interventions ascribed to the state in this reportare, in principle, more extensive than projected under the state–market antagonism much associated with the Washington Consen-sus, with a broader appreciation of the incidence of market failureas the ‘perfect markets’ paradigm of the Washington Consensus isreplaced by an ‘imperfect markets’ paradigm (Stiglitz 1989). Itacknowledges that markets fail more persistently than previouslyrecognized, and that this is especially relevant for the context ofdeveloping economies. The state becomes a necessary element(‘partner’) for the adequate functioning of the market economy(Stiglitz 1989). Yet, in practice, a set of institutional arrangements areprescribed, drawing on what are called ‘inter-sectoral partnerships’between the state, private profit and non-profit sectors, and theseproject a persistent bias against direct state presence or strategicinterventions on behalf of the state in the economy (see Fine 2001).

Both the state model and its derivative governance arrangements,as embodied in the CPIA, are ill-suited for the transformations thatdevelopment entails. The policy/institutional imperatives embeddedin the CPIA matrix do not correspond to the empirical reality ofdevelopment. They at most describe what certain advancedeconomies could look like.3 They emerge as a technocratic and a-historical attempt to deal with complex underlying political-economicprocesses. The implications of specific governance arrangements forgrowth crucially depend on the particular constellation of political-economic forces within both the state and the society (andembedded in the relationships between these); other factors includethe state of development and the nature of the country’s inter-national relations.

More generally, the policies promoted or imposed through theCPIA exercise eliminate the possibility for strategic interventionsthrough which specific sectors of the economy can be promoted –


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despite the repeatedly emphasized importance of such interventionsto the success of the now-developed countries and the East Asian‘miracle’ economies.4 The CPIA essentially embodies a set of pre-determined neoliberal norms augmented with apparent social andgovernance concerns. On this evidence, World Bank aid practicesseem little affected by its purported move forward from theWashington Consensus.

Yet, in 2004, a revealing change was made to the questionnairethat is used by World Bank staff when attributing a country’s CPIAscore. While the familiar neoliberal bias prevailed in the question-naires steering successive CPIA assessments, a set of specific policyimperatives disappeared from the narrative guidelines of the 2004questionnaire. These touched upon issues pertaining to the financialsector, capital account liberalization and the treatment of foreigninvestment.

In the questionnaires that were used by staff to attribute a CPIAscore before 2004, the imperative of an open capital account wasexplicitly integrated in the CPIA criteria. Further, a whole set ofspecific policy prescriptions regarding the financial sector prevailed,including restrictions on guided credit allocations, state ownership inthe financial sector, capital controls, and the differential treatment offoreign and domestic financial institutions. Since the 2004 CPIAexercise, however, these specific policy prescriptions no longer recur.While the preference for market-determined interest rates persists,the explicit prohibition of directed credit and the imperative of‘national treatment’ of foreign investment disappeared from thequestionnaire’s narrative guidelines. Further, the explicit restrictionson state ownership in the financial sector have been removed fromthe questionnaire. This has been replaced by a preoccupation withBasle Core Principles (BCPs) for effective banking supervision(World Bank 2004: 15).5

This is remarkable. The meaning of such change, however, needsto be critically assessed. Indeed, closer scrutiny of the later CPIAquestionnaires reveals how the CPIA rating process has increasinglycome to depend on a host of ‘diagnostic reports’, which assess acountry’s policy environment in a specific area (finance, foreigninvestment regulations, labour, et cetera) and are intended to guidestaff’s judgement of a country’s policies and institutions. Inspectionof the content of these reports reveals the persistence of the specificbiases that, at first sight, seemed to have disappeared from the CPIA


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– including those in favour of capital account convertibility andnational treatment for foreign investors, and against state ownershipin the financial sector.

Thus, while explicit incorporation of a set of possibly morecontentious imperatives disappeared from the CPIA narrative guide-lines, they have become lodged within the various reports that staffrely on when determining a score for a country’s policy and institu-tional environment. The original (neoliberal) economic and financialimperatives persist in steering staff assessments of a country’s policyand institutional environment through the CPIA procedure, butnow do so in a more surreptitious way.6

This draws attention to the importance of the World Bank’sanalytical clout – in particular through its applied country and sectorwork – to assure the continued and further adoption of a specificpolicy agenda (liberalization) in specific country contexts, and links tothe way in which the Bank understands its self-proclaimed ‘know-ledge’ role.

Tightening the Web: the World Bank and Knowledge

I have illustrated above how the World Bank has sought tostrengthen the link between aid disbursements and the state of acountry’s policy and institutional environment. The particular assess-ment tool that steers these selective aid allocations, the CPIA,embodies a persistent neoliberal bias. Further, the CPIA has beensubjected to a set of subtle changes where particular policy impera-tives – easily perceived as more contentious – no longer explicitlyappear on the CPIA questionnaire. These remain, nevertheless,embedded in the assessment exercise, now through reference to a setof diagnostic reports. These reports are often produced under WorldBank patronage and perpetuate the original neoliberal economic andfinancial imperatives. This shift, through which specific diagnosticreports acquire particular importance for the pursuit of certain partsof the Bank agenda, has something more to reveal regarding achange in the nature of Bank engagement with aid-recipientcountries.

The diagnostic reports drawn upon during the CPIA scoringexercise are part of a broader ‘knowledge exercise’ by the WorldBank. During the late 1990s, the Bank sought increasingly toemphasize its role as a ‘knowledge’ provider. This was most


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emblematically stated in the formal ‘knowledge bank’ declaration byformer Bank president James Wolfensohn (1996). While the transferof knowledge had always been a dimension of the World Bank’srole, the more so as it became leader of the aid regime when policy-based lending expanded rapidly during the 1980s, the knowledgeemphasis has sought to broaden the scope and raise the profile ofthis function.

In its ‘knowledge bank’ declarations, the Bank portrays itself as a‘clearing-house for knowledge about development’, a corporate‘memory bank’ of best practices, and a collector and disseminator ofthe best development knowledge from outside organizations (WorldBank 1998b: 140). For the World Bank, the creation anddissemination of knowledge appear as an international public goodcharacterized by under-provision (Stigtliz 1999a; Squire 2000). It isargued that the supply of such a public good will be deficientwithout active public support, and this gives rise to a crucial role forthe Bank (Gilbert et al. 1999; Stiglitz 1999b; Squire 2000; Stern andFerreira 1997; World Bank 1998a, 1998b). Former World Bankchief economist Joe Stiglitz (1999b: 590, my emphasis) elucidated:

The accumulation, processing, and dissemination of knowledge indevelopment, as well as working more broadly to close the knowledgegap, is the special responsibility of the World Bank. The two activities ofthe Bank are complementary. Knowledge, particularly knowledge aboutthe institutions and policies that make market economies work better,leads to higher returns and better allocation of capital. . . . The WorldBank has a role to play in providing such advice that extends beyond thepublic-good nature of knowledge. It is, and is widely perceived to be, anhonest broker.

In such an account, the World Bank is characterized by econo-mies of scale and scope in policy or development knowledge and,concomitantly, has a unique capacity to analyse, codify and dissemi-nate development experience around the world. For the Bank,‘knowledge’ about development appears as a ‘scientific’ matter,objective and value-neutral. The socio-historical, political andeconomic context in which knowledge comes about and is put to useis blatantly disregarded (see Mehta 1999). This combines with theglaring absence of a critical reflection on how the Bank is governed,including its shareholder realities or relationship to the financialmarkets, and implications thereof for norms of ‘scientific’ accept-ability (see Broad 2006; Wade 1996).


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However, the World Bank occupies a privileged role in the worldof development knowledge. The scale of its knowledge activitiessurpasses those of any university department or research institutionworking on development by all measures.7 And, even though theresearch undertaken by the World Bank spans a range of topics, itis dominated by economics, with the predilection of the latter forquantitative analysis and formal modelling bestowing the disciplinegenerally, and World Bank research in particular, with a semblanceof scientific rigour to the detriment of more specific, historically andsocially grounded analysis – despite the post-Washington Consensus(see Fine 2002). A more thorough analysis of this ‘zombieconomics’can be found elsewhere in this book (Fine, this volume).

Further, the World Bank’s emphasis on a knowledge missionneeds to be assessed in the context of the realities of knowledgecreation in developing countries, where a set of factors have severelyaffected domestic capacity for policy analysis. There has been asustained erosion and undermining of state capacity for policyanalysis in developing countries that have been engaged in far-reaching structural adjustment exercises (see Mkandawire 2002).This has been the result of a number of factors, including fiscalstringency imposed upon states, a heavy reliance on expatriatetechnical staff by donor agencies, and the particular way in which‘ownership’ has been understood by donors, where, in the words ofMkandawire (2002: 155), ‘“capacity-building” exercises had morethe character of cloning than the production of people with criticalanalytical skills’.

This has been compounded by a sustained erosion of theuniversity sector as a centre of expertise/knowledge in many low-income countries (see King 2001). A complex set of factors havecontributed to such a state of affairs, some of which relate to donorpolicies. In the context of the latter, the 1980s and most of the 1990swere marked by an emphasis on support for primary education anda comparative neglect of higher education. The effect of the shiftaway from higher education was particularly severe in sub-SaharanAfrica, where World Bank support for higher education plungeddramatically in the 1980s. This effect was worsened by donors’support for a consultancy culture, where think tanks rather thanuniversities tended to be favoured as sites of policy analysis.

The knowledge discourse, nevertheless, has led to the re-emergence of higher education on the donor agenda (see Mundy


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2002; King and McGrath 2004). This has happened, however,against the backdrop of the rapid privatization and international-ization of the market in education and policy services – develop-ments in which the World Bank has played an important role (IFC2001; Salmi 2002). As a result, national institutions in developingcountries are likely to be faced with increasingly intense competitionfrom foreign providers (Bennell and Pearce 1998: 24; King 2001).This could have further implications for in-country capacity toconceptualize the policy space independently or in accordance withthe specific characteristics of the country.

Conclusion

This chapter has sought to reveal how there has been a shift in theway in which the World Bank interacts with low-income aidrecipients. This has implied a move from ex-ante to ex-postconditionality and, within the practice of the latter, from the explicitpursuit of specific policy imperatives to the more embedded promo-tion of these imperatives through increased reliance on the Bank’s‘diagnostic’ capacity. The imperatives characteristic of the Washing-ton Consensus remain entrenched in World Bank aid practices, evenif in a less visible manner. This subtle change may serve to containthe contradiction resulting from the conjunction of its discursiveshifts, as through the post-Washington Consensus, and thepersistence of a set of neoliberal economic and financial imperativesat the heart of its practices.

These shifts tie into the World Bank’s broader attempt topromote its knowledge stature, most recently through the prolifera-tion of a set of specific knowledge initiatives. Throughout this effort,the Bank’s knowledge is understood as a public good reflecting itspurported comparative advantage of scale and scope in capturingand disseminating best practices of development – rather than beingcontextualized and understood within the contours of the Bank’spolitical economy, mapping specific power relations. Variousanalytical outputs of the Bank serve to inform local understanding ofthe scope for policy and institutional reform.

As a result of these trends, a logistical aid framework operateswhich seeks to guarantee the further adoption of the World Bank’sneoliberal reform agenda. This framework intrinsically implies, toborrow Soederberg’s (2004) expression, ‘an intricate web of


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surveillance and discipline’ that aims to spin ‘common-sense values’across and within national spaces.

It remains, however, to be seen whether and, if so, to what extentthe current financial and economic crisis will alter the neoliberalimperatives that the World Bank pursues, especially in thosecountries where it maintains significant leverage. This will requirespecific attention to the practices of the Bank, such as its aid alloca-tion mechanism and related conditionalities, rather than paying toomuch heed to further rhetorical shifts that are likely to occur.

Since the onset of the current economic and financial crises the roleof the World Bank has been significantly strengthened, with a suddenand sharp increase in its lending (and borrowing). Whether thisreinvigoration of its financial and lending capacity will be accompaniedby substantial changes in preferred policy reforms, particularly in thecontext of those low-income countries where the Bank retains substantialpolicy leverage, is still unclear. Initial signs, however, do not pointtowards any radical departures. First, there is no indication that it maybe moving towards a repudiation of the CPIA as the mechanism on thebasis of which it rations aid flows, with virtually no discussion of theCPIA within the Bank – as opposed, for instance, to the explicit callfrom the ‘Stiglitz Commission’ for its repudiation in the wake of thecrisis (UN 2009). Second, a ‘mental dichotomy’ (Ocampo 2009) seemsto have emerged, according to which counter-cyclical policies arepromoted in the Global North, while the Bank remains generally hostileto such a direction in the Global South. Third, the Bank remainsstrongly committed to ‘knowledge’ as a strategic direction, with noindication of a more critical appraisal of its own knowledge role. Finally,the nature of the involvement of the World Bank Group, which includesits private sector affiliates, in response to the crisis indicates a strong andcontinuing commitment to the private (which is often foreign) sector aslead engine of growth. This remains understood broadly along linesassociated with the neoliberal paradigm and its continuing (and oftenexclusive) emphasis on property rights, contract enforcement, conserva-tive macro-management and the superiority of incentives providedthrough the market mechanism. Plus ça change . . . .

Notes

1 The World Bank provides finance to developing countries on near-market terms through the so-called ‘hard window’ of the InternationalBank of Reconstruction and Development (IBRD) and, to poorer and


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non-creditworthy countries, on concessional terms through the ‘softwindow’ of the International Development Association (IDA). The PBAsystem only applies to funds allocated through the IDA.

2 See IDA (2005: 51) for the full formula and exceptions to the allocationrule.The Poverty Reduction Growth Facility was created by the IMF in 1999as follow-up instrument to the Enhanced Structural Adjustment Facility(ESAF), with an ambition to highlight explicitly the new anti-povertyimperative. The PRGF would try to induce policies that would focusboth on economic growth and poverty reduction and that would, as aresult of better national ownership, be implemented more consistently.The World Bank added its own programmatic lending instrument, thePoverty Reduction Strategy Credit (PRSC), in 2001. Blend countries thatdo not seek PRGF arrangements do not have to produce a PRSP inorder to have access to IDA resources.For the full list see <http://siteresources.worldbank.org/INTPRS1/Resources/boardlist.pdf>.

3 See Chang (2002, Chapter 3). 4 See the well-known contributions by Chang (2002); Wade (1990); and

Amsden (1989). 5 The BCPs provide a set of international standards of ‘best practice’

defined by the Bank for International Settlements. See Soederberg (2003)on how the introduction of the BCPs in developing countries serves as avehicle to overhaul existing banking supervision.

6 See van Waeyenberge (2009) for a more elaborate account. 7 Research at the Bank takes place both in its operational and research

departments. Together the resources available across these two amountto over US$180 million. Further, the World Bank Institute engages in amassive ‘client learning programme’, with the number of traineesamounting to 110,000 in 2005, up from 7,000 in 1996.

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Oxford University Press, New York NY.Bennel, P. and Pearce, T. (1998) ‘The Internationalisation of Higher Educa-

tion: Exporting Education to Developing and Transitional Economies’,Institute of Development Studies Working Paper 74, University of Sussex.

Broad, R. (2006) ‘Research, Knowledge, and the Art of “Paradigm Mainte-nance”: the World Bank’s Development Economics Vice-Presidency’,Review of International Political Economy, Vol. 13, No. 3, pp. 387–419.

Chang, H-J. (2002) Kicking Away the Ladder: Development Strategy in Historical

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sensus: an Introduction’, in Fine, B., Lapavitsas, C. and Pincus, J. (eds)Development Policy in the Twenty-first Century: Beyond the Post-Washington

Consensus, Routledge, London.—— (2002) ‘Economic Imperialism and the NDE as Kuhnian Paradigm

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Gilbert, C., Powell, A. and Vines, D. (1999) ‘Positioning the World Bank’,Economic Journal, Vol. 109, No. 459, pp. 598–633.

Herman, B. (2004) ‘How Well Do Measurements of an Enabling DomesticEnvironment for Development Stand Up?’, UNCTAD XVIII TechnicalGroup, Meeting of the Group of 24, <http://www.g24.org/003gva04.pdf>.

IDA (2002) ‘Additions to IDA Resources: Thirteenth Replenishment.Supporting Poverty Reduction Strategies’, <http://siteresources.worldbank.org/IDA/ Resources/ FinaltextIDA13Report.pdf>.

—— (2005) ‘Additions to IDA Resources: Fourteenth Replenishment.Working Together to Achieve the Millennium Development Goals, Reportfrom the Executive Directors of the IDA to the Board of Governors’,<http://siteresources.worldbank.org/IDA/Resources/ 14th_ Replenishment_Final.pdf>

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IFC (2001) Investing in Private Education. IFC’s Strategic Directions, World Bank,Washington DC.

King, K. (2001) ‘“Knowledge Agencies”: Making the Globalisation ofDevelopment Knowledge Work for the North and the South?’, in Gmelin,W. et al. (eds) Development Knowledge, National Research and International

Cooperation, Centre of African Studies, Edinburgh.King, K. and McGrath, S. (2004) Knowledge for Development: Comparing British,

Japanese, Swedish and World Bank Aid, Zed Books, London.Mehta, L. (1999) ‘From Darkness to Light? Critical Reflections on the

World Development Report 1998/99’, Journal of Development Studies, Vol.36, No. 1, pp. 151–61.

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Ocampo, J. A. (2009) ‘The Economic Crisis and the Developing World:What Next? Interview with Robert Wade and Jose Antonio Ocampo’,Challenge, Vol. 52, No. 1, pp. 27–39.

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Salmi, J. (2002) Reconstructing Knowledge Societies, World Bank, Washington DC.Soederberg, S. (2003) ‘The Promotion of “Anglo-American” Corporate

Governance in the South: Who Benefits from the New InternationalStandard?’, Third World Quarterly, Vol. 24, No. 1, pp. 7–27.

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Neoliberal Domination in the Global South, Zed Books, London. Squire, L. (2000) ‘The World Bank and Development Research’, in Vines,

D. and Gilbert, C. (eds) The World Bank: Structure and Policies, CambridgeUniversity Press, Cambridge.

Stern, N. and Ferreira, F. (1997) ‘The World Bank as “Intellectual Actor”’,in Kapur, D., Lewis, J. and Webb, R. (eds) The World Bank: Its First Half

Century. Volume 2: Perspectives, Brookings Institution, Washington DC.Stiglitz, J. (1989) ‘Markets, Market Failures and Development’, American

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van Waeyenberge, E. (2006) ‘From Washington to Post-WashingtonConsensus: Illusions of Development’, in Jomo, K. S. and Fine, B. (eds)The New Development Economics: After the Washington Consensus, Tulika Books,New Delhi.

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—— (1997) World Development Report. The State in a Changing World, OxfordUniversity Press for the World Bank, New York NY.

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Questionnaire, Operations Policy and Country Services’, 6 December,<http://siteresources.worldbank.org/IDA/Resources/CPIA2004questionnaire.pdf >

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The behemoth of neoliberalism has figured prominently in accountsof post-Soviet economic development in Eastern Europe and theformer Soviet Union. The ‘shock therapy’ and the ‘big bang’ whichaccompanied the disintegration of the Soviet system in the late1980s and early 1990s are commonly identified as ‘neoliberal’ (seeBirch and Mykhnenko; Jessop, this volume). It has been argued thatneoliberalism was imposed on post-Soviet countries by hegemonicinternational financial institutions (IFIs) such as the IMF and theWorld Bank (Gowan 1995). This was refuted by some who main-tained that if anything neoliberalism had been voluntarily adoptedby indigenous elites (Lloyd 1996). More recently others have arguedthat the emergence of consolidated neoliberal states is due either tothe extension of the transnational capitalist class to include post-Soviet countries (Shields 2003) or to alliances between domestic andtransnational class interests (Drahokoupil 2008). However, therelationship between neoliberalism and post-Soviet transition ispuzzling. Whilst many have argued transition was a neoliberalTrojan horse, others have challenged the notion that liberal marketeconomies have emerged in the region (Mykhnenko 2007). Somehave regarded Russia as an archetypal neoliberal country, at leastduring the 1990s (Job 2001; Nesvetailova 2005), whilst others havesuggested it is more akin to political or even state capitalism(Hanson and Teague 2007).

At the heart of this debate lies ambiguity surrounding the veryconcept of neoliberalism itself and especially its relationship to alter-native market-orientated movements. Whilst few scholars have com-pletely jettisoned the neoliberal discourse there have been attemptsto destabilize the relationship between neoliberalism and transition.The role of transnational networks of academic (Bockmann and

6 The Corruption Industry and Transition:Neoliberalizing Post-Soviet Space?

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Eyal 2002) and professional (Swain 2007) economists in producingand promoting neoliberal ideas has been highlighted. It has alsobeen argued that individuals and households inevitably negotiateneoliberal reform, thereby ‘domesticating’ and articulating it withnon-neoliberal and even non-capitalist practices (Smith 2006; Smithand Rochovská 2007). Moreover in the circumstances of a weakstate and a regionally or nationally rooted alternative market-orientated movement, it is possible to resist externally inspired, state-imposed neoliberal projects (Swain 2006; Sher 2008).

This chapter draws on recent work which questions the concep-tual coherence of neoliberalism in academic debate and its usefulnessin promoting political activism and progressive change to considerwhat it means to say that post-Soviet countries are neoliberal. Ourintention is to identify and destabilize the mechanisms which renderneoliberalism ‘true’. The concept of neoliberalism is underpinned bya universalist notion of the economy which is nowhere realized in apure form, resulting in studies which focus on whether neoliberalismas a normative project is more or less realized (in a more or less pureform) and on the mechanisms through which this is achieved. Ourcontention is that the assemblage and calculative devices whichproduce and promote the notion of ‘corruption’ are one of the mostpowerful mechanisms underpinning attempts to realize neoliberal-ism in post-Soviet Eastern Europe. Corruption has been used tojustify market fundamentalism around the world (Brown and Cloke2004), including in post-Soviet Europe, where anti-corruption wasused to justify the implementation of ‘shock therapy’, whilstcorruption was used to explain away its failures (Krastev 2004).

In transition the identification of corruption undermines thelegitimacy of existing economic practices and justifies their reorgan-ization. Where neoliberal ideas have come up against rival alterna-tive market-orientated movements, which, for example in Russia,have established and maintained themselves politically, one responsehas been to undermine their legitimacy by identifying them ascorrupt. Thus whereas the anti-corruption discourse in manyEastern European countries is used to justify a small state andmarket fundamentalism, in Russia anti-corruption has been used asan argument for the transfer of assets and revenues from ‘oligarchs’to the state (Tsyganov 2007). We argue that a close inspection of thesocio-technical networks producing the discourse and devices ofcorruption/anti-corruption is one way to de-centre and destabilize

THE CORRUPT ION INDUSTRY AND TRANS IT ION

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the concept of neoliberalism and fruitfully shift the terrain of pro-gressive politics. The argument unfolds in the following way. In thenext section we discuss the status of the concept of neoliberalism andargue that it is a theory of resistance which reifies the object whichis supposed to be critiqued. Thereafter we argue that one way ofdeconstructing neoliberalism, in the context of post-Soviet ‘transi-tion’, is by thinking about corruption as an ‘industry’ which hailsmarket-orientated policies commonly identified as neoliberal (deMaria 2008: 184; Krastev 2004).

Neoliberalism in Crisis: Elephant in the Room or Apparition?

Neoliberalism is in crisis in two senses. First, the onset of the 2007–9global financial-economic crisis has undermined the recent domi-nance of market fundamentalism (French et al. 2009), and, second,the coherence and relevance of the concept has been questioned.Neoliberalism has been thought about in three main ways. First, itis treated as a normative ideological class project intended to restorethe power of the bourgeoisie. It is argued that neoliberal policy is anational project of the state and of capital in the most advancedWestern economies, intended to reduce the power of the workingclass by creating and maintaining an external labour reserve (Harvey2005). Second, neoliberalism is understood as a neo-imperial project.Chang (2002), a development economist, argues that liberalization ofinternational trade and investment and selective labour flows is adeliberate strategy by advanced Western capitalist countries to lock-in their comparative advantage by preventing poorer countries fromusing import substitution to develop infant industries and accumulatenational capital. Third, neoliberalism is treated as a market-funda-mentalist ideology which is manifest in state strategies whichgenerate processes of neoliberalization. In this rendition neoliberalismremains a universally recognized phenomenon but is treated as aspatially and temporarily variegated process. This approach seeksever more conclusive and comprehensive specifications of neoliberal-ism. Peck and Tickell (2002; see also Tickell and Peck 2003) examinethe temporal evolution of national neoliberalisms in the heartlandsof the US and the UK, and their extension to virgin territory.

Some critics of market fundamentalism have recently subjectedthe concept of neoliberalism to critique. Clive Barnett (2005; seealso Barnett et al. 2008) argues that the conceptualization of neo-


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liberalism is based on functionalist readings of both Marxist notionsof hegemony and Foucault’s theory of governmentality. He main-tains that this reading, which tends to ignore not only resistance butalso difference, ascribes to neoliberalism a unity and a power it doesnot possess and concludes ‘[t]here is no such thing as neoliberalism!’(2005: 9). Castree (2006) maintains there is confusion over what neo-liberalism is and what exactly its effects are. Moreover, he doubtswhether its conceptualization will ever be refined and clarified. Facedwith a burgeoning literature revealing the ever greater variation inthe forms of ‘actually existing neoliberalism’, scholars have sought toidentify mesolevel abstract versions of neoliberalism as expressions ofan essential universal core. We wish to extend this critique byarguing for a rejection of ‘residual structuralism’ (cf. Murdoch 2006:15) and for a deconstruction of the discourse of neoliberalism. To dothis we seek to highlight the critical potential of work which under-stands the economy as an emergent configured performance (Callon1998) constructed through the interplay of rival projects and theirassociated socio-technical networks (Mitchell 2008; see also Loh-mann’s analysis of carbon trading in this volume). Whilst this way ofunderstanding the economy is not without its own problems, inparticular the danger that the complex construction of the economyis simply normalized, it can also be used as a targeted critical-politicaltool intended to selectively intervene in and progressively reconstructthe economy.

We critique three discursive practices which underpin the dis-course of neoliberalism. First, neoliberalism is represented as a total,unified and systemic entity – much in the way, indeed, that someMarxists represent capitalism (Gibson-Graham 1996: 4). Such repre-sentational forms recognize a particular form of economic and politicalauthority in which power is imagined as (more or less) centred and(more or less) unevenly radiating outwards from neoliberal heart-lands. Second, neoliberalism is an emblematic theory of resistance andas Rose (2002: 384) argues: ‘Resistance theory attempts to disruptstructuralist notions of hegemony by demonstrating that systems arealways destabilized. Yet, in doing so, it simultaneously constitutes thestructured nature of the system as primary.’ There is a fine linebetween on the one hand recognizing the influence of neoliberal ideasand on the other hand justifying and even promoting those very sameideas. Recognition of the role of think tanks in producing andpromoting neoliberal ideas risks simply describing and reifying


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market fundamentalism (see Birch and Tickell, this volume). Onenotable critic of market fundamentalism, Jamie Peck, with hiscollaborator Nik Theodore (2007: 760), examines the threat posed bythe rise of neoliberalism to the continental European variety ofcapitalism. They argue that the varieties of capitalism literature is‘defensive’ because it provides intellectual justification for thecontinental social market model of capitalism, and – paradoxicallyand prophetically – that scholars working within the varieties ofcapitalism tradition need to recognize the power of neoliberalismmore fully. In so doing they come perilously close to re-presentingthe self-understanding of triumphal market fundamentalism.

More recently Peck (2008) has dissected the intellectual history ofneoliberalism but in so doing arguably justifies rather than negatesthe truth of neoliberal theory. Equally, the framing of opposition tomarket fundamentalism as resistance to neoliberalism locates opposi-tional politics on a ready-made terrain in which the marginalizedand the dispossessed are, well, already marginalized and dis-possessed. The identification of, and resistance to, hegemonic neo-liberalism may well undermine the generation of alternative politicalimaginaries. If neoliberalism is about making the economy in aparticular image then remaking the economy in a new image mayrequire a new imagination; an imagination in which neoliberalism isat most recognized as an effect of and not a cause of political-economic practices and discourses. Our contention is that to theextent to which neoliberalism may be said to exist it is performative,and that a different way of thinking and acting is the first step toprogressive change. To update Harvey (1973: 137; emphasis in theoriginal) from a generation ago: ‘Our aim is to eliminate neo-liberalism. Therefore the only valid politics . . . is to eliminate theconditions which give rise to the truth of neoliberal theory. In otherwords, we wish neoliberal theory to become not true.’ Taking ourcue from Harvey, this entails destroying the mechanisms whichmake neoliberal theory ‘true’ or performable, thereby rendering itirrelevant to understanding society. To be sure, neoliberalism cannotsimply be wished away; it can only be willed away through alterna-tive social construction (Gibson-Graham 2006).

Third, just as neo-classical economists compare ‘real’ economiesto their abstract models represented in economics textbooks and findthem wanting (cf. Carrier and Miller 1998) so critics of neoliberal-ism compare contingent varieties of ‘actually existing neoliberalisms’


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with an essentialized ‘neoliberal model’ which nowhere is realized ina pure form. Thus neoliberalism is represented in a way whichinadvertently reinforces the notion of a pure essentialized economyseparate from an impure economy of practice. This discursivepractice enacts a binary form of thinking which privileges expert,Western economic and political knowledge as authentic over indige-nous actors and knowledges that are rendered inauthentic (Mitchell2002). This binary way of thinking not only privileges certain placesover and above others, but also privileges the future over thepresent. It envisions an idealized version of the economy in thefuture that can never be realized, for the process of realizationwould entail the loss of its disciplinary power. This historicizingprocess means certain economies are treated as ‘less modern’ thanadvanced capitalist countries. The privileging of particular ideas,places and temporalities over other ideas, places and temporalities isused to justify and legitimate disciplinary action – that is, actiondesigned to ‘correct’ irrational economic actors and ‘improve’ back-ward economies. This mode of representation produces academicauthority and scripts for promoting market fundamentalism. In thefollowing section we seek to highlight how the corruption industryproduces expert knowledge claims and disciplinary power.

The Post-Soviet ‘Corruption Industry’

The collapse of the Soviet bloc, the end of the Cold War and thedissemination of transition policies helped to promote the anti-corruption discourse within post-Soviet Europe and beyond (Abedand Gupta 2002; Krastev 2004). Figure 6.1 shows that the numberof English-language academic publications devoted to the topic ofcorruption increased dramatically from the late 1980s onwards. Inthese academic and policy research debates the region functionedas a microcosm or laboratory with which to experiment withcorruption to draw conclusions to be applied within and outwithtransition countries. Indeed corruption has been a recurring themein accounts of post-Soviet transition and has produced a body ofliterature which is as voluminous as it is varied. However, here wewish to deconstruct the anti-corruption discourse to think of it as anindustry or assemblage of academic and professional expertsengaged in the production, circulation, (re)interpretation and enact-ment of the idea of corruption/anti-corruption, which thereby


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contributes to the formation of particular economic practices andidentities. The industry comprises networks, continuously in flux,spanning academics, policy makers and practitioners operating atdifferent sites. The corruption industry defines, measures, andmarshals arguments in favour of and against certain forms ofpolitical-economic development under the banner of ‘anti-corrup-tion’. It seeks (a goal it only partially attains) to eradicate differenceby capturing, aligning and controlling practices and actors. Bydisclosing this disciplinary power we seek to open fertile terrain fora progressive politics that challenges conventional universalist andessentialist definitions of ‘the corrupt’. In post-Soviet EasternEurope this entails recognizing the ways Western geopolitical andgeo-economic centres of power use corruption to align post-Sovietpolitical economies with their interests. The industry engages inthree main interlocking activities: the identification of corruption as


118

Figure 6.1. Academic journal publications on the topics ofcorruption, rent seeking and neoliberalism, total number per year,1978–2008Source: Authors’ own calculations on the basis of ISI Web of Knowledge: Web of Science, <http://pcs.isiknowledge.com/analyze/ra.cgi> (17 March 2009).

Birch&My 02 10/6/10 13:20 Page 118

a discursive category by academics and policy makers; the measure-ment, calculation and benchmarking of corruption; and, the simula-tion and experimentation with the idea of corruption through thepractices of anti-corruption initiatives such as technical assistanceprojects funded by international donors and civil society activities.

Theorizing corruptionSocio-technical networks of academic and professional economists intransition countries and beyond produced theories of corruption andeconomic development. Figure 6.2 shows that the number ofEnglish-language academic publications about corruption in post-communist states significantly increased in the early 1990s. One ofthe earliest contributions was made by Andrei Shleifer and RobertVishny (1993), academic economists at Harvard and Chicagorespectively, who argued that corruption was caused by weak centralgovernment and that its effect was to distort the economy signifi-cantly. On the basis of research in Russia, they argued that thecentral authority present during the Soviet era resulted in monopolyor organized corruption – in which one actor had to be bribed whowould then confer favour – whereas under post-Soviet conditionsweak central authority resulted in competitive corruption, in whichmany actors had to be bribed without any certainty that the favourwould be supplied. Professional economists working for IFIs alsostudied corruption and used it to justify the Washington Consensus(Kaufmann 1997; Tanzi 1998). These theorizations did not escapecritique. Krastev (2004) argued that corruption was an effect of andnot a cause of weak states and underdevelopment. He maintainedthat the mis-identification of unfamiliar socio-economic practices,such as blat (Ledeneva 1998), as corrupt exaggerated its occurrenceand resulted in ‘corruption-centred politics’, which distorteddemocracy and undermined faith in the judicial system (see alsoGrigorescu 2006). It was also argued that in certain circumstances,such as in divided political systems and in the presence of a weakstate, corruption could promote political stability and state building(Hislope 2008; Darden 2008).

However, a notable feature of orthodox work on corruption wasthe way it underpinned prejudicial theories of economic develop-ment in the former Soviet Union which undermined the legitimacyof existing economic practices and justified intervention by externalexperts. In 1998, Joel Hellman, a political scientist then working for


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the European Bank for Reconstruction and Development (EBRD),published a paper entitled ‘Winner Takes All: the Politics of PartialReform in Postcommunist Transitions’ in World Politics, in which heargued that in countries where politicians were protected fromelectoral jeopardy, initial winners of reform were able to ‘stall theeconomy in a partial reform equilibrium that concentrated rents’ (1998:204, emphasis in original). This was a reformulation of earlier workon ‘rent seeking’ which argued that artificial monopolies resulted inwelfare costs (see Figure 6.1). Hellman joined the World Bank in2000 and with his colleague Daniel Kaufmann used the ‘BusinessEnvironment and Enterprise Performance Survey’ (BEEPS), a firm-level dataset covering 22 transition countries commissioned by theBank and the EBRD in 1999, to develop and measure what theytermed ‘state capture’: ‘the efforts of firms to shape the laws, policies,and regulations of the state to their own advantage by providingillicit private gains to public officials’ (Hellman and Kaufmann 2001).Hellman and his collaborators used the data to produce an index ofthe ‘capture economy’: countries with an aggregate capture economyindex of less than the country average were classified as having alow capture economy, whereas countries with a higher than averagescore were classified as high capture economies. The dataset was alsoused to identify ‘captor firms’ – firms that ‘frequently’, ‘mostly’ or‘always’ are required to make extra, unofficial payments to publicofficials to influence the content of new laws, decrees and regulations.

In transition economies, corruption has taken on a new image – that ofso-called oligarchs manipulating policy formation and even shaping theemerging rules of the game to their own, very substantial advantage. Werefer to this behavior as state capture. Though this form of grandcorruption is increasingly being recognized as the most pernicious andintractable problem in the political economy of reform, few systematicefforts have been made to distinguish its causes and consequences fromthose of other forms of corruption. Moreover, there have not been anyattempts to measure this specific type of corruption and to compare itacross countries. (Hellman and Kaufmann 2001, emphasis in original)

Hellman and his collaborators argued that captor firms, whichemerged during the initial stages of transition, monopolized contactwith corrupt members of the state bureaucracy to produce captureeconomies. To protect their privileged positions captor firms and thecorrupted bureaucrats colluded to form a rent-seeking elite whichsought to prevent further market reform. The state capture argu-


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ment was elaborated in relation to other forms of corruption andbroader political and economic reform, in the World Bank’s Anti-

corruption in Transition: a Contribution to the Policy Debate report in 2000and in two further reports following repeated surveys in 2002 and2005 (Gray et al. 2004; Anderson and Gray 2006). These reportssuggested that ‘reform’ reduced administrative corruption eventhough economic growth was associated with state capture. In succes-sive reports the World Bank’s emphasis shifted from data on firms’experiences of corruption and state capture towards managers’perception of corruption.

Another influential theorization of post-Soviet economic develop-ment was made by Clifford Gaddy of the Brookings Institution andBarry Ickes, an academic economist (Gaddy and Ickes 2002). Theyidentified a discrepancy between what they termed Russia’s ‘virtualeconomy’, as represented in tax returns, profit statements, companyaccounts and so on, and its ‘real’ economy as practised by economicactors. The visible economy was thus represented as inauthentic


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Figure 6.2. Academic journal publications on the topic of corruptionin post-communist transition states, total number per year,1978–2008Source: Authors’ own calculations on the basis of ISI Web of Knowledge: Web of Science, <http://pcs.isiknowledge.com/analyze/ra.cgi> (17 March 2009).

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Tabl

e 6

.1. C

orru

ptio

n an

d co

rrup

tion

-rel

ated

inde

xes

and

benc

hmar

ks o

f po

st-S

ovie

t co

untr

ies

Nam

e of

O

rgan

isat

ion

HQ

Sour

ce o

f In

dex

Ben

chm

arks

Incl

usio

n of

M

etho

dolo

gyC

over

age

ofA

vaila

bilit

yin

dex

fund

ing

esta

blis

hed

corr

uptio

n co

untr

ies

(No.

in in

dex

& t

erri

tori

es)*

Free

dom

in

Free

dom

W

ashi

ngto

n B

ilate

ral &

1

97

3P

oliti

cal f

reed

oms

20

06

A

nnua

l pol

l 1

93

cou

ntri

es

Web

-hos

ted

the

Wor

ldH

ouse

DC

, US

Am

ultil

ater

al&

civ

ic li

bert

ies

(‘Fun

ctio

ning

of

in-h

ouse

and

15

da

taba

se;

dono

rs; i

ndiv

idua

l go

vern

men

t’)of

exp

erts

terr

itori

eson

line

&&

cor

pora

te

prin

ted

repo

rt

dona

tions

Nat

ions

in

Free

dom

W

ashi

ngto

n A

s ab

ove

19

95

Dem

ocra

tizat

ion

19

99

A

nnua

l pol

l of

29

tra

nsiti

on

Onl

ine

&

Tran

sit

Hou

seD

C, U

SA

of p

ost-c

omm

unis

t(‘C

orru

ptio

n’

in-h

ouse

coun

trie

spr

inte

d re

port

Cen

tral

Eur

ope

ratin

gs)

expe

rts

and

post

-Sov

iet

Eura

sia

Cor

rupt

ion

Tran

spar

ency

Ber

lin,

As

abov

e1

99

5C

orru

ptio

n1

99

5A

nnua

l 1

80

As

abov

eP

erce

ptio

ns

Inte

rnat

iona

lG

erm

any

com

posi

teIn

dex

poll

of p

olls

Inde

x of

Th

e H

erita

ge

Was

hing

ton

Indi

vidu

al,

19

95

Econ

omic

free

dom

19

95

A

nnua

l 1

83

Web

-hos

ted

Econ

omic

Foun

datio

n &

D

C, U

SA

foun

datio

n &

(‘Fre

edom

from

aggr

egat

e of

da

taba

se,

Free

dom

The

Wal

l Str

eet

corp

orat

e do

natio

nsco

rrup

tion)

quan

titat

ive

onlin

e &

Jo

urna

lm

etri

cspr

inte

d re

port

Gov

erna

nce

Wor

ld B

ank

Was

hing

ton

Wor

ld B

ank

19

96

Gov

erna

nce

19

96

(‘C

ontr

ol

Bi-a

nnua

l 2

12

Inte

ract

ive

Mat

ters

–

Inst

itute

DC

, US

Aof

cor

rupt

ion’

)co

mpo

site

pol

l w

ebsi

te &

Wor

ldw

ide

of p

olls

prin

tG

over

nanc

e In

dica

tors

Birch&My 02 10/6/10 13:20 Page 122

Sou

rces

: Aut

hors

’ ow

n co

mpi

latio

n ba

sed

on in

stitu

tiona

l web

site

s.

Nam

e of

O

rgan

isat

ion

HQ

Sour

ce o

f In

dex

Ben

chm

arks

Incl

usio

n of

M

etho

dolo

gyC

over

age

ofA

vaila

bilit

yin

dex

fund

ing

esta

blis

hed

corr

uptio

n co

untr

ies

(No.

in in

dex

& t

erri

tori

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Bus

ines

s EB

RD

and

Lond

on, U

KEB

RD

19

99

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ines

s1

99

9

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asio

nal

26

tra

nsiti

onIn

tera

ctiv

eEn

viro

nmen

t W

orld

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ken

viro

nmen

t(‘C

orru

ptio

n’)

com

pany

co

untr

ies

web

site

&an

d En

terp

rise

surv

eyda

taba

seP

erfo

rman

ce

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vey

Bri

be P

ayer

s Tr

ansp

aren

cyB

erlin

, B

ilate

ral &

mul

ti-

19

99

Bri

bes

by

19

99

(‘ev

alua

tes

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asio

nal

22

adv

ance

d O

nlin

e &

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xIn

tern

atio

nal

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man

yla

tera

l don

ors;

indu

stri

aliz

ed

the

supp

ly s

ide

com

pany

ec

onom

ies

prin

ted

repo

rtin

divi

dual

&

coun

trie

s’of

cor

rupt

ion

– t

hesu

rvey

corp

orat

e M

NC

slik

elih

ood

of fi

rms

foun

datio

nsfr

om t

he w

orld

’s

indu

stri

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ed

coun

trie

s to

bri

be

abro

ad.’)

Glo

bal

Tran

spar

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lin,

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abov

e2

00

3P

ublic

exp

erie

nce

20

03

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l sur

vey

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abov

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n In

tern

atio

nal

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man

y&

att

itude

s (‘C

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of p

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rupt

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ntri

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ton

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at t

he

Hou

seD

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SA

perf

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tegi

cally

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ssro

ads

and

tran

spar

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’)ex

pert

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port

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coun

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s

Birch&My 02 10/6/10 13:20 Page 123

Figu

re 6

.3. T

rans

pare

ncy

Inte

rnat

iona

l Cor

rupt

ion

Per

cept

ion

Inde

x, 2

00

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ourc

e: T

rans

pare

ncy

Inte

rnat

iona

l.

Birch&My 02 10/6/10 13:20 Page 124

compared to the economic models to which it was supposed tocorrespond. They maintained that the economy, ‘a mutant system,with laws of behaviour and evolution all of its own’ (2002: 10), wassustained by the ‘loot chain’ – financial dependence on fictitiouspricing, virtual accounting and relational capital. As both the statecapture and virtual economy theories argued that economic actorswere behaving rationally and that the system was in equilibrium(able to re-produce itself), systemic reorganization would only occurthrough external political intervention.

Calculating corruptionThe theorization of corruption was indistinguishable from the experi-mental development of technologies for calculating or measuringcorruption – what Krastev calls ‘the new science of corruption’(Krastev 2004: 3; see also de Maria 2008). Table 6.1 shows that atleast nine indexes related to corruption in transition countries wereregularly calculated. The indexes made it possible for experts toclaim corruption could be measured and compared over space andtime. Indeed ‘[t]he invention of corruption as a global policy issuethat can be solved with the “one size fits all” policy would beunimaginable without the radical discovery that corruption ismeasurable’ (Krastev 2004: 23). Some indexes were pure polls ofexpert opinion whereas others were aggregate or composite polls ofpolls. The similarity in the results of the various indexes may be ameasure of their accuracy (Tanzi 1998: 578; Rose-Ackerman 2006)or the way they used and exchanged data (autocorrelation). Themost influential indexes were two polls of polls produced byTransparency International (TI) (Wang and Rosenau 2001).

In 1995, TI began to publish the ‘Corruption Perceptions Index’combining the opinions of various country experts, consultants,business people and local correspondents operating under theauspices of 11 different organizations (see Figure 6.3). In 1999, TIstarted to publish the ‘Bribe Payers Index’. The World Bank Insti-tute produced the Worldwide Governance Research IndicatorsDataset which aggregated 39 different polls of experts and surveysof public and elite opinion by more than thirty NGOs, think tanks,development agencies and private investment risk consultancies. TheWorld Bank also published the ‘Doing Business’ dataset, whichincluded a series of indicators, such as contract enforcement, relatedto corruption. Both the TI and the WBI used Freedom House’s


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‘Nations in Transit’ ratings in calculating their aggregate governanceperceptions scores. Freedom House, a US-based NGO, published apure poll of expert opinion and developed criteria for monitoringcivic liberties and political rights across the world and measuringdemocratic governance in post-Soviet countries in particular. Othersimilar indexes included the ‘Economic Freedom of the World’ Indexproduced by the Cato Institute (Washington DC) and the FraserInstitute (Canada), and the ‘Freedom in the World’ Index producedby the Heritage Foundation (Washington DC). These indexes meant‘[t]he study of corruption was portrayed as similar to the study ofinflation. The causes of corruption were reduced to the effect of thegovernments’ role in politics’ (Krastev 2004: 33) and excluded widermoral, political and institutional questions relating to Westernsupremacy (Bukovansky 2006: 183). Moreover the indexes attractedthe attention of policy makers, businesses and, especially, the media.

Simulating corruptionMultilateral and bilateral overseas development assistance donorswere instrumental in the establishment of many corruption indexes.For example the World Bank was instrumental in the founding ofTI in Berlin in 1995. In turn donors used the indexes to allocateassistance to countries (Grigorescu 2006: 522) and to determine theirpolicy advice, technical assistance and lending activities. Beginningin the mid-1990s, the World Bank and IMF identified corruption –‘the abuse of public office for private gain’ (IMF 1997: 2, fn2) – asa prime justification for the liberalization of international marketsand structural reform of developing and transitional economies(Everett et al. 2006; Bukovansky 2006; Marquette 2004). In 1997,the IMF adopted ‘a more proactive approach in advocating policiesand the development of institutions and administrative systems thateliminate the opportunity for bribery, corruption, and fraudulentactivity in the management of public resources’ (IMF 1997: vi). Inthis way the IFIs extended the scope of their surveillance of andintervention in recipient countries to include ‘good governance’ (seevan Waeyenberge, this volume).

The professional activities of anti-corruption initiatives involvedexperimenting with the idea of corruption, although the evidence oftheir directly reducing recorded levels of corruption is slim (Roussoand Steves 2006). Initially anti-corruption initiatives were over-whelmingly conceived, managed and monitored as part of wide-


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ranging lending by IFIs, and technical assistance programmes andprojects funded by multi-lateral donors, such as the EU TACIS andPHARE programmes, as well as by bilateral donors, such as the UKgovernment’s DfID and the US government’s USAID. Projectsincluded those which focused on corruption in a narrow sense(judicial reform, public procurement, media development, publicinformation strategies, political processes) as well more generalprojects including those which were intended to fund research andto popularize and promote the work of advocacy groups such as TI.Advocacy work focused domestic politics, especially at election time,on corruption and exaggerated citizens’ perception of its occurrence(Krastev 2004; Grigorescu 2006). Ironically, some of these projectsthemselves became embroiled in allegations of corruption, includingone USAID-funded project, on which Andrei Shleifer worked, inwhich the Harvard Institute for International Development providedeconomic policy advice to the Russian government (Wedel 2000).

From the outset of transition, assistance to the FSU was regardedas an instrument for promoting Western interests (Shleifer andVishny 1991) and the focus on corruption can be understood in theseterms despite subsequent efforts by the industry to enrol the anti-poverty agenda to justify its activities. Krastev (2004) argued that theanti-corruption discourse in Eastern Europe was an instrument topromote US anti-protectionist trade policy and transnational capital,and to provide a post-Cold War rationale for the existence of theWorld Bank. More broadly it has been argued that anti-corruptionis an international governance regime in which IFIs and TI deployan array of technocratic methods and enrol expert knowledges tomeasure and realize international norms (Wang and Rosenau 2001).

Conclusion: Neoliberalism and Corruption

In this chapter we have focused on the way the idea of corruption isused to justify and promote policies commonly labelled as ‘neoliberal’.Indeed the discourses of corruption and neoliberalism may be con-sidered counterparts; residual categories into which orthodox andheterodox commentators respectively place phenomena which areimagined to contradict normative prescriptions. In this sense studies ofcorruption can simply be understood as accounting for the inevitablefailure to disseminate a supposedly universal model of economicdevelopment, whilst studies of neoliberalism can be understood as


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explaining away the effects of dissemination. There are twosimilarities between the way corruption and neoliberalism are repre-sented. First, the definition of corruption along with the identificationof its causes and consequences is fuzzy – Everett et al. (2006: 9) regardcorruption as a ‘free-floating signifier’. Corruption can refer to theconduct of a specific economic or political practice at one extreme –low-level corruption – and to the organization of an entire economyand associated politics at the other – grand corruption. The idea ofcorruption can be understood as simultaneously both universal andsituated. Moreover, it is precisely this ambiguity and elusiveness whichenhance its economic relevance and political potential. Second, theidea of corruption reinforces the notional separation of economies ofpractice from both idealized orthodox and heterodox accounts of theeconomy. For example de Sardan (1999: 25–6) argues that corruptionshould be understood as a ‘moral economy’ underpinned by ‘valuesystems and cultural codes’, which explains why technocratic anti-corruption initiatives fail. There is an imaginary world where corrup-tion does not exist, which is nowhere realized in a pure form, andthere are ‘real world’ economies where extant corruption is inevitable.It is the very impossibility of realizing a corruption-free economywhich produces its disciplinary power, for its realization woulddissolve its traction. Exiting this bind demands greater recognition andtolerance of the rich variety of socio-technical practices which makethe economy in different times and places.

Post-Soviet Eastern Europe was used as a laboratory whereexperiments with corruption could be staged in order to realizeenvisioned political-economic identities. Equally, corruption wasused to justify neo-imperial projects intended to reorganize the state,and especially its relationship to economic organizations, and realignit Westwards. The attribution of practices or actors as corrupt orotherwise was just one mechanism to selectively confer modernityon some and stigmatize others (cf. Mitchell 2007). However, the2007–9 global financial-economic crisis with its origins in thefinancial system of the core Western capitalist countries challengedthe assumption that corruption is confined to the non-West andundermined the authority and political agility of the corruptionindustry. Our analysis of corruption suggests neoliberalism can beunderstood as a configured performance involving a cacophony ofdiscourses and a profusion of socio-technical practices, rather thanas a cause of them. To be sure, there is neither a hidden hand of


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the market, a politico-capitalist conspiracy, nor a recurring processof subjectification which conjures up a neoliberal world. In so far asneoliberalism may be thought to exist, it is a precarious achievementsubject to communicative and practical disruption.

AcknowledgementsAn earlier version of this chapter was presented in the ESRC SeminarSeries ‘Neoliberalism, anti-neoliberalism and de-ideologization’, at theUniversity of Glasgow on 1 April 2008. We would like to thanks the partici-pants for their comments. We thank Alex Vasudevan and Kean Birch fortheir comments on an earlier draft of this chapter, and Elaine Watts fordrawing the map.

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Since the 1970s and early 1980s, the worldwide ascendancy ofmarket-based modes of governance has seen neoliberal policiesadopted by parties at either end of the political spectrum. As a conse-quence, the manifestations of the express commitment to marketexchange are multifarious, disparate and fractured. This chapterexplores the influence of neoliberal theory on welfare state restruc-turing to illustrate the mixing of neoliberal policies and discourseswith other social, political and economic interests. Its particular focusis on the narratives of deregulation, privatization and social austeritythat have been used to legitimate temporary labour marketattachments as a recurrent objective in welfare policies in theAnglophone world. The articulation and reiteration of a neo-liberalized approach to the broader political economy has trans-formed attitudes towards welfare: from a general consensus thatwelfare exists as a safety net for people with no or low incomes,towards a more punitive approach which emphasizes self-sufficiencyand individual requirements to work. Yet keystones of the welfarestate continue to underpin the regulation of local labour markets.This suggests unevenness in the neoliberal project, which abnegatesany suggestion of neoliberalism as a universal, totalizing andinevitable process (see Birch and Mykhnenko, this volume).

To explore the continuum between the post-war Keynesian wel-fare state and the contemporary era of neoliberal workfarism (under-stood – after Jamie Peck (2001) – to comprise work-based welfarereform), this chapter will first consider the process of policy develop-ment that epitomizes the rise of this new policy regime. Followingthis, it will establish what constitutes neoliberalism and the definingfeatures of a ‘workfare state’ in general terms. It will then examinethe extent to which neoliberal workfarism relies on the re-articulation

7 Remaking the Welfare State: from Safety Netto Trampoline

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of core precepts of the welfare state as a safety net. This entails adiscussion of (1) state strategies that support the flexibilization of thelabour market and the maintenance of low-wage work; (2) themechanisms that ensure the integration of welfare recipients intoconsumer culture; and (3) the long-standing methods of disciplinethat coerce people into behaving as market actors. The chapter con-cludes by contemplating the implications of the current economiccrisis, particularly the effect of rising unemployment, on the presentframing of the welfare state not as a safety net, but as a ‘trampoline’that rebounds people from benefits (back) into employment.

The Decline of the Post-War Welfare State

Governments of both the Right and Left are involved in debatesover the best way to deliver public services. Whereas during thepost-war period it was widely accepted that state provisioning ofinfrastructure, health, education and social services was the best wayto ensure well-being, today markets are increasingly understood tobe a better way of delivering public goods and services because theyare associated with competition, economic efficiency and consumerchoice. The express commitment to market (or market-like) rule iswidely understood to transform state strategies, modes of govern-ance and political subjectivities through the destruction and dis-crediting of Keynesian welfarist and social-collectivist institutions(broadly defined) and the construction and consolidation of neo-liberalized state systems, forms of intervention and regulatory reform(Peck and Tickell 2002). This political shift is predicated on thepromotion of a minimalist state infrastructure, which is framed as areaction to the Keynesian and/or collectivist strategies that prioritizeddemand-side management at a national scale (stimulating jobs byencouraging mass production and consumption, for example). Itrequires the promotion of structural or systemic competitivenessthrough supply-side policies, which aim to increase labour marketflexibility, by putting downward pressure on the social wage andthereby reducing the cost of international production (Jessop 2002).It also entails a qualitative shift in welfare provision, wherebywelfare is based less on a model in which the state counters themarket and more on a model where the state serves the market, asother chapters in this book illustrate (see Jessop; van Waeyenberge).

In many Western post-industrial nations this is observed through


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a shift from flat rate to graduated benefits and from universalism togreater means testing. ‘Activation’ policies form part of thisapproach, placing work requirements on welfare recipients as acondition of their benefit payments. In the Anglophone model,governments have increasingly promoted individual responsibilitythrough work incentives, welfare disincentives, and the privatizationof service provision. The welfare state is no longer viewed as a‘safety net’ for people with low or no incomes, but has been restruc-tured to support training and the use of compulsions in relation towelfare-to-work programmes. In this sense, it functions somewhatlike a ‘trampoline’, not only catching people but bouncing themfrom benefits back into the paid labour market.

In support of this restructuring process, a free-market ideologyhas been marshalled, as described by both Miller and Birch andTickell earlier in this book, alongside a (moral) discourse of welfarethat warns of the dangers of welfare ‘dependency’. This builds onconservative discourse that presents welfare recipients as ‘naturally’deficient in the characteristics that made responsible citizens andgood workers, and frames welfare as a system in need of reform, notleast for its propensity to harbour joblessness and inactivity in thelowest socio-economic sectors of society. This anti-welfare rhetoric isfrequently directed at the discursive (and material) body of theyoung/single/minority-ethnic/inner-city mother, unable to supportherself and her children through ‘a lack of gainful employment’ – aclaim which has been expanded and used in some instances todepict the welfare system itself as an enlarged maternal system,spawning offspring who are not only a drain on the public purse,but also constitute a threat to society through their links with risingcrime, juvenile delinquency and a myriad other social problems(England 2008).

Rhetoric of this kind points towards the embedding and extensionof neoliberalism through the imposition of a new form of govern-ance, and is said to signal the end of the post-war welfare state(Powell and Hewitt 1998). In contrast to this claim, however, theascendancy of a set of neoliberal processes, rules and institutionsrequires a form of statecraft that retains rudiments of the Keynesianwelfare state. Flexible labour markets are underwritten by (condi-tional) welfare provisions. Social cohesion is maintained throughmeans-tested payments that enable citizens with no or low incomesto participate in society as low-level consumers. Furthermore, in

REMAKING THE WELFARE STATE

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spite of frequent allusions to the establishment of ‘active citizenship’through the restructuring of social benefits to support training andenterprise, the use of compulsions in relation to state-supportedlabour market programmes acts to create ‘docile bodies’ whodiscipline themselves in the name of individual initiative andresponsibility, in a move that parallels the individual self-regulationthat was previously achieved through Fordist organizational formsand management practices (see Fraser 2003; Hartman 2005).

Neoliberalism and the Workfare State: Key Features

Neoliberalism is a distinctive political economic theory proposingthat ‘human well-being can be best advanced by liberatingindividual entrepreneurial freedoms and skills within an institutionalframework characterized by strong private property rights, freemarkets and free trade’ (Harvey 2005: 2). Based on the monetaristtheories and research of Milton Friedman (1962; Friedman andSchwartz 1963), it places primary emphasis on the maintenance of(macro)economic stability as opposed to the Keynesian goals of fullemployment and the alleviation of poverty. Its political philosophybuilds on Friedrich von Hayek’s (1944) critique of the interventioniststate and asserts that the only legitimate role of the state is to safe-guard individual and commercial liberty, and strong privateproperty rights. It therefore advocates a ‘rolling back’ of the stateand the creation of a society governed by market mechanisms.While the market is traditionally defined through an absence of stateintervention, it is acknowledged that markets are not naturallyoccurring phenomena, but need to be made, steered and policed.To this extent, neoliberalism maintains a self-contradicting theory ofthe state as laissez-faire policies cannot be implemented withoutgovernment intervention. The mantra of ‘less state’ is thus illusory,as neoliberalism compels rather than reduces state action (O’Neill2004: 259), albeit in different ways to those of more openly inter-ventionist forms of political economy.

In recent times, the principles of marketization, privatization andderegulation have been extended across policy arenas in the GlobalNorth and Global South (see Hinojosa and Bebbington, thisvolume). Emanating from the political projects of Thatcher andReagan, this form of statecraft has advanced the qualitativereordering of state–economy relations through an experimental


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repertoire of policies. The ubiquity of market-orientated politicspositions neoliberalism as universal, yet neoliberalism is not a mono-lithic or entirely homogeneous entity. As Wendy Larner (2003)notes, there are different variants of neoliberalism, each of whichresults from the general assertion that market mechanisms are theoptimal way of organizing all exchanges of goods and services.

While recognizing that neoliberalism is variegated (Peck andTickell 2002), constellations of core values can be identified inAnglophone versions of this political economic phenomenon. WendyBrown (2006), for instance, identifies the particular formulation ofneoliberalism in the United States, which accords full citizen rightsonly to those who are autonomous individuals, whereby autonomyis construed as independence from the state or other institutions.This idealized conception of American citizens as those with theability to provide for their own needs and service their ownambitions, whether as welfare recipients or workers in ephemeraloccupations, devalues or misplaces the role of social relationships inpromoting autonomy. This produces a culture in which politicalproblems are transformed into individual problems with marketsolutions. As neoliberalism produces the citizen on the model of theentrepreneur and consumer, it simultaneously opens citizens to aheavy degree of governance and authority (Brown 2006: 705). Thisremakes the state on the model of the firm, with entrepreneurialand managerial functions, and facilitates and legitimates significantstate intervention in personal, social and economic affairs.

Yvonne Hartman (2005), commenting on the Australian context,notes a contradictory commitment to a libertarian economic philos-ophy combined with a morally conservative view of family, in addi-tion to an appeal to nationalism. The privatization of public assets,the outsourcing and contracting out of government services (throughcompetitive tendering), and the private provision of economic andsocial infrastructure have helped to replace state interventionismwith market-guided regulation. At the same time, reforms to theAustralian welfare system have privileged better-off two parentfamilies, while expanding the scale and scope of regulation for singleparents without an employment wage, and asylum seekers (Hancock2002). These covert forms of government intervention comprisepolicies (such as mutual obligation and work-for-the-dole) whichattempt to construct particular subjectivities on which to imposemarket disciplines (Dean 2002).


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In the UK, neoliberalism is articulated with social democraticprinciples in British Labour’s ‘Third Way’. This has given rise to acentralist philosophy of governance that embraces a mix ofmarket and interventionist philosophies (MacLeavy 2007). Thisstarts from the premise that as relatively closed national economiesno longer exist, there is little scope for national-level economicmanagement; however, if decisions are left purely to market forcesthen failures will result. Thus it follows that a ‘new democraticstate’ is needed, in which progress and market innovations arepromoted alongside supply-side objectives to permit the pursuit ofequity and the improvement of efficiency in contemporary circum-stances (Giddens 1998).

In each of these different national contexts, then, neoliberal dis-course tends to castigate welfarism as economically inefficient as wellas morally dubious. With competitive mechanisms seen to herald thekey means through which states can achieve economic progress,systems that ‘discourage’ competition in the labour market throughthe provision of a basic level of income to the unemployed are seenas problematic and in need of revision. Altering this, there is now amantra of ‘positive welfare’ – ‘a hand up, not a handout’ (LabourParty 1996: 2). Whereas welfare has negative connotations ofinactivity, workfare embraces a more punitive approach thatemphasizes self-sufficiency and individual requirements to work.Civil society has also been strengthened through the establishmentof a new relationship between citizens and the state, in which thereis an expectation of increased participation in the socio-politicalrealm: in neighbourhoods, communities and complementary arenasof local governance.

This change in the dominant form of state intervention istheorized by Bob Jessop (2002) as a transition from a KeynesianWelfare National State (KWNS) to a Schumpeterian WorkfarePost-national Regime (SWPR). Each of the four component termsused in these descriptors is linked to a basic dimension of economicand social reproduction. The KWNS was ‘Keynesian’ in so far asit aimed to secure full employment in what was treated as arelatively closed national economy, and to do so primarily throughdemand-side management (stimulating jobs by encouraging massproduction and consumption). It was ‘Welfare’ in so far as it triedto generalize the norms of mass consumption beyond male workersearning a family wage so that all national citizens and their depen-


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dants might share in the fruits of economic growth. It was ‘National’in so far as the national territorial state assumed primary responsi-bility for developing and guiding welfare policies on different scales;and, ‘Statist’ in so far as state institutions were the chief comple-ment to market forces and had a dominant role in the institutionsof civil society. For more on this, see Jessop’s chapter later in thisbook.

In contrast, the ideal-typical SWPR has four key characteristics.First, it demotes the promotion of full employment in favour ofpromoting structural or systemic competitiveness. It is therefore‘Schumpeterian’ in so far as it aims to foster entrepreneurship tosustain long-term economic growth. Second, it is a ‘Workfare’ regimein so far as it subordinates social policy to the aims of labour marketflexibility and competitiveness, aiming to put downward pressure onthe social wage and the cost of international production. Third, itsignifies ‘Post-national’ welfare governance in so far as other scales ofanalysis (local, regional and international) have increased significance.Not only is power transferred upwards to supranational agencies, butthere is a simultaneous devolution of some economic and socialpolicy making to the regional, urban and local levels on the groundsthat policies intended to influence the micro-economic supply-sideand social regeneration are best designed close to their sites ofinnovation. Fourth, the SWPR is de-statized in so far as non-statemechanisms and private network partnerships are more importantthan state institutions in the delivery of government policies. Thisform of government is denoted as a ‘Regime’.

Repositioning Workfare

The preceding account of the transition from Keynesian welfarismto neoliberal workfarism passes over the extent to which the work-fare state is subtended by the continued operation of the welfarestate as a safety net. It implies that welfare reform is driving a funda-mental restructuring of welfare across Western post-industrializednations, through the reduction of cash benefits to the unemployedand the ‘underemployed’ (who do not quality for unemploymentinsurance but instead are eligible to receive means-tested welfarepayments), as well as the introduction of new labour marketmeasures that are subordinate to market forces (such as increasedprivate sector involvement in the delivery of state services). While


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significant, this trajectory of development ought not to frame thewelfare state as immobile and thus outmoded, but rather should beused to unpack the different forms of welfare that have emerged in thecontemporary period. As Hartman (2005: 61) observes, ‘[al]thoughwelfare may now be leaner and meaner for some, the welfare statehas not shrunk; rather, different forms of welfare have arisen coupledwith new modes of administration and underpinned by a theoreticalrationale that has shifted from entitlement to obligation’.

The conceptualization of workfare as a trampoline that reboundspeople back into the labour market should therefore also include asurrounding net enclosure that acts to prevent injuries from falls.This would make visible the extent to which Keynesian welfarismunderwrites neoliberalism. In the present era of post-Fordist global-ization, welfare has three key functions: first, it underwrites theperipheral labour market by ensuring a minimum level of income tothose switching between welfare and work in line with fluctuationsin the economy and changing personal circumstances; second, itallows those with low or no pay to maintain (at least) an impressionof social integration through consumer activity, because welfare pay-ments are discreetly made and because blame is allotted at the levelof public debate rather than at the level of (publicly visible) failureto ‘pay one’s way’; third, it provides education and training to help(re)connect welfare recipients to work that legitimates a level of (self-)regulation, which is reminiscent of the social control establishedthrough the disciplinary apparatuses of the post-war period (forinstance, social services, public health measures, therapeutic practices)(on this see Foucault 2003).

Regulating the labour marketThe welfare states of the Anglophone or market-based model ofcapitalism (including Australia, Canada, New Zealand, the UK andthe US) are fundamentally labour market institutions, whichcondition the rules and dynamics of the job market, particularlywith regard to low-wage employment relationships (Piven 1999). As‘liberal welfare regimes’, they have long attempted to restrictgovernment intervention in the market by targeting welfare assis-tance to those in greatest need. This reflects an underlyingassumption that the market will be able to provide for most, if notall, who are willing to participate in it. As Gøsta Esping-Andersen(1990: 26) observes, ‘[b]enefits cater mainly to a clientele of low-


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income, usually working-class, state dependants’ and those onwelfare are often stigmatized as unproductive and lacking in workethic. In recent years, although anti-welfare rhetoric has increased,state provisions have continued to support the (low-wage) labourmarket. In the UK, for example, Income Support payments aremade to those on low or no wages and Working Tax Credit hasbeen introduced (in place of Family Credit, a welfare benefit) toencourage a steady supply of workers to the low-end labour marketthrough tax breaks to ensure that ‘work pays’ for people in mini-mum wage jobs (Brewer 2001).1

With deregulation of the labour market creating a periphery ofworkers who engage in precarious employment, the provisions of thewelfare state might even be becoming more rather than less impor-tant (Hartman 2005). Low-wage workers cannot usually survive onwhat they earn from work alone, so welfare provision is crucial inallowing this end of the labour market to flourish. Through thegranting of tax credits through earned income, the governmentbuttresses the working poor and furthers the establishment of a duallabour market which is comprised of a core of stable well-paid jobs,and a periphery of precarious employment (Hartman 2005). Thisindicates that flexible labour markets, which are seen to have beenestablished through laissez-faire economic policy, are not naturallyoccurring phenomena, but instead must be constructed, regulatedand policed (Peck 2002). This requires an interventionist strategy tounderwrite the operation of contingent labour markets and tosocialize the working poor for flexible employment (Peck andTheodore 2000).

The normalization of the flexible labour market and workerinsecurity is achieved through the undermining of union organiza-tion and experimentation in active welfare and workfare program-ming. As Peck (2002) shows in the US context, this re-regulationintensifies competitive pressures by expanding the labour pool,keeping wage inflation low, and facilitating an increased rate ofworker exploitation. With the macro-orientation of policy towardsfull ‘employability’ rather than full employment, a concordantprivileging of individual responsibility over social rights is achievedthrough the pastoral activities of government directed at individualsso that they work upon and monitor themselves (for example,through further education and training and/or participation inwelfare-to-work schemes).


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Maintaining social cohesionWorkfarist policies are promoted on the basis of a three-fold political-economic critique of the welfare state. This contends that long-termunemployment depletes skills and damages motivation adversely,affecting future chances of getting a job; that people remainunemployed for longer than is necessary because of the level ofbenefit payments that are made available to them; and that recon-necting people to the labour market through mandatory welfare-to-work programmes will put downward pressure on wage inflation,thereby permitting the economy to operate at a higher level ofemployment (Peck 2001). Workfare, by contrast, seeks to (re)attachpeople to the labour market through temporary work placements; torestructure benefit payments in order to remove the ‘welfare trap’that effectively sanctions limited non-participation in the labourmarket; and, through welfare retrenchment, to induce and enforcenew rules of engagement with the paid labour market that willanimate latent market forces (Peck 2002).

This neoliberal politics is invoked through public discoursewhich articulates the doctrines of the individual and the freemarket (Brown 2006). In the UK, for example, a tough commen-tary on welfare has accompanied the explicit focus on paid workin government policy (DSS 1998; DWP 2006). Soon after Labourwas elected to power in 1997, the New Deal for the Unemployedwas introduced by the Department for Education and Employ-ment in collaboration with the Employment Service and a rangeof public-private training providers. Originally aimed at gettingyoung people (aged 18 to 24) back to work, it has subsequentlybeen extended to include lone parents, the disabled and those overthe age of 25. Under the scheme those who have been unem-ployed for a set period – the specific amount of time depends onwhich claimant group a person is categorized under – are ‘offered’a range of options including subsidized work, full-time educationor training, voluntary sector jobs, or an environmental task forceplacement. These activities are intended to improve the welfarerecipient’s job prospects (through training, rehabilitation and workexperience) and be of benefit to society (by improving expertiseand efficiency in the labour market and improving localcommunity arenas through voluntary contributions) (DfEE 1997;DSS 1998).


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Further legislative reforms of the incapacity benefits system havesince been implemented in the context of very high levels ofeconomic inactivity through sickness and disability (including highnumbers of people displaced by the collapse of traditional industriesand those suffering from, for example, mental illness). In 2008, anEmployment and Support Allowance was introduced to bringexisting social insurance and social assistance schemes for peopleincapable of work through long-term illness or disability under therubric of a single system. This has helped to tighten the basis onwhich people’s capacity for work is assessed, with new arrangementsfor supporting people’s (re)entry to the labour market, throughpersonal action plans and financial sanctions for failure to engage inwork-related activity.

Such reforms are constituted through the putative relationship ofwelfare claimants to the job market. People of working age have noother legitimate status or basis for social inclusion (Dean 2006). Asthe Rt Hon James Purnell MP noted in his first speech as Secretaryof State for Work and Pensions, the government sees the welfarestate as a way out of ‘worklessness’ and a way up the career ladder,not a way of life:

My title . . . embodies an ideological break with the past. It is not all thatlong ago that my predecessors were called the Secretary of State forSocial Security. What a telling name: security as something handeddown; welfare as a bureaucratic transfer; people as the recipients offunds. The title said nothing about people’s actual lives and ambitions,nothing, in fact, about the best way of securing their welfare. The newtitle, Secretary of State for Work and Pensions, tells a wholly differentstory. It tells you that work is the best route to personal welfare and well-being: it tells you that if you work hard and contribute then you deserveyour retirement to be free from anxiety about money. (Purnell 2008: nopagination)

This implies a welfare state that is a facilitator of the labour marketrather than a welfare state that has and will continue to function asa fallback for those outside of the labour market.

The logic of welfare-to-work is complex and hybrid in nature,comprising a problematic combination of ‘human capital develop-ment’ and ‘work first’ approaches (Dean 2006). While policyrhetoric signals the empowerment of claimants, their preparationand ownership of action plans and the utilization of untapped skills,


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the strong emphasis on compulsion, participation and the applica-tion of benefit penalties or sanctions for non-compliance indicate adifferent notion of responsibility that obscures the state’s failure tomeet people’s non-material needs, including their need to work.Thus as job insecurity becomes increasingly common for those whodo contingent work or work in low-paid service positions, therequirement for all to look for work, train for work or face sanctionsis applied alongside cash transfers to sustain those at the bottom endof the labour market. In contrast to rhetoric about ‘hand ups’ not‘hand outs’, such payments allow recipients to get by and get on atthe more mundane level of everyday life. This promotes socialcohesion by helping to reduce the income inequalities betweenworkers and the unemployed, and allowing the latter group to con-form to societal norms as citizen consumers in spite of the scape-goating that appears at the level of public debate (for a usefuldiscussion of the building blocks of social cohesion see Forrest andKearns 2001). At the same time, it could be argued that the deliber-ately covert nature of discreet welfare payments effectively institu-tionalizes welfare support as a ‘guilty little secret’ at an individualand interpersonal level, as something which ought to be hiddenfrom view (so as not to risk public recognition of ‘dependence’ onthe state).

Preserving social controlBy making welfare payments conditional upon recipients’ willingnessto seek employment, undertake training and/or volunteer for work inthe local community, workfare programmes enforce the civicresponsibilities of citizens to sustain themselves. This assault on thechimera of dependency culture is concerned to draw individuals intoaccepting responsibility for aspects of social protection once governedby the welfare state by codifying rules of conduct (such as indepen-dence and a preference for paid employment to welfare benefits as asource of income) and making them the basis for government inter-vention (Dean 2002). As poverty is associated with individualirresponsibility or the failure to manage risk, work assumes the formof a moral obligation. This moral obligation entails compliance withthe social order in the workfare state era.

The fostering of a shared sense of morality and commonpurpose is an important element of social control. While anti-welfare discourse operates to legitimate an increased level of


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control over income recipients’ lives, it simultaneously ensures thatexpectations regarding citizen entitlements will be dampened. Thusmeasures are introduced to make the receipt of welfare paymentsmore onerous for some groups, with broad public support(Hartman 2005). In the Anglophone model, the state promotes ageneral shift away from a culture of state support of the economy,business and society to a new ethos of self-help, enterprise andindividual initiative. This occurs through the provision of self-esteem training and job search skills in a quasi-market. Such quasi-markets of public and private service providers are intended toeducate the unemployed into exercising choice in relation to theirown economic development and are further used to promote theneoliberal assumption that the delivery of welfare services andbenefits through the market is not only efficient, but also in theinterests of individual liberty in the sense of giving the welfare‘consumer’ the freedom to choose.

To make certain that choice is exercised at a micro-level, theUK’s New Deal for the Unemployed allots a case manager toindividuals to ensure they enrol for courses and training activitiestailored to meet their ‘specific needs’. This micro-regulation is atvariance with the interpretation of welfare reform as a kind ofmarket deregulation, because it reveals that declining support forsocial welfare is part of a punitive policy development in which thestate has a substantial and active role (Beckett and Western 2001).In the wake of Victorian penal policies that reflected theindividualist, laissez-faire philosophy of free market capitalism, thepost-war welfare state was built on the assumption that govern-ment intervention could and should reform and integrate thesocially marginal (Garland 1985). This has since been underminedby new conceptions of social marginality that imply the need formore exclusionary and security-minded responses to marginalgroups and individuals. Hence, there is a shift in governancetowards workfarist programmes that emphasize the undeserving orunreformable nature of welfare recipients that tends to stigmatizeand separate them from society as a whole. These programmesfeature less generous welfare benefits and more punitive anti-crimepolicies as a result of political discourse about individual responsi-bility for social problems, and welfare programmes and the‘culture of dependency’ as important causes of crime (Beckett andWestern 2001).


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Once again, however, this transformation should not be inter-preted simply by counterposing an interventionist to a non-interventionist state. As Nikolas Rose and Peter Miller (1992)make clear, neoliberal political initiatives entail the adoption of arange of devices which seek both to create a distance from theformal institutions of the state and other social actors, and to actupon policy subjects ‘at a distance’. This ought not to be viewedas the disintegration of the disciplinary apparatuses of the post-war period, but as a transformation in the mechanisms of controlthat are pivotal to the governance of social life. An array oforganizational forms and technical methods now impels citizensto conform to particular codes of behaviour through theutilization, instrumentalization and mobilization of techniquesand agents other than ‘the state’ (for example, the calculativepersonnel of the jobcentre who impel individuals within thatlocale to work out ‘where they are’, calibrate themselves inrelation to ‘where they should be’ and devise ways of gettingfrom one state to the other).

In the Anglophone model of capitalism, the expansion of work-based welfare reform in the current context of rising unemploy-ment and deep recession could pose a challenge to the promotionof self-provisioning, prudentialism and an individualist ethic of self-responsibility. In contrast to the buoyant economic climate of late1990s when the New Deal for the Unemployed was firstestablished in the UK, for example, present financial-economicconditions pose a specific challenge to the neoliberal philosophy ofa smaller (welfare) state, the primacy of the market, and therenewed significance of labour flexibility. With businesses sheddingjobs and households struggling to pay debts, more skilled workersare coming onto the job market with the effect that the mostexcluded have to compete even harder to get work. As RichardJohnson, managing director of welfare-to-work for Serco CivilGovernment (an organization that works with government todeliver front-line public services) says: ‘Think of it like a conveyorbelt: as unemployed numbers rise, those at the front of the queueget pushed lower down’ ( The Guardian 2008). More able-bodiedpeople coming onto the job market means that the most excludedwill now have to compete even harder to get work, which has ledto calls for greater consideration to be given to intervention to helppeople cope with long periods of economic inactivity (ibid.).


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Conclusion

At the level of policy, tactical, pragmatic modifications are currentlybeing made to the neoliberal standard of efficiency as determined bycompetition in an economy fully open to world markets, issues thatare addressed throughout this book. In addition to the recentsubsidization and nationalization of corporations in an attempt tostabilize the economy and society, a proto-Keynesian system ofdebt-financed tax cuts and spending increases has been launched tohelp lift the economy out of recession. To this end, it has beensuggested that we are witnessing a ‘regime change, propelled by awholesale loss of confidence in the Anglo-American model oftransactions-orientated capitalism and the neoliberal economics thatlegitimized it’ (Wade 2008: 5). By attributing to market-orientatedpolitics a hegemonic status, such claims imply a period of closerregulation of the markets, and the renewed necessity of activities andefforts to reduce citizens’ reliance on the market as concordant witha new period of economic development.

In this context, it should be more broadly recognized thatworkfare requires an active role for the state both in underwritingthe economy and in creating the conditions appropriate for itsredevelopment. This is paradoxical to the original ‘closed’ notion ofneoliberalism, but serves to illustrate the extent to which the conceptcan be manipulated and orchestrated in different ways, leading to amuch larger spectrum of strategic options, policy prescriptions andde facto practices. It further proves neoliberalism to be ‘a relativelymanipulable and fungible platform for actors to use to reconstitutetheir strategies and tactics’ in the context of a multi-level, more openand market-like globalizing world (Cerny 2008: 39). Because neo-liberalism encompasses a range of agendas, it is open to several oftenconflicting interpretations.

Neoliberalism is, therefore, more variegated than self-representa-tions suggest. Its mixture of free-market liberalism and arm’s lengthregulation has varied historically and across space. As such, currentchallenges to emerge from the instability and inequality of the neo-liberal model are likely to see the re-articulation of SWPR principles.This is because the contemporary framing of neoliberalism asinevitable/all-encompassing prevents any serious discussion of alterna-tives to workfare policy, particularly alternative forms of interventionthat might achieve greater economic equality (von Mahs 2001).


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Note

1 For details see: <http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/index.htm> (8 January 2009).

References

Beckett, K. and Western, B. (2001) ‘Governing Social Marginality: Welfare,

Incarceration and the Transformation of State Policy’, Punishment and

Society, Vol. 3, No. 1, pp. 43–59.

Brewer, M. (2001) ‘Comparing In-Work Benefits and the Reward to Work

for Families with Children in the US and UK’, Fiscal Studies, Vol. 22, No.

1, pp. 41–77.

Brown, W. (2006) ‘American Nightmare: Neoliberalism, Neoconservatism

and De-democratization’, Political Theory, Vol. 34, No. 6, pp. 690–714.

Cerny, P. G. (2008) ‘Embedding Neoliberalism: the Evolution of a

Hegemonic Paradigm’, Journal of International Trade and Diplomacy, Vol. 2,

No. 1, pp. 1–46.

Dean, H. (2006) ‘Activation policies and the changing ethical foundations of

welfare’, ASPEN/ETUI conference: activation policies in the EU,

Brussels, 20–21 October.

Dean, M. (2002) ‘Liberal Government and Authoritarianism’, Economy and

Society, Vol. 31, No. 1, pp. 37–61.

DfEE (1997) Design of the New Deal for 18–24 Year Olds, Department for

Education and Employment, London.

DSS (1998) New Ambitions for Our Country: a New Contract for Welfare,

Department of Social Security, London.

DWP (2006) A New Deal for Welfare: Empowering People to Work, Stationery

Office, London.

England, K. (2008) ‘Welfare Provision, Welfare Reform, Welfare Mothers’,

in Cox K., Low, M. and Robinson, J. (eds) The Sage Handbook of Political

Geography, Sage, London.

Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism, Polity

Press, Cambridge.

Forrest, R. and Kearns, A. J. (2001) ‘Social Cohesion, Social Capital and

the Neighbourhood’, Urban Studies, Vol. 38, No. 12, pp. 2125–43.

Foucault, M. (2003) Society Must Be Defended (trans. D. Macey), Penguin

Books, London.

Fraser, N. (2003) ‘From Discipline to Flexibilization? Rereading Foucault in

the Shadow of Globalization’, Constellations, Vol. 10, No. 2, pp. 160–71.

Friedman, M. (1962) Capitalism and Freedom, University of Chicago Press,

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Friedman, M. and Schwartz, A. J. (1963) A Monetary History of the United States

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Garland, D. (1985) Punishment and Welfare: a History of Penal Strategies, Gower,

Aldershot.

Giddens, A. (1998) The Third Way: the Renewal of Social Democracy, Polity Press,

Cambridge.

Hancock, L. (2002) ‘The Care Crunch: Changing Work, Families and

Welfare in Australia’, Critical Social Policy, Vol. 22, No. 1, pp. 119–40.

Hartman, Y. (2005) ‘In Bed with the Enemy: Some Ideas on the Connec-

tions between Neoliberalism and the Welfare State’, Current Sociology, Vol.

53, No. 1, pp. 57–73.

Harvey, D. (2005) A Brief History of Neoliberalism, Oxford University Press,

Oxford.

Hayek, F. von (1944) The Road to Serfdom, Routledge, London.

Jessop, B. (2002) The Future of the Capitalist State, Polity Press, Cambridge.

Labour Party (1996) Getting Welfare to Work, Labour Party, London.

Larner, W. (2003) ‘Neoliberalism?’, Environment and Planning D: Society and

Space, No. 21, pp. 509–12.

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Strategies, and Languages of Neoliberal Legitimacy’, Environment and

Planning A, No. 39, pp. 1715–34.

O’Neill, P. M. (2004) ‘Bringing the Qualitative State Back into Economic

Geography’, in Barnes, T., Peck, J., Sheppard, E. S. and Tickell, A. (eds)

Reading Economic Geography, Blackwell Publishing, Oxford, pp. 257–70.

Peck, J. (2001) Workfare States, Guilford Press, New York.

—— (2002) ‘Labor, Zapped/Growth, Restored? Three Moments of Neo-

liberal Restructuring in the American Labor Market’, Journal of Economic

Geography, Vol. 2, No. 1, pp. 179–220.

Peck J. and Theodore, N. (2000) ‘“Work First”: Workfare and the Regula-

tion of Contingent Labour Markets’, Cambridge Journal of Economics, Vol.

24, No. 1, pp. 119–38.

Peck, J. and Tickell, A. (2002) ‘Neoliberalizing Space’, Antipode, Vol. 34, No.

3, pp. 380–404.

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Cornell University Press, Ithaca NY, pp. 83–99.

Powell, M. and Hewitt. M. (1998) ‘The End of the Welfare State?’, Social

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Purnell, J. (2008) ‘Ready to Work, Skilled for Work: Unlocking Britain’s

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The Guardian (2008) ‘How the Financial Crisis Will Affect Welfare-to-Work’,

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PART TWO • THE FALL OF NEOLIBERALISM

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8 Zombieconomics: the Living Death of the Dismal Science

BEN F INE

From time to time, capitalism has been likened to hell on earth, notleast with the image of those dark satanic mills. Rosa Luxemburgcame close to perceiving capitalism as a vampire system in arguingthat it could only reproduce itself on an expanded scale by absorb-ing non-capitalist production, thereby infecting the life-blood onwhich it depended, whilst Frimpong-Ansah (1991) has posited theAfrican vampire state as the antithesis of the developmental state.There is also the classic contribution by Taussig (1980) in whichconfrontation with the commodity is perceived as experiencing thedevil itself, quite apart from the moneylenders in the temple.1

The idea that economics itself derives from the underworld is, asfar as I know, rare if not unknown. But, as I will argue, the currentphase of economics as zombie-like is particularly apt. Not thateconomics is short of pejorative labels, from the ‘dismal science’ firstposited as such by Thomas Carlyle for failing to keep individuals intheir designated (servile) positions, through to the autism with whichit has most recently been labelled in the pursuit of greater hetero-doxy. Even the mainstream itself, prior to the current crisis, hasgarnered unprecedented levels of popularity, hitting the bestsellerlists, by self-deprecatingly referring to itself as ‘freakononomics’ (seeLevitt and Dubner 2006 – and Fine and Milonakis 2009; Milonakisand Fine 2009 for critique, and for a detailed background to muchelse in this chapter). Significantly, in the wake of the crisis, whilsteconomists are probably second only to bankers in public disdain,they have confidently declared that none of it is their fault – it isonly that their principles have been improperly applied.2

The main reason that mainstream economics in the currentphase of neoliberalism is zombie-like is because it is both dead andalive at the same time, ‘undead’ as popular culture suggests. That it

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prevails within its own disciplinary boundaries with little or nocontest and with scant respect for alternatives is uncontroversial – asmany of the chapters in this book will attest. Zombieconomists areout there: they are extraordinarily powerful and almost impossibleto slay. So zombieconomics is alive but not well because it is alsoundead, in two senses, as the genre suggests. First, it is entirelyparasitic upon the living, feeding upon them in order to sustain itsown life. Second, in so feeding, it degrades whatever it touches andtransforms it into its own condition. The process can only come toan end in that nightmare vision in which we have all becomezombies. It is apparent that the appropriate metaphor for economicsis one of zombies and not vampires, for Dracula was at least acultured and sophisticated being, well-attuned to the sensitivities ofboth his victims and their cultures and histories.

The purpose here is to examine the nature of zombieconomicsand how it came into being. In successive sections, I trace theevolution of economics from the marginalist revolution of the 1870sthrough the Keynesian revolution and the monetarist counter-revolution to the current phase of economics imperialism, in whichboth economic and non-economic analysis is primarily reduced tothe optimizing behaviour of individuals in face of market imper-fections. Such reductionism endows zombieconomics with so muchlife – yet with so little content, both in terms of analytical elementsand understanding of contemporary capitalism. In addition, theclosing remarks locate its significance in relation to the currentfinancial crisis. It is a moot point whether it offers a critique or asupport for neoliberalism in such changed circumstances.

From Marginalist to Formalist Revolution

Apart from a few technical developments, the core components oforthodox, mainstream neoclassical economics would be understoodby the marginalist economists of the 1870s. Indeed, many of theconcepts now used were put forward and popularized by AlfredMarshall in his Principles of Economics of 1891 – the main economicstextbook for the next fifty years. The marginalist revolution putforward the notion of economic rationality and drew out itsimplications from optimizing behaviour for the theory of supply(production) and demand (consumption). It gave rise to a technicalapparatus associated with a utility function to explain demand and


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a production function to explain supply, and corresponding marginalutility and productivity.

For the newly emerging orthodoxy, the inter-war period wasdominated by placing the ‘technical apparatus’ on a sound footing.The task set was of incorporating marginalism into a mathematicalform in which the consequences of economic rationality could beidentified in a tight deductive fashion. Does an optimum exist for theconsumer? Is it unique? Is it efficient? Do demand curves always slopedownwards? Answers to these and similar questions were elusive,especially without the support of an extraordinarily restrictive range ofassumptions and methods to accommodate them. Or, to put it moreconstructively, the goal of answering these questions became imper-ative and almost any sacrifice would be made in order to attain it.

The result was an ‘implosion’ of the marginalist principles in uponthemselves. In brief, first, utility itself was reduced from general well-being to a logic of choice across bundles of goods. Second, prefer-ences as the basis for those choices were assumed to be fixed. Third,these preferences were the only rationale for behaviour. Fourth,technical assumptions were made about consumer choices, such asconvexity (a mix is better than a pure consumption) and non-satiation. Similarly, production became a simple technical relation-ship in which inputs, including labour, are seen as physical entitieswhich provide output through given technologies. Fifth, bothindividuals and goods were stripped of any meaning and becameabstract formal symbols of themselves. Sixth, issues of method weresimply overlooked as deductivism came to the fore independent ofany claims to realism.

But, equally important, the new marginalist principles were seento be at most a part of an economic explanation. In particular, theyhad no purchase upon either the other motives of individuals orsystemic behaviour. They were simply the science of reduced individ-ual behaviour in market-type situations. The inadequacy of suchprinciples could not have been more strikingly exposed than by themass unemployment of the 1930s. To cope with this challenge,marginalist microeconomics needed to be complemented by anentirely different set of principles. With these came the division ofthe discipline into microeconomics and macroeconomics, the latterdominated by Keynesianism. In addition, there remained in placethroughout the inter-war period a strong commitment to whatwould now be called heterodox economics.

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In short, during the inter-war period, microeconomic principleswere in the process of being established but only at the expense ofan implosive reductionism to an extraordinarily narrow range ofassumptions and methods, ones that were unacceptable to the restof economics, let alone the other social sciences, and whose scope ofapplication was perceived to be confined to the science of marketsupply and demand. This was, however, not so much to be changedas to be thrown into reverse. For, in describing developments withineconomics between 1945 and 1955 as a ‘formalist revolution’, Blaug(2003) highlights what is an uncontroversial and rapid process inwhich mathematical and statistical techniques assumed muchgreater, and ultimately, overwhelming significance. But we are lessconcerned with the rise of formal techniques than with shift in sub-stantive content and the reasons for it.

This has a number of elements. First, during this period, the goalof perfecting the technical apparatus was finally accomplished, notonly for the consequences of the optimizing individual (the Hicks-Slutsky-Samuelson conditions) but also for general equilibriumtheory (Arrow-Debreu), which focused upon the conditions underwhich optimizing individuals as a whole are coordinated through themarket mechanism. Second, the centre of gravity for economicsswitched from the UK to the US, symbolized by the rise ofimportance of Samuelson in place of Marshall/Keynes (see below).Third, a remarkable flip in the analytical status of the core technicalapparatus began to gather momentum, from implosion as the condi-tion of its establishment, to explosion of the scope of its application.

The latter gave rise to ‘economics imperialism’. This involvesappropriating the subject matter of other disciplines by reducing itto the principles of marginalism. There is a historical logic under-pinning this process. For the marginalist principles have nolimitations set upon their scope of application, since they areuniversal in content. Optimizing and utility and production functionshave no ties to historical or social specificity by time, place oractivity. They can, in principle, be applied to anything. In practice,though, historically the principles were first obtained, as indicated,by confining them to a particular type of behaviour in a particularcontext, the market. Consequently, and subsequently, where andhow the boundaries are drawn between the application of theseprinciples and those of the other social sciences is contingent, bothupon the internal character and dynamics of the constituent


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disciplines of the social sciences themselves, and upon the externalinfluences to which they are subject.

From Formalist to Keynesian Revolution

What was not achieved in the immediate post-war period, with theformalist revolution, was the triumph of neoliberal economics. Theperiod straddling the formalist revolution to the end of the post-warboom was undoubtedly Keynesian in character despite the bias, ifnot predetermined predisposition, towards laissez-faire that is partand parcel of the technical apparatus of mainstream economics.This does not mean that neoliberalism had no influence on the formtaken by Keynesianism, as Miller illustrates earlier in this book. ForUS laissez-faire ideologues conducted a concerted campaign toassociate Keynesianism with communism and to depict it as aninstrument of the enemy in the Cold War. As Backhouse (2006: 16)puts it, ‘Prominent Keynesians, from Galbraith to Samuelson, werevilified and labelled Marxists or communists.’3

In short, Keynesianism in the immediate post-war period was ahot political and ideological potato, sharpening and representingmajor differences between Republicans and Democrats and theirdiffering responses both to the experience of inter-war depressionand to the way in which to preclude such a disaster in the future.With the post-war boom and the passage through the extremes ofMcCarthyite anti-communism, such differences were tempered asKeynesianism became the orthodoxy. But, even if its ultimatetriumph was inevitable – as long as the economy was doing well andthis could be imputed to macroeconomic management – the formsand direction taken by Keynesianism were not fixed at the outset.

In this light, Colander and Landreth (1996) usefully point to theKeynesian revolution as comprising theoretical, political and text-book elements. But it is inappropriate to see these as separate fromone another. And it is equally important to recognize that for acouple of years Keynesianism was taught from a much more radicaltext by Tarshis (1947), who had studied in Cambridge in the 1930s.Tarshis’s sympathies lay with working people, in aiming at as higha level of wages as was consistent with full employment. He was alsoopposed to the negative impact of monopoly on employment anddistribution. Not surprisingly, following a vicious campaign, his textwas dropped from curricula across the United States after threats of

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withdrawal of private funding (see Colander and Landreth 1996).Thus, whilst Samuelson became the leading figure in promotingKeynesianism in the United States, he was not in the lead initially.This tends to be forgotten given his subsequent domination ofKeynesianism in the United States. His text Economics first appearedin 1948 and is now in its eighteenth edition, with William Nordhausas co-author from 1985. It has spawned many imitators alongside itsown adoption across the US and elsewhere as a major textbook. Itis sufficiently important as a text in the history of economic thoughtto have been reissued in 1998 in its original edition!

It follows that the political climate may not have prevented therise of Keynesianism in the United State, but it had considerableinfluence over both its theoretical direction and its textbook content,most obviously as dictated by Samuelson. As Backhouse (2006: 16)puts it, surely too cautiously, ‘doubts about its closeness to com-munism did not prevent Keynesianism from becoming widelyaccepted in academia, though that may have contributed to itsbeing expressed in more careful, technical language than mightotherwise have been the case’. But, as mentioned, it is not simply amatter of ‘whether Keynesianism’ but also of ‘what Keynesianism’.For there are sufficient differences in substance between Samuel-son’s treatment and that of Tarshis, whose style and content ofanalysis is unrecognizable to a reader guided by comparison withmacroeconomic texts of today. And it is not simply a matter of thedifferences as they were but as they might have become. Tarshis, forexample, is not so far short of the approach being offered byKalecki, the major difference being the latter’s denial of thepossibility of eliminating unemployment under capitalism for wantof its capacity to discipline workers when jobs can be left withoutfear of being unable to gain another. But the emphasis on monopolyas a key characteristic of the Keynesian system – as output-restrict-ing and distributionally disadvantageous to real wages and effectivedemand – was inspired by Kalecki but has only survived in theheterodoxy of post-Keynesianism (see Fine and Murfin 1984).

In short, given outside influences, it is hardly surprising thatKeynesianism should take the route laid out by Samuelson asopposed to Tarshis. But this was not just a matter of externalinfluence on what may or may not have been acceptable. It alsoreflected developments within the discipline itself. It is, for example,apparent that Keynes himself, as he was formulating The General


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Theory, became opposed to methodological individualism, to math-ematical modelling (other than as a guide to clear thinking andpresentation) and, most of all, to econometrics (for fixing parametervalues to an economy necessarily subject to uncertainty and wavesof expectations). Yet, the Keynesian revolution that bore his namewas to be developed along these lines, most notably in the IS/LMapproach to macroeconomics and the building and estimation ofmacroeconomic models.4

The exceptional case of methodological individualism is impor-tant. For, despite its consolidation through the formalist revolution,mainstream macroeconomics remained for the time being immunefrom its charms and drew upon more or less theoretically arbitraryways of constructing macroeconomic aggregates. One reason for thisis that the way in which the microeconomic principles had beenestablished, and the qualifications associated with them, remainedfresh in the minds of the new generation of mathematical econo-mists. It was not simply a matter of the difficulty of extrapolating thebehaviour of the individual to the behaviour of the economic systemas a whole, as had been accomplished with general equilibriumtheory. In addition, the newly completed principles were extra-ordinarily vulnerable to the introduction of any rogue element, atleast until established as a conventional wisdom. There could be noexternalities, interdependent preferences, market imperfections, un-certainty, institutions, non-economic behaviour and so on. No rolecould be found for money. As a result, mainstream economicsremained aloof – precisely because of their destructive implicationsfor its core principles – from developments that it would embrace sowarmly later on.

This is apparent from Amadae’s account (2003: 11–12) of thepromotion and rise of rational choice across US social science.During the period of the formalist revolution, as the neoclassicaltechnical apparatus was consolidating its hold over the discipline,

within the university, rational choice theory developed as a series ofoverlapping, multidisciplinary revolutions . . . three distinct disciplinarytransformations . . . social choice, public choice, and positive politicaltheory. . . . The path-breaking rational choice scholars all shared twoinstitutional foci crucial to the institutional and professional success ofrational choice.

These were RAND (Research and Development Corporation)and the Public Choice Society. The aim of RAND was in part to

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inform US military strategy, and it called upon economists andother social scientists to investigate self-interested behaviour from avariety of perspectives. So, long before they were taken up ineconomics in its now latest phase of economics imperialism (seebelow), there was a focus on game theory, behaviouralism, and strat-egizing. As Amadae (2003: 77) puts it:

The theory of rational choice has interlocking descriptive, normative, andprescriptive components, and was developed to inform action respectingnuclear strategy and complex questions of weapon procurement.

As a result, it deployed a diverse toolbox and, at least in principle,exhibited a close attachment to US Cold War policy.

These developments were not particularly attractive to a neo-classical economics, consolidating around Keynesianism andPigovian welfarism based on a corrective, benevolent state (see Mac-Leavy, this volume). As a result, microeconomic principles, offeringa case for laissez-faire, had little purchase upon the academicprofession relative to mainstream macro (Keynesianism) and micro(welfarism) perspectives. Indicative of this is the marginal position ofHayek at the time. As Mirowski (2007) perceptively observes,Hayek’s intellectual trajectory draws upon very different approaches.But what they have in common with rational choice theory is thewish to popularize intellectually the case for neoliberalism. Initially,these neoliberal precursors may have drawn upon orthodox eco-nomic thinking in the dispute with Keynes and the market socialismdebate, but, ultimately, the Road to Serfdom – the founding documentof neoliberalism – involves an entire break from mainstreameconomics and is entirely incompatible with it. Instead, it drawsupon uncertainty, innovation and spontaneous order, none of whichwas, or has become subsequently, compatible with the mainstream(see Birch and Tickell, this volume).

So, with the formalist revolution focused upon and inspired bythe individual, neoliberalism in theory was confined to microeco-nomics, too vulnerable to be extended to the economy as a whole orto incorporate previously excluded elements underpinning thesystemic case for neoliberalism based on spontaneous order,inventiveness, or uncertainty. Samuelson’s own account of conversionto Keynesianism in Colander and Landreth (1996) is extraordinarilyrevealing in these respects. For him, becoming a Keynesian was amatter of overcoming or, more exactly, unsuccessfully reconciling it,


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with his prior predilection for micro-foundations. He confesses,‘What I resisted in Keynes the most was the notion that there couldbe equilibrium unemployment’ (p. 159). Indeed, ‘I was like a tuna:the Keynesian system had to land me, and I was fighting every inchof the line. I was worried about micro foundations’ (p. 161). Heplaces considerable emphasis on his own personal experience ofunemployment, finding himself as a student in the 1930s unable toget a summer job at any wage to relieve family poverty. So Samuel-son wanted to be a Keynesian but could not marry it with micro-economic principles. How did he resolve this conundrum? The plainanswer is that he did not and simply accepted the intellectualincompatibility, ‘I was content to assume that there was enoughrigidity in relative prices and wages to make the Keynesian alterna-tive to Walras operative’, presuming the presence of some ‘sub-structure of administered prices and imperfect competition’ (p. 160).And, in retrospect, he judges:

It’s a modern desire to have impeccable micro foundations for macro. . . .I decided that life was more fruitful not worrying about it. . . . Moreover,the search today for micro foundations for macro does not have a richset of results. . . . It’s because I get a better positivistic macroeconomicsto do some worrying about the micro foundations that I do the worrying,and not because I have a tidy conscience that everybody’s microfoundations must be tidy. (p. 162)

From Keynesian Revolution to Monetarist Counter-Revolution

Samuelson’s retrospective account has a modern ring about it in itsmode of expression, with its reference to micro-foundations formacroeconomics. For his attitude is embedded in his and thediscipline’s past, with an ill-concealed contempt for such micro-foundations in and of themselves as a logical exercise in mathe-matical consistency (his target was the New Classical Economics, seebelow). For Samuelson’s generation, Keynesianism was macro, and itfloated systemically free from micro, although the latter might offerideas on how to go about the former. Thus, Samuelson offers theremarkably frank confession that his Keynesian macro had not beenlanded in the sense of being founded on sound micro foundations,and that he had ceased to care about this. But rather too convenientis the extent to which his presumed micro foundations are those of aslight rigidity in prices, derived from ‘imperfect competition’, and

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incorporated into an equilibrium, possibly at less than full employ-ment for the economy as a whole. For the reference to imperfectcompetition, and the use to which it is put, scarcely begins to get togrips with the systemic consequences of the monopolization ofmodern capitalism, and other features, and its implications for itsunderlying dynamic let alone its level of economic activity. To someextent this helps us to explain why Tarshis should have given way toSamuelson, even though both were Keynesians, without resting theexplanation upon relatively less important factors such as Samuel-son’s powers of exposition and his use of mathematics as a neutrallyprofessional and more acceptable form of exposition.

For one of the consequences of the Keynesian and formalistrevolutions was to divide the discipline into microeconomics andmacroeconomics as its core constituent theoretical components, withthe remainder of the subject matter relegated to the applied or policybackburner as regards both its lesser analytical principles and itspractical significance. By the same token, the conventional wisdombecame one in which the post-war boom was perceived to have beenthe triumph of interventionist Keynesian policy making over theinstability created by unfettered markets. In addition, somewhatinconsistently, macroeconomics became analytically preoccupiedwith short-run deviations around given long-term trends. In this way,the major factors underpinning the post-war boom were simply over-looked or reduced to epiphenomena. In these I would include theinterpenetration of trade and investment within the advancedcountries, and the role of the state in expanding health, educationand welfare and in intervening to restructure domestic economiesthrough measures ranging across industrial policy to public owner-ship.

Consequently, with the collapse of the post-war boom in the1970s, the crisis of Keynesianism, and the resurgence of mone-tarism, the prospects for neoliberalism were entirely different fromthose that prevailed at the time of the formalist revolution, asdiscussed elsewhere in this book (see Birch and Mykhnenko; Jessop,this volume). Not only were the marginalist principles sacrosanct,but they were also unburdened by any memory of the extraordinaryqualifications that had been necessary to allow them in the firstplace, either by assumption or scope of application. Economicsimperialism had made great strides in, for example, human capitaltheory, the new economic history (cliometrics) and public choice


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theory. And Thatcherism and Reaganism reigned supreme. Thetime was more than ripe for the emergence of monetarism in itsmost extreme form, the New Classical Economics, with the presum-ption that all markets work perfectly but for random shocks, andthat the principles of marginalist economics should be extended tothe macroeconomy. In addition, following Milton Friedman, theidea of expectations is reduced to the domain of knowable outcomeswith attached probabilities as opposed to the irreducible uncertaintyassociated with Keynesianism. Further, the principle of optimizationis extended to include the processing of information in the theory ofrational expectations – so that individuals now optimize bymodelling the economy and, thereby, have the capacity to neutralizeinterventions by the state as long as they can be anticipated. Otherthan in distorting microeconomic functioning, the state is thereforeperceived as ineffective in macroeconomic policy. Indeed, in thewake of the stagflation of the 1970s, it is truly remarkable that itshould be felt possible to understand the economy in terms of singlerepresentative individuals for households and firms, with the leadingNew Classical Economists proclaiming that ‘the term “macro-economic” will simply disappear from use and the modifier “micro”will be superfluous’ (Lucas 1987: 108).

New Classical Economics, then, sought to wash Keynesianismaway and, without wishing to blame the victim, it could do sobecause of the latter’s narrow understanding of macroeconomictheory itself, in leaving aside those systemic factors that were notreducible to macroeconomic aggregates that could be incorporatedinto mathematical models of supply and demand. But it is importantto recognize, or recall, that the neoliberalism in scholarship of theNew Classical Economics is highly peculiar relative to the neo-liberalism both of ideology and of the practice-producing diversitiesof neoliberalism highlighted by many other contributors to thiscollection. It is totally orthogonal to neo-Austrian arguments con-cerning the virtues of free markets. And, in practice, neoliberalismhas always been highly interventionist. This can be understood intwo ways. On the one hand, the free market is a myth and the statecan and does intervene to make markets work in particular waysand in favour of particular interests. On the other hand, theideology of non-intervention is more appropriately seen as arationale for discretionary and not minimal intervention.

In this light, it is not surprising that there are many different

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accounts of, and forms taken by, neoliberalism. They all involve atransformation as opposed to a reduction of the role of the state (seeBirch and Tickell, this volume). But what we can now see afterthirty years of neoliberalism is that it is heavily steered by the vestedinterests, practices and ideology of finance, not least through whathas been appropriately termed ‘financialization’, discussed earlier inthis volume by Tyfield and later by Shaoul. This involves both theproliferation of ‘fictitious’ financial markets built upon existingactivities as well as the creation of new spheres of operation forfinance (Fine 2007). For the New Classical Economics, of course,this proliferation of finance would not occur unless it were efficientin mobilizing and allocating resources and managing risk. This isstretching credibility when the rewards at a macro-level of managingfinance are exceeding those of using it. With the emergence over thelast decade of financial crises, now deep and global, this logic isindeed running incredibly thin, and the first call for intervention torescue financial markets always comes from those markets them-selves!

From Monetarist Counter-Revolution to Zombieconomics

This all suggests that neoliberalism is currently going through asecond phase, distinct enough from the first that it can be perceivedas a reaction against neoliberalism itself as ‘Third Wayism’, ‘thesocial market’, or whatever (see also Jessop, this volume). For,whilst the first phase involved state promotion of interests throughthe market, especially liberating financial markets, the second phaseis faced with both ameliorating the consequences of this shocktherapy and of continuing to intervene to allow it to be sustained.The emphasis, in principle, is upon how to make markets sociallyacceptable and work in general, however that might be defined inemployment, distribution and welfare delivery – as explored earlierby MacLeavy (this volume). In practice, the markets given thegreatest priority will be those of finance.

As is apparent, the New Classical Economics (and neoliberalideology more generally) is totally inadequate to this task other thanas an unremitting pressure against collectivist forms of provision andinterests. Exactly the opposite is the case for the new information-theoretic economics, which emphasizes the importance of marketimperfections. Crucial to the New Classical Economics is the


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assumption of perfectly working and instantaneously clearingmarkets: supply always equals demand. This reflected the monetaristworld vision that markets work well if left to themselves, a positionposing the analytical challenge to argue otherwise than, ‘interfere inmarkets and you prevent them from working well’. The marketimperfections approach offered an answer, especially in the case ofimperfect information. In such circumstances, it could be shown thatmarkets might not be efficient, they might not clear (persistentimbalance between supply and demand), or that markets might failto arise altogether. This might be so even if prices were perfectlyflexible in principle. An employer, for example, might not reducewages despite high levels of unemployment, in order to maximizeprofit through attracting a more productive, disciplined and loyalworkforce on average.

In short, the new market (and information) imperfection approachdisplayed an ability to address macroeconomic problems despitebeing based on the aggregated optimizing behaviour of individuals.In this way, the technical apparatus of utility and productionfunctions could be used to extend microeconomics to incorporatemacroeconomics, even that with a Keynesian flavour. Together withother developments within microeconomics, especially those relatedto the now acceptable game theory, this allowed the use of thetechnical apparatus of consumer and producer theory to be extendedalmost universally across the discipline of economics. Areas that hadpreviously been seen to be more applied, inductive and policy-oriented – from industrial through to development economics –increasingly came under the umbrella of the microeconomicprinciples that had only been established initially by accepting theirlimited scope of application.

Nor has this process of expansion of microeconomic principlesbeen confined within the borders of economics. Previously, asindicated, economics imperialism had been based on the idea oftreating the non-market as if it were the (perfectly working) marketby other means. By contrast, with the market imperfections approachto the economy, the non-market could be understood as the inducedresponse to those market imperfections, whether this be institutions,culture or customs. Whereas previously these had been seen asirrelevant or, at most, an irrational barrier to the (as if) perfectlyworking market, it was now possible to explain their existence andsee them as a way of improving upon imperfectly working markets.

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The effect was to reinvigorate economics imperialism across abroader front and to render it more palatable to other social sciencesdespite its methodological and theoretical peculiarities from theperspective of other disciplines. Whilst methodological individualismof a special type (utility maximization) persisted, it could be cloakedin terms less dismissive of the other social sciences. For it nowaccepted that institutions and history matter, rather than being seenas at most temporary obstacles to the reach of the perfectly workingmarket across all economic and social life.

Thus, economics imperialism has now built upon old fields andcreated new ones in and around the borders of economics: the newgrowth theory, the new trade theory, the new economic sociology,the new institutional economics, the new welfare economics, the newpolitical economy, the new economic geography, the new develop-ment economics (see van Waeyenberge, this volume, for the impacton World Bank policy), and so on. In a sense, it has done this in twodifferent ways. First, it has brought back in what was previously leftout in the reductionist process by which its technical apparatus wasestablished. In general terms, the ‘social’ becomes important wherethe social ranges over the non-market and the non-individualistic,even though these still remain tied to optimizing behaviour;individuals choose to be altruistic, for example, because it is a way ofovercoming market imperfections or coordination problems.

Second, though, this often leads to what might be termed mixedor dirty models. Whether for theoretical or empirical expediency,the standard technical apparatus is supplemented by some otherfactor or set of factors appropriated from another social science orsimply through speculative reasoning. This is to bridge the previousdivide between rational and irrational. A good example is therecently prominent economics of happiness, where populations donot seem to report themselves happier despite rising incomes overtime. It is a simple matter to add in some other variable to utilitytheory to address this, the most convenient being reference torelative income position. Then we are able to explain why short-runincreases in one person’s income improve feelings of well-being butnot improvements in income for everybody over time, as relativepositions remain the same. This is the basis for ‘freakonomics’ –with an inclination to rely upon self-interest, a willingness to incor-porate other factors as necessary, and otherwise to provoke byappeal to statistical analysis and other damn lies.


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But freakonomics is just the most popular form taken by zombi-economics, itself the form adopted by economics imperialism in theage of neoliberalism. This approach is dead in that it is based uponan unquestioned methodological individualism and technical appara-tus of the narrowest type, it is totally ignorant of its own history, ofits own methodology and of alternatives, and it fails to engage withthem except to dismiss them as unscientific and lacking in rigour(whereas it is its own intellectual fragilities in these respects that aremost marked). It has no concept of the systemic, such as global-ization, nor of power and conflict, and it has no understanding of themeaning of categories of analysis in terms of historical and socialspecificity other than in defining path dependence, initial conditionsor choice between models or equilibria. And it is undead inblundering around looking for applications out of the incidence ofmarket imperfections, whether in the dimly incorporated real world,or through appropriation and degradation of the material of othersocial sciences. In the realm of policy, it seeks interventions to correctmarket imperfections on a piecemeal basis and, even though recog-nizing that such imperfections arise in financial systems themselves, itfails to address how the power of such systems are to be curbed. Thegoal is to restore financial markets to health, through whateverinterventions are necessary, although it is a moot point whether thisis or will represent a break or a support to a continuing neoliberal-ism. In these respects, zombieconomics is an ideal frame forsupporting any of the variegated forms and applications of neo-liberalism as outlined by Jessop and MacLeavy in this volume.

Conclusion

I am acutely conscious that zombie movies rarely end happily, withthe best case scenario being survival to live another day. Within thediscipline of economics itself, there is much to confirm, and regret,in adopting this perspective. This view is not universally accepted,for there are those who believe that the signs of life in zombi-economics, not least the innovations upon its frontiers in techniqueand subject matter, will lead it to be transformed into something else(see, for example, Colander et al. 2004; Davis 2006). This cannot beruled out in principle, but a zombie is a zombie and the prospectsof its becoming different and better are not bright. Equally, theprospects for neoliberalism remain uncertain in the light of the

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current financial crisis, and extensive neoliberal measures to secureintervention by the state to rescue the financial system, even to thepoint of nationalizing financial institutions. But it is salutary to recallthat the end of the post-war boom witnessed, with the rise of theNew Classical Economics, an approach that denied macroeco-nomics as opposed to microeconomics, focused on hyper-rationalrepresentative individuals, presumed markets work perfectly, andbelieved that government could be at best ineffective and at worstinefficient.

Further, to move from the ridiculous to the more ridiculous,zombieconomics has, with an ubiquitous reach far exceeding itspuny grasp, offered one more new field – neuroeconomics! Buildingupon insights from neuroscience that reveal some of the workings ofthe brain, it might be thought that the rational economic agent ofmainstream economics would have to be rejected since the scienceshows that other influences on individual behaviour impact muchfaster than rational calculation. But one school of neuroeconomicscleverly suggests that the optimizing individual is aware of theseflaws and takes them into account in optimizing. For Glimcher et al.(2005: 253):

Neoclassical economics and utility theory on which it is based provide theultimate set of tools for describing these efficient solutions; and evolu-tionary theory defines the field within which mechanism is optimized byneoclassical constraints: and neurobiology provides the tools for eluci-dating those mechanisms.

In plain language, optimizing individuals treat their own brains asan obstacle in pursuing given goals rationally!

More encouraging are the prospects for the renewal of politicaleconomy across the social sciences, despite the designs of, and incontest with, economics imperialism. I see this as the consequence ofthe current dual retreat from the extremes of both postmodernismand neoliberalism, not least as the past decade or so has witnessed arevival of interest in understanding contemporary capitalism, system-ically and simultaneously, as both a material and cultural system. Inthis light, the current directions to be taken by social theory areremarkably open and are liable to be diverse across disciplines andtopics. It may not be possible to take the zombie out of theeconomics but we can restore political economy to social science.


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Notes

1 Indeed, ‘Banking was conceived in iniquity and was born in sin. Thebankers own the earth. Take it away from them, but leave them thepower to create money, and with the flick of the pen they will createenough deposits to buy it back again. However, take it away from them,and all the great fortunes like mine will disappear and they ought todisappear, for this would be a happier and better world to live in. But, ifyou wish to remain the slaves of bankers and pay the cost of your ownslavery, let them continue to create money’ – Sir Josiah Stamp, formerlya director of the Bank of England, and reputedly the second richest manin England in the 1930s. See also John Lanchester on ‘zombie banks’ in‘It’s Finished’, London Review of Books, 28 May 2009.

2 See, for example, Barry Eichengreen, ‘The Last Temptation of Risk’, The

National Interest, May/June, 2009.3 See also Backhouse and Medema (2007), Colander and Landreth (1996),

Galbraith (1975, as victim at Harvard), and especially Lee (2009).4 IS/LM is not an acronym but derives from the standard depiction of

Keynesianism through the IS (goods market) and LM curves (moneymarket).

References

Amadae, S. (2003) Rationalizing Capitalist Democracy: the Cold War Origins of

Rational Choice Liberalism, Chicago University Press, Chicago IL.Backhouse, R. (2006) ‘Economics since the Second World War’, paper to

the History of Postwar Social Science Seminar Series, London School ofEconomics, March, <http://www.lse.ac.uk/collections/CPNSS/events/Abstracts/HIstoryofPoswarScience/Econsince1945.pdf>.

Backhouse, R. and Medema, S. (2007) ‘Defining Economics: Robbins’ Essay

in Theory and Practice’, mimeo, <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=969994>.

Blaug, M. (2003) ‘The Formalist Revolution of the 1950s’, Journal of the

History of Economic Thought, Vol. 25, No. 2, pp.145–56.Colander, D. and Landreth, H. (eds) (1996) The Coming of Keynesianism to

America: Conversations with the Founders of Keynesian Economics, Edward Elgar,Cheltenham.

Colander, D., Holt, R. and Rosser, B. (2004) ‘The Changing Face of Main-stream Economics’, Review of Political Economy, Vol. 16, No. 4, pp. 485–99.

Davis, J. (2006) ‘The Turn in Economics: Neoclassical Dominance to Main-stream Pluralism?’, Journal of Institutional Economics, Vol. 2, No. 1, pp.1–20.

Fine, B. (2007) ‘Financialisation, Poverty, and Marxist Political Economy’,

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Poverty and Capital Conference, University of Manchester, 2-4 July2007, <https://eprints.soas.ac.uk/5685/1/brooks.pdf>.

Fine, B. and Milonakis, D. (2009) From Political Economy to Freakonomics:

Method, the Social and the Historical in the Evolution of Economic Theory,Routledge, London.

Fine, B. and Murfin, A. (1984) Macroeconomics and Monopoly Capitalism,Harvester, Brighton.

Frimpong-Ansah, J. (1991) The Vampire State in Africa: the Political Economy of

Decline in Ghana, James Currey, London. Galbraith, K. (1975) ‘How Keynes Came to America’, in Keynes, M. (ed.)

Essays on John Maynard Keynes, Cambridge University Press, Cambridge.Glimcher, P., Dorris, M. and Bayer, H. (2005) ‘Physiological Utility Theory

and the Neuroeconomics of Choice’, Games and Economic Behavior, Vol. 52,No. 2, pp. 213–56.

Lee, F. (2009) Challenging the Mainstream: Essays on the History of Heterodox

Economics in the Twentieth Century, in preparation.Levitt, S. and Dubner, S. (2006) Freakonomics: a Rogue Economist Explores the

Hidden Side of Everything, Penguin, London.Lucas, R. (1987) Models of Business Cycles, Blackwell, Oxford.Milonakis, D. and Fine B. (2009) From Political Economy to Economics: Method,

the Social and the Historical in the Evolution of Economic Theory, Routledge,London.

Mirowski, P. (2007) ‘Naturalizing the Market on the Road to Revisionism:Bruce Caldwell’s Hayek’s Challenge and the Challenge of HayekInterpretation’, Journal of Institutional Economics, Vol. 3, No. 3, pp. 351–72.

Samuelson, P. (1948) Economics: an Introductory Analysis, McGraw-Hill, NewYork NY, with W. Nordhaus (since 1985), eighteenth edition 2005, firstedition republished in 1998.

Tarshis, L. (1947) The Elements of Economics: an Introduction to the Theory of Price

and Employment, Houghton Mifflin, Boston MA.Taussig, M. (1980) The Devil and Commodity Fetishism in South America,

University of North Carolina Press, Chapel Hill NC.


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After 160 years one would need to change the first sentence of theCommunist Manifesto only slightly if one wanted to write a neoliberalmanifesto. A spectre is haunting Europe – the spectre of neoliberalism. All the powers

of old Europe have allied in a holy witch-hunt against this spectre. (Wohlgemuth2007: 1, my translation)

Although written by a neoliberal thinker, the first two sentences ofWohlgemuth’s manifesto indicate recent worries about neo-liberalism. For him, it seems to be the target of hostile forces ratherthan prone to collapse from its own contradictions. The world wasnot always so hostile. Indeed, in the 1980s its supporters werecelebrating the global acceptance of neoliberalism as a theoreticaland policy paradigm. Now, apart perhaps from the USA and theUK, the continuing global crisis of finance-led accumulation seemsto have tolled the death-knell of neoliberalism. It seems that, ratherthan its arrival marking the end of history, neoliberalism itself isdestined for the dustbin. From its initial formulation as a politicalproject in Paris in 1938 to the panic-stricken meetings in New York70 years later, there have been many efforts to promote and defendneoliberalism as the ideal basis for economic, legal, political, socialand moral order. Yet the moment of its triumph was when it beganto decompose and acquire its current zombie form (cf. Fine, thisvolume). It remains uncertain, however, whether the current crisiswill be treated as one in or of neoliberalism.

Before proceeding, the extreme polyvalence of the term ‘neo-liberalism’ must be noted (see Birch and Mykhnenko, and othercontributions in this volume). As Neoliberalismus, the term was coinedin Germany by Alexander Rüstow in 1932 and entailed a strongstate to police as well as to guard markets. This Ordo-liberal ‘social

9 From Hegemony to Crisis? The ContinuingEcological Dominance of Neoliberalism

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market economy’ model contrasts with the Chicago free marketversion of neoliberalism that was adopted in Chile in 1973 and thenpursued in many other countries. Given the many forms anddegrees of neoliberalism (distinguished theoretically below and illus-trated empirically by other contributors), it is sensible to see neo-liberalism as a socially constructed term of struggle (kampfbegriff) witha more or less ‘productively fuzzy’ role in economic, political andideological contestation. This said, my current remit is to approachneoliberal restructuring through the critique of political economyand show how its impact will outlast the possible collapse of neo-liberalism in the current crisis.

A Typology of Efforts at Neoliberalization

Four main forms of neoliberalism emerged during the 1970s and1980s. They are presented below as points on a continuum ratherthan in terms of chronological succession, and they also overlap atthe margins. The most radical form of neoliberalization is neoliberalsystem transformation. This was attempted in the national states thatemerged from the decomposition of the former Soviet Bloc, withRussia and Poland providing the two best-known examples frommany (see Swain et al., this volume). System transformation involveda tabula rasa approach in which ‘creative destruction’ of inheritedstate socialist institutions was expected to lead somehow to thespontaneous emergence of a fully functioning liberal marketeconomy and society and a more gradual development of liberaldemocracy. This approach owed more to Chicago-style neo-liberalism than to Ordo-liberalism and it was intended to create theconditions for the far-reaching commodification of economic rela-tions and the extension of the commodity form into social relationspreviously subject to non-market forms of provision.

Next in the continuum are essentially endogenous neoliberal regime

shifts in so-called ‘liberal market economies’. Familiar cases arethose associated with Thatcher and Reagan but similar shiftsoccurred in Australia, Canada, New Zealand, and, most recently,Iceland. The standard case involves a shift from the accumulationregimes and modes of regulation associated with post-war com-promises between capital and labour in Atlantic Fordism to regimesand modes of regulation that systematically privilege capital overlabour. This shift combines the roll-back of policies and institutions


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associated with the Atlantic Fordist post-war settlement with theroll-out of new or restructured institutions intended to consolidatethe regime transition and entrench the change in the balance offorces (cf. Peck and Tickell 2002). While typically introduced byparties on the right of the political spectrum, such shifts have alsobeen supported by centre-left parties, often under a disingenuous‘Third Way’ label. Moreover, with a little help from Northernfriends and/or military dictatorships, many Latin Americaneconomies also undertook such transitions from the 1970s to 1990sin response to crises in the import-substitution industrializationmodel (see Hinojosa and Bebbington, this volume). Indeed, the firstneoliberal experiment of world-historical significance occurred inChile under General Pinochet following his US-backed militarycoup d’état in 1973. The economic policy mix pursued in bothtypes of regime shift included measures to promote liberalization,deregulation, privatization, market proxies in the public sector,internationalization, and reduced direct taxation. It was alsoassociated with changes in social policy that subordinate welfareprovision to the demands of competitiveness, labour marketflexibility, and reduction of the social wage as a cost of (inter-national) production (cf. MacLeavy, this volume). The overall aimwas to modify the balance of forces in favour of capital and institu-tionalize the neoliberal economic imaginary (cf. Duménil and Lévy2004; Harvey 2005; Howard and King 2008; Birch and Tickell,this volume). This has occurred with varying success, if ultimatelydisastrously owing to blowback effects in neoliberal regimes and thebroader world market.

The third form of neoliberalism comprises more or less wide-ranging neoliberal structural adjustment programmes. These restructuringprocesses and regime shifts are more exogenous and top-down incharacter than neoliberal regime shifts, emerging less fromdomestic politics, whether in liberal democratic or authoritarianregimes, than from external imposition by the leading capitalistpowers and/or transnational economic institutions and organiza-tions (see Tyfield; van Waeyenberge, this volume). This processtypically involves adopting neoliberal economic policies in line withthe ‘Washington Consensus’ as part of the conditions attached tofinancial and other forms of assistance to crisis-ridden capitalisteconomies in parts of the Global South (see, for example, Gowan1996; Gwynne and Kay 2000; Robinson 2008; Saad-Filho and

FROM HEGEMONY TO CR IS IS?

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Johnson 2005; Sader 2008; Veltmeyer et al. 1997). Neoliberalconditionalities may, of course, be endorsed by certain local capitalsand state managers, but, where political opposition is relativelyunified (as in Mahathir’s Malaysia in 1997–8), they may be dilutedor waived. Such programmes are often presented as technocraticsolutions to economic crises, as van Waeyenberge (this volume)shows for the World Bank, but they also have uneven economic,political and social impacts domestically as well as broader geo-economic and geo-political significance. Finally, regardless of case-specific features, the policies adopted in the second and third formsof neoliberalism display many similarities when they occur outsideadvanced capitalist economies.

Fourth, there are relatively pragmatic and potentially reversibleneoliberal policy adjustments. These comprise modest changes deemednecessary to maintain alternative economic and social models in theface of internationalization and a global shift in the balance offorces. They are often combined with adaptation in corporatist and/or statist features of the corresponding accumulation regimes andmodes of regulation and with shifts in the balance of forces betweencentre-left and centre-right parties. The Nordic social democraciesand Rhenish capitalism provide several examples (cf. Becker 2007;Cox 2001; Lavelle 2009; Lindbom and Rothstein 2005; Streeck2009).

These four forms coincided in the 1990s, producing the highpointof neoliberalism (see Birch and Mykhnenko, this volume). At the verymoment of neoliberal triumphalism, however, signs of failure startedto emerge. Within ten years it became clear that: (1) neoliberalsystem transformation had largely failed as a ‘grand project’; (2)neoliberal regime shifts need to be flanked and supplemented byvarious forms of ‘third way’ policies, networks, and public–privatepartnerships to maintain their overall momentum in the face ofmounting resistance and/or growing signs of failure; (3) neoliberalstructural adjustment rarely produced the promised results, oftenaggravated the underlying problems, and could provoke a politicalbacklash as populist politics were revived (see Hinojosa andBebbington, this volume); and (4) neoliberal policy adjustmentsrarely lead to neoliberal regime shifts (witness Sweden andGermany in the 1990s, where conservative governments acceptedthe broad constraints of their respective inherited models of socialcompromise).


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Neoliberalism and Economic Determination

Despite the passing of the neoliberal highpoint, there are significantpath-dependent effects resulting from the crisis tendencies associatedwith each form of neoliberalism and from their interaction. Theseeffects are not only economic but also political and ideological. Thisis evident in the ways that neoliberal policies have shaped the forms,timing, and dynamics of economic crises (broadly understood) notonly in countries where neoliberalism had been adopted, imposed oradapted but also in regions where this had not yet occurred. It canalso be seen in the geo-economic and geo-political effects of failedneoliberal system transformation and structural adjustment pro-grammes, and in the uneven terrain on which struggles over theinterpretation of the crisis in and/or of neoliberalism and theappropriate policy responses are being conducted in social forma-tions where neoliberal regime shifts or significant neoliberal policyadjustments have occurred.

To establish why neoliberalisms and neoliberalization processeshave been and, despite their respective crisis tendencies, remain soinfluential on a world scale, we must not only relate them todomestic and international politics but also locate them within theoverall logic of capital. To do this we can draw on Marx’s distinc-tion between the use-value and exchange-value aspects of thecommodity, and his subsequent elaboration of analogous categorieswithin the capital relation more generally. Thus the worker is aconcrete individual with specific skills, knowledge, and creativity andan abstract unit of labour power substitutable by other such units(or, indeed, other factors of production); the wage is a source ofdemand and a cost of production; money functions as a ‘national’currency circulating within a monetary bloc and as an internationalcurrency exchangeable against other currencies; productive capitalis a more or less concrete stock of time- and place-specific assetsundergoing valorization and abstract value in motion (notably asrealized profits available for re-investment); land is a gift of natureand a monopolistic claim on revenues; knowledge circulates as partof the intellectual commons and can also be subject to intellectualproperty rights as Tyfield (this volume) illustrates in an earlierchapter; and so forth. For each of these social forms, neoliberalismprivileges its exchange-value over its use-value moment, empha-sizing cost reduction and cost recovery, and subjecting all economic


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activities to demands to meet or exceed the prevailing world marketaverage rate of profit. Such one-sided treatment can only disguise,but not suppress, the significance of the use-value aspect of theserelations. Eventually this aspect reasserts its importance to the over-all reproduction of the capital relation (and social life moregenerally) and, in the absence of appropriate ways to handle thecontradictions between use value and exchange value, crises emergethat effect a forcible re-imposition of the unity of the capitalrelation.

Neoliberalism tends to judge all economic activities in terms ofthe prevailing global average rate of profit and all social activities interms of their contribution to capital accumulation. For it is capitalin its exchange-value aspect that is most easily disembedded frombroader socio-spatial-temporal contexts and thereby freed to ‘flow’relatively smoothly through space-time. Unsurprisingly, then, thepursuit of neoliberalism tends to privilege hypermobile financialcapital at the expense of capitals that are embedded in broader setsof social relations and/or that must be valorized in particular timesand places (see Shaoul, this volume). It also encourages theextension of profit-oriented, market-mediated accumulation intospaces where it was previously absent. It is therefore associated withtime-space compression as well as time-space distantiation.

One way to make sense of the emergent dynamic and continuingimpact of neoliberalism is through the concept of ‘ecologicaldominance’. Developed in the biological sciences, it refers to therelative dominance of different species in an ecological system.Transferred to the social field, it signifies the relative dominance ofone subsystem or institutional order within a self-organizing ecologyof subsystems or institutional orders. This can be explored in termsof the extent to which the development of one societal subsystem orinstitutionalized order has a bigger impact on the development ofother subsystems or orders than they have on it. It is important inthe context of capitalist social formations to note that thisencompasses the impact of crisis tendencies and crises as well as theimpact of relatively successful performance – especially as the latteris usually confined to specific times and places and involves thedisplacement and/or deferral of problems elsewhere and/or into thefuture. This overall criterion can be re-specified in terms of sevenaspects of the social world, each of which is relevant to the capacityof one subsystem or institutional order (such as the market economy,


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the legal system, political authority, education, science, and so on) tobecome ecologically dominant (see Table 9.1).

All seven aspects vary across social orders but they are closelyassociated with the logic of capitalism, especially when this logic isgeneralized to a world scale on neoliberal, finance-led lines. Indeed,I argue that the profit-oriented, market-mediated logic of capitalaccumulation (including its extra-economic supports), operating on aworld scale, can shape the development of other ensembles of socialaction more powerfully than they can shape it. This includes theimpact of both positive and negative externalities – that is, beneficialand harmful effects. It must be emphasized here that ecologicaldominance does not involve an automatic, one-sided relation of

domination in which the economy always and everywhere imposes itslogic on other systems. There is no ‘last instance’ in relations ofecological dominance (Morin 1980: 44). It is always differential,relational, contingent, and reversible. Hence, rather than being anecessary feature of capitalist social relations from their firstemergence onwards, ecological dominance is one of their contingentfeatures. It is stronger when capitalist relations are disembeddedfrom other social relations and institutional orders and the logic ofcapital can therefore operate relatively unhindered by its overlapwith these other social ensembles. Yet excessive disembedding ofmarket transactions – especially in land, labour and money – canprovoke economic and social crises and, in response, social demandsfor their re-embedding and re-regulation to ensure structuredcoherence and social cohesion (cf. Polanyi 1944).

Let me now comment on the connection between the sevenaspects of societal relations conducive to ecological dominance andthe finance-led, neoliberal form of organizing the social relations ofproduction.1 First, as the capitalist economy becomes increasinglydisembedded from other institutional orders, there is a tendency forthe direct impact of external pressures on the organization andperformance of the market economy to diminish. Instead internalcompetition tends to become the most powerful driver of accumu-lation. This occurs because external pressures are mediatedincreasingly through the competition among individual capitals toprofit from such pressures and/or to move capital elsewhere(including in liquid assets) to escape them. Furthermore, as financialcapital tends to control the most liquid, abstract and generalizedexpression of capital, it is better placed to respond to short-term


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Table 9.1. Factors relevant to ecological dominance in the relationsamong societal systems

Internal • Scope for continuous self-transformation becauseinternal competitive pressures are more important thanexternal adaptive pressures in the dynamic of a givensystem

• Extent of internal structural and operationalcomplexity and the resulting scope for spontaneousself-adaptation in the face of perturbation ordisruption (regardless of the external or internal originof adaptive pressures)

• Capacity to distantiate and/or compress itsoperations in time and space (i.e. to engage in time-space distantiation and/or time-space compression)to exploit the widest possible range of opportunitiesfor self-reproduction

Transversal • Capacity to displace its internal contradictions,paradoxes and dilemmas onto other systems, into theenvironment, or defer them into the future

• Capacity to redesign other systems and shape theirevolution by context steering (especially throughorganizations that have a primary functionalorientation and also offer a meeting space for otherfunctional systems) and/or constitutional (re)design

External • Extent to which other actors accept its operations ascentral to societal reproduction and orient theiroperations in this light (e.g. integrating its needs intotheir own decision-making premises and programmes asnaturalized constraints). Organizations also have a keyrole here through their ability to react to the irritationsand expectations of several functional systems

• Extent to which a given system is the main source ofexternal adaptive pressure on other systems (e.g.through the impact of recurrent system failures,worsening social exclusion, and positive feedbackeffects) and/or is more important than theirrespective internal pressures for system development

Source: Modified version of Jessop (2007).

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profit opportunities and threats (Bryan and Rafferty 2006). How-ever, as Minsky (1982) pointed out, stability within capitalism leadsto instability; thus this capacity of financial capital contains the seedsof its eventual financial collapse.

Second, the anarchy of market forces and the dual role of theprice mechanism in reallocating capital and enabling learning andreflexivity on the part of economic actors mean that the profit-oriented, market-mediated economy tends, other things being equal,to have greater (but by no means infinite) resilience in the face ofexogenous disturbances. It is mainly through flexible forms ofcompetition and the resulting scope for local variation that capital asa social relation can adapt to external perturbations. Indeed,adopting a different approach to the same question, Peck andTickell (2002) argue that there are several local forms of neo-liberalism, neglect of which leads observers to underestimate itssurvival power.

Third, and relatedly, because money can dissociate economictransactions in time and place, capital can extend its operations intime and space (distantiation) and/or intensify them in these regards(compression). The mutual reinforcement of these processesfacilitates real-time integration in and across the world market andgives capital greater flexibility to reorganize its activities.

Fourth, through these and other mechanisms, the expandedreproduction of capital tends to weaken the structural constraintsassociated with other societal subsystems or institutional ordersand/or to resist their agents’ efforts to control the economy. Capitalcan do this up to a point through its internal operations in time(discounting, insurance, risk management, futures, derivatives,hedge funds, et cetera) or space (capital flight, relocation, outsourcingabroad, claims to extra-territoriality, et cetera) as well as by extendingthe logic of exchange value into other systems, the public sphere,and everyday life. This increases the ‘indifference’ of the profit-oriented, market-mediated economy to its environment (seeLohmann 1991, and this volume). Such indifference is very typicalof international finance, which is more tightly integrated – forbetter or, more recently, worse – on a global scale than other formsof capital. Nonetheless finance capital (let alone capital in general)cannot escape its long-term material dependence on the principle ofeconomic determination in the first instance: wealth must first beproduced before it can be distributed or, in terms more appropriate


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to capitalism, surplus value must be produced before it can berealized and distributed. Nor can it escape its material dependenceon the existence and performance of other institutional orders(such as protection of property rights and contracts, basiceducation, legislation and its enforcement, scientific discoveries).And, of course, it always remains the prisoner of its own crisistendencies. Thus the overaccumulation of financial capital enabledby its dissociation from, and indifference to, other moments of thecapital relation eventually led to the bursting of financial bubblesaround the world. More generally, as the world market grows inthe shadow of the ecological dominance of neoliberalism, all itscontradictions are generalized and come into play.

Fifth, compared to the species involved in natural evolution,social agents have much stronger capacities to redesign theirenvironment and their evolutionary potential, and even to changemodes of social evolution (Willke 1997). In addition to the immenseinnovative capacities within the market economy, with all itsimplications for social evolution, we should also note the scope thatexists for redesigning the rules that govern the market economy andthe ways in which it is embedded in the wider social formations.The four varieties of neoliberalization all involve efforts to redesignthe framework within which struggles around competition andaccumulation occur, modifying thereby the capacity for exchangevalue to become ecologically dominant. Indeed, whereas theChicago School tends towards blind faith in markets, the Ordo-liberals insist on a robust regulatory framework and measures tocompensate for market failure.

Sixth, the primacy of accumulation over other axial principles ofsocietalization (such as national security, ‘racial’ supremacy,religious fundamentalism, adherence to the rule of law, or socialsolidarity) is related to the power of the respective self-descriptionsand social values of these principles, especially as articulated andrepresented in the public sphere and, above all, the mass media inthe course of struggles for political, intellectual, and moralleadership (see Miller, this volume). The influence of such self-descriptions and values in everyday language and the mass mediais seen in the role of economic considerations in choosing amongalternatives in a non-economic institutional or organizationalcontext – for example, in designing school curricula, choosingresearch topics, or deciding what is newsworthy. Struggles over


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competing axial principles will be easier to win where the corres-ponding institutional order is organized, like the world economy,on the basis of centre–periphery relations rather than a multitudeof essentially similar segmented units, such as schools or families(Luhmann 1996). Neoliberalism illustrates this in terms of thedominant role of financial capital over other fractions of capital ona global scale and of hegemony of the USA as an imperial powerthat is far more than first among equals in the inter-state system.Both played key roles in promoting neoliberalism and margin-alizing opposition from peripheral economic forces and smaller, lesspowerful states. Hegemonic struggle is also easier where socialforces that cross-cut functional systems seek to coordinate theirrespective operations via positive or negative coordination. A powerbloc organized through parallel power networks provides animportant mechanism of system and social integration in thisregard (Poulantzas 1978; Baecker 2001).

Seventh, as a correlate of the first factor, an ecologically domi-nant system is the primary source of external adaptive pressure onother systems. So, as the world market grows more complex, theenvironment of other institutional orders, institutions, organizationsand networks becomes more complex too, forcing them to increasetheir internal complexity to remain operationally autonomous.Moreover, as Wagner (2006) notes, where the failures of one system(or order) have a disproportionate impact on other systems (ororders), this also reinforces its ecological dominance. This holds notonly for the impact of market failures on resources and revenuesrequired by other systems, but also for the more general socialrepercussions of economic crises in an integrated world market.This is very clear in the dynamics of the current world recession(or, perhaps, imminent depression) in so far as it is the failures ofneoliberalism more than its previous limited successes that areforcing the most significant adaptations elsewhere within socialformations up to and including world society.

How Neoliberal Globalization Favoured Capital’s EcologicalDominance

Marx argued that the world market is the most developed mode ofexistence of the integration of abstract labour with the value form.Here production is posited as a complex totality but, at the same


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time, all contradictions come into play (Marx 1973: 227). In contrastto crude versions of world system theory, this does not entail a singlelogic operating on a global scale with singular directionality. Insteadwe find a variegated world market with an emergent logic based oninteraction among different ‘varieties of capitalism’ and other formsof economic organization as mediated through shifts in the balanceof forces (see Birch and Mykhnenko, this volume). As the worldmarket has operated ever more as an integrated system in real timeunder the ecological dominance of neoliberalism, Marx’s analysisbecomes ever more relevant.

The always tendential ecological dominance of capitalism is closelyrelated to how far its internal competition, internal complexity andloose coupling, scope for self-reorganization, ability to engage intime-space distantiation and compression, capacity to displace anddefer problems, and hegemonic aptitudes are freed from frictions andobstacles established by other societal systems. The most significantsource of such friction has been the Westphalian inter-state systemwith its mutually exclusive sovereign territorial states and, at least forthe most powerful states, ability to set boundaries to the full realiza-tion of the logic of capital accumulation on a world scale. Globaliza-tion, especially in its neoliberal form, has had a key role in reducingthe frictions introduced by national ‘power containers’ or analogousborders, and thereby advances the relative ecological dominance ofthe world market. It reinforces the dominance of exchange valuewithin economic organization and frees money capital (the mostabstract expression of the capital relation) to move at will in searchof profit world-wide (Jessop 2002). Liberalization, deregulation,privatization, expansion of market proxies in the residual state sector,internationalization, and the lowering of direct taxes all boost thescope for internal variation and selection in the profit-oriented,market-mediated economy. Along with commitment to shareholdervalue, this benefits hypermobile financial capital, reinforcing its com-petitiveness and ratcheting up its ability to displace and deferproblems onto other economic actors and interests, other systems,and the natural environment (see Shaoul; Lohmann, this volume).Yet, as Marx foresaw, this also enhances the scope for the contra-dictions and dilemmas of a relatively unfettered (or disembedded)capitalism to shape the performance of other systems, underminingcrucial extra-economic conditions for accumulation.

Even after the global neoliberal highpoint has passed and all the


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contradictions of neoliberalism have come into play, neoliberal logicstill dominates world society through the path-dependent effects ofpolicies, strategies, and structural shifts that occurred before orduring the highpoint and the continuing attempts to impose thatlogic. This is particularly (but by no means exclusively) associatedwith the weight of the American economy in the world market and,as noted above, the ecological dominance of the world marketwithin world society as a whole.

Recognizing the significance of neoliberalism in these respectsindicates the need for a change in perspective on the place of theUSA in the world market and world society. Often discussed as aneconomic superpower and/or as a global hegemon, the USA nolonger enjoys the economic domination and multiple hegemoniesthat it exercised in the immediate post-war economic order. Itsrulers were willing to sacrifice immediate economic interests forlong-term global advantage by enabling economic rivals to join,directly or indirectly, an expanding international economy. In thelast two decades the US has been losing economic and politicaldominance at different rates and in different ways relative to theEuropean Union, Brazil, Russia, India, China and South Africa.This can be seen in the US fiscal, budgetary, and trade deficits andthe re-emergence of a multi-polar international order. It nonethelessremains ecologically dominant by virtue of its overall weight in theworld market and, more significantly, because of the many dispro-portions with which it is associated on a world scale. This producesa pathological co-dependence of the US and other economies. Thisis especially clear in the structural coupling of the American andChinese economies, which supported the unsustainable growth ofproduction in China and consumption in the United States. Amongthe most obvious indicators of the ecological dominance of theAmerican economy are the positive feedback effects of the growinginternational trade and financial imbalances between the UnitedStates, China and Japan, as well as their implications for environ-mental destruction through the unsustainable growth of productionin China and consumption in the United States. Accordingly thecrisis tendencies and failures of the US economy still cause moreproblems for other economies than they can cause for it.

To this we must add the paradox that the capacity of US capitaland state to displace and defer the contradictions of neoliberalismonto other spaces and times at relatively little cost to themselves (as


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opposed to workers and the wider population) has reached its limits.This is reflected in ‘blowback’ (using Chalmers Johnson’s term,2000) in the form of neoliberal crisis at home, with, as is evident,massive potential to damage the growth dynamic of the USeconomy too. Elsewhere we are witnessing an intensification offinancial mercantilism, ‘competitive austerity’ policies, trade wars,and the deepening of imperialist rivalries. It is difficult to foreseehow the necessary adjustments can be made without a major globalcrisis that will forcibly re-impose proportionalities in the globalcircuit of capital that have proved impossible to resolve politically.The credit crunch and resulting debt deflation have the potential topromote this re-equilibration but the capacity of neoliberal forces todefine the current crisis as one within neoliberal, finance-ledaccumulation has limited this process to date, despite a worseningconjuncture in the ‘real economy’.

It is tempting, now that the financial and asset bubbles haveburst, to focus on capitalism’s long-term future and ignore theirrationality of unregulated finance-led accumulation (see Shaoul,this volume). Yet this would involve overlooking the continued path-dependent effects of that irrationality in the overall logic of capital.Compared to the role of finance in the structured coherence ofFordism and in the prospective coherence of a more productivist,post-Fordist knowledge-based economy (see Tyfield, this volume),the ecological dominance of neoliberal financialization continues toundermine the structured coherence and spatio-temporal fixes ofregimes based on the primacy of productive capital. The destructiveimpact of financialization in this regard is reinforced through theneoliberal approach to accumulation through dispossession (especiallythe politically licensed plundering of public assets and the intellec-tual commons – see Lohmann, this volume) and the dynamic ofuneven development (enabling financial capital to move on whenthe disastrous effects of financialization weaken those productivecapitals that have to be valorized in particular times and places). Itis also supported by the markets opened for the ‘symbionts andparasites’ of ecologically dominant capital fractions, which havetheir own forms of uneven development on local, regional, nationaland global scales.


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Conclusions

As Wohlgemuth suggests, neoliberalism is currently recognized as apotentially threatening spectre or zombie not only by old (socialdemocratic) Europe but also by many other powers, major andminor. In part this is because neoliberalism has rarely been realizedin the form envisaged by its first advocates – the Ordo-liberals –because of the usual slippage between theoretical paradigms andpolicy implementation, the greater influence of the Chicago Schoolfrom the 1970s, and, most significantly, the dominance of trans-national finance capital interests in economic and political strategyfollowing the crisis of post-war modes of growth. Now there is morerecognition of the need for close regulation plus flanking andsupporting mechanisms to ensure that market failures and the effectsof ‘blow-back’ neoliberalism do not undermine the market economyand threaten the cohesion of market society. Nonetheless lessregulated variants of neoliberalism seem to have survived in theAnglo-American heartlands thanks to the continuing domination offinance-led accumulation. The explanation for these differencesmust be found in the relative balance of forces in different ‘varietiesof capitalism’ within the world market and their associated stateforms at different scales. There is certainly a growing antagonismbetween demands for re-industrialization, a Green New Deal, andpromotion of the globalizing knowledge-based economy as thematerial and ideological expression of productive capital and thelogic of a finance-led, shareholder-value-oriented process of capitalaccumulation that is more concerned to re-capitalize the financialinstitutions and restore the finance-led accumulation regime.

Even if neoliberalism is less pervasive overall, ecological dominanceis not confined to success but also includes the impact of failure.Accordingly, it will prove hard to reverse the legacies of ‘roll-back’neoliberalism on a world scale and/or to tame it on the same scale

through the flanking and supporting mechanisms adopted in roll-forward neoliberalism. It is more worrying that the ecological domi-nance of neoliberalism may be ended by the ecological dominance ofthe natural environment in a period of growing environmental crisis.Whether or not the spectre of neoliberalism can be exorcised is anopen question; more fearsome is the spectre of environmental crisisand here there are disheartening signs that all the powers of Europeand beyond have not yet allied decisively to destroy it.


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Note

1 Analogous forms of ecological dominance can be identified in fractalfashion in the relations among different fractions or forms of capital anddifferent varieties of capitalism in the world market, and even at moremicro-levels of analysis (such as the relative primacy of calculation interms of production criteria, financial returns, and marketing in theorganization of the activities of a given enterprise and its output).

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Left Review, Series II, No. 52, pp. 5–32.Streeck, W. (2009) Re-Forming Capitalism: Institutional Change in the German

Political Economy, Oxford University Press, Oxford.Veltmeyer, H., Petras, J. and Vieux, S. (eds) (1997) Neoliberalism and Class

Conflict in Latin America, Palgrave, Basingstoke.Wagner, T. (2006) ‘Funktionale Differenzierung und ein ökonomischer

Primat?’, available at <http://www.sozialarbeit.ch/dokumente/oekonomischer_ primat.pdf>, (30 July 2009).

Willke, H. (1997) Die Supervision des Staates, Suhrkamp, Frankfurt.Wohlgemuth, M. (2007) ‘Das Gespenst des Neoliberalismus’, available at

<http://wirtschaftlichefreiheit.de/wordpress/?p=69> (30 July 2009).


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The (Re)birth of a New Kind of Politics

This chapter is about a politics of doing it yourself (DIY), or moreaccurately it is about doing it ourselves, collectively. There isnothing new about any of these ideas, but what I want to explore iswhat the shift towards DIY politics that has been quietly gatheringforce over the last few decades means for changing our world – and,in relation to this book, what a DIY politics means for interveningin the continuing story of the rise and fall (and rise again) ofneoliberalism. It is DIY because it doesn’t wait for political leaders,party bureaucracies or elite summits to deliver social change, nordoes it believe that they have any legitimacy or are able to do so. Itbelieves that given the current severity and multiplicity of crises inour neoliberalized world, rapid change needs to occur immediately,and that groups and individuals at the grassroots have the requisiteskills and abilities to effect substantial change – as Routledge alsoillustrates in the following chapter of this book. Key to DIY politicsis an explosive combination of making protest part of everyday life,but also making life into workable alternatives for a wider socialgood.

The spaces opened up during these events are necessarily fraughtwith tensions, disagreements and conflict, often reflecting the well-worn divisions on the Left between majoritarian and minoritarianpolitics – or the horizontals and the verticals. The emergence of themovement of movements represented a clear tension and desire fora break with traditional models of Left political organizing, arejection of ideological dogma in favour of fluid, creative and moreshifting political affiliations that could surprise opponents, as well asparticipants. It rejected well-worn routes to political change –

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central committees, organized marches and the ballot box. Thisnewer kind of politics takes on a less clearly defined enemy andembraces no set demands nor fixed programmes for state power,instead seeking to reformulate the future in the here and now. It isthe revolution of everyday life writ large (Vaneigem 1979).

In this chapter, I draw on my own experiences within this recenthistory of the movement of movements, including organizing campsat the G8 and the camp for climate action, popular educationgrassroots activity with a group called Trapese, and helping run anautonomous social centre in Leeds called the Common Place.1

Given the recent crisis of capitalism, it’s a good time to reflectcritically on some wider meanings and instructive lessons for thiskind of political organizing. The historic meeting of the G20 in April2009 showed how the global elite are committed to disastrouslyreviving the old high-output, high-growth economy rather thanmaking the necessary shift to a sustainable, low-growth, partici-patory and carbon-neutral global society. This is a huge failure anda huge opportunity. It shows that the movement of movements wasright ten years ago at Seattle, but the movement was too young ortoo weak, or the ideas too much against the times, to have theimpact it desired. What has been reconfirmed is that the global elitehave no interest in the goals of social movements for greaterequality, sustainability and freedom, and that they remain anobstacle rather than a vehicle to realizing them. The triple climatic,energetic and financial crises that seem to engulf us have opened upa junction point and an amazing opportunity.

Much of what motivates me in writing this and stating someprinciples is that the progressive Left has been so weak recently inits ability to justify, demand and argue publicly for the imple-mentation of our utopias. And the far Right will only too willinglystep in here if progressives do not (see Birch and Tickell, thisvolume). In the cracks that have opened up in the capitalist ordersince the financial crisis of 2007–8 we now need (as many of ushave recognized for years) to make our alternatives seem feasibleand sensible, not crazy and left-field. In this spirit of reflection,debate and renewal for progressive Left politics, I offer sevenprinciples which can contribute to a strategic appraisal of whatthese movements, groups and initiatives have achieved, and canachieve, in terms of promoting radical and grassroots socialchange.

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DIY politics

DIY politics has been a constant presence within human societies.Much philosophical writing from libertarian and anarchist traditionshas shown that people can manage themselves, freely andcooperatively, without the need for government. The nineteenth-century Russian anarchist and geographer Peter Kropotkin (1972),for example, detailed at great length how mutual aid has been acornerstone of human life without which we would not havesurvived, while Harold Barclay (1990) has shown how people havelong thrived without government. Such sentiments tap into deephistorical currents which have resisted shifts to centralized, institu-tional forms of government. They link to a range of movementsstruggling for greater political autonomy, liberty and self valorizationsuch as the Diggers, the great slave rebellions, and the civil rights,peace and feminist movements. While many radical movementshave been deeply tainted by associations with the failed socialexperiments of the Soviet era, this desire for self-management goesfar beyond state-imposed experiments. In fact, the key to under-standing DIY politics is to regard it as an ordinary, everyday affair.Most people’s quibble would not be whether people can managetheir own lives, but whether, given the complexities and problems ofour current society, it seems a likely or appealing option right now.Addressing this concern is the core of this chapter.

Notwithstanding the deep roots of doing it yourself, recentstrands of particularly creative and confrontational DIY politics canbe traced to the European situationist (Debord 1983) and auto-nomist movements of the 1960s and 1970s (Katsiaficas 2004), theDIY movements of the 1990s drawing on the energies of Earth First!and the free party, the rave scene (McKay 1998) and the morerecent emergence of anti-globalization activism, often inflected witha strong anti-capitalist sentiment (see Shaoul, this volume). The term‘movement of movements’ is often used to describe this latter turn, avibrant hydra-like disorganization with no clear centre, definedthrough the idea of ‘one no, many yeses’, and which has networkedgroups across the world and mobilized large international days ofaction (Mertes 2004; Notes from Nowhere 2003; Kingsnorth 2004;see also Routledge, this volume).

The 1999 World Trade Organization demonstrations in Seattlebecame a sacred birthing ground for this movement, and


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subsequent mobilizations against summits in London, Bonn,Prague, Ottawa, Cancun, Gleneagles and Evian, to name a few,helped the movement’s ideas and tactics to develop. Such eventsreflect a unique combination of being against corporate globaliza-tion and the brutalism of the 1990s neoliberal Washington Consen-sus (see Birch and Mykhnenko; van Waeyenberge, this volume),while showing a passion for social and ecological justice. It insistson the need to build a new internationalism based on globalNorth–South solidarities taking inspiration from examples such asthe 1994 Zapatista uprising, the Argentinean uprising in the wakeof the 2001 crisis, Brazil’s Landless Peasant Movement and ViaCampesina. Networks such as People’s Global Action haveemerged to give a voice to this ‘movement of movements’ and toquestion the legitimacy of sovereign nation states and self-appointedelite international institutions. Many contemporary examples reflectthe continuing energy of self-organized DIY politics, such as theprotests in Greece and Iceland in late 2008 and early 2009, thenetwork ‘We Won’t Pay for Their Crisis’, the wave of supermarketsit-ins and ‘bossnappings’ in France during 2009, and factoryoccupations by sacked workers such as those at Visteon in the UKin April 2009.

Detours in DIY Politics: Autonomous Social Centres in the UK

Before I introduce the principles, I want to undertake a brief detourinto one aspect of this DIY politics that I have been involved in: theUK social centres movement. Since the late 1990s the UK has seenthe growth of a network of self-managed spaces and collectives. Theimportance of self-managed autonomous spaces for resistance andcreating alternatives to capitalism cannot be understated. They havebeen key in directly confronting the logic of capital by reclaimingprivate property and opening it back up to the public as non-profit,non-commercial zones. They have created spaces in which self-organization, solidarity and mutual aid can flourish. Finally, theyhave become spaces for uniting social movements, strengtheninglocal activism and thinking ‘strategically’.

I have covered in detail the particular story of social centres inthe UK elsewhere with others (see Hodkinson and Chatterton 2006).But for the purposes of this article it is worth restating some key

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points. Social centres have developed through a number of waves,emerging first under the guise of anarchist Autonomy Clubs of the1980s inspired by punk, anti-fascist and Claimants Unions activists.The mid-1990s saw a wave of squatted spaces emerge inspired bythe UK free party and anti-roads protest camp culture, while thelate 1990s saw many activists involved in anti-global and moreconscious anti-capitalist activism, through which a desire emergedfor more permanent activist bases or hubs for organizing. It was notuntil the early 2000s, after activists visited and engaged with thedaily militancy and innovations of the occupied centri sociali in Italy,that the idea migrated to the UK, inspiring a whole wave of newcentres.

The current network of social centres in the UK, numbering overa dozen, are bases for a range of radical, anti-authoritarian politicalgroups such as No Borders and the Camp for Climate Action andhave now become a recognized part of the UK activist infrastructure,hosting tours and national meetings of activists.2 They haveattempted to create welcoming, professional spaces to avoid associa-tions with squats and attract a broader audience. Typically socialcentres contain a mix of public talks, film screenings, reading areas,vegan cafés, bar and gig spaces, food-growing areas, art spaces, openaccess computers, free libraries, language classes for refugees, freeschools and classes, and free meeting space. Some have set upworkers’ co-operatives to run the buildings and most are run byregular open assembly meetings using consensus.

While they are far from perfect (problems include genderimbalances, creeping professionalization and levels of bureaucracy,overwork, lack of sustainability, inclusion, et cetera), what I havefound most instructive about social centres from my experienceswith them is that they represent a huge outpouring and confidencein our ability to do it ourselves – to manage our own infrastructuresbased on different, largely non-capitalist, values. They recognize theimportance of establishing stable bases for developing and testingout alternatives. In the light of the current financial crisis, theirpotential benefits have only been magnified in terms of providingcapacity for resilient communities that can organize and educatethemselves, provide relevant services and bring people together inopen, non-corporate spaces. In our times of plenty in the West(which may be drawing to a close), social centres have been quietlypreparing and teaching these lessons.


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Seven Principles for a Politics to Change our World

Value self-management, mutual aid and collective workingSelf-management, collectivity and mutual aid have become coremotives of the kinds of DIY politics promoted over the last fewyears. Its value today for contemporary grassroots political organ-izing is how to build in the ashes of the now discredited neoliberalproject which purposefully attempted to erode a sense that collec-tivity and mutual aid were worthy aspirations for any society (that‘there is no such thing as society, only individuals and families’ asThatcher said).

We are not talking about self-management in the liberal-individual legalistic sense embedded in enlightenment values whereindividuals are cut adrift from responsibility, and acquire a legalright to freely maximize profits in the market. Rather, it is self-management that builds times and spaces to bring individualstogether, undermining the logic of private ownership and recog-nizing that our individual needs are actually met collectively.Collective self-management builds a common ownership andmanagement of spaces and services and erodes the capitalist logicof accumulation for individual gain. It urges us to recreate andreclaim ‘the commons’ in its many forms: material, discursive andknowledge-based resources (see de Angelis 2007; Midnight Notes1991; see also Tyfield; Lohmann, this volume).

Self-management and mutual aid are realized through our dailyencounters and activities with others. John Holloway (2010) stresses animportant difference here between the externally imposed abstract,wage labour, and more self-determined useful doing. It is throughuseful doing, as opposed to work, that we struggle against the imposi-tion of capital and capitalist work geared towards generating surplusvalue and the exchange of commodities. Working collectively,undertaking useful, life-affirming activity allows us to revalue worknot just as a means of securing employment, but to developmeaningful relationships with others.

A priority is to find ways out of demoralizing and low-wage jobsand develop ways of living which meet our own needs, not those ofthe money economy. In collective work, combining manual andintellectual labour allows us to appreciate the importance ofstimulating our minds and ideas, but also learning practical skills to

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enable greater self-reliance. Mutual aid, developing an ethic of carefor others and creating voluntaristic and free support structures, isboth individually empowering and also provides incredibly usefulsocial networks. It is not about waiting for politicians, planners, orlocal business elites and the media to tell us what will happen. Self-management is embedded in a belief that we can do it ourselves;that given the right resources and circumstances people actuallyhave the necessary skills and ideas. It is about debunking the role ofthe expert – the architect, the planner, the teacher, the politician.Clearly, much legwork is needed if people are to gain the self-beliefthat they can manage their own lives.

Many micro examples are flourishing here from self-managedcommunities and eco-villages, workers’ cooperatives, syndicalistunions, self-build housing, workplace organizing and strikes. Examplesrange from Mondragon in the Basque country, involving severalthousand members and networks of shops and banks through tosmall cooperatives of a few people who manage their own workplace.Carlsson (2008) has highlighted the ‘nowtopians’ – the dumpsterdivers, critical mass cyclists and backyard biofuel engineers who arebuilding the future right here through useful doing outside the logic ofcapital (see Routledge, this volume). We are likely to see an increasein this community-directed resourcefulness as people begin to re-assemble the scraps of the neoliberal economy.

Be committed to participatory organizing and direct democracyA significant critique of representative democracy exists within DIYpolitics, outing it as no more than a liberal oligarchy where the stateguarantees the reproduction of the existing social and economicorder through its legal monopoly on violence. Direct democracy, incontrast, is based upon self-governance which facilitates the par-ticipation of all. At times it is a slow and difficult process, butBenjamin Barber (1984: 115) described it as strong democracy, asopposed to the weak democracy of most liberal states:

Strong democracy is a distinctly modern form of participatory democ-racy. It rests on the idea of a self-governing community of citizens whoare united less by homogeneous interests than by civic education andwho are made capable of common purpose and mutual action by virtueof their civic attitudes and participatory institutions rather than theiraltruism or their good nature.


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DIY politics is an expression of this strong democracy which seeksa reinvention and reinvigoration of political process, decision makingand communication through experimentation with particularorganizational principles such as face-to-face democracy, decentral-ization and consensus (Seeds for Change 2003; Starhawk 1988).These are flexible tools and creative processes acting as buildingblocks for resistance. They value the input of all comers and attemptto reinvent everyday social relations and encourage participants tocommunicate more consensually. They have drawn on tools fordirect democracy such as the use of affinity groups (action or organ-ization in small groups sharing common goals), spokes-councils (afederated structure of the previous groups, offering proposals andmaking decisions at a wider level), and consensus decision-makingtechniques (a rejection of decision making by majority voting,hierarchy and committee) (see Routledge, this volume). Rather thantrying to impose the will of the majority, tools for direct democracyattempt to highlight, acknowledge and deal with differences.

Many anarchist and autonomous groups have, rightly so, beenwary of the idea of organization. The traditional Left is oftencharacterized, and with good reason, as containing dead-endbureaucracies, ineffective party and union officials, declarations andmarches, all leading to questionable amounts of empowerment,action and change. Instead, direct democracy values flexibility andinnovation, and seeks constant renegotiation and reaffirmationrather than dogmatic adherence to fixed leadership and hierarchicalstructures. These characteristics can, given the right attention, createa certain robustness in the face of authority and surveillance, andlean, flexible structures allow quick movement as events happen. Akey aspect is biodegradability, where groups compost back into thesubsoil of political activism, often reforming anew. This renewal andregeneration is a healthy part of the lifecycle of protest and dissent,guarding against hierarchies and rejuvenating energies. Again, giventhe right commitment, experimentation in organizational formallows opportunities to evaluate, reflect and change, and the partici-patory nature of this process means that groups evolve to reflect theneeds of participants.

Clearly there are limits here too. The temporary nature ofpolitical activity and groupings can also erode effectiveness. The keyis to build capacity for sustained action in ways that also guardagainst hierarchies, cults of leadership and disempowerment. Other

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challenges exist such as the difficulty of shifting from passiveconsumers to active participants. The dominance of paid workmakes most people sceptical of the idea of voluntaristic participationand outside pressures of debt, work and family prohibit many fromgetting involved. Direct democracy is also an experiment in groupself-discipline – how do participants (re)regulate themselves andothers, relying not on values in our individual capitalist lives, but onthose to which we aspire in our collective non-capitalist lives? Manypeople are, understandably, wary of self-policing, but recognition ofcollectively agreed norms is essential for the health and continuationof groups.

Build infrastructure that meets needs without increasingdependencyBeyond the temporary autonomous zone (Bey 1991), communitiesof resistance need to build parallel infrastructures, which genuinelyrepresent non-capitalist values and are embedded in activities thatrepresent the needs of a locality. Many aspects can be envisagedhere – community bakeries, free shops, food programmes, skillexchanges and local trading systems, local currencies, seed swaps,printing presses, home schooling, local history walks, retraining andso on. A key aspect is to build this infrastructure in ways that buildsa commons, where access is unmediated by the logic of work andcapital. As welfare state infrastructure declines, outlined earlier byMacLeavy (this volume), and are made into new income sources forthe private sector, what kinds of infrastructure can, and should, bebuilt in its place? Can these meet our desires and needs right hereand now and what are the consequences of building these spaces?Key issues include capacity for building and maintaining infra-structure, making wider links and strategic alliances with groups,sharing resources, managing conflicts, and securing resources. Ofparticular importance is the need to embed activity that responds toactual needs, empowering without creating new dependency cultures.

One of the most difficult elements to resist is the seduction ofsocial enterprise and the rise of enterprise culture at the grassroots.One concern which Mayer (2003) raises is the extent to whichactivist projects are becoming cornered by modes of neoliberalgovernance based around mobilizing ‘social capital’, becomingentrepreneurial and chasing grants to maintain their activities. Thisis compounded by the fact that the decline of generous welfare


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benefit regimes which supported ‘dole autonomy’ (non-marketlabour) has shifted activists into professionalizing and monetarizingformerly more confrontational political activity. Some activists havefound sums of money, for example, to provide activities and servicesfor the most vulnerable groups in society such as the homeless orasylum seekers/refugees. One unintended, very important and oftenoverlooked aspect of this is that it can create a mini local welfarestate, unburdening the local state of statutory responsibilities forthese vulnerable groups, without any shifts in the allocation of taxes.The local state is then free to retreat to its core functions of pro-moting business and inward investment. In such a context, activistsneed to organize and make the case that if they are going to take onselected functions of the local state then the ownership of publicassets and the payment of taxes have to become renewed arenas forpolitical contestation.

Within such neoliberal governance (Brenner and Theodore 2002;see Jessop, this volume), these groups need to consider what kind ofrelationship, if any, should be maintained with the state. Strategi-cally, is it the right thing to do to opt out and promote self-manage-ment? It is worth keeping in mind that poorly conceived andimplemented forms of service provision can be as damaging asdependence on external ones if they are temporary and vulnerableto closure by the state. Nevertheless, all groups need to consider howto deal with the local state as it seeks to discipline, neoliberalize anddepoliticize community activism.

Embrace the impure, messy politics of the possibleOne of the most liberating aspects of recent political organizing isthat participants are invited to engage more directly, experimentallyand creatively with what social change means. When Holloway andPelaez (1998) talked about ‘reinventing the revolution’ they werereferring to a more participatory process – a revolution as theZapatistas say, ‘that is made by walking’. The very idea of a revolu-tion, then, is reconceptualized in a number of ways at a moremundane level as rupture through a million bee stings rather thana great dagger blow (Holloway 2010); through ordinary peopledoing extraordinary things rather than heroic feats by a vanguardistparty.

On this journey, participants aim to self-critique their ownpractice and impacts, and seem to be genuinely open to dialogue

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rather than self-congratulation. This kind of dialogue creates ‘thirdspaces’ (Routledge 1996) between those who self-identify as activistsand wider publics, creating new and unforeseen political identities.In this messy world of the possible, the process is as important as theoutcome of resistance; the journey is an end in itself (Wright 2006).On the terrain opened up by the failure of state-based and ‘actuallyexisting socialism’, DIY politics allows a rethinking of the idea ofrevolution – it is not about seizing the state’s power but, asHolloway (2002) argues, ‘changing the world without taking power’.However, we are not seeking the absence of structure or order, butthe rejection of a government that demands obedience (Castoriadis1991).

DIY is a politics of possibility, where activism is also a post-capitalist politics for what comes next (Gibson-Graham 2006). Thisspirit of possibility is used to counter the fixity of representativepolitics. It is a politics of prefiguration (‘be the change you want tosee’, as Gandhi said) which aims to build achievable futureaspirations in the present through an accumulation of small changes.It is about embracing ‘power together’ rather than power over. Aconstant sense of opening and possibility, of becoming, is at theheart of this political identity – that projects are not fixed and canbe altered or renegotiated by the creative energies of participants.DIY and autonomous politics embrace political identities that areopen, incomplete, complex and multiple. They share a suspicion ofManichean politics, of its simple binaries, dividing activist fromordinary citizen, left from right.

Part of the messiness of politics is creating space for emotions.Emotional connections are as important as intellectual arguments inbuilding participatory politics (Pulido 2003; Gibson-Graham 2006;also Routledge, this volume). We need to dispel notions thatactivism is emotionally objective. Awareness of our emotions allowsus to ask – are we promoting explicit, cooperative ways ofinteracting which are rooted in a deep desire for mutual aid, todevelop a sense of care and responsibility for others? The everydayemotional work of caring in political communities, especially bywomen, is often overlooked but is central to building a sense ofbelonging. We need to be attuned to the sheer amount of unequallydistributed effort which goes into the social reproduction of politicalgroups.


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Get out of the activist ghetto – be accessible, relevant and funRecent activism has seen a tendency to reach out beyond what isseen as the activist ghetto – part of a conscious political strategy toengage more broadly with radical, anti-capitalist ideas that empha-size the potential for self-management in people’s daily lives (seeHinojosa and Bebbington, this volume, for examples from LatinAmerica). Many involved in horizontal DIY politics are aware of theneed to avoid internally focused ghetto politics, recognizing thatsubcultural spaces often fail to provide bridges between radical ideasand their usefulness in daily reality. We need to tease out howpeople’s problems impact on their everyday lives, avoid judgingpeople, and encourage them to express themselves in their own way.Activists too often forget that political engagement is also aboutlooking at where people find themselves and how they understandwhat’s going on around them.

The key issue at stake, then, especially in our media-saturatedsocieties, is one of relevance, accessibility and messaging. One of thechallenges is how progressive political groups on the Left need toshake off associations with dogmatic/moralist politics and promoteaccessible, alive, relevant and fun politics. In particular, how cananti-capitalist ideas be made relevant and gain in popular currency,and be seen as a rational and feasible response rather than aminority concern? Duncombe (2007) explored how progressivesoften fail to capture the popular imagination and are often perceivedto be dogmatic and moralistic as they don’t creatively use the morespectacular elements of consumer culture (but see Routledge, thisvolume).

The historic challenge which remains, as Wendy Brown (2002)reminds us, is to make whatever micro tactics we are involved inseem feasible and exciting. Humour can play a key role in generatingcommon identification and solidarity. Saul Alinsky, the grandfatherof community organizing, used to say that ridicule is man’s (andassumedly woman’s too) most potent weapon, and that a good tacticis one your people enjoy (see Alinsky 1972). Many groups havetaken these ideas seriously, creating fast-moving, media-savvy tacticsthat make people think and laugh, attempting to be moreprofessional and welcoming, pitching themselves on the intersectionbetween subculture and pop culture with greater attention toaesthetics and design. However, as we have seen this raises criticismsof co-optation and a creeping lifestylism. But attention to message

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content, distribution and the messengers are all still crucial. What isrequired is a clear, identifiable message, a solid analysis of yourtarget audience and how you will reach them. Creating messagesthat tap into the way people see the world and pick up on popularnarratives, opens up possible areas of dialogue between the radicaland the everyday.

Think and act strategicallyThinking strategically and planning are the often overlooked ele-ments of contemporary DIY politics. Spending time to fit ouractivities into a longer strategy, reflecting on tactics and making timeto plan is also essential for the success of any group or initiative. It’sonly through these kinds of steps that a group can understand whereit is, how well it is doing, and if it is meeting its aims. A recurrentquestion for those embarking on DIY, with its less rigid politicalforms, is what would it actually mean to win?3 This is a tricky ques-tion when there is not a single clear enemy (but global capitalism,neoliberal elites, poverty, carbon criminals to name a few), and whatis being challenged is an internalized social relation of capitalismpossessed in varying degrees by us all. So what does social changelook like and what does it feel like when it comes? When can weconfidently say that we are making progress towards our goals? Oneresponse is that winning is related to process as much as content – itis about the way we struggle as much as the issues we are strugglingon. If in the process of building a movement against climate change,for example, we are simply reinforcing market-based solutions orbuilding redundant bureaucracies, can we claim victories for thekinds of politics we espouse?

Additionally, creating a series of steps as a goal, rather than aim-ing too high, is essential to building a campaign that has coherenceand is legible to those that might want to join. Setting aims andobjectives can be done poorly, quickly and in a way that raisesexpectations about what can be achieved. But given enough timeand focus any group can develop a core goal or aim, a clear target,and objectives to work towards. Knowing your enemy, as well asyour allies, is crucial and depends on good research. These aspectsdon’t have to be immovable, and they should be flexible and changeas the group and its values change.4 Bill Moyer (2001) in hisMovement Action Plan highlighted the need for clear organizing, andan awareness of where a movement is in a longer cycle of growth


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and decay. After an intense moment of victory, many groupsmisinterpret periods of inactivity as failure rather than quiet growthand consolidation. Moyer has stressed how social movements needto build towards structural change by proposing new alternativesand worldviews rather than just opposing symptoms. A key lessonhere is not resting on false hopes that any gains secured will bepermanent. Problems emerge when it is actually unclear what doescome next or what our hoped-for future looks like. Participatoryvisioning and action planning can help tremendously here, wherecollective energies are focused on planning actions, visioning alter-natives and clarifying campaigning strategies.

Disorganization and horizontal politics can also become over-fetishized, seeing organization building as a sure route to co-optationand deradicalization. But thinking strategically is not the same assuccumbing to institutionalization. As Hardt and Negri (2000)outline, tactics of desertion, exodus and nomadism allow us to rejectestablished forms of institutionalized power and build more mobilecounter-powers from our own resources. The process of institutionalrenewal needs to relate as much to group process as to content. Theformer without the latter can lead to lack of focus, and the latterwithout the former can lead to wasteful organization building. Ourstrategies should look to be interconnected and expansionary,making strategic alliances where practicable. They should alsoappreciate that reforms can lead to a demand for more reforms andcreate a non-reformist situation (Albert 2004). A key lesson of themost successful campaigns is to recognize the long haul. There willbe compromises along the way, but not so many that they under-mine group values. Groups also need to be ready to take risks anddefend gains. And this is where strategic allies can come in extremelyuseful, especially for smaller micro examples.

Evaluate and reflectThe phase of evaluation and reflection is an essential but often over-looked element of building and sustaining movements for change. Inour urgency to move on to the next stage or action, we often over-look the need to reflect on what is and isn’t working, how peoplefeel, what impact we are having and what potential problems areahead. It often seems a diversion from the real business of activismout on the streets. We need to evaluate in order to be realistic aboutwhat anti-capitalist ideas can achieve, and in what ways they spread.

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It is important to recognize that reflecting on our practice allows usto refine our analysis and improve our practice. Regular timesshould be built in for evaluation and reflection so that they becomepart of the natural cycle of politics.

Being critically evaluative is about being brave enough toacknowledge what isn’t working and being prepared to changecourse. It is also about being clear on the differences between out-comes and impacts. Our activism should not be just about gene-rating outcomes. What we are looking for is impact in terms of realchange. And this should be embedded in our goals, to which weneed to constantly return. Consultations and militant co-inquiry areuseful techniques to explore what issues to fight on. This kind ofwork has been used successfully in 1970s Italy and more recently inArgentina in the 2001 crisis (see Malo de Molina 2005; Holdren andTouza 2005; Colectivo Situaciones 2003).

Conclusion: from the Ashes of the Crash

In this chapter I have focused on the idea of DIY politics, as itcontains so much potency for empowerment and galvanizingimmediate action in the face of the multiple crises of our neoliberalage. I have outlined seven principles, which I hope will be of someuse in terms of critically evaluating and offering ways forward forbuilding a politics to change our world and challenge the hegemonyof the neoliberal market economy and market society. This kind ofpolitics is by no means a simple or straightforward process. It is notdoctrinaire, well-organized, coherent and easily defined – and norshould it be. It is simultaneously in, against and beyond capitalism.Its complexity and shifting nature are key to its survival, resilienceand creativity.

In the face of the recent failure and crisis of the global economicmodel of neoliberalism and the political institutions that hold it up,as well as the looming twin problems of fossil fuel dependency anddangerous climate change, it is a politics that is needed now morethan ever. Time has never been better for revaluing the potential forself-managed forms of community, work and services based onmutual aid and collectivity. Examples of how people can do itthemselves are part of the old battle of ideas, words and practicesabout how to build a better world. They need to expand, connect,and look feasible without becoming too fixed. We need to make the


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old order look ridiculous, and shout out, like the small child did, thatwe cannot see the emperor’s new clothes. Given what is at stake andhow dire the consequences of carrying on with ‘business as usual’are, it is a battle that we cannot afford to lose.

Notes

1 See <www.trapese.org> and Trapese 2007; <www.thecommon place.org.uk>.

2 See <www.socialcentresnetwork.org.uk>.3 See Issue 1 of Turbulence magazine at <http://turbulence.org.uk/

turbulence-1/>.4 Many guides exist on campaigning. See Coover (1985); Crimethinc

(2005); Minieri and Getsos (2007); Moyer (2001); Lattimer (2000); Rose(2005); Coe and Kingman (2007).

5 This phrase is taken from the recent New Economics Foundation report.See <www.neweconomics.org/gen/fromtheashesofthecrashes051108.aspx>.

References

Albert, M. (2004) Parecon: Life After Capitalism, Verso, London.Alinsky, S. (1972) Rules for Radicals, Random House, London.Barber, B. (1994) Strong Democracy: Participatory Politics for a New Age, University

of California, Berkeley CA.Barclay, H. (1990) People without Government: an Anthropology of Anarchy, Kahn

and Averill, London.Bey, H. (1991) The Temporary Autonomous Zone, Ontological Anarchy, Poetic

Terrorism, Autonomedia, New York.Brenner, N. and Theodore, N. (2002) Spaces of Neoliberalism, Blackwell, Oxford.Brown, W. (2002) ‘An Interview with Wendy Brown’ in Schalit, J. (ed.) The

Anti-Capitalism Reader: Anti-Market Politics in Theory and Practice, Past, Present

and Future, Akashic Press, Brooklyn NY.Carlsson, C. (2008) Nowtopia: How Pirate Programmers, Outlaw Bicyclists and

Vacant-Lot Gardeners Are Inventing the Future Today, AK Press, New York NY.Castoriadis, C. (1991) Philosophy, Politics, Autonomy: Essays in Political Philosophy,

Oxford University Press, Oxford.Coe, J. and Kingman, T. (2007) Tips on Good Practice in Campaigning. NCVO,

<http://www.ncvovol.org.uk>.Colectivo Situaciones (2003) Sobre el Militante Investigador, available at:

<http://transform.eipcp.net/transversal/0406/colectivosituaciones/es/print> (15 June 2006).

Coover, V. (1985) Resource Manual for a Living Revolution, New SocietyPublishers, Philadelphia PA.

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Crimethinc (2005) An Anarchist Cookbook: Recipes for Disaster, AK Press, NewYork NY.

de Angelis, M. (2007) The Beginning of History, Pluto Press, London.Debord, G. (1983) Society of the Spectacle, Black and Red, Detroit MI.Duncombe, S. (2007) Dream: Re-imagining Progressive Politics in an Age of Fantasy,

New Press, New York NY.Gibson-Graham, J. K. (2006) A Postcapitalist Politics, Minneapolis MN.Hardt, M. and Negri, A. (2000) Empire, Harvard University Press, London. Hodkinson, S. and Chatterton, P. (2006) ‘Autonomy in the City? Reflections

on the Social Centres Movement in the UK’, City, Vol. 10, No. 3, pp.305–15.

Holdren, N. and Touza, S. (2005) ‘Introduction to Colectivo Situaciones’,Ephemera, Vol. 5, No. 4, pp. 595–601.

Holloway, J. (2002) Change the World Without Taking Power, Pluto, London.—— (2010) Crack Capitalism, Pluto, London.Holloway, J. and Pelaez, E. (1998) Zapatista! Reinventing Revolution in Mexico,

Pluto, London.Katsiaficas, G. (1997) The Subversion of Politics: European Autonomous Movements

and the Decolonization of Everyday Life, Humanity Books, New York NY.—— (2004) Confronting Capitalism: Dispatches from a Global Movement, edited

with E. Yuen and D. Burton-Rose, Soft Skull Press, New York, NY.Kingsnorth, P. (2004) One No, Many Yeses: a Journey to the Heart of the Global

Resistance Movement, Free Press, London.Kropotkin, P. (1972) Mutual Aid: a Factor of Evolution, Freedom, London.Lattimer, M. (2000) The Campaigning Handbook, Directory of Social Change,

London.Malo de Molina, M. (2005) Common Notions, Part 1: Workers Inquiry, Co-

Research, Consciousness-Raising, <http://transform.eipcp.net/transversal/0406/malo/ en/print> [1 July 2006].

Mayer M. (2003) ‘The Onward Sweep of Social Capital: Causes and Conse-quences for Understanding Cities, Communities and Urban Movements’,International Journal of Urban and Regional Research, Vol. 27, No. 1, pp.110–32.

McKay, G. (1998) DIY Culture: Party and Protest in 90s Britain, Verso, London.Mertes, T. (2004) The Movement of Movements: a Reader, Verso, London.Midnight Notes (1991) The New Enclosures, Autonomedia, New York NY.Minieri, J. and Getsos, P. (2007) Tools for Radical Democracy: How to Organize

for Power in Your Community, John Wiley and Sons, San Francisco CA.Moyer, B. (2001) Doing Democracy: the MAP Model for Organizing Social

Movements, New Society Publishers, Philadelphia PA.Notes from Nowhere (eds) (2003) We Are Everywhere: the Irresistible Rise of Global

Anti-Capitalism, Verso, London.Pulido, L (2003) ‘The Inner Life of Politics’, Ethics, Place and Environment,

Vol. 6, No. 1, pp. 46–52.


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Rose, C. (2005), How to Win Campaigns, Earthscan.Routledge, P. (1996) ‘The Third Space as Critical Engagement’, Antipode,

Vol. 28, No. 4, pp. 399–419.Seeds for Change (2003) Consensus Decision Making, Seeds for Change Online

@ <www.seedsforchange.org.uk>.Starhawk (1988) Truth or Dare: Encounters with Power, Authority, and Mystery,

Harper, San Francisco CA.Trapese (2007) DIY: a Handbook for Changing Our World, Pluto, London.Vaneigem, R. (1979) Revolution of Everyday Life, Rising Free Collective, New

York NY.Wright, E. O. (2006) ‘Towards a Socialist Alternative’, New Left Review,

Second Series, Vol. 41, pp. 93–124.

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11 Dreaming the Real: a Politics of Ethical Spectacles

PAUL ROUTLEDGE

Introduction: Manufacturing Dissent

From 6 to 8 July 2005 the G8 (Group of Eight) nations met atGleneagles, Scotland. The G8 – consisting of the US, Canada,Japan, Britain, Germany, France, Italy and Russia – holds annualsummits where top government officials discuss issues of macro-economic management (or running the neoliberal global economy),international trade, terrorism, energy, arms control et cetera. Withthe emergence of the global justice (anti-capitalist) movement, suchsummits have been accompanied by protests – both at the placeswhere the G8 meet, and elsewhere across the globe. These protestsprovide a critique of neoliberal capitalism, debate alternatives to it,and challenge the ‘business-as-usual’ performance of such summitsby attempting to disrupt their operation.

In the months prior to the G8 protests, an idea spread meme-likearound various British cities, including London, Bristol, Manchester,Birmingham, Sheffield, Aberdeen, Edinburgh, Newcastle andGlasgow, and to parts of Europe and the US. In these cities an armyof rebel clowns was being formed and was to be deployed during theG8 protests. This was the Clandestine Insurgent Rebel Clown Army(CIRCA). As they noted on their website:

We live on a planet in permanent war – a war of money against life, ofprofit against dignity, of progress against the future. A war that gorgesitself on death and blood and shits money and toxins, deserves anobscene body of deviant soldiers – an insurgent army of rebels, whichcelebrates life and happiness and continuous rebellion. This army isclandestine because words, dreams, and desires are more important thanbiographies. Inside everyone is a lawless clown trying to escape, andnothing undermines authority like holding it up to ridicule. Run away

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from the circus and join the Clandestine Insurgent Rebel Clown Army(CIRCA) (www.clownarmy.org).

In early July, people from around the world gathered inEdinburgh for the Make Poverty History march and a week of actionsaround the G8 meeting in Gleneagles, Scotland. They were met bya ragtag army of some 200 rebel clowns formed from a series oftwo-day workshops that had been organized in various UK cities inthe months prior to the meeting. The Clandestine Insurgent RebelClown Army is an exemplar of a new form of politics that seeks toutilize various types of tactical performance in order to raise publicawareness about issues, challenge popular assumptions and open upa dialogue on a particular issue (see also Chatterton, this volume). Itis an example of what Stephen Duncombe (2007) terms ‘dream-politiks’ (see below) that articulates a politics embracing people’sdreams and desires to open up the imagination by manufacturingdissent.

Sites of Intervention: Cultural Activism

When manufacturing dissent against neoliberal institutions andpolicies it can be helpful to conceive of a variety of ‘sites of inter-vention’.1 Forms of resistance associated with labour struggles,revolutionary movements, peasant movements and other risingshave frequently taken place at sites of production (such as factoriesand fields), destruction (such as places of resource extraction), anddecision (such as government and corporate headquarters). Themethods of resistance associated with such locations have includedstrikes and picket lines at sites of production; road blockades andtree-sits at sites of destruction; and direct actions and global days ofaction at sites of decision (such as the G8 protests).

However, although these forms of resistance are still pertinent inchallenging the ‘accumulation by dispossession’ highlighted byHarvey (2003) and fellow contributors to this book (see Tyfield;Lohmann), other forms of resistance such as cultural activism arealso important, particularly in an age of spectacle and screenculture. As Guy Debord (1983: 2) argued in his classic Society of theSpectacle, state and corporate control is frequently achieved incapitalist society through ‘a social relation among people, mediatedby images’. In the context of neoliberal capitalism Henry Giroux

A POL IT ICS OF ETH ICAL SPECTACLES

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(2007) has developed this idea to argue that we live in a culture ofcommodification whereby visual symbols and visual culture work toaestheticize politics through affective appeals to consumerism (whathe terms ‘the terror of the spectacle’). This is juxtaposed by Girouxwith the ‘spectacle of terrorism’ which affirms the practice of politicsover the aesthetics of commodification through an appeal to the real,building a social consensus around fear rather than consumption.However, this spectacle also relies on mediated images for its powerand affect, hence ‘audio-visual culture has become our primary wayof coming into contact with the world and at the same time beingdetached (safe) from it’ (Arva, quoted in Giroux 2007: 17).

In such a time of the signs, cultural activism poses a challenge inother sites of intervention, namely those of consumption, potentialand assumption.2 Points of consumption such as chain stores andsupermarkets are confronted by such tactics as consumer boycotts,market campaigns, and so on. A contemporary example of thisapproach to cultural activism is the church of the immaculateconsumption that targets points of consumption (and indeedassumption) by the activist ‘The Vacuum Cleaner’ and encouragesbelievers to worship products instead of buying them. This par-ticular tactic emerged out of the Laboratory of InsurrectionaryImagination (Lab of II), a cultural activist initiative that developed inpreparation for the protests against the G8 meeting in Gleneagles,Scotland, 2005. The counter-logic behind this approach is thatcontemporary capitalism encourages a consumerism based less onsurvival than on personal fulfilment through the purchasing of ‘life-styles’, which takes place in cathedrals of consumption, or shoppingcentres. Activists will infiltrate a multinational store (the point ofconsumption) and then commence praying to particular products(trainers, jewels, toiletries), asking for salvation and fulfilment fromthe product in question. The action not only attempts to increasepublic awareness about contemporary consumption behaviours, buthas also succeeded in temporarily closing stores (The VacuumCleaner 2007).

Points of potential include imagining possible future scenariosabout how to live and actualizing alternatives ‘on the ground’.These are imbued with a desire to create the reality dreamed byactivists, and a belief in the capacity of activists to build that worldwith their own hands – as Chatterton outlines in the previouschapter. Such practices engage with the ethical, political and


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aesthetic to connect cultural politics with political and socialresponsibility. An example of such cultural activism is Critical Mass,an open free-form bicycle ride, in which bicyclists, through theirpower of numbers – their critical mass – take over city streets.Begun in San Francisco in 1992, critical masses have occurredaround the world during the past fifteen years, ranging in size froma handful of riders to several thousands. Critical masses haveoccurred regularly in over 215 US cities, 143 cities in Europe, 22cities in Asia, 20 cities in Australia, and 8 cities in Latin America(Duncombe 2007). The object of critical masses is to bring to publicattention the inferior status accorded to bicyclists on urban streets,and by the mass occupation of those streets by cyclists, criticalmasses spectacularly demonstrate cyclists’ right to the road. Indeed,the idea is not so much to occupy space as to open it up for newmeanings (what constitutes traffic on urban streets, for example) andexperiences (such as various interactions between people using thestreets). Critical mass articulates alternative potential uses of thestreets, and of what might constitute urban traffic. However,because it is an open-ended spectacle, it is open to a multitude ofinterpretations (including people not understanding what the pointof the critical mass is), and to a range of different types ofbehaviours, including those of aggression towards drivers (Dun-combe 2007).

Finally, points of assumption necessitate challenging underlyingbeliefs and control mythologies, and thus the role of culturalactivism is to hijack spectacles using the images and signs of popularculture. An example of such activism is the Clandestine InsurgentRebel Clown Army, mentioned at the beginning of this chapter anddiscussed in more detail below. At the heart of these types of culturalresistance is an insurrectionary imagination: a sense of possibility notlimited to copying a pattern or following someone else’s design, butrather based on creativity, and dissolving the boundary betweendream and reality, what Stephen Duncombe (2007) terms ‘dreamingthe real’.

Dreaming the Real

Taking its inspiration from the work of Brazilian Augusto Boal’sTheatre of the Oppressed (Boal 1992), the International Situationists(Knabb 1989) and Ken Kesey’s Merry Pranksters, dreaming the real


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involves an activism of tactical performance that attempts to raisepublic awareness about issues; challenge popular assumptions; andopen up dialogue on a particular issue. In so doing, the activistsarticulate their concerns, critiques, and demands through activistmedia (which activists can control) rather than on a terrain that theactivists do not control, like the mainstream media. Suchperformance anticipates intense reactions or even hostile inter-vention on behalf of the public, and attempts to incorporate theminto the dramaturgy of the event. Powerful or unexpected imageryis often deployed to make a deeper impression on the viewer.Indeed, the form of the performance is part of the content. Activistsmodel a form of behaviour – one that is creative, bodily engaged,surprising, and enjoyable – in the forms of dissent that they hopeothers will ultimately follow.

This approach of ‘dreampolitik’ is aimed at constructing a politicsthat embraces people’s dreams and desires, and fashions spectaclesthat give these form, employing symbols and associations thatinspire, offer direction, and open up the imagination. Primarily, thisis achieved through the creation of what Duncombe terms ‘ethicalspectacles’: participatory, open-ended, and playful urban trans-formations whereby the politics desired is embodied in the means ofthe spectacle. The principal characteristics of ethical spectacles arethat: (1) they are autonomous in character, in that they are self-organized creative actions; (2) they are participatory, in that people(including the public) actively participate in the creation andperformance of the spectacle; (3) they involve transformative play(such as humour and satire) to communicate messages to the public.Such play necessitates (like all jokes) active audience participationand imagination (so they get the joke) which creates an intimacybetween the performer and the audience. Indeed, such narrativeinterdependency works against social relations of hierarchy andseparation (between the ‘performer’ and the ‘audience’, for example);(4) they are open-ended, being open to ongoing modification andadaptation to specific situations, always being in motion andinvolving contingency at the level of form and meaning; (5) they aretransparent, creating clearly absurd spectacles to get people to reflectupon normal reality in some way. Such transparent spectacle allowsspectators to look through what is being presented by the performersto the reality of what is really there. As Duncombe (2007) argues,whereas the society of the spectacle employs illusion in the pretence


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of displaying reality, ethical spectacles demonstrate the reality oftheir own illusions; and (6) they embrace theatrical elements.

The Clandestine Insurgent Rebel Clown Army

Perhaps the exemplar of the ethical spectacle in recent times hasbeen the Clandestine Insurgent Rebel Clown Army (CIRCA).CIRCA targets points of assumption (and partially potential) andwas formed, as noted above, in order to protest the G8 meeting atGleneagles, Scotland, in 2005. CIRCA was an autonomousinitiative, in that it was self-organized by activists who wished toparticipate in it, and creative in its approach to activism: the purposewas to develop a form of political activism that brought together thepractices of clowning and non-violent direct action which tookemotional and political responsibility as an act of self-constitution.Activists (or in this case rebel clowns) actively participated in thecreation and the performance of the ethical spectacle of CIRCA’sapproach to protesting the G8. Active participation was nurturedprimarily though the establishment of affinity groups.

Practically, affinity consists of a group of people who sharecommon ground (friends, lovers, shared beliefs, dreams) and who canprovide supportive, sympathetic spaces for members to articulate,listen to one another, and share concerns, hopes and fears. Thepolitics of affinity enables people to provide support and solidarity forone another. Ideally, such a politics should be built on consensusdecision making, which is non-hierarchical and participatory,embodying flexible, fluid modes of action. The common values andbeliefs articulated within the politics of affinity constitute a ‘structureof feeling’ resting upon collective experiences and interpretations,which are cooperative rather than competitive, and which arepredicated upon taking political action. The idea of consensus hereis based upon the notion of mutual solidarity – constructing thegrievances and aspirations of geographically and culturally differentpeople as interlinked. Mutual solidarity enables connections to bedrawn that extend beyond the local and particular, by recognizingand respecting differences between people while at the same timerecognizing similarities (for example, in people’s aspirations) (Olesen2005). It is about imagining global subjectivities through similaritiesof experience, recognizing the shared opportunities and techniquesof struggle (Starr 2005).


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During the G8 protests, there were fifteen different rebel clownaffinity groups from different places. For example, there were groupscalled Glasgow Kiss, the Cloon Army, Group Sex, Backward Intelli-gence, et cetera. Affinity was nurtured in a variety of ways. First,through a series of day-long workshops, and subsequent affinitygroup meetings, clowning techniques were practised and refined.These provided a common repertoire of clowning practices –including group play, movements, gestures, and language – thatwere shared by all CIRCA participants. Second, all CIRCA ‘clown-batants’ shared a common ‘multiform’. Rebel clowns wore personal-ized clown faces and rebel clown uniforms that were deconstructed,decorated and subverted according to the individual creativity ofeach person and/or group. These created a sense of affinity withindiversity. The clown masks and multiforms were a form of tacticalmedia: they worked to free up personal inhibitions, magnify activists’commonality and enable activists to act together, whileparadoxically rendering them unidentifiable to the authorities and


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Figure 11.1: CIRCA help out with security at Faslane nuclearsubmarine base, Scotland, July 2005Photograph by Rabbitman.

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the media, while at the same time attracting media attention. Third, the workshops and multiforms helped to develop group

dynamics and close interpersonal relations. Despite the seriousness ofthe protests against the G8, clown workshops and actions involved agreat deal of play and laughter which helped to forge deep bondsbetween people and groups. Feeling part of a rebel army, sharingaspects of uniform and language, while at the same time actingautonomously in affinity groups and having their own specific clowncharacters (General Panic, Major Disaster, Corporal Punishment,Private Function) was empowering and provided activists with adeep sense of solidarity.

During the protests, we held clown councils, whereby activistswould sit in a circle and have meetings based upon consensusdecision making. Each affinity group would propose a spokespersonwho would sit at the front of their group and discuss matters withthe other affinity groups’ spokespersons. Each issue raised by the‘spokes council’ would be discussed internally by each affinity group,


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Figure 11.2: CIRCA at the Make Poverty History: Shut Down the G8Demonstration, Edinburgh, Scotland, July 2005

Photograph by Kolonel Klepto.

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and its decision communicated back via its spokesperson to theentire council. Once consensus on each issue was reached, activistswould move on to the next issue. These councils were held everyday during the protests, at first in Edinburgh, and then at the ruralconvergence site near Stirling. Each group also kept in contact viamobile phone. In the clown councils activists might agree to differand to allow each group to pursue its own set of actions during theprotests. Or activists might all agree on a specific strategy duringone of the protests.

CIRCA also actively used transformative play (especially humourand satire) to communicate a message of opposition to the G8. Thiswas achieved through a series of CIRCA ‘operations’, under therubric of the War on Error. The War on Error was a struggle wagedagainst the political errorism of imperial wars (such as the war inIraq); the economic errorism of neoliberalism, and the environ-mental errorism of over-consumption. Through the very idea of aclown army (particular pertinent at a time of illegal wars in theMiddle East) and the satirical representation of the War on Terror,the public were invited in on a variety of jokes in order to create anintimacy between them and the rebel clowns.

The face-to-face encounters experienced through workshop‘games’ and through direct action enabled the embodying ofaffinities. In particular, it was the conducting of action with others –in demonstrations, blockades, occupations, street theatre – thatforged the bonds of association crucial to the creation of commonground. Affinity groups tapped into people’s desire to be social,nurturing a politics that recognized everyone (in the group) andtheir participation. Such considerations are intimately entwined withwhat Laura Pulido (2003) calls the ‘interior life of politics’: theentanglement of the emotions, psychological development, souls,passions and minds of activists.

Emotions are personal feelings that occur in relational encounterswith human and non-human others. They mediate social andpolitical processes through which people’s subjectivities are repro-duced and performed (Kwan 2007). Politically, emotions areintimately bound up with power relations and also with relations ofaffinity, and are a means of initiating action. People becomepolitically active because they feel something profoundly – such asinjustice or ecological destruction. This emotion triggers changes inpeople that motivate them to engage in politics (see also Chatterton,


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this volume). It is people’s ability to transform their feelings aboutthe world into actions that inspires them to participate in politicalaction. Affinity with others under such conditions creates intensiveencounters or what Bey (1991: 23) termed a ‘seizure of presence’,wherein practical politics – embodied, intersubjective and relational– is practised. Collaborative association with (activist) others necessi-tates interaction with others, through particular actions and theexperiencing of personal and collective emotions, through creativityand imagination, and through embodied, relational practices thatproduce political effects (Anderson and Smith 2001; Bennett 2004;Thien 2005; Bosco 2007).

CIRCA was not an excuse for activists to dress up as clowns andbring colour and laughter to protests. Rather, the purpose was todevelop a form of political activism that brought together thepractices of clowning and non-violent direct action. The purposewas to develop a methodology that helped to transform and sustainthe inner emotional life of the activists involved as well as being aneffective technique for taking direct action. This was becauseCIRCA believed that a destructive tendency within many activistmovements has been the forgetting of the inner work of personaltransformation and healing. By working with the body – throughvarious clowning games and manoeuvres – the purpose was toacknowledge and reveal the fears and anxieties as well as joys andpleasures of being human in these times. In addition, as Bakhtin(1984) has argued, the purpose of play/games was to draw playersout of the bounds of everyday life, liberating them from the usuallaws and regulations. Through the opening up of emotions, gamesserve to deprogramme the regulated, inhibited self. Such processesalso served to create affective attachments between activists thatcontributed to the building of solidarity, what Jeffrey Juris (2008)terms ‘affective solidarity’.

CIRCA believed that, in addition to the streets, the emotional lifeof activists was a site of struggle. CIRCA was an attempt to changethe way activists felt as well as the way they struggled. Innovativeforms of creative street action – materialized as various clown‘operations’ – were understood as being crucial for building andinspiring movements. CIRCA’s aim was to bring clowning back tothe street, to reclaim its disobedience and give it back the socialfunction it once had: its ability to disrupt, critique and heal – addingdisorder to the world in order to expose its lies and speak the truth.


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The clown soldiers that made up CIRCA attempted to embody life’scontradictions, they were both fearsome and innocent, entertainersand dissenters, healers and laughing stocks. Clowning, like carnival,attempted to suspend and mock everyday law and order (Routledge2005).

This form of emotional politics played out in both the interior lifeof the clowns and in that of other activists. At times it also seemedto affect some of the authorities. Instead of battling the police andsecurity at the G8 meeting, CIRCA was concerned with under-mining and ridiculing the intimidation and provocation of securityforces at demonstrations. For example, by blowing kisses to riot copsbehind their shields; or by hogging the lenses of police cameras; andfollowing the evidence-gathering teams around, mocking them andpreventing them from conducting their surveillance. During theMake Poverty History march in Edinburgh, a large group of black blocactivists were surrounded and detained by police. CIRCA wasmobilized to provide solidarity, encircling the cops who wereencircling the black bloc. CIRCA’s presence contributed in somesmall way to the police finally releasing them. Various protesters atthe G8 protests later commented that the presence of CIRCA hadhelped diffuse tense situations at certain times. Moreover, CIRCAclowning attempted to access the person behind the police uniform.During CIRCA operations, police officers were witnessed smilingand laughing in interaction with rebel clowns, and even mimickingthe clown salute. This entailed the right thumb of the right handbeing held to the nose, with the hand vertical, palm facing to theleft, and the fingers wiggling. It was used when clowns met eachother, and whenever clownbatants encountered authority figuressuch as the police (Routledge 2005).

CIRCA actions are open-ended in that, within the loose structureof any clown ‘operation’, there is space for spontaneity as well asadaptation and response to emerging events. Indeed, CIRCAactions contained an element of dissimulation, or the unexpected,what Sun Tzu, author of The Art of War, termed ‘being unknowableas the dark’. By this he is referring to the crucial attributes of fluidityand adaptation – the interchange of surprise unorthodox move-ments and orthodox direct confrontation, mixing together into awhole. Fluidity and adaptation are primary characteristics of affinitygroups. The personnel and workings of such groups are fluid anddecentralized. There are no real leaders (although there are


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temporary organizers of particular actions), which both reflects theautonomist philosophy of such groups as well as posing deepproblems for surveillance and control by the authorities. CIRCAtried to remain open to the spontaneity of clowning and of the event,so as not to become too rigid in their action and play (Routledge2005).

CIRCA tactical performances were also clearly transparent:CIRCA was plainly not a real army, but rather people who werepresenting themselves as one, albeit a subverted, deconstructeddeviant clown army. It was an obvious performance, and in par-ticular one that alienated the familiar world of militarization andforeign wars, and in so doing encouraged the viewer of the spectacleto step back and look critically at the taken-for-granted world. Forexample, the CIRCA Operation HA.HA.HAA (Helping AuthoritiesHouse Arrest Half-witted Authoritarian Androids) was deployed toinvert the logic and expectations of the 6 July demonstrationsagainst the G8. Instead of replicating the choreography of recentprotests against neoliberal globalization, such as activists trying toclimb the fences and disrupt the meeting, and engaging in violentconfrontation with security forces, CIRCA wanted to deploy rebelclowns to keep the world’s most dangerous ‘errorists’ (the G8politicians) under house arrest in perpetuity, by helping the police tobuild the fences around their meeting place at the Gleneagles hotelhigher, and never letting them out.

Through such open-ended theatrical spectacles, in which publicparticipation was encouraged, CIRCA attempted to fleetingly bringinto being new worlds and possibilities, subverting the normativefunction of space through what Uitermark (2004) terms ‘carnival-esque hacking’. This ‘deprogramming of space’ implies an intentionaldisruption and disorientation of consensus reality: in this case theestablished choreography of protest at global days of action wherebyprotesters attempt to disrupt the meetings (of the G8 in this case)through scaling fences, and the police are trained to aggressively stopthem from doing so. Rebel clown logic – an associative logic, basedon visual signs – sought to invert or subvert hegemonic logic and thetaken-for-granted world. Clown logic used army uniforms to associateitself with a culture of permanent war, and through that to theconnections to neoliberalism, wars for oil and the War on Terror.

Indeed, CIRCA directly addressed the dominant spectacle of theWar on Terror, a war that nurtures fantasies of fear, and where the


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desire for security is cloaked in the reality of war. This spectaclepretends to be real via distraction (‘there are weapons of massdestruction in Iraq’) and substitution (permanent war will securepeace). In contrast, CIRCA presented an ethical spectacle, the waron error, through which fears were acknowledged and thendeconstructed. The patent artificiality of the war on error made themessage more effective. It caused people to laugh (thereby dispellingfear of ‘security’ at demonstrations); it highlighted the falsity ofsupposed reality (that the G8 leaders really will solve the problemsassociated with neoliberalism and war); and it let the audience in onthe production by dressing up as rebel clowns. Moreover, CIRCAalso tapped into a popular desire to rebel, and drew upon apowerful emotional repertoire.

CIRCA also attempted to enact an emotional politics thatplayed out in both the interior life of the clowns and in that ofother activists – and, at times, among the public and theauthorities. CIRCA’s ‘tactics’ recognized the vulnerability ofactivists as well as people’s fear and concerns during protest events,and in the climate of tension constructed through the War onTerror. Part of CIRCA’s strategy was also to transform fearthrough laughter, play and ridicule. As Bakhtin (quoted in LaneBruner 2005: 151) notes, ‘laughter purifies from dogmatism; itliberates from fear and intimidation’. Recent informal researchconducted on police responses to the G8 protests in Scotlanddetermined that CIRCA displaced police expectations of activistbehaviour at protests, made the police more open to protesters,and encouraged the police to try to avoid arresting protesters andcommunicate more fully with activists (personal communication,Glasgow, 2007).

Conclusion: Ethical Spectacles and Full Spectrum Resistance

Through its intervention into sites of political meaning CIRCAengaged in a particular form of cultural activism that sought toutilize various types of tactical performance in order to raise publicawareness about specific issues and practices (the G8 meeting, theWar on Terror); challenge popular assumptions about suchpractices; and open up a dialogue concerning them.

CIRCA embodied Duncombe’s notion of a ‘dreampolitiks’:through its practice of ethical spectacles it provided an example of a


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different kind of politics, one that was prefigurative in character inthat the political ends desired (ones that were participatory,collaborative, non-violent and playful) were embodied in the meansused. Moreover, the texture of the experience of activism – theemotions generated and felt – and the autonomy of the actionmattered as much as the political outcomes of particular actions. Inother words it was the process of the political practice that wasinsurrectionary (see also Chatterton, this volume). In addition, theinvolvement of others (including the public) in play opened up aspace for people to explore what activism might mean for them,beyond the traditional and, at times, rather passive process ofpolitical engagement such as the demonstration and rally. Suchpolitical practice opens up important questions for the practice ofresistance against neoliberalism.

As humanity enters the second decade of the twenty-first century,we are confronted by the perfect storm of global financial andenvironmental crises. Rather than this heralding the demise ofneoliberal globalization in its various predatory forms (see Birch andMykhnenko; Jessop, this volume), we are likely to see a reconstituted‘greened’ neoliberal agenda that will become a key element in themanagement of the global economy, at the level of decision making,political legitimation, and the creation of new processes of capitalaccumulation. Progressive challenges to the legitimation of thissystem are crucial in whatever forms people choose to make them.While important forms of resistance associated with traditionalterrains such as labour struggles, revolutionary movements or peasantmovements continue to take place at sites of production (in the formof strikes and picket lines, for example), destruction (as in the form ofblockades), and decision (as in direct actions and global days ofaction), why should ‘the Left’ (however constituted or imagined)assume that such approaches accompanied by intellectual argumentsalone will transform how people perceive reality? As Rist (quoted inKwan 2007: 30) notes, ‘messages that are conveyed emotionally andsensually can break up more prejudices and habitual behaviourpatterns . . . than intellectual treatises’. Indeed, the experiences ofCIRCA and other forms of cultural activism provide potentadditions to the repertoire of resistance tactics, particularly in theirattention to the emotional register of activists’ experiences.Challenges to neoliberalism require full-spectrum resistance acrossall sites of intervention, if we are to dream reality into being.


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Notes

1 This idea is drawn from the Smartmeme Collective (who discuss ‘pointsof decision’), quoted in Verson (2007).

2 Of course, in practice, these sites of intervention frequently overlap.

References

Anderson, K. and Smith, S. J. (2001) ‘Editorial: Emotional Geographies’,Transactions of the Institute of British Geographers, Vol. 26, pp. 7–10.

Bakhtin, M. (1984) Rabelais and His World, Indiana University Press,Indianapolis IN.

Bennett, K. (2004) ‘Emotionally Intelligent Research’, Area, Vol. 36, No. 4,pp. 414–22.

Bey, H. (1991) T.A.Z., Autonomedia, Brooklyn NY.Boal, A. (1979) Theatre of the Oppressed, Pluto Press, London.—— (1992) Games for Actors and Non-Actors, Routledge, London.Bosco, F. (2007) ‘Emotions that Build Networks: Geographies of Human

Rights Movements in Argentina and Beyond’, Tijdschrift voor Economische

en Sociale Geografie, Vol. 98, No. 5, pp. 545–63.Debord, G. (1983) Society of the Spectacle, Black and Red, Detroit MI.Duncombe, S. (2007) Dream: Reimagining Progressive Politics in an Age of Fantasy,

The New Press, London.Giroux, H. (2007) ‘Beyond the Spectacle of Terrorism’, Situations, Vol. 2,

No. 1, pp. 17–52.Harvey, D. (2003) The New Imperialism, Oxford University Press, Oxford.Juris, J. (2008) ‘Performing Politics: Image, Embodiment, and Affective

Solidarity during Anti-Corporate Globalization Protests’, Ethnography,Vol. 9, No. 1, pp. 61–97.

Knabb, K. (ed.) (1989) Situationist International Anthology, Bureau of PublicSecrets, Berkeley CA.

Kwan, M-P. (2007) ‘Affecting Geospatial technologies: Towards a FeministPolitics of Emotion’, The Professional Geographer, Vol. 59, No. 1, pp. 22–34.

Lane Bruner, M. (2005) ‘Carnivalesque Protest and the Humorless State’,Text and Performance Quarterly, Vol. 25, No. 2, pp. 136–55.

Olesen, T. (2005) International Zapatismo, Zed Books, London.Pulido, L. (2003) ‘The Interior Life of Politics’, Ethics, Place and Environment,

Vol. 6, No. 1, pp. 46–52.Routledge, P. (2005) ‘Reflections on the G8: an Interview with General

Unrest of the Clandestine Insurgent Rebel Clown Army (CIRCA)’,ACME: An International E-Journal for Critical Geography, Vol. 3, No. 2, pp.112–20.

Starr. A. (2005) Global Revolt, Zed Books, London.


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The Vacuum Cleaner (2007) ‘How to Prank, Play and Subvert the System’in Trapese Collective (ed.) Do It Yourself: a Handbook for Changing the World,Pluto Press, London, pp. 187–200.

Thien, D. (2005) ‘After or Beyond Feeling? A Consideration of Affect andEmotion in Geography’, Area, Vol. 37, No. 4, pp. 450–6.

Uitermark, J. (2004) ‘Looking Forward by Looking Back: May Day Protestsin London and the Strategic Significance of the Urban’, Antipode, Vol. 36,No. 4, pp. 706–27.

Verson, J. (2007) ‘Why We Need Cultural Activism’ in Trapese Collective(ed.) Do It Yourself: a Handbook for Changing the World, Pluto Press, London,pp. 171–86.


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At the time of writing (June 2009) the Peruvian government was inthe midst of its worst political crisis since it was elected in 2006.The cause was a highly conflictive situation in Peru’s Amazonia,where indigenous peoples were protesting against the government’sdecision to pass legislation that would facilitate hydrocarbonexploration, mining, commercial farming and logging in theirterritories. This event, though remarkable for its scale and theauthoritarian response it induced from government,1 was hardly anisolated incident. As The Economist (11 June 2009) noted, ‘Peru hasseen many conflicts between foreign mining and oil companies andlocal people, who complain of environmental damage and/or alack of tangible benefits from these investments.’ Nor is it only thecentre-right Peruvian government that has systematically pro-moted the expansion of extractive industries. In March 2009 theostensibly post-neoliberal government of Ecuador, already laudingthe benefits that ‘responsible’ foreign mining investment couldbring to the country, withdrew the legal status of the country’smost vocal environmental NGO.2 The Bolivian government,claiming both post-neoliberal and indigenous credentials, haslikewise promoted foreign investment in extractive industries andappears to brook relatively little dissent on the matter from indige-nous organizations.

This contention reflects the existence of quite different views onthe role that extractive industries might play in national develop-ment. While foreign and national governments, and private investorsalike, see mining as a source of great potential profit and revenue,many communities and civil society groups have opposed excessiveexpansion because profit has come at the detriment of host localities.

12 Transnational Companies and TransnationalCivil Society

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These groups express concern about environmental damage (resourcedepletion, contamination, species extinction, landscape transfor-mation) and the social and economic costs that can accompanyextraction (livelihood decline, forced labour, the introduction anddissemination of new diseases, enclave economies).

This contention is a direct consequence of neoliberal reforms (seevan Waeyenberge, this volume) that, since the early 1990s, havecreated substantially more favourable environments for foreigninvestment in extractive industries. However, one effect of thiscontention – as well as of international pressure and the lessons ofhistory – is that these ‘new’ private, mostly multinational, investorsare under pressure to establish greater linkages with the localeconomy and society, demonstrate greater environmental responsi-bility, and respond to the demands of affected populations. In thisprocess, NGOs, civil society networks and other non-communityorganizations have played a significant role in shaping the emer-gence and evolution of communities’ reactions as well as ininfluencing the responses of multinational companies and govern-ments, as Chatterton and Routledge have explored in earlierchapters in relation to the Global North.

This chapter aims to show the basis on which conflicts provokedby the expansion of the mining industry arise and the role thatinternational and domestic actors have played in deepening, miti-gating or resolving these conflicts and – as a result – in influencingthe trajectory of mining expansion in particular territories. Weargue that in order to understand how conflicts emerge and evolve,it is necessary to analyse two phenomena in particular: miningexpansion as part of a neoliberal development strategy, which hasterritorial implications, and the transnational nature of the roleplayed by civil society actors in challenging that strategy. Whiletransnational relationships have often allowed greater leverage, theyhave also sometimes been asymmetric and on occasion haveprovoked mutual criticism, tension and rupture within coalitions, aswell as conflicts with actors from different spheres. We illustrate ourargument with vignettes from our research in Peru, Bolivia andEcuador (for more detail see Bebbington et al. 2007a, 2008;Bebbington 2007; and Hinojosa 2007).3 Finally, we suggest that thedynamics of these conflicts have changed since the election ofostensibly post-neoliberal governments in Ecuador and Bolivia, andwill change again in the face of the global financial crisis.

TRANSNAT IONAL COMPANIES AND TRANSNAT IONAL C IV I L SOC IETY

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Neoliberal Policies and Mining as a State Financial Strategy

There is consensus, across diverse theoretical and ideologicalpositions, that the 1990s saw neoliberal policies spread throughoutthe Andean countries (cf. Gwynne and Kay 2004; World Bank2005). While this has produced macroeconomic stability and somegrowth, this has primarily favoured urban areas. These policies havealso produced growing rural unrest, mainly because much of theeconomic growth has been based on the extraction and export ofminerals and hydrocarbons (primarily, oil and gas) found preciselyin some of the poorest areas of the Andean countryside (Keenan etal. 2002). Indeed, despite the period of optimism experienced since1990 when the economies of Peru, Ecuador and Bolivia grewrespectively on average by 4.7, 4.2 and 3.1 per cent per year,poverty – and in particular, rural poverty – shows no significantdecline (Hall and Patrinos 2005).

As Gwynne and Kay (2004) suggest, neither investment of suchimportance – foreign direct investment (FDI ) in Andean countriesincreased from US$4,333 to US$14,714 million between 2000 and2007 (Economic Commission for Latin America and the Carib-bean, quoted in Lara and Silva 2009) – nor its effect on growthwould have been possible without a specific set of policies aiming toincorporate national economies into growing global markets. In thecase of the mining sector, these policies aimed to attract andfacilitate the entrance of large companies with fresh capital andmodern technology for exploration and exploitation. The aim wasfor these companies to modernize the sector and provide govern-ments with the revenue so eagerly needed for public investment –a position strongly argued by the Peruvian President (García 2008).

In Peru, successive governments since the 1990s have guaranteedfull advantages to firms willing to invest in the country – theyreceived the same treatment as national investors, all barriers torepatriation of profits were removed, fiscal provisions requiring thatthey pay no more than regular company tax and long-term stabilityin taxation rates were guaranteed, and imports of inputs andtechnology were facilitated (Bury 2007). In Bolivia, the ‘neweconomic policy’ implemented since 1985 likewise produced anenvironment favourable to foreign investors and in Ecuador similarpolicies were established, although at a slower pace with fewerenforcement mechanisms and a clear emphasis on the hydrocarbons


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sector (Anderson 2004). These domestic policies were complementedwith external accords. For instance, the Peruvian government signedand ratified international agreements on private investments such asthose with the Multilateral Investment Guarantee Agency (of theWorld Bank Group) and the US Overseas Private InvestmentCorporation, plus 28 other bilateral agreements that guaranteedfavourable conditions to private investments operating withinPeruvian territory (cited in Bury 2007).

As a result, FDI in the extractive industries increased. In Peru,investment increased five-fold between 1990 and 2000, with anadditional 12 million hectares being given in concession to miningcompanies and producing an increase of US$3.1 billion in mineralexports over the period 1990–2003 (Bebbington et al. 2007a). InEcuador, where the emphasis was on the oil sector, FDI grew atabout 2.5 per cent per year. By contrast, mining projects wereunable to shift from exploration to full-fledged mineral production,accounting for only 0.2 per cent of the total value of the country’sexports (Anderson 2004). In Bolivia mining investments wereimportant in the late 1980s and in the 1990s investments in thehydrocarbons sector were dominant.

In order to complete the neoliberal package, investment policieswere accompanied by sets of institutional reforms that modifiedland tenure laws and legal mechanisms for changing the preferreduses of land, which would affect the regulation that applies to themining sector in each one of the countries. These reforms weremeant to ease the establishment and further expansion of privatecapital and property rights in areas of the countryside with richmineral deposits. However, the implementation of these policychanges took longer than that of the investment promotion policies.The superposition of formal laws and contradictions between theformal legal system and customary norms and practices governingthe access to and control of land in the Andes (Bebbington andHinojosa 2007) have delayed the process of privatization and landreallocation, but not stopped it. Notwithstanding their inconsis-tencies, the institutional reforms have allowed national and trans-national companies to occupy and assume a degree of control overthe mineral-rich rural territories (Bridge 2004; Bury 2007) – areaswhich would otherwise remain under agricultural use and com-munity governance.


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Neoliberal Mining Expansion, Social Conflict and Civil SocietyOrganizations

The new mineral and hydrocarbon concessions in Peru, Bolivia, andincreasingly Ecuador cover immense areas for potential exploitation.These spatial consequences of globalizing neoliberal capitalism havethreatened (or been perceived to threaten) the viability of small andmedium farm agriculture as well as urban and rural water supply.Furthermore, given that mining investments occur in areas currentlyoccupied by peasants and small farmers, this mineral expansionchallenges the ability of rural people to control the patterns ofchange in their lived environment. In the process they have alsodeepened existing ruptures in society across ethnicities, classes andregions. At the heart of many of the ensuing conflicts lies a confron-tation between the economic dynamics of deregulated neoliberalcapitalism and the political dynamics of rural populations (andcertain parts of the local/regional and national civil society) deter-mined to insist on a right to be heard and to dispute centralgovernment’s and private capital’s decisions and actions regardingthe use of rural land.

Consequently, the surge of conflict in areas affected by mining andhydrocarbons reflects the pre-eminence given to export-orientedresource extraction over the last two decades of economic neo-liberalization, and the efforts of civil society groups and socialmovements to exercise some form of control over these activities andtheir impacts. This conflict is as much a struggle over whose rightsand voices count in political-economic decision making as it is anargument over different pathways of economic development. Forsome it is also a conflict over models of ownership – and, indeed,within mining protest movements, there are many actors calling fora return to pre-reform state-owned extractive industry and a rejec-tion of the multinational dominance of the sector that is currentlyevident.

Two phenomena are noteworthy in these struggles: the spread ofconflict to urban and regional spaces, and the particular roles playedby social movement organizations (SMOs). Indeed, in many miningconflicts urban and regional ‘defence fronts’ play an important role.In some cases the concerns of these urban actors are issue-based,above all when populations become concerned about the implica-tions of the mine expansion for the urban environment – in


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particular water quality and quantity, and air and noise contamina-tion. In other cases, the involvement of urban groups at a regionallevel has had a more ‘ideological’ and rights-based component.Here, to paraphrase many informants, people criticize ‘the unfairterms on which multinational companies derive profits fromnational resources’. The more general point is that within protestmovements one encounters both urban and rural voices andconcerns – and that while these are partially aligned they are notalways completely aligned. The strength that comes from numberscan therefore be offset by weaknesses that come from divergence ofinterests (Bebbington et al. 2008a).

Social movement organization dynamics and effectsTerritorially based protest has become increasingly organized in andthrough a range of SMOs working alongside rural populations.Some of these SMOs have emerged specifically in response toextractive industry; others already existed around interests (such asindigenous rights to territory) that have been threatened byextraction. Examples of such SMOs are CONACAMI (the NationalConfederation of Mine-affected Communities, Peru), CONAIE (theEcuadorian Confederation of Indigenous Nations) and CONAMAQ(the Bolivian National Council of Indigenous Organizations fromthe Qullasuyu).4 These SMOs have been assisted by local andnational NGOs (for instance, CIPCA and GRUFIDES in Peru,Acción Ecológica in Ecuador, CISEP, CEPA and FOBOMADE inBolivia). During the conflicts these NGOs have helped to connectcommunity organizations with international organizations to obtainfinancial support and influence negotiations through debate, lobbyand direct pressure. International NGOs and agencies and networks(such as Friends of the Earth, Oxfam International, the Mining andCommunities network, together with their respective nationalaffiliates) have also sought to connect with local organizations to offerfinancial and logistic support as well as to develop actions in theinternational arena, where they lobby international governmentalorganizations and national governments, and promote national andinternational campaigns advocating for environmental and socialjustice.

As the cases described in this chapter illustrate, the evolution andoutcomes of conflicts between communities and large mining com-panies must be understood in the light of this involvement of non-


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community actors – often referred to, perhaps unfairly, as ‘out-siders’. Although these non-community actors have substantiallydifferent aims in certain respects, they also share visions, values andprinciples that involve a commitment to some kind of sustainableand inclusive pattern of development. Nevertheless, a recurrenttheme in mining conflicts is that the involvement of these organiza-tions is always controversial. Business, media, government, andother broadly pro-mining actors criticize them and question theirlegitimacy and right to become involved in what these actors seek tocast as national or even local debates. Much of the debate abouttheir role hinges around whether they are viewed as inducing andintensifying these conflicts or as mitigating and resolving them.

Whatever the case, ‘outsiders’ have played an important role indrawing attention to the information and power asymmetriesbetween companies and local communities, and between states andcitizens. At the same time they have suggested – more or less explicitlydepending on the case – that the rapid and deepening roll-out of neo-liberalism depends on the existence of such asymmetries. Addressingthe imbalance, these actors advocate for local communities both atnational and international levels, generate new information andanalysis, foster public and policy debate and provide direct support tolocal organizations (though usually on a very modest scale). This rolehas generally been recognized as valid and useful by communities,particularly when it has produced tangible outcomes. Nonetheless,the relationships between the local communities and NGOs havealso involved a fair share of disagreements with regard to the degreeof representation that the NGOs should assume on behalf ofcommunities, an issue also raised by both Chatterton and Routledgein earlier chapters. These disagreements have had (generallynegative) implications for the strength of social movements aroundmining issues (Bebbington 2007). With these thoughts in mind wenow discuss four separate mining conflicts in the Andes.

Mining and Socio-environmental Conflicts in the Andes

Yanacocha (Peru)Minera Yanacocha (MYSA) – a joint venture between the USA-based Newmont Mining Corporation with 51.35 per cent, thePeruvian Compañía de Minas Buenaventura with 43.65 per cent


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and the International Finance Corporation from the World BankGroup with 5 per cent – is the biggest open-pit gold mine in LatinAmerica and the fifth largest in the world. Given its high level ofproduction, the richness and purity of the mineral deposit and lowproduction costs, Yanacocha is an especially profitable venture(Bury 2007; Puplava and King 2004). The mine extends across10,000 hectares in the Cajamarca region (Northern PeruvianAndes), an area larger than the regional capital city. Given that theland market is quite underdeveloped in the area, 1,386 squarekilometres of land were acquired from peasant households throughmechanisms that later were denounced as unfair, coercive ordishonest – in terms either of the prices agreed or the manipulationof land titling processes and the exercise of pressure over individualsto sell their land.

Although such machinations had not led to a large-scale conflict– at least not in the early years of the mine – the effects of MYSAin the Cajamarca region have been controversial. The mine broughtsignificant resources that have had a positive effect on the regionaleconomy. Investment reached around US$860 million, whilst theexpenditure on goods and services between 1992 and 2000 wasapproximately $1.7 billion. Though only 7 per cent of this spendingoccurred in the Cajamarca region itself, $153.6 million was spent oncreating jobs and $11 million on various social programmes. None-theless, such an injection of fresh capital has also led to criticismsthat an ‘enclave economy’ has been reproduced, with negativeeffects on the dynamics of domestic markets, and that this injectionof resources has caused social dislocation (cf. Roca Servat 2009;Gorritti 2004).

MYSA has also generated significant environmental impacts,transforming landscapes, changing vegetation patterns and disturb-ing water courses. Although initially conflicts between local popula-tion and MYSA occurred mostly in the communities directlyaffected by land purchases, urban discontent was also growing. In2000 in the roadside village of Choropampa, a mercury spillagefrom a MYSA contractor’s truck generated severe health effects andled to increased alarm about urban water supply. When in 2004 thecompany attempted to expand its operations into Cerro Quillish –the mountain that is deemed to contain the water reserves fordomestic use in the region – the conflict became thoroughly urban-ized (Bebbington et al. 2008).


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The process of social mobilization and protest thus gainedstrength, incorporating a number of new actors from rural and urbanareas. Three local NGOs (ADEA, ECOVIDA and GRUFIDES)became more visible, in response to MYSA’s negative impact and itsdismissive attitude towards the affected communities. Their workinitially emphasized the dissemination of information, environmentaleducation, and awareness raising about the mine’s activities amongthe local population. Contacts were also steadily developed withinternational organizations such as Oxfam America and GlobalGreengrants Fund in order to seek financial support. Over this sameperiod, national and regional organizations such as CONACAMIand the Federation of Women Peasant Vigilance Organizations ofNorthern Peru were also actively advocating for community rights,mobilizing rural people, and connecting to international organiza-tions such as Project Underground to get funding and additionalsupport. The trajectory of these organizations, however, hasinvolved increased tensions due to internal disputes and contro-versial agreements between some of their leaders and MYSA.Indeed, by the early 2000s, efforts to create a regional basis ofCONACAMI had failed in Cajamarca.

Nevertheless, in spite of differences among community organiza-tions and local NGOs, the movement that they produced hasinfluenced the relationships between MYSA and the local popula-tion, as well as the relationship between mining, livelihoods anddevelopment. Furthermore, at an international level, where therelationships between international NGOs and local organizationshave also been characterized by tension and ruptures, Yanacocha-Cajamarca has become an emblematic case used by global civilsociety organizations to show how campaigning, lobbying andadvocacy strategies can contribute to the furtherance of environ-mental justice.

Majaz (Rio Blanco) (Peru)The Rio Blanco project is a concession acquired in 2001 byMonterrico Metals plc. – a London-registered company that since2007 has been owned primarily by Chinese capital – to exploitcopper and molybdenum deposits. Located in the high Andes at theeast of the Piura region (northern Peru, bordering Ecuador) theproject occupies land that belongs to two peasant communities whouse it for extensive grazing and as a ‘reserve’ for community


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purposes. Via its wholly-owned Peruvian subsidiary Minera MajazSA., Monterrico began exploration in 2002, following governmentapproval of the company’s environmental evaluation. The evalua-tion process was non-transparent and has subsequently beencriticized by local and national organizations as well as by thePeruvian Ombudsman. The company still needs to secure approvalof its environmental impact study in order to convert the explora-tion project into a fully fledged open-pit mine.

Reaction and mobilization against Minera Majaz began in theearly phases of the exploration process. This protest revolved aroundthe legality of the governmental resolutions that allowed thecompany to occupy community land without prior permission fromthe affected villagers and, subsequently, challenged the validity ofthe environmental evaluation presented by the company in order tobegin exploration. Throughout the protest, the two most affectedcommunities were joined by federations of peasant organizationsand local municipalities as well as by the communities, munici-palities and activists from two neighbouring provinces of Cajamarca,which, due to their location downstream, could be potentiallyaffected by the project. Much of the mobilization was non-violent,yet in both 2004 and 2005 a series of confrontations with the localpolice led to the deaths of two peasants as well as injuries to severalpersons.

These incidents induced the regional government of Piura tocreate a space for negotiation. The initiative failed, however, as localactivists and communities accused the coordinators of assuming apro-mining position. An earlier mission composed of the provincialCatholic bishop and representatives from Oxfam America andCONACAMI also failed. Indeed members of the mission wonderedout loud whether it had been deliberately sabotaged – the mainindicator of this being that the air-force helicopter transporting themdeposited them at a site far from the protest, and then the policeprevented them from walking to the location of the protest. Theseincidents were followed by a mass-media ‘war’ which sought togenerate public distrust in the coalition of NGO, church andpeasant organizations, suggesting that they harboured ‘terrorist’sympathies.

During 2007, local, regional, national and international activistscame together in several initiatives to put more pressure on the com-pany. In one case, the Peru Support Group of the UK produced a


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report on the case and then, in conjunction with a UK parlia-mentary body, used it to foster public debate and media coverage inPeru and the UK (Bebbington et al. 2007). In another case, Peruvianorganizations drew on international support to organize and sponsora citizen referendum on the mine’s future. The result was a firmrejection of the mine by over 90 per cent of votes. While both thegovernment and mining sector dismissed the referendum as illegal,it had revealed local concerns and fostered public debate. That said,the government still insists that mining is fundamental for Piura’sand Peru’s overall development, whilst communities and other civilsociety actors continue to emphasize the threat posed by mining tothe natural environment and the sources of their livelihoods. Theycriticize the bias of a state that, they argue, protects foreign invest-ments above its own citizens’ rights (Burneo 2007). Meanwhile, in2009, UK lawyers opened a legal case against the company in theUK courts.

Cotacachi-Intag (Ecuador)Canton Cotacachi is located in the north-west Ecuadorian Andes,some two hours drive to the north of Quito, and extends across bothhigh altitude grassland and humid tropical valleys. It includes theIntag sector where copper reserves were found in the 1980s by anexploratory mission funded jointly by the Belgian and Ecuadoriangovernments. In the 1990s, after a larger-scale phase of explorationfinanced by the Japanese International Cooperation Agency, theproject passed to Bishi Metals (a subsidiary company of Mitsubishi),subsequently bought by Roque Bustamante which, in turn, sold theconcession to Ascendant Copper Corporation (a Canadian companybased in Colorado, USA). Then Ascendant Copper transferred theproperty to its subsidiary Ascendant Ecuador in 2005 (Bebbington etal. 2008). More than 20 years after the start of the explorationphase, and despite the fact that significant mineral reserves werefound at the time of a global, emergent market-fuelled boom incopper production, the project at Intag has failed to progress towardsserious geological exploration. This apparent halt in the expansionof mining capital can be explained by the following four factors.

First, from the very beginning there has been strong – and attimes violent – opposition to the mine expansion from the localpopulation, which was assisted by the local Catholic Church andnational (Acción Ecológica – AE) and local (DECOIN) environ-


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mental NGOs. Indeed, DECOIN itself was created with the par-ticipation of the campesino colonos as well as urban activists in responseto the initial activity of Bishi Metals. Second, this local protestmobilization has been combined with an active programme ofenvironmental education directed especially towards local youth andwomen. The programme also facilitates visits to areas elsewherealready affected by open-cast mining. AE, DECOIN, certain localactivists and international networks played an important role in thisprocess. Third, given the existing connection between AE andinternational networks of NGOs (including Friends of the EarthInternational, Rainforest Action Network and Global GreengrantsFund) and between Intag residents and foreign nationals, the Intagcase quickly acquired visibility and international support. Fourth,the case shows the importance of the position assumed by the localgovernment in determining the trajectory of these conflicts and theexpansion of mining capital. Cotacachi’s indigenous mayor, AukiTituaña, himself nationally and internationally visible for his commit-ment to local democracy and inter-cultural relationships, hasassumed an increasingly environmentalist and anti-mining discourseand provided support to local activists. More significantly, themunicipality and supportive local organizations have dedicated timeand effort to elaborating an alternative strategy for local developmentbased on more sustainable economic sectors such as ecotourism,organic coffee, handicraft production and watershed protection.

Inti Raymi (Oruro, Bolivia)The department of Oruro is located in Bolivia’s high plateau andcharacterized by remarkably low indicators of social development.Yet the department hosts the country’s richest open-pit gold mine,Inti Raymi (IR), owned primarily by Newmont Mining Corporation.In 2004, having exhausted the gold deposits, IR announced theclosure of its Kori Kollo mine (the other site, Kori Chaca, willcontinue to operate). This has caused the rural communities in thesurrounding areas to begin voicing their concerns about the environ-mental damage caused by the mine over its 20-year-long operation.Local communities demanded that the government intervene andcarry out an environmental audit in order to ensure some com-pensation. The demand was accepted by the government in 2004;however, at the time of writing this audit is yet to be completed.The company argues that its operation was developed within an


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existing framework for environmental protection, complying withthe mandatory environmental standards and taking steps towardsthe reduction of the environmental damage potentially caused. Bycontrast, the affected communities claim that there are signs ofsubstantial environmental degradation.

In this case, the confrontation between the company and localcommunities has continued unabated. In their struggle, the con-flicting parties have not acted alone. Inti Raymi relies on a group ofexternal advisers (lawyers, consulting companies and experts) and itsExternal Community Relations team, which is in charge of easingthe tensions between the company, the local communities and thestate. In turn, the local communities receive assistance from theNGO sector, which has supported the communities by providingthem with information, advice and financial help. These NGOs andlocal activists also engaged in direct lobbying and advocacy with thestate officials in La Paz (Bolivia’s capital city).

Conclusion

Transnational civil society and effective protestMining expansion and the conflicts that it has engendered in theAndes have been characterized by a significant presence of inter-national actors – private, public and non-governmental (Bebbing-ton and Hinojosa 2007). The mining industry has becomeincreasingly dominated by multinational corporations, entering intojoint-venture, subsidiary, and sub-contractual commercial arrange-ments with national companies and, through these partnerships,inserting themselves into some of the most remote localities in theAndes. Likewise, civil society action around mining has involvedcollaborations among international, national and local groups (oftenon the basis of prior long-standing relationships).

Given that pro-mining interests have portrayed external NGOs asone of the most important factors fuelling the conflict, these NGOsare continually under close scrutiny and criticism from miningcompanies and national governments. In the majority of cases suchNGOs have not been recognized as ‘genuine’ representatives oflocal communities and people’s interests, not to mention regional ornational interests. They are criticized for being ‘biased’ towardsenvironmentalism and against economic development. The local


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NGOs are also accused of adhering to a foreign anti-globalizationagenda and lacking the knowledge about what both the localcommunities and countries really need (which, according to govern-ment and the sector, is FDI and growth: Garcia 2008). As such,NGOs and networks of civil society organizations have been labelledas a threat to the supposedly well-intentioned efforts of nationalgovernments aimed at promoting economic development by attract-ing foreign investment; particularly in sectors such as mining wherethe Andean countries have, for reasons of natural resources, anabsolute or comparative advantage.

While we must not generalize too much about the ways in whichNGOs participate in conflicts between local communities and bigmultinationals, certain aspects of the internal dynamics of socialmobilization help explain the uneven effect of protest against miningacross our cases. Of particular importance are the following: (1) theextent to which NGOs were able to develop close collaboration withcommunity organizations; (2) the extent to which such collabora-tions have in turn generated alliances with local governments; (3) thestrength of the alliance between the local NGOs and internationalactors; and (4) the role played by the central government. At thesame time, the strength and cohesiveness of local capacities (ofindividuals and community organizations) to organize and mobilize– and to propose alternatives – has been the key to a successfulmobilization against the expansion of mining.

The two Peruvian cases have shown that the intensive involve-ment of local and national NGOs and the deployment of inter-national support have created awareness of, and drawn mediaattention to, the conflict between mining expansion and ruralcitizenship. In Ecuador and Bolivia, the conflicts have been kept at a‘more local level’ with the central governments playing a less clearlydefined (though still a pro-mining) role; as a result, the miningcompanies have had to deal directly with the local communities andtheir representatives. In the Ecuadorian case, the result has (so far)been that the mining industry has been unable to develop the minein Cotacachi. In the Bolivian case, the mining corporation has founda way to continue its expansion, yet, at the same time, it has had tocreate compensatory mechanisms to mitigate the conflict. Thoughcivil society actors have at times pursued different (even self-interested) goals and strategies, the NGOs that collaborated withlocal communities have indeed played an important role in reducing


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some of the relational asymmetries (especially regarding knowledgeand information) which give mining companies and central govern-ments much more power vis-à-vis local organizations and com-munities. NGOs have also played an important role in giving voiceto local community concerns in those spaces where for practicalreasons it was otherwise quite unlikely that the communities them-selves could have assumed a direct presence. Nonetheless, when theNGOs have assumed ‘excessive’ leadership, the cohesion andlegitimacy of such a mobilization have weakened. In these cases atleast, a ‘successful’ transnational network has not merely been theone with local, national and international actors, but rather the onewhich was able to elaborate a well-articulated strategy, cutting acrossgeographical scale while giving prominence – particularly in thepublic sphere – to community organizations.

Transnational civil society and post-neoliberalismWhat does the current moment – defined by an internationalfinancial and economic crisis and the presence of self-styled post-neoliberal governments in Bolivia and Ecuador – imply for suchtransnational NGO strategies around mining? We consider this issuealong two dimensions: the impact of the credit crunch on mininginvestment; and the posture of Andean governments vis-à-vis protest.First, the crisis has led to a slowing of investment across all of theworld’s major mining companies, as they have responded to a fall inprice for most minerals (except for gold) as well as to capital scarcity.This slowdown in activity should provide transnational networkswith time to reflect more strategically on the broader objectives ofthe movement, and perhaps to institute a shift from reactive to moreproactive positioning. However, the economic slowdown has notbeen the only consequence of the crisis. Non-traditional companiesand capital, in particular from China, have moved into the Andeanregion (for instance, Chinalco purchased 20 per cent of the mininggiant Xstrata in Peru). This change in the composition of the sectorpresents a challenge for social movement organizations, to whomthe institutional cultures of these new companies are unknown. Asecond consequence of the crisis might be that Andean governments,increasingly desperate for investment, will become increasinglyintolerant of protest. Indeed, as noted in the introduction, 2009 hasseen legal and violent repression of protest in Peru, legal repressionin Ecuador, and discursive repression from all three governments,


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neoliberal and post-neoliberal alike. The implication is that evenunder ‘post-neoliberalism’ and in the presence of crisis, it will belargely ‘business as usual’ in the extractive sector. It will continue togenerate a similar set of impacts in mineral-rich territories and hencewill also continue to induce local protest and a mobilized opposition.However, for such mobilization to be effective in the new ‘post-neoliberal’ context, both the strategies and broader alliances of civilsociety organizations will probably have to change. Crisis is anopportunity, but it is also a crisis.

AcknowledgementsWe are grateful for an ESRC Professorial Research Fellowship (RES 051-27-0191) to Tony Bebbington which made much of this research and thischapter possible.

Notes

1 On 5 June 2009 soldiers opened fire on protesters. The number killed isdisputed, ranging from less than one to several dozens of people. Inresponse, protesters also killed policemen.

2 This was later reinstated, following an international outcry.3 See also <www.sed.manchester.ac.uk/research/andes>. 4 An imperfect translation for Consejo Nacional de Ayllus y Markas del

Qullasuyu.

References

Anderson, S. (2004) ‘The mineral industry of Ecuador’, in US Geological

Survey Minerals Yearbook 2004, USGS, Washington DC.Bebbington, A. (ed.) (2007) Minería, movimientos sociales y respuestas campesinas:

una ecología política de transformaciones territoriales, IEP and CEPES, Lima.Bebbington A. and Hinojosa, L. (2007) ‘Conclusiones: Minería, neoliberal-

ización y re-territorialización del desarrollo rural’, in Bebbington, A. (ed.)Minería, movimientos sociales y respuestas campesinas: una ecología política de

transformaciones territoriales, IEP and CEPES, Lima.Bebbington, A., Connarty, M., Coxshall, W., O’Shaughnessy, H. and

Williams, M. (2007a) Mining and Development in Peru, with Special Reference to

the Rio Blanco Project, Piura, Peru Support Group, London.Bebbington A., Hickey, S. and Mitlin, D. (2007b) Can NGOs Make a

Difference? The Challenge of Development Alternatives, Zed Books, London.Bebbington, A., Humphreys Bebbington, D., Bury, J., Lingan, J., Muñoz, J.

P. and Scurrah, M. (2008a) ‘Mining and Social Movements: Struggles


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over Livelihood and Rural Territorial Development in the Andes’, World

Development, Vol. 36, No. 12, pp. 2888–905.Bebbington, A., Hinojosa, L., Bebbington, D. H., Burneo, M. L. and War-

naars, X. (2008b) ‘Contention and Ambiguity: Mining and the Possibilitiesof Development’, Development and Change, Vol. 39, No. 6, pp. 887–914.

Bridge, G. (2004) ‘Mapping the Bonanza: Geographies of Mining Investment in anEra of Neoliberal Reform’, The Professional Geographer, Vol. 56, No. 3, pp.406–21.

Burneo, M. L. (2007) ‘Comunidades, Estado y minería: el proyecto RíoBlanco y la consulta vecinal’, Pueblos, No. 29, pp. 13–15.

Bury, J. (2004) ‘Livelihoods in Transition: Transnational Gold Mining Opera-tions and Local Change in Cajamarca, Peru’, Geographic Journal, Vol. 170,No. 1, pp. 78–91.

—— (2007) ‘Neoliberalismo, minería y cambios rurales en Cajamarca’, inBebbington, A. (ed.) Minería, movimientos sociales y respuestas campesinas: una

ecología política de transformaciones territoriales, IEP and CEPES, Lima.García A. (2008) ‘El perro del hortelano’, El Comercio, Lima, 28 October.Gwynne, R. and Kay, C. (eds) (2004) Latin America Transformed: Globalization

and Modernity, second edition, Oxford University Press, New York NY.Hall, G. and Patrinos, H. A. (2005) Indigenous Peoples, Poverty and Human

Development in Latin America: 1994–2004, World Bank, Washington DC.Hinojosa, L. (2007) ‘In the Name of the Environment: the Political

Economy of Socio-Environmental Conflicts in Altiplano Mining Areas ofBolivia’, TCD Andes Working Paper, <http://www.sed.manchester.ac.uk/research/andes/publications/reports/Hinojosa_TerritoryandconflictsinBolivia.pdf>.

Keenan K., de Echave, J. and Traynor, K. (2002) ‘Mining and Communi-ties: Poverty Amidst Wealth’, PERI and CSE Conference Paper SeriesNo. 3, University of Massachusetts, Amherst MA.

Lara C. and Silva, C. (2009) ‘Los posibles impactos en inversiones yservicios del acuerdo de asociación entre la Unión Europea y la Comuni-dad Andina de Naciones’, unpublished report, Santiago de Chile.

Puplava, J. and King, E. (2004) ‘Open the Checkbook – Buy the Ounces –a Fundamental and Technical Review’, Financial Sense, <http://www.financialsense.com/Market/puplava/2004/0308.html>.

Roca Servat, D. (2009) ‘The Realm of Private Governance: Mining Corpo-rations and Local Communities in Peru’, conference paper, LASA2009,Rio de Janeiro. 11–14 June.

The Economist (2009) ‘Blood in the Jungle’, 11 June.World Bank (2005) Equity and Development. World Development Report 2005,

World Bank and Oxford University Press, Washington DC.


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Numerous writers have drawn attention to the rise of neoliberal-ism, the particular forms it has taken in different countries, and itsbroader social, economic and political effects, all of which areevident in this book (see, for example, earlier chapters by Birchand Mykhnenko; Birch and Tickell; Jessop; Swain et al., thisvolume). Neoliberalism is associated with a range of economic andfinancial policies that started in the late 1970s and were aimed atrolling back the gains made by the working class in the advancedcapitalist countries in the post-war period. These included theelimination of the Keynesian welfare state and the social safety net(see MacLeavy, this volume); the end of any commitment to fullemployment and of state subsidies for industry; flexible labourmarkets with the concomitant destruction of trade union anddemocratic rights in order to drive down wages and conditions; theprivatization of state-owned enterprises; the outsourcing of thedelivery of public services; the introduction wherever possible ofuser charges for public services; and the private financing of publicinfrastructure. In the so-called developing countries, aid and loanswere made conditional upon the adoption of these and similarpolicies that became known as the ‘Washington Consensus’ (seevan Waeyenberge, this volume).

This wholesale break-up of the welfare state and the sale of state-owned enterprises and assets are part of an ongoing process wherebythe social and public services pass into the private sector throughbuyouts, subcontracting, concessions, and sale and lease-back opera-tions. Increasingly such goods and services are then integrated intothe wider international economy as they are taken over by the trans-national corporations. In other words, the social welfare functions ofthe nation state are being integrated into the world economy, but

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for the benefit of capital, not labour or the population at large.Neoliberalism, and the intellectual theories that justified the turn toprivate ownership and the free market, thus provided the ideologyand mechanisms to accomplish an international market for goodsand services that were either produced by national monopolies ornot traded at all, and a new source of profit for capitalist enterprises.It was one of the mechanisms by which the world economy hasbecome integrated on an unprecedented scale in a process nowknown as globalization.

Neoliberalism is also associated with de-industrialization and theturn to financialization, the accumulation of capital based uponasset trading as opposed to production of goods and services (seeTyfield; Lohmann, this volume). Together, these policies have led toan unceasing assault on working people, their jobs and the socialwage in both the advanced capitalist countries and less developedcountries. They have given rise to explosive social tensions in theUnited States, Europe and around the world as evidenced byoccupations, strikes and demonstrations as a result of increasingsocial polarization, especially evident in the current financial crisis.Such struggles reflect the growing hostility to the domination oftransnational corporations and financial institutions over the lives ofworking people and society as a whole. However, if such oppositionto neoliberalism is to be successful, it is important to understandwhat it is, what has caused it, and how it has led to a breakdown ofnot only the financial but also the economic system, giving rise tothe very real threat of a Great Depression and war.

The central argument of this analysis is that the root causes ofneoliberal policies, so detrimental to the working class, lie within theworking of the economic system itself and not simply an ideologicalsea change that occurred in isolation from the changes in thestructure of the international economy. It characterizes neo-liberalism as a response by corporate bosses and owners to thefailure of the post-war settlement that was based upon nationalregulation. In the advanced capitalist countries, capital accumu-lation became increasingly dependent not on production but tradingin financial assets. Far from resolving the problems of capitalaccumulation, economic growth and global poverty, such policieshave only exacerbated them. Furthermore, in the interest of notletting a crisis go to waste, the ruling elites in the US, UK andEurope are implementing measures that will restructure the financial


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and economic system in the interest of the financial oligarchy andconsolidate the power of the few at the expense of working peopleand the rural poor all over the world. Such an analysis is crucial forunderstanding and identifying what must be done, the socialistreorganization and control of the economy, and the means by whichit can be achieved. This chapter will consider each of these issues inturn.

Neoliberalism: a Response to Developments within theEconomic System

While there have been many reviews of neoliberalism (see Birch andMykhnenko; Swain et al., this volume), Beams (2008) is one of thefew to have traced its source and development to the workings of thecapitalist economic system itself. It is pertinent here to summarizebriefly the purpose of a capitalist enterprise: its mission is not simplyto make an absolute level of profit but a level of profit proportionalnot to sales but the amount of capital employed. This is typically10–15 per cent, and must always be higher than the prevailinginterest rate, since this represents the basic return that is available tothe providers of finance. As the amount of capital employed in anenterprise increases, so must the profit. The cash surplus is thatwhich remains from sales revenues after all external goods andservices and the internal costs of the workforce have been paid. Inthe final analysis, that cash surplus or surplus value – the basis ofprofit – represents the surplus labour extracted from the workforce,which produced the goods and services and without which valuecould not be created.

A number of commentators have argued that neoliberal policiesare the outcome of a ‘free market’ ideology, but it is more accurateto consider them as an expression of the crisis of the profit systemas a whole. The ideological sea change – known as the New RightAgenda, or neoliberalism – that took place in the mid-1970s (seeBirch and Tickell, this volume) has been presented as simply apolicy shift and could by implication therefore be reversed byanother policy change. But in fact it reflected the response ofbusiness leaders and their governments to two interrelated changesthat had taken place in the world economy: the end of the post-warboom as reflected in the collapse of the 1944 Bretton WoodsAgreement and the downturn in the rate of profit.

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The Bretton Woods Agreement, a crucial part of the post-wararrangements to restore world trade, production, investment andemployment, and thereby restabilize capitalism, established the USdollar as the world currency, fixing the value of national currenciesto the dollar at the rate of $35 as the set value of an ounce of gold.Its very success in restoring world trade and investment was at theexpense of the US’s balance of trade, which, combined with the costof the Vietnam War, led to a huge outflow of dollars that farexceeded the amount of gold in the US vaults. From the perspectiveof economic orthodoxy, the logical ‘solution’ would have been toimpose a recession in the US to reduce the balance of paymentsdeficit and/or terminate the Vietnam War. Neither was politicallyacceptable to the ruling elite there. Instead, President Nixon severedthe link between the dollar and gold in August 1971 and institutedthe floating dollar regime, thereby devaluing the dollar and leavingthe holders of dollars overseas to shoulder the cost. This marked theend of the Bretton Woods system of regulating the world economy.

The collapse of Bretton Woods signified that the global expansionof capital could no longer be contained within a system of nationalregulation: the very same problem preceding the First World War.This gave rise to a major downturn in trade and recession. Nonational currency could underpin the world economy. It marked theend of the post-war boom or so-called golden age, which had in thefinal analysis been based upon US economic hegemony. The result-ing global mobility of capital also spelt the end of the programme ofKeynesian national regulation that formed the basis of the post-warwelfare state, and the state-owned enterprises and services. WhileKeynesian measures were applied to the recession of 1974–5, theyserved to worsen the situation and stoke inflation.

The downturn in the rate of profit in the 1960s and 1970s wasthe driving force for several interrelated processes: the globalizationof production in order to lower costs and the development andapplication of new technologies of production (such as computersand telecommunications). Restraints on the movement of capitalwere lifted, enabling corporations to establish production plantsoverseas to access lower wage platforms, bring in internationalfinance, and buy financial assets overseas. Changes in technologyenabled ever-fewer productive units to supply a world market.Together these processes have been responsible for a transformationof the structure of the capitalist economy.


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But at the same time, the enormous technological innovations inthe production process based on the computer chip, instead ofresolving the falling rate of profit, enormously intensified the crisis ofthe profit system. The essence of this new technological regime wasthe replacement of value-creating labour by capital equipment inthe production process. Consequently, rather than alleviating thetendency of the rate of profit to fall, it has worked to exacerbate it,as Armstrong et al. (1984) perceptively showed a quarter of a centuryago. While this consequence was and is largely invisible in the publicdebates, it lay at the heart of the policy shift and neoliberalism. Thefalling rate of profit relative to the amount of capital employed (eventhough the absolute amount of profit may rise in particular indus-tries or companies) lay behind the successive waves of mergers andcross-border acquisitions in the 1980s and 1990s, as corporationssought to cut costs and sell off surplus assets, thereby reducing theamount of capital employed.

Financialization: the New Mode of Capital Accumulation

The falling rate of profit in basic industry and manufacturing alsoled to parallel processes. First, there was a shift out of manufacturingin advanced capitalist countries such as the US and Britain in the1980s in a process that led to severe de-industrialization. De-indus-trialization was accomplished by interest rates rises to record levels– and thus the increasing value of the national currency, making theprice of manufactured goods uncompetitive on the world markets.Such policies were legitimized under the rubric of ‘beating inflation’.

Second, there was a turn to financial engineering or financial-ization, representing a new regime of capital accumulation basednot on the production of value but on the expansion of financecapital and the buying and selling of financial assets. The end offixed currencies in 1973, which enormously increased the risksarising from international trade, provided an important stimulus tothe growth of financial derivatives. These derivatives sought toeliminate the risk of price changes between the time when a contractwas signed and the commodity was delivered, and had existed for along time. However, new financial derivatives were developed thatsought to insure against exchange rate and other financial risks andwere traded on newly established markets such as the ChicagoMercantile Exchange and the Chicago Options Exchange. These


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derivatives soon became an important source of speculation: forexample, the value of over-the-counter agreements had grown fromalmost nothing in 1973 to $683.7 trillion in 2008 (BIS 2008), anamount equal to more than ten times the value of global GDP.

Similarly, foreign exchange transactions grew from $14 billion aday in 1973 to $1.26 trillion in 1995. While in 1973 world trade ingoods and services had accounted for 15 per cent of these trans-actions, by 1995 it had declined to just 2 per cent. Later, suchderivatives and other financial assets including mortgages, rentalincome, credit card debt and utility revenues were increasinglybundled together and securitized as repayments for long-term loans.As well as the enormous growth in financial derivatives, the newregime gave rise to various asset bubbles financed by debt: the shareprice bubble, the dot.com bubble and the housing bubble.

Bryan and Rafferty (2006) explain the significance of derivativesin that they not only ‘bind’ assets in the present to assets in thefuture, but also ‘blend’ assets, allowing investors to hedge againstadverse movements in one financial asset and take advantage of therelative movement between various classes of assets. That is, deriva-tives blend the characteristics of different asset forms, ‘commen-surating the values of different financial assets’, thereby enablingfinance capital to assume a more universal character. While theyhave become a vehicle for massive speculation that has precipitatedthe collapse of the global financial system, speculation was not theirprimary or original purpose. Or to put it another way, as Marx(1961) explained, while credit originates as ‘the humble assistant ofaccumulation’, it soon becomes a new mechanism of competitionand ‘the centralization of capitals’.

Banks and other financial institutions sought to increase theirlending via a process known as securitization, whereby their loans toindividual home-owners, capitalists and corporations were bundledtogether to pool their uneven risk profile, sold on as ‘securitizedbonds’, and serviced with the income from their associated loanportfolio. The proceeds were in turn used to finance new mortgagesand loans, enabling banks to turn over their capital faster andincrease their profits. Increasingly, mortgages, known as the sub-prime mortgages, were sold to people on low incomes on theassumption that house prices would continue to rise. They did, untilworkers, whose wages were not rising and who had exhausted alltheir means of increasing their income, were unable to keep up with


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their repayments, triggering a default, a collapse in house prices andthe breakdown of the entire financial system.

Further impetus to financialization as a new mode of capitalaccumulation came from the decision by the US Federal ReserveBoard to lift the controls on the movement of capital and laterreduce interest rates. This enabled a vast increase in the export offinance capital to low-wage platforms, most notably China, the FarEast and later Russia and Eastern Europe, where the level of wageswas one third that of the US. This huge expansion in the workingclass, and thus the amount of surplus value that could be extractedby capital, provided a new basis for capital accumulation: thesurplus value extracted in China was then distributed to otherfractions of capital in the form of licence fees, rents and interest tobanks and financial institutions. Peter Mandelson, when EuropeanTrade Commissioner, illustrated this point very graphically when heobserved that a Chinese firm manufacturing an iPod receives only$4 for a product retailing at $290 in the US.

The shift from manufacturing to financialization can be gaugedby the following statistics and examples. Whereas in 1982 the profitsof US financial corporations accounted for 5 per cent of total UScorporate profits after tax, this had risen to 41 per cent in 2007.Similarly, in Britain, the financial sector became the most importantprofit-generating sector in the economy, with one in ten Londonersworking in the City of London. According to Epstein and Power(2003), the share of national income going to the finance sector‘dramatically increased’: between the 1960s and 1970s and the1980s and 1990s, this rose by 143 per cent in the UK, 92 per centin the US, 1112 per cent in South Korea and 155 per cent inFrance.

Moreover, the trade in derivatives and financial assets was notconfined to the financial corporations. Even non-financial corpora-tions turned to trade in financial assets and securities to increasetheir profits, taking out loans to do so. Increasingly, they set upbanks or joint ventures with banks to provide the credit for theircustomers to buy their goods and services. Corporations such asGeneral Motors made more money out of their financial arms thanthey did from selling their cars.

This shift to financialization marked a qualitative change in theeconomies of the US and Britain and was fuelled by a vast increasein debt. US debt rose from 163 per cent of GDP in 1980 to 346 per


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cent in 2007. Household debt rose from 50 per cent of GDP in 1980to 100 per cent in 2007. In the financial sector, debt rose from 21per cent of GDP in 1980 to 83 per cent in 2000 and 116 per centin 2007.

In addition to the switch to this new form of capital accumu-lation, the owners of capital also sought to increase their share of thevalue created by the working class in the production process. Underconditions where the overall surplus value was expanding, as in thetwenty-five years after the Second World War, capital was able totolerate the welfare state and even welcome the nationalization ofbasic industries. Such policies provided a means of containing andregulating the class struggle since the government as owner was ableto pay higher wages and improve working conditions in countrieslike Britain, while the welfare state meant that employers did nothave to make extensive provision for health insurance and retire-ment for its workforce as employers in the US did in the period ofthe long boom. Nationalization shifted the cost of investment incapital-intensive industries onto the taxpayers while enabling theirformer owners to reinvest the proceeds from compensation in moreprofitable ventures. At the same time the nationalized industries andservices could be run in ways that constituted a subsidy to industry.Indeed, the nationalizations in the 1940s were justified with claimsof the increased efficiency that would flow from the restructuringand increased investment that only government could provide(Millward 1999).

But under conditions where the tendency is for surplus value todecline, deductions in the form of corporate taxation to financesocial welfare became increasingly intolerable. One of the responsesof the ruling elites everywhere was to attempt to claw back a portionof the surplus value previously appropriated by the state in the formof social welfare provision to the working class, since any reductionin tax payable – or, more importantly, tax actually paid – representsan attempt to increase their profit or the rate of return on capitalemployed. Corporations and mega-rich insisted upon, and got, areduction in business taxes and their own personal tax at theexpense of ordinary people, contributing to the continuing fiscalcrisis of the state. They have legally or otherwise minimized theirtax payments by relocating their activities to off-shore tax havensand devising other tax dodges; for example, unpaid tax by the richand major corporations costs every British worker at least £1,000 a


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year. Governments everywhere clawed back the billions lost in suchtax cuts via regressive taxes on the consumption of basic goods andservices that have hit the poorest families the hardest.

Corporate refusal to pay tax is not just a British but a universalphenomenon. A report by Christian Aid (2008) argues that illegaltax evasion by companies is depriving the world’s poorest countriesof US$160 billion a year. The sums lost globally due to tax evasion,which is illegal, are approximately equal to nearly one and a halftimes the amount of foreign aid given to poor countries. Adding intax avoidance, which is entirely legal, this would be several timesgreater than all foreign aid. Similar considerations lie behind theerosion of pension provision, be it by the employer or by the state(since employers must either contribute directly to the state pensionprovision or indirectly via taxation), and other social insuranceprovisions. All welfare provision represents in the final analysis adeduction from the surplus value extracted from the working classand realized for the capitalist corporations and their owners in theform of profit.

Furthermore, the 40 per cent or so of GDP that did not directlyyield a profit must now be opened up via privatization, ‘partner-ships’, outsourcing, and all the rest, to private profit, representing 30years of ongoing assault on the social position of the working classas capital seeks to overcome the pressures on the rate of profit.Hence the continuous rounds of privatizations, cost cutting andausterity budgets. As soon as one round of cuts is completed,another begins. This is because while all these measures benefitedsome social layers at the expense of the many (see Duménil andLévy 2003), they failed to establish a new equilibrium based on theexpansion of the mass of surplus value. Indeed, the last 30 yearshave been marked by crises: to name but a few, the collapse of theUS savings and loans industry in the 1980s; the 1987 stock marketcrash; the Swedish and Japanese banking crises in the early 1990s;the 1994 Mexican peso crisis; the 1997 Asian crisis; the Russiancrisis and the collapse of Long Term Capital Management in 1998;and the collapse of the dot.com bubble and the Argentineaneconomy in the early 2000s.

The driving force behind all these developments is the require-ment for new sources of profit and a reduction in restrictionsimposed upon the corporations’ activities by national governmentsas they undertake the production of and investment in goods and


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services on an international scale. Transnational corporations(TNCs) seek to extend and deepen their global reach at the expenseof the universal right to water, sanitation, transport, energy, healthcare and education, and basic democratic rights. But the creepingprivatization espoused by all governments, the international finan-cial institutions, the European Union, and the TNCs, also expressmore fundamental processes – the inherent drive of the productiveforces to break free of the constraints of the outmoded nation statesystem.

The Financial and Economic Crisis of Neoliberalism

In August 2007 the financialization bubble burst. The problemsstarted with US sub-prime mortgages, which were loans to thepoorest members of American society whose income was stagnant ordeclining in real terms and who were increasingly reliant uponpersonal debt to fund their living costs. The sub-prime mortgagecollapse has given rise to a credit squeeze that has led to the collapseof major banks and engulfed the entire $57 trillion US financialsystem and global financial markets. Furthermore, it has precipitatedan economic collapse in world trade and economic growth thatthreatens the livelihoods of millions of workers and their familiesaround the world.

The attempts by governments to ‘do whatever it takes’ to bail outthe banks for their reckless and criminal activities, and prop up thefinancial system – with successive rounds of previously unimaginablesums of money – will consolidate the power of the largest financialinstitutions and squeeze out the smaller players, and threatennational insolvencies and austerity. In effect, the banks and financialinstitutions have privatized the US and UK Treasury with not eventhe pretence of consulting the broad mass of the people who mustpay for it, whilst failing to ensure accountability for the billions if nottrillions of public monies. The cost will be borne by the workingclass, via massive cuts in public expenditure and tax rises to makeway for the interest charges needed to service their government’sborrowing to prop up the banks. Nothing exposes more graphicallythe diametrically opposed interests of the two classes.

But such measures are doomed to fail, as many of the financialcommentators have noted. This is because they do not address thesource of the problem: that the crisis is the expression of the


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fundamental laws of capitalism and that the claims on the surplusproduced by the working class are many times larger than the massof surplus value. To give but one example, the value of the assets(the loan portfolio) of just four of the British high street banks in theeye of the storm is three times Britain’s annual GDP. The solution,from the capitalists’ perspective, lies in increasing the exploitation ofthe working class in order to expand the amount of surplus valueand by forcing out, bankrupting and eliminating whole swathes ofcapital, thereby wiping out their claims on the surplus value andrestoring the returns to those sections of capital that remain.

In other words, a vastly intensified repeat of the policies of thelast 30 years is required. However, such policies can never be imple-mented democratically or peacefully. Hence the curtailment of civilliberties in most industrial democracies, which has been legitimizedby the ‘war on terror’, will be used to intimidate and prevent class-based opposition to such policies. It is this which underlies above allthe turn to militarism and new forms of colonialism to control accessto vital resources in the Middle East, Central Asia, Africa and theArctic.

Defeating Global Capitalism: Challenges and Lessons

This analysis therefore raises important questions about the char-acter of any oppositional movement against such control by thegiant corporations. While there has been widespread opposition overthe last ten years to the policies of the international financialinstitutions of global capitalism, the opposition has largely taken theform of opposition to globalization or neoliberalism as opposed toglobal capitalism. Furthermore, it was unclear on what basis theywere opposing global capital (or globalization?) and neoliberalism (asa form of capitalism or capitalism itself?); whether they agreed witheach other; and, crucially, to whom or to which social layers theywere speaking: international institutions, governments, trade andlabour leaders, or the broad mass of the world’s population?

In other words, there has been a basic confusion that has identi-fied ‘globalization’ with ‘global capitalism’, neoliberalism as ‘badcapitalism’ and the Keynesian welfare state as ‘good capitalism’.While globalization – the increasingly global character of the produc-tion and exchange of goods and services – is in itself a progressivedevelopment, the destructive consequences flow not from globaliza-


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tion as such but from the subordination of all economic life to theanarchic pursuit of profit, based upon national forms of politicalorganization. What is required, in short, is a recognition that theenemy is not globalization or neoliberalism but capitalism. Thus, thereal question is not how to return to some mythical golden age ofnational economic life such as the immediate post-war period, withthe concomitant demands for Keynesian economic prescriptions andregulation, but who will control the global economy and in whoseinterests it will be run.

It is impossible to succeed against neoliberalism if the contest isisolated from any wider social and political struggle of the workingclass. An examination of the past century shows that whatever gainswere made were by-products of major political and social strugglesof the working class, struggles that were led by socialists against theexisting opportunist leaderships. As Rosa Luxembourg pointed out ahundred years ago,

Work for reform does not contain its own force, independent fromrevolution. During every historic period, work for reforms is carried ononly in the direction given to it by the impetus of the last revolution, andcontinues as long as the impulsion of the last revolution continues tomake itself felt. (Luxembourg 1988: 49)

Just consider the origins of the nationalized industries and thewelfare state in Britain. They were the product of a big movementin the working class. The British ruling class, acutely conscious ofthe Russian Revolution in 1917 and the revolutionary upheavals inEurope that followed the Russian Revolution and the First WorldWar, grudgingly allowed a reformist Labour government, in theperiod following the Second World War, to nationalize coal, railand other basic industries, and to grant welfare reforms: socialinsurance, education, healthcare and social housing. It was actingin response to the threat of revolution posed by the sustainedupsurge of the working class and the oppressed masses inter-nationally in the mid- to late 1940s, and the need to re-stabilizeand restructure bankrupt British capitalism. The nationalizations ofbasic industries were not socialist measures but were bound up withthe need for coordination and planning to better serve the needs ofindustry.

Conversely, the subsequent privatization of the state-ownedenterprises was bound up with the decline of the nationally regu-


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lated economy. To cite but one example, the nationalized railways.The decline of mass industrial manufacturing, the disappearance ofthe nationally based coal industry and the transfer of freight to roadtransport meant that industry bosses no longer had a significantstake in the railways: nationalization had lost its raison d’être. Railthus became a target for privatization. The subsidies that had oncebeen given to the public monopolies were now to be given on aneven greater scale to private sector corporations, marking a newstage in the decline of British capitalism and the ongoing assault onthe working class.

But as well as these economic factors, there was anothersignificant factor. The erosion of the welfare state and the sale of thenationalized industries not just in Britain but all over the world in thelast thirty years have been directly bound up with the absence of anypolitically conscious movement in the working class. The socialistconceptions that animated large sections of workers in the aftermathof the Russian Revolution came under sustained attack fromStalinism, labour reformism and trade unionism, which togetherattacked genuine socialism and, above all, internationalism, aboutwhich the radical left has been largely silent.

The shifts in the economic base of society in the 1960s and 1970soutlined above did not go unopposed. The period 1968 to 1975 wasone of immense revolutionary struggles, starting with the events inFrance in May 1968, and including the civil rights struggles andmass opposition to the Vietnam War as well as major industrialstruggles in North America, the bringing down of the Labourgovernment in Britain and the dictatorships in Greece, Spain andPortugal. But in each and every case, these struggles were betrayedby their social democratic and Stalinist leaderships, which were inturn supported by various radical groups. They all opposed the needfor a new leadership politically independent of the old national andchauvinistic bureaucracies that dominated the working class, and asocialist and internationalist perspective to overthrow capitalism.Instead, they promulgated the belief that these organizations couldbe pressured to the left.

The defeat of these struggles between 1968 and 1975 and the re-stabilization of capitalist rule were therefore crucial political factorsin the resurgence in the power of the ruling elites, temporarily onthe back foot after the Second World War. Furthermore, in eachand every case, these old organizations subsequently moved even


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further to the right and themselves played key roles in implementingneoliberal policies. Their (former) radical supporters likewisefollowed suit and moved further to the right.

The Way Forward

No Marxist analysis would be complete without elaborating a per-spective for the working class. The defence of jobs, wages andessential services entails the conscious recognition that capitalism,not the increasingly global character of modern society or neo-liberalism, is the real enemy. Global capitalism – the subordinationof humanity to the profit interests of a few hundred giant trans-national corporations – cannot be fought by seeking to return to ahistorically outmoded system of relatively isolated and unintegratednational economies. The point is not to reject the advances ofscience and technology or to retain local, small scale production, butto wrest control of the enormous productive forces created byhuman labour from the TNCs and nation states, and place themunder the common ownership of all humanity, with their develop-ment subordinated in a rational and planned way to human needs.

Socialism requires the development of a conscious politicalmovement of the working class, capable of challenging the very basisof the profit system itself. Such a movement must be armed with ascientific socialist perspective and firmly grounded in the strategicexperiences of the twentieth and twenty-first centuries. It implies avery definite social orientation and programme – that of revolution-ary scientific socialism as opposed to the dominant, politically liberalprograme of national reformism – which is why the traditionalorganizations of the working class and intellectuals have been unableso far to mount any effective opposition to the neoliberal agenda.

The crucial questions confronting workers today arise from thebreak between the existing parties of the working class – the LabourParty in Britain and social democratic or socialist parties in Europe– and their radical supporters, and corresponding rejection of thenotion that real social and political change can be brought about bythe parliamentary system. This means developing a genuine socialistand internationalist movement that can articulate and fight for itsown independent interests, using the World Socialist Web Site(www.wsws.org) as its vehicle, and building sections of such an inter-national movement in each country. In the US, Canada, Britain,


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Germany, Australia and Sri Lanka, the party pledged to such aperspective and programme is the Socialist Equality Party (SEP).

The SEP proposes militant industrial action based upon theindependent interests of the working class. Workers should answerthe attempts of big business and government to make the workingclass pay for the capitalist crisis by reviving the militant traditions ofan earlier period that have been suppressed by the trade unionbureaucracy. Workers should form independent and democraticrank-and-file factory, workplace and neighbourhood committees toorganize opposition to the banks, corporations, and governments,through demonstrations, factory occupations and strikes. This mustbe done independently of the pro-capitalist unions, which fordecades have promoted the myth that the interests of workers can beadvanced through the Labour Party, which has upheld the interestsof the corporations and the banks no less assiduously than its Con-servative predecessors. Industrial action must reject class collabora-tion in favour of a new political strategy: the building of a massparty of the working class to fight for the independent interests ofworking people.

The SEP urges the rejection of the capitalist market and revivalof an international socialist movement of the working class. Workersin Britain and throughout the world are facing the consequences ofan economic system whose central principle is the pursuit of privateprofit – regardless of its consequences for society as a whole. Thesocialist reorganization of the economy includes the nationalizationof the banks and basic industry, placing them under public owner-ship and the democratic control of the working population, andtheir operation based on social need, not private profit.

In every country, workers face a similar future: rising unemploy-ment, declining wages, economic depression. A revived politicalmovement of the working class must have as its aim the fight for aworkers’ government, a government of, by and for the working class.The crisis of capitalism is a global crisis and the response of theworking class to this crisis must be a global response.

References

Armstrong, P., Glyn A. and Harrison J. (1984) Capitalism since World War II:

the Making and Breakup of the Great Boom, Fontana Paperbacks, London.Bank for International Settlements (BIS) (2008) ‘Semi-annual Statistics on


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Over the Counter (OTC) Positions in the Global OTC DerivativesMarket’, Basel, Switzerland, November.

Beams, N. (2008) The World Economic Crisis: a Marxist Analysis, <http://www.wsws.org/media/nb-lecture-1208.pdf> (accessed 23 July 2009).

Bryan, D. and Rafferty, M. (2006) ‘Financial Derivatives: the New Gold?’,Competition and Change, Vol. 10, No. 3, pp. 265–82.

Christian Aid (2008) Death and Taxes: the True Cost of Tax Dodging, ChristianAid, London.

Duménil, G. and Lévy, D. (2003) ‘Costs and Benefits of Neo-Liberalism: aClass Analysis’, in Epstein, G. (ed.) Financialization and World Economy,Edward Elgar, London.

Epstein, G., and Power, D. (2003) Rentier Incomes and Financial Crises: an

Empirical Examination of Trends and Cycles in Some OECD Countries, Depart-ment of Economics and Political Economy Research Institute (PERI),University of Massachusetts, Amhurst, MA.

Luxemburg, R. (1988) Reform or Revolution? Pathfinder Press, New York NY.Marx, K. (1961) Capital, Volume I, Lawrence and Wishart, London.Millward, R. (1999) ‘State Enterprise in Britain in the Twentieth Century’,

in Amatori, F. (ed.) The Rise and fall of State Owned Enterprises in the Western

World, Cambridge University Press, Cambridge.


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What let the world down last autumn was not just bankrupt institutionsbut a bankrupt ideology. What failed was the Conservative idea thatmarkets always self-correct but never self-destruct. What failed was theright-wing fundamentalism that says you just leave everything to themarket and says that free markets should not just be free but values-free.(Gordon Brown, British Prime Minister, speech at the 2009 Labour PartyAnnual Conference)

As it has been shown in the past, unleashed money-capital possessesimmense self-destructive power. It remains to be seen whether this willbe repeated in the global financial dislocation that has followed the USsub-prime mortgage defaults and, if called upon, whether states will beable to rescue capitalism. And, in doing so, will they again unwittinglycreate the conditions that sustain the ideological misconception that thereexists an ‘invisible hand’ and that it is best able to regulate humanity’seconomic affairs? (Geoffrey Ingham, Capitalism, 2008: 226)

The Beginning of the End for Neoliberal Ideology. . .

As we enter the third year of the global financial and economiccrisis, we begin to assess its preliminary outcomes, sense a numberof possible longer-term scenarios for capitalism, and enact a varietyof viable alternatives. There are two broad conclusions which can bedrawn from the current crisis. First of all, neoliberalism has self-destructed. The thirty-year long global march of the free-marketideology has come to an abrupt end with the shrinkage of money-credit that began in August 2007. The global financial and eco-nomic crises have painfully revealed that the long boom in theheartland of global financial capitalism was propelled by consumer-led indebtedness. We can now see that global financial capitalism

CONCLUSION • The End of an Economic Order?

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was the ultimate neoliberal innovation enabled by the precedingwaves of economic deregulation and liberalization.

As the first two waves of the current crisis (financial andeconomic) have begun to generate the third wave of rising levels ofunemployment, we are able to estimate the extent of the havoccaused by this unleashed power of money-capital. Over the 2007–10period, direct monetary losses from the current crisis have resultedin global write-downs held by banks and other financial institutionsof $3.4 trillion (€2.3tn; £2.1tn), with more than half of these lossesstill to be realized at the time of writing (IMF 2009b: 5). Totalsupport for the financial system from the governments and centralbanks around the world – the cost of the global bail-out – hasamounted to $10.8 trillion (€7.4tn; £6.8tn) in government creditguarantees, ‘toxic’ asset purchases, central bank liquidity, and othermeasures (BBC News 2009a). In a summary news headline, the‘crisis cost us $10,000 each’, with UK residents having to lose$50,000 (£31,250) per head for the dubious privilege of hosting theworld’s major financial centre (Schifferes 2009).

In terms of change in global output, real GDP decelerated from5.2 per cent in 2007 to 3 per cent in 2008, before contracting by 1.1per cent in 2009. The IMF optimistically expects the global economyto grow by 3.1 per cent in 2010, yet the bulk of the recovery wouldbe driven by China, India, and other so-called emerging marketeconomies, with more uncertainty and unemployment in the West(BBC News 2009d; Giles 2009c; IMF 2009f). So far, the first globaleconomic recession since the Great Depression of the 1930s hasalready destroyed at least 50 million jobs around the world, at leasthalf of them in the supposedly advanced economies (Wachman2009a; Groom 2009a; Pimlott and Farchy 2009; Seager 2009) andpushed another 90 million people in the global South into ‘extremepoverty’, defined by the World Bank as living on less than $1.25 aday (Giles 2009b). In addition to the gigantic monetary, output andemployment damage inflicted by the current crisis, it has hadprofound ideological ramifications. The massive socialization ofprivate losses by the all-too-visible hand of major Western govern-ments has exposed the role of the state and class power relations inunderpinning capitalism as a system of continuous accumulation ofcapital for private gain (see Gowan 2009).

The rapid action by the major governments worldwide in a bidto save giant transnational corporations from the financial meltdown


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has ultimately shattered the ideological disguise carefully constructed

by the twentieth-century neoliberal doctrinaires. In a startling

admission, a leading ideologist of neoliberalism has confirmed:

‘Another ideological god has failed. The world of the past three

decades has gone’ (Wolf 2009b). At the time when editorials of the

Financial Times, the world’s major financial capitalist newspaper,

regularly condemn ‘the system’s structural failure’ (Editorial 2009a;

Editorial 2009b; Editorial 2009c), and the IMF (2009c) sings various

governments’ praises for ‘wide-ranging, coordinated public inter-

vention’ that has supported demand and rescued financial markets

from themselves: it seems all too clear that the neoliberal economic

ideology is finished. And with the hopes of a swift recovery dashed

by every new release of depressing employment data (Groom 2009b;

Hughes and Rappeport 2009; IMF 2009d; Rappeport 2009;

Rappeport et al. 2009), many more years of pain to come ought to

undermine the remaining support for the political creed which has

so spectacularly crashed.

. . . and Western Hegemony

This book has generally supported the argument made forcefully by

David Harvey (2005) and the late Peter Gowan (2009) that the

neoliberal economic order which emerged after the dismantlement of

the Bretton Woods System (1944–76) was built to serve the interests

of a ‘New Wall Street System’ and heralded the rise of a new

Western imperialism geared towards accumulation by dispossession

(cf. Choonara 2009). Therefore, the second conclusion we are able to

draw is that the fall of neoliberalism ought to cause irreparable

damage to the new imperialism and end US hegemony in inter-

national affairs. Protesting against the approaching ‘all about oil’

Anglo-American invasion of Iraq in 2003, Harvey made a poignant

observation:

As occurred in Britain at the end of the preceding century, the blockage

of internal reform and infrastructural investment by the configuration of

class interests during these years also played a crucial role in the

conversion of US politics towards a more and more overt embrace of

imperialism. It is tempting, therefore, to see the US invasion of Iraq as

the equivalent of Britain’s engagement in the Boer War, both occurring

at the beginning of the end of hegemony. (Harvey 2005: 180–1)

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As the current crisis has unfolded, the USA and its Western allieshave found themselves confronted with an emergent multi-polarworld. The once almighty Group of Seven (G7) major capitalisteconomies (Canada, France, Germany, Italy, Japan, the UK, andthe USA) has become another victim of the global financial-economic crisis (Giles 2009d) to clear the way for a Group ofTwenty (G20) – a new top gathering which includes, besides the old‘advanced industrialized nations’ of the now defunct G7, the EUand the ‘emerging market economies’ of Argentina, Australia,Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia,South Africa, South Korea, and Turkey.

The arrival of new and resurgent contesting powers has been awidely discussed topic of the late 2000s. However, the current ‘crisisin the heartland’ of the Euro-Atlantic world has rendered theWest’s relative decline inevitable (see Gowan 2009). As the presentvolume has shown, the innovations of financial capitalism – thehallmark of the now discredited Anglo-Saxon liberal marketeconomics – have sown the seeds for its downfall. Despite all thenoise made by the die-hard right-wing economists (for a review, seeKrugman 2009) about structured finance as the major contributorto ‘the global boom over the past three decades’ (Becker andMurphy 2009) and ‘free-market capitalism as the most effectivemeans to maximize material wellbeing’ (Greenspan 2009) which‘gave growing numbers rewarding lives’ (Phelps 2009), the writinghas been on the wall for the old economic order for some time. Asclearly shown by Robert Brenner (2009: 2), ‘the fundamentalsource of today’s crisis is the steadily declining vitality of theadvanced capitalist economies over three decades, business-cycle bybusiness-cycle, right into the present’. Indeed, according to our owncalculations (on the basis of IMF 2009g), the average annual realGDP growth rates for the advanced economies were steadilydeclining from 3.1 per cent in the 1980s, to 2.7 per cent in the1990s, and eventually to 1.8 per cent in the 2000s. In the G7economies, real GDP growth was even slower, falling annually onaverage from 3.0 per cent (in the 1980s) to 2.5 per cent (1990s),and to 1.5 per ccnt (2000s). Thus, besides totally bankrupting somesmall states like Iceland and Latvia, and eventually causing a world-wide recession which has so far permanently wiped out about 10per cent of global output, the neoliberal economic order has in facthardly been an era of exuberant wealth creation even in the core


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of the capitalist world economy! In the meantime, it is ‘emergingand developing economies’, and in particular ‘developing Asia’ withits state-owned banks and ‘plain vanilla’ financial products, whichhas progressively accelerated over 1980–2009 at annual averagerates of 6.7, 7.2, and 8.0 per cent per decade respectively (see alsoOakley and Waldmeir 2009).

In September 2009, during a global economic summit in thecity of Pittsburgh, the US administration formally announced thebirth of the new international economic order, in which the G20had to take on a role as a new permanent ‘premier forum’ for co-ordinating the world economy (Editorial 2009d). The acknow-ledgement by the richest nations of North America and WesternEurope that they no longer had a monopoly of wisdom on whatis good for the global economy would be followed by a formal-ized power shift of voting rights in the International MonetaryFund towards rapidly growing nations, particularly China (BBCNews 2009b; Guha 2009b; IMF 2009e), and then a potentiallylarge-scale restructuring of both the IMF and the World Bank(Beattie 2009; Ebrahim 2009). According to most currentanalyses, the old European powers have been firmly marginalized(Rachman 2009; Stephens 2009b), whilst ‘Asian capitalism’ andChina have emerged as the most significant winners from the2007–9 crisis (Acharya 2009; Mahbubani 2009). As thedeveloped world’s ‘teachers have made big mistakes, any visitorto Asia will recognize the West’s reputation for financial andeconomic competence is in tatters, while that of China hassoared. The wheel of fortune is turning’ (Wolf 2009e). Rathersymbolically, in September 2009 the UK’s largest bank HSBCannounced the relocation of its headquarters back to Hong Kong(Jenkins and Tucker 2009). On 29 September, Jeffrey Sachs(2009), one of the pioneers of neoliberal revolution, claimed that‘the G1’ (the USA) had waned in its ‘economic leadership’ andfinally ‘passed on the baton’ to the G20. A few days afterwards,Robert Zoellick, the president of the World Bank, confirmed theprofound change in global power relations in which ‘the USeconomic power is declining’ in a multi-polar economy (BBCNews 2009e). All one can currently hear is ‘the crunching andgrinding of geopolitical plates’ (Stephens 2009a). The USinvasion of Iraq looks ever more likely as the equivalent ofBritain’s fated commitment to the Boer War.

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Picking through Neoliberal Wreckage: towards a New ‘OldMorals Capitalism’?

Having considered the broader, long-term picture of ideological andgeopolitical transformations, we can turn towards more immediateconcerns by deducing a potential trajectory of the current globalfinancial-economic crisis from the information available to us atpresent. Up to now the mainstream of international politics hasresponded to the 2007–9 crisis in three interrelated ways. First, therehas been a social representation of the current conjuncture as acrisis in capitalism and not of the system per se (see Barber 2009a;Freeland et al. 2009; Kennedy 2009; Sorrell 2009; Quinlan 2009).Time and again the public at large is pressurized into believing that,in the words of a long-standing Left-basher, a bit more sociallyresponsible capitalism ‘is the best we can do and, at least for now,our governments’ central duty is to try to keep it that way. For thismay be as good as it gets’ (Lloyd 2009b). Second, and closelyconnected with the previous statement, there has emerged a sense ofmoral panic. A moral failure is said to have preceded the financialmeltdown (Weitzner and Darroch 2009). ‘Let’s tell the truth – weall borrowed too much. We are all in this together’, confessed theUK shadow Chancellor of the Exchequer to his party conference inOctober 2009 (Osborne 2009). The failure of the ‘new economy’ hasbeen typically blamed on ‘greedy’ bankers, crackpot stockbrokers,and ‘naive’ government ministers (Preston 2008; cf. Mason 2009).The ‘out-of-touch’ ‘bonus culture’ of the super-rich managers hasbeen severely criticized (Guerrera 2009). The Church of England hasdeclared that the City of London (as the country’s financial servicescentre) must ‘repent’ (Murphy 2009). Pope Benedict XVI hascondemned ‘immoral’ capitalism’s ‘grave deviations and failures’,calling for a return to ethics (Caldwell 2009; Dinmore 2009). Torediscover the ‘catechism of a system that endures’, Samuel Brittan(2009a) of the Financial Times has recommended turning to the late-Georgian values of the novelist Jane Austen. In a more straight-forward fashion, Gordon Brown (2009), Britain’s Prime Minister,speaking to the British Labour Party, has helpfully spelt out some ofthose ‘basic values’ that ‘bankers had lost sight of’, including ‘notreckless risk-taking’ but ‘effort, merit and hard work’; ‘not just self-interest’ but ‘self-discipline, self-improvement, and self-reliance’; andnot just caring for ourselves but caring for each other. ‘Better’,


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‘tighter’, ‘global’ public regulation of international money-capitalmarkets has been actively called upon to punish the unrepentantbankers and to end ‘the oligarchy of financial capitalism’ (see Augar2009; Bonino 2009; Chakrabortty 2009; Freeland et al. 2009;Kaufman 2009; Lagarde 2009; Lawson 2009; Rogoff 2009; Wolf2009a; Wolf 2009g).

Third, the cry for a new ‘good old morals’ capitalism built aroundessentially Victorian puritan values has come, intriguingly, amidst theemerging fourth wave (past financial, economic, and unemploymentstages) of the current crisis – that of public deficit spending. Thereturn of governments worldwide to the once ‘old-fashioned’Keynesian fiscal demand management, unprecedented monetaryeasing, bail-outs and ‘rescue’ nationalizations, has come at a tremen-dous price (BBC News 2009c; Brittan 2009b; Shiller 2009; Wolf2009d). As one editor has put it:

Banks incurred large losses. But the celebrants of capitalism turned intowards of the state, socializing shareholders’ and creditors’ exposure. Addthe fiscal stimulus states had to put in place, and much of the cost of thecrisis shows up as public debt. Who ends up paying depends on politicalchoices: if austerity, then taxpayers and those reliant on public spending;if inflation, savers; if – in extremis – default, once trusting creditors.(Editorial 2009e)

Pro-corporate commentators have been quick to figure out whowas going to pay for the economic wreckage of neoliberalism: ‘Thepainful truth is that the incomes of taxpayers were put at thedisposal of the financial sector’s creditors. Desperate times; desperatemeasures. What makes the decision quite unbearable is that it was,in my view, also correct’ (Wolf 2009f). All the major Western right-wing parties – be they Angela Merkel’s Christian Democrats ofGermany or David Cameron’s Conservatives of Britain – have fullyagreed on the ‘need for fiscal prudence’, opening the way for a new‘age of austerity’ (Barber 2009b; Elliott 2009; Milne 2009c). Thus,the new ‘moral capitalism’ in the making would definitely be‘tougher’ – but could it be ‘fairer’, as claimed?

The evidence on any substantial financial sector reform, whichinevitably lies at the heart of the new fairer ‘moral capitalism’, hasso far been lacking. On the contrary, there has been a lot ofevidence about corporate ‘business as usual’, with executive pay andbonuses rising (Farrell 2009; Finch 2009; Finch and Bowers 2009),

CONCLUS ION

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and the financial ‘masters of the universe reborn’ (Groom 2009c;Guha 2009a; Heaney 2009; Mathiason 2009; Wachman 2009b;Wolf 2009c). Then again, what has become clearer is the real andactual beginning of ‘austerity’ for the majority of taxpayers on middleand modest incomes. The new ‘old morals capitalism’ will beincapable of delivering ‘fairer outcomes’ despite all the assurances(Osborne 2009; cf. Brown 2009). The upcoming decade of ‘savage’cuts in public spending, lower living standards, higher taxes for all(except those who can avoid them), and further privatizations ofpublic property (Booth 2009; Braithwaite and Clover 2009; Giles2009a; Parker and Timmins 2009; Pickard and Plimmer 2009;Sherwood et al. 2009; Travers 2009) will undoubtedly be a decadeof intense industrial confrontation and social struggle.

The spectrum of progressive political forces – the Left – in all ofits many incarnations (pragmatic-reformist, socialist revolutionary,libertarian-anarchist, populist, and green), is bound to be in the vanof the political struggle for social justice, jobs, livelihoods, andagainst environmental catastrophe. So far, the academic andpopular/populist left-wing literature has already begun to providesome contemporary answers to the many pressing questions facedtoday by the majority of people worldwide (see Elliott and Atkinson2008; Mason 2009; McMurtry 1998; Preston 2008; Shutt 2009;Shutt 2010; Turner 2009). We hope that this book contributes in itsown way to these issues. At the same time, the mainstream politicalLeft has suffered in ‘the squeezed middle’ of fiscal stimuli and rescuenationalizations (Barker and Mallet 2009; Lloyd 2009a; Lloyd2009c). It has been unable, by and large, to gain from the currentcrisis of capitalism, much to the glee of the right-wing press and theirelectorate (Chaffin 2009a; Chaffin 2009b; Boland et al. 2009; Peel2009; cf. Milne 2009b). The complexity and magnitude of thecurrent crisis, combined with rising fears over social stability andpersonal security amongst the people at large, pose a considerablecommunication and perception challenge for the Left in terms ofproviding viable, constructive alternatives to new/old capitalism inthe ‘age of austerity’ (Milne 2009a). As this volume has shown, weall have our work cut out. Yet, for once, we should agree withMartin Wolf (2009b): where we end up, after this financial tornado,is for us to seek to determine.


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References

Acharya, S. (2009) ‘Asia Rises, One Economic Giant at a Time’, The Financial

Times, 28 July.Augar, P. (2009) ‘Insiders Cannot Provide Answers on Finance’, The Financial

Times, 19 July.Barber, L. (2009a) ‘Capitalism Redrawn: the Old Model Is Tarnished’, The

Financial Times: The Future of Capitalism, 12 May.—— (2009b) ‘Merkel Victory Strengthens Centre-Right in EU’, The Financial

Times, 28 September.Barker, A. and Mallet, V. (2009) ‘Centre-Left Leaders Rally Faithful’, The

Financial Times, 29 September.Beattie, A. (2009) ‘Doubts Remain over Global Power of IMF’, The Financial

Times, 3 October.Becker, G. and Murphy, K. (2009) ‘Do Not Let the “Cure” Destroy

Capitalism’, The Financial Times: The Future of Capitalism, 12 May.Boland, V., Steen, M. and Escritt, T. (2009) ‘Far Right Exploits Rising

Insecurity’, The Financial Times, 8 June.Bonino, E. (2009) ‘What Did We Really Learn from the Economic Crisis?’,

The Financial Times, 28 September.Booth, R. (2009) ‘Tories Adopt Budget Airline Service Model: London

Borough’s Radical No-Frills Approach Could Drive Cameron Policy’,The Guardian, 28 August.

Braithwaite, T. and Clover, C. (2009) ‘Moscow Plans to Privatise PublicAssets’, The Financial Times, 21 September.

Brenner, R. (2009) ‘What Is Good for Goldman Sachs Is Good for America:the Origins of the Current Crisis’, Centre for Social Theory and Com-parative History, UCLA, 18 April, <www.sscnet.ucla.edu/issr/cstch/papers/BrennerCrisisTodayOctober2009.pdf>.

British Broadcasting Corporation (BBC) (2009a) ‘Follow the Money’, BBC

News, 10 September, <news.bbc.co.uk/go/pr/fr/-/2/hi/business/8249411.stm>.

—— (2009b) ‘Emerging Economies Get New Role’, BBC News, 25September, <news.bbc.co.uk/go/pr/fr/-/1/hi/business/8274046.stm>.

—— (2009c) ‘G20: Economic Summit Snapshot’, BBC News, 24 September,<news.bbc.co.uk/go/pr/fr/-/2/hi/in_depth/business/2009/g20/7897719.stm>.

—— (2009d) ‘More US Jobs Lost than Expected’, BBC News, 2 October,<news.bbc.co.uk/go/pr/fr/-/2/hi/business/8287216.stm>.

—— (2009e) ‘US Economic Power “Is Declining”’, BBC News, 4 October,<news.bbc.co.uk/go/pr/fr/-/2/hi/business/8289302.stm>.

Brittan, S. (2009a) ‘A Catechism for a System That Endures’, The Financial

Times: The Future of Capitalism, 12 May.—— (2009b) ‘The Key to Keynes’, The Financial Times, 22 August.

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Brown, G. (2009) ‘Speech at the 2009 Labour Party Annual Conference’, 27September, Brighton, UK, <www.labour.org.uk/gordon-brown-speech-conference>.

Caldwell, C. (2009) ‘Mixing Morals and Money’, The Financial Times, 10July.

Chaffin, J. (2009a) ‘Right Set to Gain Lion’s Share of Seats’, The Financial

Times, 8 June.—— (2009b) ‘Socialists across Continent Left Licking Wounds’, The Financial

Times, 8 June.Chakrabortty, A. (2009) ‘This Unexpected Radical Shows Up an Abject

Failure to Tame the Banks’, The Guardian, 28 August.Choonara, J. (2009) ‘Marxist Accounts of the Current Crisis’, International

Socialism, No. 123, <www.isj.org.uk/index.php4?id=557&issue=123>.Dinmore, G. (2009) ‘Pope Condemns Capitalism’s “Failures”’, The Financial

Times, 7 July.Ebrahim, A. (2009) ‘The World Bank Must Fix Its Business Model’, The

Financial Times, 5 October.Editorial (2009a) ‘Lessons for Capitalism’s Future’, The Financial Times: The

Future of Capitalism, 12 May.—— (2009b) ‘Shareholder Value Re-Evaluated’, The Financial Times: The

Future of Capitalism, 12 May.—— (2009c) ‘The Consequences of Bad Economics’, The Financial Times:

The Future of Capitalism, 12 May.—— (2009d) ‘G20 Takes Charge’, The Financial Times, 27 September.—— (2009e) ‘Picking through Economic Wreckage’, The Financial Times, 5

October.Elliott, L. (2009) ‘The Dawning of the Age of Austerity’, The Guardian, 24

August.Elliott, L. and Atkinson, D. (2008) The Gods That Failed: How Blind Faith in

Markets Has Cost Us Our Future, The Bodley Head, London.Farrell, G. (2009) ‘TARP Banks Award Billions in Bonuses’, The Financial

Times, 30 July.Finch, J. (2009) ‘M&S Boss Warns Gordon Brown Against Attack on Free

Market’, The Guardian, 30 September.Finch, J. and Bowers, S. (2009) ‘Executive Pay Keeps Rising. Special

Report: In FTSE’s Worst Ever Year, Top Directors Received Inflation-Busting Hikes’, The Guardian, 14 September.

Freeland, C. and others (2009) ‘Thoughts on a Crisis’, The Financial Times:

The Future of Capitalism, 12 May.Giles, C. (2009a) ‘Brown’s Talk of Higher Spending Hides Huge Cuts’, The

Financial Times, 17 September.—— (2009b) ‘A Pattern Emerges’, The Financial Times, 21 September.—— (2009c) ‘IMF Warns of Further Recession Risks’, The Financial Times,

30 September.


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—— (2009d) ‘Crisis Bookends Life of G7’, The Financial Times, 2 October. Gowan, P. (2009) ‘Editorial: Crisis in the Heartland. Consequences of the

New Wall Street System’, New Left Review, New Series, No. 55(January–February), pp. 5–29.

Greenspan, A. (2009) ‘We Need a Better Cushion against Risk’, The Financial

Times: The Future of Capitalism, 12 May.Groom, B. (2009a) ‘OECD Warns 25m Jobs at Risk from Crisis’, The

Financial Times, 16 September.—— (2009b) ‘Jobless Hits Highest Level since 1995’, The Financial Times, 17

September.—— (2009c) ‘Rising City Job Openings Signal Hiring Upturn’, The Financial

Times, 17 September.Guerrera, F. (2009) ‘A Need to Reconnect’, The Financial Times: The Future of

Capitalism, 12 May.Guha, K (2009a) ‘Bankers Fight Back against Regulatory Overkill’, The

Financial Times, 2 October.—— (2009b) ‘Financial Experts Back IMF Overhaul’, The Financial Times, 5

October.Harvey, D. (2005) The New Imperialism, paperback edition, Oxford University

Press, Oxford.Heaney, V. (2009) ‘Harsh Reality of Banking Reform’, The Financial Times,

21 September.Hughes, J. and Rappeport, A. (2009) ‘FTSE Falls through 5,000 on US

Gloom’, The Financial Times, 3 October.Ingham, G. (2008) Capitalism, Polity Press, Cambridge.International Monetary Fund (IMF) (2009a) Global Financial Stability Report:

Responding to the Financial Crisis and Measuring Systemic Risks (April 2009),IMF, Washington, DC.

—— (2009b) Global Financial Stability Report: Navigating the Financial Challenges

Ahead (October 2009), IMF, Washington, DC.—— (2009c) World Economic Outlook: Sustaining the Recovery (October 2009),

IMF, Washington, DC.—— (2009d) ‘Rising Unemployment Marks Crisis Third Wave, Says IMF

Chief’, IMF Survey Online, 5 September.—— (2009e) ‘G20 Backs Sustained Crisis Response, Shift in IMF

Representation’, IMF Survey Online, 25 September.—— (2009f) ‘Global Recovery Under Way but Likely to Be Slow, Says

IMF’, IMF Survey Online, 1 October.—— (2009g) World Economic Outlook Database (October 2009), IMF, Washing-

ton, DC.Jenkins, P. and Tucker, S. (2009) ‘HSBC to Move Chief Executive to Hong

Kong’, The Financial Times, 25 September.Kaufman, H. (2009) ‘How Libertarian Dogma Led the Fed Astray’, The

Financial Times, 27 April.

CONCLUS ION

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Kennedy, P. (2009) ‘Read the Big Four to Know Capitalism’s Fate’, The

Financial Times: The Future of Capitalism, 12 May.Krugman, P. (2009) ‘Saved by Big Government: Reagan Was Wrong’, The

Guardian, 10 August.Lagarde, C. (2009) ‘The Crisis Demands We Finish What We Started’, The

Financial Times, 7 October.Lawson, N. (2009) ‘Capitalism Needs a Revived Glass-Steagall Act’, The

Financial Times: The Future of Capitalism, 12 May.Lloyd, J. (2009a) ‘Europe’s Left Is Failing to Gain from the Crisis’, The

Financial Times, 19 April.—— (2009b) ‘Why Not Socialism?’, The Financial Times, 15 September.—— (2009c) ‘Europe’s Centre-Left Suffers in the Squeezed Middle’, The

Financial Times, 2 October.Mahbubani, K. (2009) ‘Lessons for the West from Asian Capitalism’, The

Financial Times: The Future of Capitalism, 12 May.Mason, P. (2009) Meltdown: the End of the Age of Greed. Verso, London.Mathiason, N. (2009) ‘Britain May Be Forced to Bail Out Offshore Tax

Havens’, The Guardian, 14 September.McMurtry, J. (1998) The Cancer Stage of Capitalism. Pluto Press, London.Milne, S. (2009a) ‘The Cuts Agenda Is a Brilliant Diversion from the Real

Crisis’, The Guardian, 16 September.—— (2009b) ‘If Labour Loses, It Will Be the Fruit of Its Fatal Faustian

Pact’, The Guardian, 30 September.—— (2009c) ‘We Have Been Warned: the Nasty Party Is Still With Us’, The

Guardian, 7 October.Murphy, M. (2009) ‘Archbishop Chastens City for Failure to Repent’, The

Financial Times, 17 September.Oakley, D. and Waldmeir, P. (2009) ‘Developing Nations Shine in the Crisis

Gloom’, The Financial Times, 27 July.Osborne, G. (2009) ‘We will lead the economy out of crisis: speech at the

2009 Conservative Party Annual Conference’, 6 October, Manchester,UK; <www.conservatives.com/News/Speeches/2009/10/George_Osborne_We_will_lead_the_economy_out_of_crisis.aspx>.

Parker, G. and Timmins, N. (2009) ‘Tories and Labour Match Talk ofCuts’, The Financial Times, 6 October.

Peel, Q. (2009) ‘Global Insight: Europe’s Left Is Failing’, The Financial Times,29 September.

Phelps, E. (2009) ‘Uncertainty Bedevils the Best System’, The Financial Times:

The Future of Capitalism, 12 May.Pickard, J. and Plimmer, G. (2009) ‘RAC Calls for Main Roads to be

Privatised’, The Financial Times, 25 August.Pimlott, D. and Farchy, J. (2009) ‘Jobless Level Highest since 1995’, The

Financial Times, 12 August.Preston, R. (2008) Who Runs Britain? Hodder, London.


266

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Quinlan, J. (2009) ‘The Perils of De-Globalisation’, The Financial Times, 21July.

Rachman, G. (2009) ‘Europe’s Plot to Take over the World’, The Financial

Times, 6 October.Rappeport, A. (2009) ‘US Unemployment Rate Hits 9.8%’, The Financial

Times, 2 October.Rappeport, A., van Duyn, A., and O’Connor, S. (2009) ‘US Job Losses Hit

Recovery Hopes’, The Financial Times, 2 October.Rogoff, K. (2009) ‘Why We Need to Regulate the Banks Sooner, Not Later’,

The Financial Times, 18 August.Sachs, J. (2009) ‘America Has Passed on the Baton’, The Financial Times, 29

September.Schifferes, S. (2009) ‘Crisis “Cost Us $10,000 Each”’, BBC News, 10 Septem-

ber, <news.bbc.co.uk/go/pr/fr/-/2/hi/business/8248434.stm>.Seager, A. (2009) ‘End of Recession? Not for the Unemployed’, The

Guardian, 14 September.Sherwood, B., Timmins, N. and Barker, A. (2009) ‘Leading Tory Councils

Plan Radical Cuts’, The Financial Times, 11 August.Shiller, R. (2009) ‘A Failure to Control Animal Spirits’, The Financial Times:

The Future of Capitalism, 12 May.Shutt, H. (2009) The Trouble with Capitalism: an Enquiry into the Causes of Global

Economic Failure, Zed Books, London.—— (2010) A World Without Profit: Possibilities for the Post-Capitalist Era, Zed

Books, London.Sorrell, M. (2009) ‘The Pendulum Will Swing Back’, The Financial Times: The

Future of Capitalism, 12 May.Stephens, P. (2009a) ‘Four Things You Must Know about the Global

Puzzle’, The Financial Times, 24 September.—— (2009b) ‘Europe Loses Its Lisbon Hiding Place’, The Financial Times, 1

October.Travers, T. (2009) ‘Radical Rightwing Leaders Have the Wind in Their

Sails’, The Guardian, 28 August.Turner, G. (2009) No Way to Run an Economy: How the World Slipped into

Depression, Pluto Press, London.Wachman, R. (2009a) ‘Union Press G20 to End “Casino Capitalism”’, The

Guardian, 1 April. —— (2009b) ‘Reborn Masters of the Universe’, The Guardian, 19 July.Weitzner, D. and Darroch, J. (2009) ‘Why Moral Failures Precede Financial

Crises’, Critical Perspectives on International Business, Vol. 5, pp. 6–13.Wolf, M. (2009a) ‘Cutting Back Financial Capitalism is America’s Big Test’,

The Financial Times, 14 April.—— (2009b) ‘Seeds of Its Own Destruction’, The Financial Times: The Future

of Capitalism, 12 May.—— (2009c) ‘This Crisis Is a Moment, But Is It a Defining One?’, The

CONCLUS ION

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Financial Times, 19 May.—— (2009d) ‘Why It Is Still Too Early to Start Withdrawing Stimulus’, The

Financial Times, 8 September.—— (2009e) ‘Wheel of Fortune Turns as China Outdoes West’, The Financial

Times, 13 September.—— (2009f) ‘Do Not Learn Wrong Lessons from Lehman’s Fall’, The Financial

Times, 15 September.—— (2009g) ‘Why Narrow Banking Alone Is Not the Finance Solution’, The

Financial Times, 29 September.


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abortion, US opponents, 46

abstraction and commensuration,

processes of, 90

Accetor Mittal, carbon trade division, 88

Acción Ecológica, 227, 232-3

accounting standards, climate applied, 82

Adam Smith Institute, UK, 26, 29, 37-9

ADEA, Peruvian eco-NGO, 230

affinity groups, 211-16

Afghanistan, US occupation, 13

African Development Bank, PBA system

use, 98

agrofuels, ‘project-based’ credit, 83

aid, World Bank’s 1998 Assessing Aid, 96

AIDS, medicines patented, 64

AIG, insurance corporation, 15

Aims of Industry, UK, 29-30

Alinsky, Saul, 199

Allende, Salvador, 5

alternative political imaginaries, 116

Amadae, S., 159-60

American Enterprise Institute, 26, 50-1

American Legislative Exchange Council,

51

Andean mining: Chinese investment, 236;

community conflicts with, 234

Anderson, Digby, 30

anti-communism USA, 45-7; McCarthyite,

157

anti-corruption, post-Soviet: discourse,

113, 117-18, 127; initiatives, 119, 127;

professionals, 126

anti-road protest camps, 192

anti-welfare rhetoric, 141

Argentina, 258; 1999-2002 crisis/uprising,

9, 191, 247; 2001 class enquiries, 202

Armenia, output slump, 10

Armstrong, P., 243

Ascendant Copper Corporation, Canada,

232

Asia: Development Fund PBA system use,

98; growth rate, 258; ‘miracle’

economies, 102

Atlantic Council, 31

Atlantic Fordism, 172

‘austerity’: competitive, 184; selective, 262

Australia, 258; neoliberal version, 137,

172

Austrian school, economics, 3

autonomist movements, 190

autonomy, ‘dole’, 197

Backhouse, R., 157-8

Bakhtin, M., 215, 218

balance of forces, class, 4, 24, 39, 173,

185

Bank of Sweden Prize, 50

banks: Asian state-owned, 259; Barclays,

87; global bail-out scale, 2, 248, 256,

261; HSBC, 15, 259; of China, 15;

top twenty changes, 15

Barber, Benjamin, 194

Barclay, Harold, 190

Barclays Capital, carbon trading, 87

Barnett, Clive, 114

BASF, pharmaceutical corporation, 35

Basle Core Principles, 102

Bayh-Dole Act 1980, USA, 70-1

Beams, N., 241

Bear Stearns, ‘rescue’ of, 13, 15

Belgium, Ecuador mining, 232

Benedict XVI, Pope, 260

bilateral investment/trade treaties, 72-3

Bilderberg Group, 33-6

Index

Birch&My 04 10/6/10 13:26 Page 269

binary thought, privileging of, 117

biological research, as nationa; asset, 70

‘bioprospecting’/’biopiracy’, 64

biotechnology, 62, 64; corporate interests,

67; financial crisis impact, 73; start-

ups, 69; ‘technology of the future’

rhetoric, 68; USA patentability

established, 71

biotic carbon stores, proposed, 86

Blackburn, Robin, 12

blat, 119

Blaug, M., 156

Blumenthal, Sidney, 25

Blyth, Mark, 4

BNP Paribas, France, 13, 15; carbon

trading, 87

Boal, Augusto, 209

Bolivia: extractive industries concessions,

226; GDP growth, 224; mining sector,

222-5; 1985 ‘stabilization’ programme,

9; post-neoliberal government, 236

Bono, 37

Bosnia Herzogovina, output slump, 10

‘bossnapping’, France, 191

BP, 34

Brazil, 258; landless peasant movement,

191; TRIPs opposition, 66

Brenner, N., 6

Brenner, Robert, 258

Bretton Woods Agreement,

dismantlement, 4, 11, 241-2, 257

‘Bribe Payers Index’, Transparency

International, 125

‘BRIC’ countries, 74, 183, 258

British American Tobacco, 34

British Centre for Policy Studies, 26

Brittain, Samuel, 260

Brookings Institute, 121

Brown, Gordon, 260

Brown, Wendy, 43, 47, 137, 199

Bryan, D., 244

Brzezinski, Z., 37

Buckley, William, 47

budget deficits, monetarism overthrown,

16

Bush, George H.W., 48

Bush, George W., 46, 48, 54

Business Environment and Enterprise

Performance Survey, 120

calculability ideals, expert ingenuity, 85-90

Callon, Michael, ‘overflows’ concept, 91

Cameron, David, 261

Camp for Climate Action, 192

Campus Watch, 53

Canada, neoliberal shift, 172

Cantor Fitzgerald, carbon trading, 87

capital accumulation, 176-7, 180; financial

asset trading, 240; new possibilities for,

90

capitalism: adaptability, 179; ‘Asian’, 259;

‘moral’, 261; Rhenish, 174; social

market model, 116; varieties of, 182,

185

carbon markets/trading, 7, 61, 77, 91;

accounting ‘offsets’, 84; ‘assets’, 86, 88;

commodity dealers, 88; credits, 83-4,

89; ‘equivalences’ abstract

measurements, 82, 89; permits, 87;

size of, 78; US-proposed system, 86

Carlsson, C., 194

Carlyle, Thomas, 153

carnivalesque hacking, 217

Carroll, W., 4

Carson, C., 4

Castree, N., 115

Cato Institute, 126

CBI (UK Confederation of British

Industries), 28

Central Africa, forest land grabs, 86

Centre for Policy Studies, 29

‘centres of persuasion’ neoliberal, 49, 51

centri sociali, Italy, 192

CEPA, Bolivian NGO, 227

Chan, Michelle, 88

Chang, H.-J., 114

Chevron, 85

Chicago, 172; Board of Trade, 78;

Mercantile Exchange, 243; University

economics school, 3, 119, 180, 185

Chile: Chicago boys/Pinochet era, 5, 8,

172-3

China, 256, 258-9; Construction Bank, 15;

economic stimulus package, 14;

external mining investments, 236;

hydroelectric dams, 85; imports from,

13; low wage platform, 245; RWE

chemical factory, 84; technology

transfer demands, 74; unsustainable

growth, 183

Christian Aid, 247

Church of England, 260


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CIA (Central Intelligence Agency), 28, 35

CIPCA, Peruvian NGO, 227

CISEP, Bolivian NGO, 227

Citigroup, 13, 15

citizenship, individual responsibility model,

7-8

City of London Polytechnic, 32

civil liberties curtailment, 249

civil society: international activist, 223,

230, 234

Claimants Unions, 192

Clandestine Insurgent Rebel Clown Army

(CIRCA), 206-7, 209, 211-12, 215-17;

‘War on Error’, 214, 218

class inquiries, 1970s Italy, 202

climate: action camps, 189; carbon market

response, 77; change, 202; ‘fictitious’

commodity, 79-81; greenhouse gas

‘safe’ level, 82; privatized, 78;

technology transfer demands, 74

Clinton, Bill, 78

cliometrics, 162

CND (Campaign for Nuclear

Disarmament), 32

Colander, D., 157, 160

Cold Warriors, US intellectual elite, 45

Columbia University, biomedical patents,

71

commodification, 12, 79-81

Common Cause Ltd, UK, 28

Common Place, Leeds social centre, 189

‘commons’: building of, 196; defence of

communal land, 231; intellectual, 184;

private appropriation of, 61;

reclaiming, 193

Compañía de Minas Buenaventura, Peru,

228

Compass, 52

competitiveness, ‘logic’ of, 7

CONACAMI organization, Peru, 227,

230-1

CONAIE movement, Ecuador, 227

CONAMAQ movement, Bolivia, 227

conditionality(ies): basic similarity of, 174;

‘selectivity’ version, 95; World Bank

redefined, 94

Congress for Cultural Freedom, 35

Conservation International, 87

Constellation Energy, carbon traders, 87

consultants: carbon trading abstractions,

83; culture of, 105

Convexivity, 155

corporate lobbying organizations, 23-5

corporate-community power assymetries,

228; land acquisition mechanisms, 229

corruption, notion of, 113; ‘free-floating’

signifier, 127; ‘industry’, 117-18;

‘measuring’, 125; managers’ perceptions,

121; theorizing, 119

cost-benefit analysis, 77

Cotacachi-Intag, Ecuador, 232, 235

Council on Foreign Relations, USA, 25

‘counter establishment’, 25

Countrywide, USA mortgage bank, 13

CPIA (Country Policy and Institutional

Assessment), World Bank, 97, 107;

empirical reality lack, 101; neoliberal

norms, 98, 100, 102-3; ratings, 99

Credit Default Swaps, 11

Credit Suisse: EcoSecurities acquisition,

87; securitized carbon deal, 88

Critical Mass, protest tactic, 209

Crozier, Brian, 28-32

cultural activism, anti-capitalist, 208-9,

218-19; audience participation, 210

Cultural Warriors, USA, 46

‘culture industries’, oligopolies, 63

Curtis, Lionel, 25

Czech Republic, 10

dam projects: ‘offsets’, 83; irrigation

damage, 85

Davignon, Etienne, 35

de Sardan, J. P. O., 127

Debord, Guy, 207

debt: consumer-led, 8, 246, 255; Global

South bondage period, 67; USA, 245

decision-making, market ‘superiority’, 63

Debt Sustainability Network, 98

DeCOIN, Ecuador eco-NGO, 232-3

democracy: direct, 195-6; representative,

194

Demos, 52

dependency culture, chimera of, 144

deregulation: labour market, 5, 7, 30, 37

derivatives, 11; carbon, 90

Deutsche Bank, carbon trading, 87

developing country policy analysis, World

Bank undermined, 105

Diamond, S., 45

Diggers, 190

Dillon Reed, 13

INDEX

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Birch&My 04 10/6/10 13:26 Page 271

direct action, non-violent, 215

disciplinary apparatus, neoliberal state, 146

Ditchley Foundation, UK, 31

DNV, Norwegian carbon consultant, 86

Doha Declaration 2001, TRIPs limiting,

72

dollar-gold link, broken, 242

donor agencies/community: expatriate

staff, 105; ‘pedagogical’ role, 96

dot.com bubble, 247

‘dreampolitiks’, 207, 210, 218

Duménil, G., 4

Duncombe, Stephen, 199, 207, 209-10,

218

Dunkel, Arthur, 34

Earth First, 190

East Asia, ‘miracle’ economies, 102

Eastern Europe, post-Soviet: economic

growth, 112-13; economic laboratory,

127; low wage platform, 245

EBRD (European Bank for

Reconstruction and Development),

120, 123

Eco-NGOs, media offensives against, 234-

5

‘ecological dominance’, notion of, 176-8,

180-4

economic crises, neoliberal scope, 175

economic exchange, ‘natural law’ of, 2

Economic League, UK, 28

economic sector state promotion, 101

economics: formalist revolution, 160;

‘imperialism’, 154, 166; information-

theoretic, 164; mainstream, 153;

marginalist, 3, 155, 162; micro-macro

split, 162, 165, 168; neo-classical, 116;

supply-side, 4

ECOVIDA, Peruvian eco-NGO, 230

Ecuador: Accíon Ecológica, 227, 232-3;

extractive industries concessions, 226;

GDP growth, 224; mining sector

conflicts, 222-3; oil sector, 225; post-

neoliberal government, 236

Eden, Douglas, 32

Egypt, RWE chemical factory, 84

elite(s): ex-Soviet indigenous, 112; policy-

making, 24-6, 48-9; global, 189; profits

taxes cut aim, 246; rent-seeking, 120;

ruling, 240; state apparatus

intellectuals, 52

enemies and allies, class, 200

Eni-Agip, 85; pollution rights validation,

86

Enron, 88

environmental justice movements, 91

equilibrium theory, economics, 156, 159,

162

‘equivalents’, emissions reductions

abstractions, 79-81; expert creation

ingenuity, 85-7

Esping-Andersen, Gosta, 140

Eucalyptus plantation, as carbon credit, 84

European Commission, 37

European Round Table of Industrialists, 35

European Union: ETS, 83; financial

assets-GDP ratio, 12; TACIS and

PHARE programmes, 127; TRIPS-

plus protagonist, 74

Everett, J., 127

ex-USSR, economic development, 112;

external experts, 119

extractive industries: Andes FDI, 222-6;

export oriented, 226

Exxon, 34

factory occupations, Visteon, 191

Fannie Mae, 15

FDI (foreign direct investment) privileged,

224-5, 232

Federation of Women Peasant Vigilance

Organization, 230

Feulner, Ed, 50

FINA, 35

Financial Times, editorials, 257

finance capital(ism), 1, 179; asset bubbles,

184; corporate profit share, 245;

dominant position, 181; global assets-

GDP ratio, 12; hyper-mobile, 176,

182; market collapse, 8, 57;

overaccumulation, 180; universal

character, 244; write-downs, 256; see

also, banks

‘financialization’, 2, 11, 61, 67, 71, 164,

240, 243

‘fiscal prudence’, demands for, 261

Fisher, Anthony, 27

fixed currencies system, 1973 break, 243

Flannery, Tim, 81

FOBOMADE, Bolivian NGO, 227

Food and Agriculture Organization, UN,

86


272

Birch&My 04 10/6/10 13:26 Page 272

Foot, Michael, 32

foreign exchange transactions, intensity of,

244

forests: carbon absorption uncertainty, 87;

land grabs, 86

Fortis, 35; carbon trading, 87

fossil fuel dependence effects, 80-1, 202

Foucault, M., governmentality theory, 115

foundations, corporate sponsored, 25, 31

France: finance capital corporate profit

share, 245; May 1968, 251

Frank, Thomas, 46

Fraser Institute, Canada, 126

Fraser, Sir Antony, 4

Freddie Mac, 15

free markets ideology, ‘spontaneous order’,

3

Freedom Association, 29

Freedom House, 122-3, 125; ‘Nations in

Transit’ ratings, 126

Freiburg School, Germany, economists, 3

freakonomics, 153, 166-7

Friedman, Milton, 3-4, 9, 27, 50, 163

Friends of the Earth, 88, 227, 233

Frimpong-Ansah, J., 153

Fukuyama, Francis, 8

G8 2005 Gleneagles protests, 206, 208:

camps, 189; clown groups presence,

211-12

G20, 258; April 2009 meeting, 189

Gaddy, Clifford, 121

Galbraith, J.K., 157

game theory, 165

GATS (General Agreement on Trade in

Services), WTO, 66

GATT (General Agreement on Trade and

Tariffs), 64; Uruguay Round, 34, 36

GDP growth rates, advanced economies’

decline, 258

General Electric, finance division, 88

General Motors, 34; financial arm, 245

generic drug manufacture, 68

Genetech, stock exchange listing, 71

Georgia, output slump, 10

Germany: Christian Democrats, 261;

1990s accumulation crisis, 11; Freiburg

School, 3

Giroux, H., 207-8

Glimcher, P., 168

Global Greengrants Fund, 230, 233

global production networks, 62

Global South, 1979-80 balance of power

away from, 67

global warming, commodity approach, 82-

3

Goldman Sachs, 15, 78; carbon trading

plans, 87

Gore, Al, 78

Gouldner, Alvin, 43

governance: ‘good’ ideology, 96, 126; new

structures, 25

Gowan, Peter, 257

Gramsci, A., 52

Greece: dictatorship fall, 251; 2008-9

protests, 191

Green New Deal, 185

Group of Twenty, 258

GRUFIDES, Peruvian NGO, 227, 230

Gulf of Guinea Citizens Network, 86

Gwynne, R., 224

Hakim Bey, 215

Hall, Stuart, 2

happiness, economics of, 166

Hardt, Michael, 201

Harris, Lord Ralph, 26-7, 33

Hartman, Yvonne, 137, 140

Harvard University, 9, 82, 119; Institute

for International Development, 127

Harvey, David, 1, 23, 39, 116, 257

Haseler, Stephen, 32

Hayek, Friedrich von, 3, 26-7, 38, 50, 54,

63, 136, 160

Healey, Denis, 32, 35

hegemony: concept of, 24; discourses of,

47; Marxist notions of, 115; USA, 181,

257

Hellman, Joel, 119-20

Heritage Foundation, USA, 4, 26, 32, 50-

1, 122, 126

Hodgson, Godfrey, 46-7

Holloway, John, 193, 197-8

Hoskyns, John, 29

housing boom(s), 1-2

HSBC bank, 15; Hong Kong relocation,

259

human capital theory, 162

Hungary, IMF bail-out, 14

Huntington, Samuel, 36

IBM, 34

INDEX

273

Birch&My 04 10/6/10 13:26 Page 273

ICC (International Chamber of

Commerce), 33, 36; WTO lobbying,

34

Iceland: bail out, 14; bankruptcy, 258;

neoliberal shift, 172; protests, 191

Ickes, Barry, 121

IKB Bank, Germany, 13

IMF (International Monetary Fund), 36,

112, 126, 257; growth forecasts, 256;

Poverty Reduction and Growth

facility, 98; voting rights system, 259

‘imperfect competition’, 161-2; World

Bank version, 101

import-substitution model, 173; prevention

of, 114

incapacity benefits tightening, UK, 143

income support payments, UK, 141

India, 256, 258; economic stimulus

package 14; technology transfer

demands, 74; TRIPs opposition, 66;

Uttaranchal dam project, 85

indigenous peoples, land-eco struggles,

222-3

individual responsibility, political discourse

of, 145

Indonesia, 258; forest land grabs, 86;

REDD schemes, 87

Industrial and Commercial Bank of

China, 15

Industrial Research and Information

Services Ltd, 28

inflation: monetarist obsession, 7; 1970s oil

crisis, 50

innovation, patent policy impediment, 65

Institute for Economic Affairs (IEA), UK,

4, 26-7, 30, 33

Institute for European Defence and

Strategic Studies, 32

Institute for Public Policy Research, 52

Institute for the Study of Conflict (ISC),

UK, 28-9, 32

Intellectual Property Committee,

corporate, 66

intellectual property rights, 7, 63; free

trade link construction, 65; global

economic restructuring role, 60-1

interest rates: low policies, 11; market-

determined, 102; 1979-80 increase, 67;

prevailing, 241; 2004-6 rise

consequences, 13, 243

Intergovernmental Panel on Climate

Change (IPCC), 83-4

International Situationists, 190, 209

Inti Raymi gold mine, Bolivia, 233-4;

compensatory mechanisms, 235

Iran, Revolution, 67

Iraq: Anglo-American

invasion/occupation, 13, 56, 257, 259;

ruling class ‘realist’ opposition, 24

Ireland: budget deficit, 16; financial assets-

GDP ratio, 12

Italy, Berlusconi governments, 37

Ivens, Michael, 30

Japan, 183; critique of World Bank, 95;

financial assets-GDP ratio, 12;

International Corporation Agency,

232; 1990s accumulation/bank crisis,

11, 247

Jay, Peter, 27

Jenkins, Roy, 32

job losses, global scale, 256

Joe Coors, 52

John M. Olin Foundation, 52

Johnson, Richard, 146

Jolie, Angelina, 37

Joseph, Keith, 29

JP Morgan Chase, 15; Climate Care

acquisition, 87

Juris, Jeffrey, 215

Kalecki, M., 158

Kaufmann, Daniel, 120

Kay, C., 224

Kenney, M., 70

Kesey, Ken, Merry Pranksters, 209

Keynes, J. M., 160; ‘fetish of liquidity’, 90;

The General Theory, 38, 158

Keynesianism/era of, 3, 155, 161, 250,

261; ‘Atlantic Fordism’, 43; ‘culture

industries’, 63; discrediting of, 4, 134;

goals of, 136; golden age of, 1;

irreducible uncertainty principle, 163;

national regulation form, 242;

neoliberal influenced, 157; 1970s crisis

of, 60, 67, 167; proto version of, 147;

2008-10 version of, 14, 16, 56; USA

version, 158; welfare state, 239, 249

Kissinger, Henry, 36

knowledge(s): -based economy (KBE), 60,

63, 184-5; carbon market redistribu-

tion, 89; expert claims, 117, 127;


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intellectual property rights, 175;

mining companies assymetrical, 236;

primitive accumulation of, 72;

‘scarcity’ construction, 63; World Bank

‘exercise’, 103; World Bank custodian

self-image, 60, 96, 104-6

Koch Family Foundation, 52

Kommunalkredit, carbon trading, 87

Krastev, I., 119, 125, 127

Kristol, Irving, 45

Kropotkin, Peter, 190

Kyoto Protocol, 82; carbon market boost,

88; Clean Development Mechanism,

85; Emissions Trading Scheme, 78

Laboratory of Insurrectionary

Imagination, 208

labour market: employment precacity,

141, 144; ‘flexibility’, 8, 134, 146, 173,

239; peripheral, 140; state facilitated

‘flexibility’, 135, 143; temporary, 133

Labour Party UK: Atlanticist tendency,

31; neutering of, 30, 32; New Labour,

52, 252, 260

laissez faire, state project, 77

Landreth, H., 157, 160

Larner, W., 44, 137

Latin America, structural adjustment, 8

Latvia: bail-out package, 14; bankruptcy,

258

Lawson, Nigel, 28

Lévy, D., 4

‘left’, The: political, traditional models,

188

Lehman Brothers, 14-15

‘less state’, misleading rhetoric, 136

‘leverage’, 11

Leyshon, A., 12

liberalization, trade and capital, 5

life expectancy, 10

life sciences: developments in, 60;

patenting, 71; US federal research

funding, 70

Lisbon Agenda, 37

Lloyds TSB, bank, 15

local ‘ownership’ World Bank talk, 96

London School of Economics (LSE), 3, 27

Long Term Capital Management crisis,

247

‘loot chain’, notion of, 125

low-wage platforms, 245

Luxemburg, Rosa, 153, 250

Machlup, Fritz, 3

Maclennan, Robert, 31

macroeconomics, IS/LM approach, 159

‘Make Poverty History’ 2005 march, 207,

213, 216

Mandleson, Peter, 245

marginalism, economic, 154-5, 162

‘market, the’: disembedded transactions,

177; fundamantalism, 30;

imperfections approach, 165; /state

misleading dichotomy, 77-8

marketization, social, 5

‘marketplace of ideas’, 63

Marshall, Alfred, 154

Marx, Karl, 38, 90, 175, 181-2

mass media, 180; pro-corporate

commentators, 260-1

Mayer, M., 196

MBIA, USA, 13

means testing, welfare benefits, 135, 139

media tactics, political activism, 199

medicines, patents, 64

mercantilism, financial, 184

mergers, corporate, 243

Merkel, Angela, 37, 261

Merrill Lynch (Bank of America), 37, 86,

261

methane: capture ‘offset’, 84; gas flaring,

85

Mexico, 258; 1994 peso crisis, 9, 247

Miliband, Ralph, 39

military-industrial complex, 47

Miller, Peter, 146

Minas Gerais, Brazil, activists, 84

Minera Yanacocha gold mine, Peru, 228-9

Mining and Communities network, 227

mining corporations: ‘enclave economies’,

229; media offensives by, 231, 234-5

Minsky, H., 179

Mirowski, P., 160

Mitchell, Timothy, 91

Mitsubishi, Bishi Metals subsidiary, 232-3

Mkandawire, T., 105

mobile phones, activist use, 214

modernity, conferring of, 127

Moldova, ‘transformational depression’, 9,

10

molecular biology research, as US

national asset, 68

INDEX

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Mondragon co-operative, 194

monetarism, 4; inflation focus, 7

monopoly, 157-8

Mont Perelin Society (MPS), 3-4, 26-30,

33, 38-9, 49-51

Monterrico Metals, 230; Peruvian

subsidiary, 231

Morgan Stanley, carbon trading, 87

mortgages, 12, 244, 248

‘movement of movements’, 190

Moyer, Bill, 200-1

Mudge, S., 45

mutual aid, 193-4

National Association for Freedom, 32

national bailouts, IMF/EU, 14

nationalization, UK, 250-1; ‘rescue’, 261;

subsidy justification, 246

Nature Conservancy, 87

Negri, Antonio, 201

neo-imperialism, neoliberalism as, 114

neoliberalism(s): Andean countries form,

224; Anglopohone versions, 44, 137;

calculable world view, 91; ‘common

sense’ claim, 2; crisis ‘blowback’, 184-

5; discourse deconstruction, 115;

growth rates failure, 1; ideological

origins, 2-3; intellectual history of, 116;

intellectuals’ ‘war of position’, 55

interventionist, 163; legacy influence,

175; ‘naturalizing’, 43; political

movements need, 45; political project,

6; reconstituted ‘green’, 219; social

problems individualized, 48, 137; state

project, 10, 77; varieties of, 6, 147,

172, 179; working class gains roll back,

114, 239

Nestlé, 34

Netherlands, aid criteria, 98

neuroeconomics, 168

New Century Financial, 13

New Classical Economists, 163-4, 168

New Deal for the Unemployed, New

Labour programme UK, 142, 245-6

New Deal settlement, USA, 50; attacks

on, 53

‘new economy’, conceit of, 10

New Right Agenda, 241

New Zealand, neoliberal shift, 172

Newcombe, Ken, 78

Newmont Mining Corporation, 228, 233

NGOs (non-governmental organizations):

‘excessive’ leadership instances, 236;

international, 227; local community

relations, 228

Nigeria, 86; Federal High Court, 85; oil

emissions ‘equivalents’ ingenuity, 85

Nixon, Richard M., 51, 242

No Borders group, 192

non-linearity, fetish of, 91

Nordhaus, William, 158

Northern Rock, UK, 13, 15

‘nowtopians’, 194

nuclear energy, ‘project-based’ credit, 83

Obama, Barack, 56, 78; healthcare plan

opposition, 57

off-shore tax havens, 246

‘offests’, climate benefit units, 83;

‘additionality’ judgments, 89; bundled

assets, 88; expert creation ingenuity,

84; regressive redistribution tendency,

86

Ordo-liberal social market economy, 171,

185

‘organic intellectuals’, neoliberal, 52-3, 56

organization, experimentation with forms,

195

‘over-the-counter’ financial instruments, 11

ownership models, conflicts over, 226

Oxfam: America, 230-1; International,

227

Papua New Guinea, forest land grabs, 86

Paris: Club, 98; 1938 ‘neoliberal’ meeting,

171

participatory visioning, 201

patent(s): biotech attractive, 69; Global

North agencies, 73; purpose redefined,

65; scope, 64; US law reform

coalition, 70-2;

Peck, Jamie, 6-7, 44-5, 114, 116, 179

Pelaez, E., 197

penal policies, Victorian, 145

pension provision, erosion, 247

People’s Global Action, 191

Performance Based Allocations,

conditionality version, 96-7

Perle, Richard, 46

personnel interchanges, global elite, 34-5

Peru, 235; extractive industries

concessions, 226; GDP growth, 224;


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international investment agreements,

225; June 2009 repression, 222, 236;

mining disputes, 223

Pfizer, 66

pharmaceutical transnational corporations,

66; domestic power of, 67; 1970s

profitability crisis, 68; profits size, 71;

revenues of, 69; US trade policy

dominance, 67

Pinochet, Augusto, 5, 8

Pirie, Madsen, 38-9

Pittsburgh summit 2009, 259

Poland, 10, 172; ‘shock therapy’, 9;

‘transformational depression’, 9

Polanyi, Karl, 45, 77, 90 ‘fictitious

commodity’ concept, 79

Polanyi, Michael, 3

policy entrepreneurs, 55-6

policy-based lending, World Bank, 95

political activism, anti-capitalist: consensus

decision-making, 212-13; cultural, see

above; emotional content, 198, 214-15,

218; ghettoized danger, 199;

professionalization danger, 197; tactical

performance, 210

political inevitability, neoliberal claim, 43

politics: aestheticized, 208; of possibility,

198

pollution rights: ‘cap and trade’, 82;

China selling, 85; 1970s USA, 78

Portugal, dictatorship fall, 251

‘positive welfare’, rhetoric of, 138

post-war settlement, national regulation,

240

postmodernism, 168

poverty, individualized blame, 144

price mechanism, dual role, 179

privatization, 2, 5, 7, 135, 239, 247-8,

251, 262

production processes: ‘flexible’, 62;

innovations, 243

profit: new sources of, 240; rate of, see

below; taxes on, 246

Project for the New American Century, 46

Project Underground, 230

PRSPs (Poverty Reduction Strategy

Papers), 98; policy diversity lack, 99

Public Choice Society, 159

public choice theory, 162

public-private partnerships, 5; training

providers, 142

Pulido, Laura, 214

Purnell, James, 143

R&D costs, pharmaceuticals, 68-9

Rabobank, carbon trading, 87

race-to-the-bottom strategies, 7

Rafferty, M., 244

Rainforest Action Network, 233

RAND (Research and Development

Corporation), 159

rate of profit: downturn, 241-3; global

average, 176; pressures on, 247

rational choice, social sciences dominance,

159

rational expectations, theory of, 4, 163

Rave/free party culture, UK, 190, 192

Reagan, Ronald, 5, 48, 136, 163, 172

rebel clowns, 212

Recombinant DNA research: techniques,

69; public concern problem, 70

REDD carbon scheme, 86; indigenous

peoples movements split on, 87

reductionism, economic, 154;

microeconomic principles, 156

Rees Mogg, William, 27

‘rent-seeking’, 120

Republican Study Committee, 51

research foundations, business financed,

46

‘resistance’, theory, 115

resource colonialism, 249

Rio Banco project, Peru, 230

Rio Tinto, 34

riot police, mocking of, 216

Rist, P., 219

Rockefeller, David, 36-7

Rose, Nikolas, 146

Rougier, Louis, 3

Round Table group, 25

Royal Bank of Scotland, 15

Royal Institute for International Affairs

(Chatham House), 25

Rüstow, Alexander, 171

‘rule of law’, state responsibility, 6

ruling class, fractions of, 24

rural land struggles, 235; international

support, 232; urban support, 226-9

rural land use, pro-corporate shift, 225-6

rural poverty, Andes countries, 224

Russia, 172, 258; ‘anti-corruption’ use,

113; coal mines, 84; low wage

INDEX

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Birch&My 04 10/6/10 13:26 Page 277

platform, 245; ‘shock therapy’, 9

Russian Revolution, impact of, 250-1

RWE, Germany, ‘offset’ projects, 83-4

Sachs, Jeffrey, 9

same-sex marriage, US opponents, 46

Samuelson, Paul, 156-8, 160-1;

mathematics use, 162

San Francisco, Critical Mass origins, 209

Sandor, Richard, 78

Sarah Scaife foundation, 52

Sassen, Saskia, 12

Saudi Arabia, 258

Schumpeterian Workfare Post-National

Regime (SWPR), 138-9, 147

‘securitization’, 11-12, 87, 244

‘seizure of presence’, 215

Seldon, Arthur, 27, 30

self-esteem ‘training’, 145

self-management, collective, 193, 196

self-suffiency, ideological emphasis, 133

Serco Civil Government, 146

shareholder value: dominance of, 182;

World Bank realities, 104

Shell, 34, 85

Shleifer, Andrei, 119, 127

‘shock therapy’, economic, 9, 112; anti-

corruption rationalization, 113

single parents, 135, 137

‘skills’, aid industry, 96; ‘job search’, 145

slave rebellions, 190

Slovakia, 10

Slovenia, 10

small and medium farms, threatened, 226

Smith Institute, 52

Smith, Neil, 46

Social Affairs unit, UK, 30

social centres, UK, 189-92

social control, 140

social democracy: countering project, 27;

European parties, 252; Nordic, 174

Social Democratic party, UK, 31-2

social enterprise, seduction of, 196

social marginality, new conceptions of, 145

social movement organizations (SMOs),

226; evaluation phases, 201-2; land use

struggles support, 227

social-collectivist institutions, discrediting

of, 134

Socialist Equality party, national

organizations, 253

Société Générale de Belgique, 35

Soederberg, S., 106

South Africa, 183, 258

South Korea, 258; finance capital

corporate profit share, 245; RWE

chemical factory, 84

Soviet bloc, collapse, 117, 172

Spain: Aznar government, 37; dictatorship

fall, 251

spectacles: ‘ethical’, 210; hijacking of, 209;

of ‘terrorism’, 208; War on Terror

dominant, 218

squatting, 192

stagflation/structural crisis 1970s, 4, 7

Stalinism, 251

Stanford University, biomedical patents,

71

state, the; ‘African vampire’, 153;

calculation and regulation role, 77;

‘capture’ notion, 120, 125; corporate

subsidizing, 147; economic role

defined, 6; labour market

underwriting, 140; market rule

extension role, 45-6; neoliberal project,

10; private services involvement, 139;

‘rolling back’ of, 136; system, 248;

Westphalian inter-system, 182

Stern, Nicholas, 86

Stiglitz, Joseph, 104; ‘Commission’, 107

strategic thinking, social movements need,

201

Strauss, Norman, 29

structural adjustment loans/policies, 8-9,

94-5, 173-5

student revolt, 1968, 28

‘sub-prime carbon’, danger of, 88

sub-prime mortgage crisis, 57

subcultural spaces, limits of, 199

Sumitomo, carbon trading, 87

‘Summit’ mobilizations, 191

Sun Tzu, The Art of War, 216

supermarket sit-ins, 191

supply-side policies, 134

surplus value: excessive claims on, 249;

finance capital dependence on, 180

Sweden, 1990s bank crisis, 247

tactical media, 212

Tarshis, L., 157-8, 162

Taussig, M., 153

tax avoidance, 246-7; revenues, 13


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Tax Rate Committee, USA, 55

Thalidomide, regulatory costs increase

impact, 68

Thatcher, Margaret, 5, 27, 36, 136, 163,

172; ‘Thatcherism’, 29 ‘There is No

Alternative’, 1

‘the corrupt’, essentialist definitions, 118

The Observer, ISC publicizing, 29

The State in a Changing World, 101

The Times, market fundamentalist, 27

‘The Vaccuum Cleaner’, 208

Theodore, Nik, 116

think tanks, 4, 8, 24-6, 55-6; Atlanticist,

31; neoliberal-conservative, 47, 51;

New Labour, 52; rationalizations, 54;

role, 115; UK, 29-30, 52; ‘universities

without students’, 53; USA, 44, 46

‘Third Way’ ideology/policies, 164, 173-4;

New Labour version, 138

Thrift, N., 12

Tickell, Adam, 6-7, 44-5, 114

time-space, compression/distantation, 176-

9

Tituaña, Auki, 233

trade unions, 251; attacks on, 30, 39, 141,

239

‘transformational depression’, 9-10

transition economies, post-Soviet, 114;

-neoliberal relation, 112; captor firms,

120

transnational capitalist class, emergent, 23

Transparency International, 122-3, 127;

‘Corruption’ perception, 125; founding

of, 126

Trapese, group, 189

Treasury Department, USA, 55

tree planations, ‘offset’, 83

Trexler, Mark, 89

Trilateral Commission, 33, 35, 37

TRIMs (Trade-Related Investment

Measures agreement), WTO, 66

TRIPS (Trade-Related Aspects of

Intellectual Property Rights

agreements), WTO, 60, 66, 69;

innovation undermining, 72;

negotiated, 66; neoliberal centrality of,

67; ‘plus’ provisions, 73; USA

favouring, 65

Trotskyist internationalism, 45

Troubled Asset Relief Programme, USA,

14

Turkey, 258

UBS bank, Switzerland, 13

Uitermark, J., 217

UK (United Kingdom): aid criteria, 98;

banks’ rescue package scale, 14;

budget deficit, 16; Conservative party,

261; corporate tax refusal, 247; DfID,

127; economics, 156;

‘Euroscepticism’, 23; financial sector

corporate profit share, 245; global

securities market share, 12;

manufacturing decline, 13, 243;

neoliberal think tanks, 4; neoliberal

version, 138, 171; New Labour, 52,

252, 260; Peru Support Group, 231;

ruling class, 240, 250; taxpayer finance

sector costs, 256; welfare state, 246

Ukraine: ‘transformational depression’, 9;

bail-out package, 14

UN (United Nations), 85, 95

unemployment, 134; 1930s mass, 155;

unemployed people as citizen

consumers, 144

uneven development, dynamic of, 184

Unilever, 29, 34

universities: biotech departments, 69;

developing world eroded, 105-6;

Manchester, 3; patent reform interest,

70-1; USA life sciences departments,

68

USA (United States of America): Acid

Rain Programme, 78; balance of class

power shift 1979-80, 67; Balance of

Trade, 242; Bayh-Dole Act 1980, 70-

1; budget deficit, 16; Cold War policy,

160; conservative movement/coalition,

44, 46-8, 53; de-industrialization, 13,

243; debt, 246; Democrat Party, 30;

domestic patent reform, 67-8;

economic stimulus package, 14;

economics curricula, 156-7;

‘exceptionalism’, 23; faux-Keynesian

interventions, 56; Federal Reserve

Board, 8, 13, 245; financial assets-

GDP ratio, 12; financial sector support

scale, 14; global securities market

share, 12; Government Accountability

Office, 85; hegemony, 181, 257; life

sciences patent coalition, 72; neoliberal

think tanks, 4, 47, 51; neoliberal

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version, 43, 171; New Deal, 3;

originated assets write-down, 15;

Overseas Private Investment Corpora-

tion, 225; right-wing foundations, 31;

ruling elite, 240, 242; S&L

crisis/scandal, 247; social sciences,

159; trade deficit, 13; Treasury, 55;

TRIPs favoured, 65; universities

budget strain, 69; USAID, 127

user charges, public services, 239

USSR (Union of Soviet Socialist

Republics), demise, 8, 46, 67

utility theory, economics, 155, 166

Uzbekistan, 10

value: exchange logic, 179; use-exchange

contradiction, 175-6, 182

Via Campesina, 191

Vietnam War, 251; economic impact, 242;

opposition to, 28

virtual economies theory, 125

Vishny, Robert, 119

Vitol, energy speculator, 88

Von Mises, Ludwig, 3

wages, downward pressure, 134, 142, 173

Wagner, T., 181

Wall Street Journal, editorial position, 50

Walras, Léon, 161

War on Terror, climate of tension, 218

‘Washington Consensus’, 7-8, 95, 100-2,

105, 119, 173, 239; Latin American

crises, 9; World Bank apparent shift

from, 94

Watson, Matthew, 2

Waxman-Markey Act, USA, 86

Weitzman, Martin, 82

welfare state, as safety net, 139

welfare: A.C. Pigou theorizing, 160;

‘dependency’ rhetoric, 135;

microregulated, 145; state as safety

net, 139; -to-work/workfare

programmes, 133, 135, 138-40, 142-3,

147

Wells Fargo, 15

Whitehorn, John, 28

Williams, Shirley, 31

Williamson, John, 8

WIPO (World Intellectual Property Rights

Organization), 72-3

Wohlgemuth, M., 171, 185

Wolf, Martin, 262

Wolfensohn, James, 96, 104

Wolfowitz, Paul, 46

Working Tax Credit, UK, 141

World Bank, 6, 112, 120, 123, 126, 174,

259; Africa Report 1994, 96; aid

practices, 102, 107; analytical clout,

103; Anti-Corruption in Transition, 121;

‘anti-poverty’ agenda, 127; carbon

funds, 78; Country Policy and

Institutional Assessment (CPIA), see

above; development knowledge

economies of scale, 104; ‘extreme

poverty’ definition, 256; From Plan to

Market 1996, 9; ‘governance’

promotion, 100-1; Institute, 122, 125;

International Finance Corporation,

229; knowledge role/agenda/claims,

94-5, 99; local ‘ownership’ talk, 98;

neoliberal agenda, 106 Multilateral

Investment Guarantee Agency, 225;

PRSPs, see above

World Economic Forum, Davos, 33, 36

World Socialist Web Site, 252

world system theory, 182

World War II, UK impact, 250

WTO (World Trade Organization), 6, 34,

36, 64, 72; current round stalemate,

74; Seattle demonstrations against,

190; TRIPs, see above

Zapatistas, 191, 197

Zoellick, Robert, 259


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Rise an Fall Neoliberlaism

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