Saturday, December 3, 2011

Politics of Family Structure

 

Politics of Family Structure

By Arlene Skolnik1

The family trend of our time is the deinstitutionalization of marriage and the steady disintegration of the mother-father child raising unit. This trend of family fragmentation is reflected primarily in the high rate of divorce among parents and the growing prevalence of parents who do not marry. No domestic trend is more threatening to the well-being of our children and to our long-term national security.2
According to pundits and politicians across the political spectrum, the major danger to the future of the country is the growing number of children being raised in one-parent families. This is said to be especially true in those families where the mother was never married. The two-parent family structure is now hailed as both an anti-poverty program, as well as the only reliable route to children's success and emotional well-being. Moreover, the growth of one-parent families is widely thought to be the cause of the nation's most serious problems including crime, drugs, gangs, violence and failing schools.
In addition, there are two other peculiarities of the current debate about the family. First, family discourse is rarely linked to discussions of the economy. Discussions of the underclass, for example, typically deal with declining values, rather than the decline of blue-collar jobs or the social consequences of prolonged unemployment.
Second, although the entire Western world has experienced similar changes in family life since 1965 (i.e. increasing numbers of women in the workplace, steeply rising divorce rates, etc.), virtually every country except the United States has adapted to them through family support policies. These policies include parental leave, child care, and family allowances. The assumption in these countries has long been that shifting family patterns are a response to large economic and social forces. We are the only country in which government policy has been aimed at reversing the tide of family change, rather than mitigating its effects.3
At times, it has appeared that the American public is ready to accept the realities of late twentieth century family life, and reconcile old family values with the new family patterns. The new consensus against single motherhood, and its roots in old norms, is a recent development.
After the 1992 election, the family values issue seemed to fade. Dan Quayle's attack on Murphy Brown's single motherhood backfired. The public clearly preferred candidate Clinton's focus on the economy and his more inclusive version of the family theme: family values means valuing families, no matter what their form.
Murphy Brown seemed to have had the last word. The first show of the l992-1993 season was an extended rebuke towards Dan Quayle, including clips of his then infamous speech attacking the single mother character. Welcoming a group of real one-parent families to the show, she proclaimed:

I'd like to introduce you to some people who might not fit into the Vice President's vision of the family, but they consider themselves families nonetheless. They work, they struggle they hope for the kind of life for their children that we all want for our children, and these are the kind of people we should be paying attention to.4
Vice President Quayle also watched the show with a group of single mothers, trying to show that he was not attacking them when he criticized Murphy Brown.
This brief era of good will to families of all shapes and sizes was quickly followed by a new, bipartisan crusade focused on family structure that included divorce as well as single parenthood. The conservative right has for years equated family values with the traditional nuclear family. This new crusade against the one-parent family, as noted earlier, drew support from across the political spectrum including Democrats, liberals and communitarians. Over the succeeding months, the crusade gathered momentum. Eventually, even President Clinton joined in, remarking that he had reread Quayle's speech, and had found a lot of good things in it.
The new family restorationists have proposed a number of new policies aimed at discouraging divorce and the formation of one-parent families. After the elections of l994, the newly elected House of Representatives proposed a series of draconian measures aimed at reducing the number of single mothers. These include ending welfare support for teenage mothers under the age of eighteen, and doing away with payments for additional children born to a mother already on welfare.
While not all family restorationists go along with such drastic legislation, they generally use a language of moral failure and cultural decline to account for family change. They all seek to revive the stigma that used to surround divorce and single motherhood. To change the cultural climate, they call for government and media campaigns like those that have been successful against smoking and drinking. They also propose a number of policy changes, including making divorce harder, or even outlawing it, for parents with minor children. Some have also advocated restrictions on AFDC benefits to unmarried mothers.
The well-being of American children should be an urgent concern of policymakers. Focusing our national attention on the needs and problems of families raising children could be enormously positive. However, the current family structure crusade is playing by the family values scripts of the l980's. The result is that the issue is framed, "Are you for or against the two-parent family?" This approach paints critics into an anti-family corner. This approach of stigmatizing single parents, cutting off welfare, and restricting access to divorce may harm large numbers of children and deepen the very social ills they are trying to remedy.
There is nothing new in blaming social problems on the breakdown of the family, nor in the figure of the fallen woman and her bastard child as objects of scorn and pity. Throughout our history, public policies made divorce difficult to obtain and penalized unwed parents and often their illegitimate children as well. However, by the l960's and l970's, public opinion in the United States and other Western countries had became more tolerant of formerly stigmatized family patterns. Further, legal systems throughout the western world became less willing to brand some children as illegitimate and deprive them of rights given to others. We are now being told that the new tolerance is a mistake, and we should revive the old stigmas and constraints.
Most Americans, including those committed to greater equality between men and women, are deeply uneasy about the family changes of recent decades. They are also worried about crime and violence. The new movement for family structure owes much of its persuasive power to its reinforcement of public anxiety concerning the authority of social science. Barbara Dafoe Whitehead, of the Institute for American Values, describes so-called family diversity in the form of divorce and one-parent families as damaging both the children and the social fabric of our society. Karl Zinsmeister, of the American Enterprise Institute, also refers to a mountain of evidence showing that children of divorce end up intellectually, physically, and emotionally scarred.
Despite the strong claims of scientific backing by the most vocal advocates of family structuralism, the research literature is far more complicated than these simplistic portrayals. The use of social science is selective and misleading. As some scholars admit, the debate about family structure is not simply about scientific evidence. It is also a debate about values.
Few would deny that the divorce of one's parents is a painful experience, and that children blessed with two good parents generally have an easier time growing up than others. In addition, few people would challenge the reality that raising a child from infancy to successful adulthood can be a daunting task even for two people. However, in order to decide whether family structure should be the focus of major policy initiatives, it is necessary to establish answers to a number of preliminary questions.
First, are children of divorce or one-parent homes markedly worse off than those who live with both parents? Second, if such children are so disadvantaged, is the source of their problems the family structure itself, or some factor that may have existed earlier or have been associated with it? Third, can public policies intended to stigmatize and reduce or prevent divorce or single parenthood do so without unintended negative consequences for children's well-being? Additionally, would positive measures such as support for one-parent families or reducing the stress that accompanies marital disruption be of more benefit to children?
Finally, there is the issue that has helped to fuel the backlash against single parents: the supposed direct link between family structure and what a Newsweek writer called a nauseating buffet of social pathologies, especially crime, violence, and drugs. Dan Quayle tried to link the family values issue with the equally explosive issues of crime and violence in his Murphy Brown speech. In the wake of the Los Angeles riots, Quayle argued that it was not poverty per se, but a poverty of values that had led to the breakdown of families in the inner city, and which in turn was responsible for the violence. The one sentence about Murphy Brown in his speech caused the national outrage which overshadowed the rest of the message.
Charles Murray was more successful at linking family values with fear of crime. He has warned that because of rising white family illegitimacy rates, a coming white underclass was going to engulf the rest of society in the kind of anarchy found in the inner cities. What is the evidence for this incendiary claim? Why is it that countries with similar trends in family structure do not suffer from the social deterioration that plagues us?
The family restorationists do not provide clear answers to these questions. The answers found in the research literature do not lend much support to their extreme statements about the importance of family structure or to some of the drastic policies they propose to change it. It is true that the research does not show that one-parent families are the same as two-parent families. Without a father's contributions to parenting and family support, single mothers face added burdens, responsibilities, and stresses.5
Some of these advocates seem to misunderstand the research enterprise in fundamental ways. For example, they trumpet findings about correlations between family structure and poverty, or lower academic achievement, or behavior problems, as proof for their arguments. However, doing so ignores the principle taught in elementary statistics that correlation does not equal causality.
Every beginning student learns a few textbook examples of misleading correlations. For example, suppose someone finds that increased ice cream consumption is linked to increases in drownings and auto accidents. The cause is not ice cream, but rather it is the weather because people swim more, drive more, and eat more ice cream in the summer. Similarly, single parenthood may be part of a package of social problems. It is also important to know that causality can and often does go in two directions at once. Poor women are more likely to have out-of-wedlock babies than others, but having the child may impede them from moving out of poverty. In short, finding a correlation between two variables is only a starting point for further analysis.
Some of the shortcomings of the family structuralists are in the research literature itself. Studies of divorce, for example, have been plagued by methodological problems which make them hard to interpret or apply. Many of the studies have been based on relatively small samples of white families. Some of the studies are based on families seeking clinical help or embroiled in legal conflict.
It is often hard to compare studies with one another because they use different measures, different ages of children, and different time spans since divorce. Some studies, including one of the most widely cited on the harm of divorce, use no comparison groups at all. Other studies compare divorced families with intact ones, when the more appropriate comparison groups are children in happily and unhappily married families.
Further, the family structuralists, along with some researchers, lump together children of divorce with those whose parents never married. Yet, these kinds of families tend to have different characteristics and different needs. For example, never married mothers tend to be younger, poorer, and less educated than divorced mothers. There are also significant differences in the well-being and development of the two groups of children.
It is important to look first at the evidence on divorce. The impact of divorce on children should be taken seriously, but the family structuralists paint a far darker and more simplistic picture than the research literature suggests. Researchers agree that around the time their parents separate almost all children go through a period of distress. Within two to three years, most children have recovered. The great majority of children of divorce are not impaired in their development. It is important to keep in mind that findings can be statistically significant without necessarily making a large difference in real life terms.
In fact, a meta-analysis of divorce findings published in 1991 reported very small differences between children from divorced and children from intact families in such measures of well-being as school achievement, psychological adjustment, self concept, relations with parents and relations with peers. Furthermore, the more methodologically sophisticated studies--those that controlled for other variables such as income and parental conflict--reported the smallest differences.
In general, those researchers who interview or observe children of divorce report more findings of distress than those who use data from large sample surveys. Yet, even in those kinds of studies, the great majority of the children develop normally. One point researchers agree on is that children vary greatly in response to divorce, depending on circumstances, their age, and their own psychological traits and temperament.
To the extent that children of divorce differ from those in stable two-parent families, the differences may not be due to the divorce itself but to circumstances before, during, and after the actual legal undoing of the marital bond. Most researchers now view divorce not as a single event in itself, but as a process unfolding through time. The child will usually endure parental conflict, estrangement, emotional turmoil, separation from one parent and economic deprivation. Often, divorce means moving away from home, neighbors and schools.
Researchers have known for some time that children from intact homes with high conflict between parents often have similar or even worse problems than children of divorced parents. Recent studies in this country, as well as in Australia and Sweden, confirm that marital discord between the parents is a major influence on children's well being, whether or not a divorce has occurred.
Some of the family structuralists recognize that children in high-conflict families might be better off if their parents divorced than if they stayed together. But, they want to discourage or limit divorce for parents who are not in the high-conflict category, and may simply be bored or unfulfilled. The problem is how to draw the line between the two, and who should do the drawing.
It is hard for outsiders to really know what goes on inside a marriage. High-conflict marriages are not necessarily violent or even dramatically quarrelsome. By the time friends and relatives hear about marital troubles or plans for divorce, the couple has usually been coming apart for a long time. Further, a number of recent studies show that even moderate levels of marital dissatisfaction that affect the parents' own emotional state can have a detrimental effect on the quality of parenting.
The most critical factor in a child's well-being in any form of family is a close, nurturing relationship with at least one parent. For most children of divorce, this means the mother. Her ability to function as a parent is in turn influenced by her physical and psychological well-being. Depression, anger, or stress can make a mother irritable, inconsistent, and less able to cope with her children and their problems. Marital dissatisfaction and conflict can be a major influence on a woman's psychological state, whether or not divorce occurs.
Until recently, the typical study of children of divorce began after the separation took place. Two important studies--one by Jack Block and his colleagues and another by Andrew Cherlin and his--examined data on children that focused on the child's behavior long before the parents divorced. These studies found that problems usually attributed to the divorce could be seen months and even years earlier.
Usually, these results are assumed to reflect the impact of family conflict on children. But a recent analysis of divorce trends around the world offers another possibility. The research not only shows that many of the so-called effects of divorce were present before the marriage, but also suggests the even more radical hypothesis that in at least a sizable number of families the problems that children generate may create parental conflict and thereby increase the likelihood of divorce.
At the moment, however, in contrast to the crusade against single mothers, the attack on divorce seems to have made little headway. Divorce, after all, affects a sizable proportion of middle-class families, including a number of leading family values advocates such as Ronald Reagan, Newt Gingrich, Robert Dole and Phil Graham.
The issue of never-married single-parent families has become a flash point in the family wars because it touches on such important issues as sex, gender, race, and welfare. Dan Quayle's attack on Murphy Brown confused the issue. It is true that increasing numbers of single, educated, middle-class women are having children. In fact, among those in professional or managerial occupations the rate nearly tripled in the last decade. Despite the increase in these Murphy Brown mothers, however, only eight percent of women are in that category.
Out-of-wedlock births continue to be far more prevalent among the less educated, the poor, and racial minorities. As prominent authors have pointed out, the assumption that early childrearing causes poverty and school dropout is backward. These conditions are as much the cause as the effect.
Elijah Anderson, Linda Burton, William Julius Wilson and other urban sociologists have broken down the old economy versus culture dichotomy in understanding poverty. They have shown how the unraveling of the economy in the inner cities, combined with the continuing stigma of race, has resulted in a destructive interaction between structural change and cultural response. Cut off from the rest of society, with little or no hope of stable, family-supporting jobs, young men prove their manhood through an oppositional culture based on ruthless macho and sexual prowess. Young women, with little hope of either a husband or economic independence, drift into early sexual relationships, and in turn into pregnancy and childbirth.
Once in place, the oppositional culture on the streets, and the violence it fosters, becomes a new reality afflicting the inner city. The majority of its residents identify with decent rather than street values, but their children must at least learn the code of the streets to survive there. In a vicious cycle, the street culture reinforces fear and other negative feeling towards inner city blacks, leading to further alienation and hopelessness on the part of the young. Breaking the cycle will take more than moral exhortation or cutting off welfare.
The same economic transformations that have battered the inner cities have also shaken the middle class. The family structuralists, however, have little to say about the impact of economic forces on families. Some authors have mentioned that the loss of good jobs has deprived high school graduates across the country, as well as inner city young people, of the ability to support families. Improving job opportunities for young men would enhance their ability and presumably their willingness to form lasting marriages.
There is no shortage of evidence on the impact of economic hardship on families. The studies of inner city problems are paralleled for other groups in a spate of recent books. Some portray the fast growing population of working poor, people who play by the rules but remain below the poverty line. Other books have documented the impact on working-class families of the decline from well paying white collar jobs. They also point to the hardening of working and middle-class attitudes toward the poor, racial minorities, and immigrants as a byproduct of economic decline. Other authors document the effects of downward mobility in middle-class families.
A large body of quantitative research reinforces these more qualitative analyses. As Glen Elder and others have found, using data from the Great Depression to the l980's, economic conditions such as unemployment or economic loss are linked to children's problems through their parent's emotional states. Economic stress often leads to depression and demoralization which in turn leads to marital conflict and bad parenting, which can consist of harsh discipline, angry outbursts, and rejection. Child abuse and neglect, as well as alcoholism and drug use, have been found to increase in response to economic stress.
As child advocates and researchers have long known, the greatest threat to children's well-being and development is poverty and inadequate income. The Society for Research in Child Development has recently issued an over 700 page special issue of its quarterly journal devoted to children and poverty. Overall, the articles reflect the ecological perspective, originally expounded by Uri Bronfenbrenner and others, now central to the understanding of human development.
The key assumption of the ecological framework is that single variables such as family structure or low birth weight are not very useful in themselves in explaining child outcomes. Rather, a complexity of factors in the child, in the family, in the immediate environment and beyond contribute to development. Poverty has such an impact because it affects not only the parent's psychological functioning, but is linked to poor health and nutrition in parents and children. In addition, it contributes to impaired readiness for education, bad housing, the stresses of dangerous neighborhoods, and poor schools, as well as the stigma of being poor. Thus, one study found that among both black and white children, family income and poverty status were more powerful determinants of children's cognitive development and behavior than other factors, including family structure and maternal schooling.
Child poverty in the United States, as the family structuralists point out, is higher than it was two decades ago. It is also much higher in the United States than in other Western countries, among both whites and blacks. It is not an inalterable fact of nature that children born to poor families or unmarried mothers have to grow up in poverty. Although other western countries may have higher initial poverty rates than we do, they do more than we do to provide additional support. 6 They are less willing than we are to choose disapproval of parents over supporting the well being of children.
The family structure debate raises larger questions about the changes in family, gender, and sexuality in the past three decades, such as what to think about them and what language to use in talking about them? The language of moral decay will not suffice. Many of the nation's churches and synagogues are rethinking ancient habits and codes to accommodate new conceptions of women's equality, and new versions of morality and responsibility in an age of sexual relationships outside of marriage and between partners of the same gender.
The nation as a whole is long overdue for a serious examination of the upheaval in American family life since the l960's. An important consideration is how to mitigate its social and personal costs, especially towards children.
Leaving aside the cultural warfare that might break out, such an examination would be grounded in the history of the American family and not the lost family of a mythical past conjured up by our nostalgic yearnings. A more realistic vision is offered by the massive body of historical scholarship that has emerged since the l970's. From the beginning, American families have been diverse, on the go, and buffeted by social and economic change. The gap between family values and actual behavior has always been wide.
Such an examination would also be based on the awareness that the family trends we have experienced over the past three decades are not unique to America. Every other Western country has experienced similar changes in women's roles and family structure. The trends are rooted in the development of the advanced industrial societies. Family sociologist Andrew Cherlin has explained that we can no more keep wives at home or slash the divorce rate than we can shut down our cities and send everyone back to the farm.
However, our response to family change has been unique. No other country has experienced anything like the cultural warfare that has made the family one of the most explosive issues in American society. Most other countries, including our cultural sibling Canada, have adapted pragmatically to change, and have developed policies in support of working parents, one-parent families, and all families raising children.
Sooner or later, we are going to have to let go of the fantasy that we can restore the family of the 1950's. Given the cultural shocks of the past three decades, and the quiet depression we have endured since the mid-l970's, it is little wonder that we have been enveloped in a haze of nostalgia.
Yet, the family patterns of the l950's, which Americans now take as the standard for judging family normality, were actually a deviation from long term trends. 7 Since the nineteenth century, the age of marriage, the divorce rate, and women's labor force participation have been rising. In the l950's, however, because of an unusual set of historical circumstances, the age of marriage fell to a new low, the proportion of the population married reached a new high, and the American birth rate approached that of India. In addition, the divorce rate leveled off. The only trend to persist through the Ozzie and Harriet era was the steady but unnoticed march of women into the labor force.
Barring a major cataclysm such as a severe depression, the changes are too deeply woven into American life to be reversed by "just say no" campaigns or drastic changes in divorce and welfare laws. Most of us would not want to reverse all the trends that have helped to transform family life, including declining mortality rates, rising educational levels for both men and women, reliable contraception, and greater opportunities for women.
The task is to buffer the effects of these changes on children and families. We already have ample knowledge of what needs to be done. 8 Ultimately, the politics of the family is simply politics. An article arguing the need for systematic economic reform points to a dilemma facing the Clinton or any other reform minded administration. Between the new economic realities and the kinds of broad measures that might address them, there is a yawning gulf of politics and ideology into which even the most well-meaning and intelligently conceived policy can tumble. A similar gulf lies between the new realities of American family life and the kinds of child and family policies that have been proposed by commissions and study groups over the years.
Yet there may be more possibilities for consensus in favor of ameliorative approaches out there than there appears to be at the moment. As E.J. Dionne has pointed out, the debate is more polarized than the public. 9
We saw in 1992 that an inclusive pro-family message could be articulated and combined with proposals for economic and social reform. Such a message, recognizing both the diversity of family life and the continuing importance of family, appealed to a broad cross section of Americans. It easily could happen again. If we are to avoid the nightmare scenarios of social deterioration described by the new family structuralists, we had better not follow their more punitive and coercive prescriptions.

The ethics of the free market:


The ethics of the free market:
why market liberalism is wrong

The moral, political and social objections to market liberalism and the market itself. The market is not a neutral 'process', it is a structure deliberately imposed, to implement the goals of a liberal ideology. It can be ethically assessed, and rejected, on that basis: criticism of the market overlaps with general critique of liberalism.



The goals of market liberalism

Market liberals see the free market as an instrument to achieve certain goals. Very few attempt to justify the market on quasi-esthetic lines, as something of intrinsic value but without direct application. When liberals speak of the free market, they mean a functioning market with real participants.

___Balance and stability Metaphors of balance and equilibrium are often used by liberal philosophers, to justify liberal political systems. The market is sometimes justified in these terms. In the early days of capitalism, the market was praised as a moderating influence on a turbulent society. The early-capitalist ideology is described by Albert Hirschman in The passions and the interests: political arguments for capitalism before its triumph (1977). The expression 'la douce commerce' dates from that time: commerce was contrasted with war. The underlying value system is rarely explicit, but logically it implies that balance and equilibrium are inherently good - otherwise, why arrange society to maximise them?
___Hidden order
Another philosophical justification for liberal structures is that they reveal, or bring into existence, a more perfect order. This line of argument derives from mediaeval theology (although it might be much older). The idea is that God's plan is revealed, by the combined result of human actions. In market liberalism, explicit claims that the market produces the best 'ordering of society' are common. Liberal societies, and the market, are also justified by their ordering of individual preferences. Neoliberals appeal to the superiority of 'emergent' or 'self-organising' orders, as opposed to 'patterned' or 'designed' orders. Again these are value preferences in themselves - 'emergent' is not a synonym for 'good' and an emergent order does not inherently justify itself.
___Prosperity and welfare of the community
Despite their claimed individualism, market liberals often appeal to the general success of market societies, to justify the market's existence. The fact that some individuals do not benefit, or are dissatisfied, is ignored. The usual comparison is with the planned economy of the Soviet Union, which is considered a total failure. Compared to historical examples of planned economies, market economies have higher average incomes - but unequally distributed. Again, it is a value preference in itself, to choose the 'common good' over any other moral defects of the market - especially with such a crude measure of the 'common good'.

The imposition of the market

Competition is a characteristic of the free market, but its supporters do not tolerate any competitor for the free market itself. Almost always, they support a comprehensive global free market, a planetary monopoly. The market has definite goals, as explained above - it is not neutral and there are alternatives. A global free market implies their suppression. A voluntary global free market does not exist, at least not on this planet. The market was imposed, and maintains itself, by deliberate action.
___Expansionism Expansionism is one of the clearest characteristics of market liberalism. Especially in the post-Soviet 'transition economies' there are identifiable national lobbies and groups which have no other purpose, than to impose the free market on that country. There are also individuals and organisations demanding a global free market, although usually within the context of global liberalism. At present, market liberalism is probably the most aggressive global ideology - more so than for instance Islamism. Very few Islamists have serious plans for the Islamisation of the United States, but in contrast many Americans demand (and expect) a transformation of Islamic societies into liberal market democracies.
___Internal filters
The internal ideological strength of the market is less visible than its expansionism, but no less real. The market, to use a biological analogy, has an immune response. The structures of a market society obstruct criticism and opposition to the market, it neutralises attacks from within. The filter working of the job market is the best example: it is much harder for opponents of the market to get a job, than for its supporters. This filter effect is in action every time a vacancy is filled, and is often institutionalised in the form of permanent assessment. Employees at an investment bank - who can lose their job if their tie is the wrong colour - are unlikely to suddenly join anti-capitalist demonstrations. Over time, the probable effect is a lessening of all criticism, and a general acceptance of the market as inevitable and 'normal'. The social conformity, which was seen by dissidents as a typical characteristic of 'Soviet-bloc' societies, is just as evident in market societies.
___Military imposition of liberalism
It should not be forgotten that the free market is also imposed by military conquest - not in isolation, but as part of an imposed liberal-democratic political regime. The present liberal market democracies in Austria, Belgium, France, Germany, Italy, Luxembourg and the Netherlands, are the direct result of invasion by US and allied forces in 1944 and 1945. In recent years, interim administrations with liberal-democratic orientation have been imposed by military force, on Bosnia, Kosovo, East Timor, and parts of Macedonia. A free market economy existed already in these areas. Nevertheless, the market is part of the 'packet' of values and social structures, imposed by the troops. In addition, the NATO as a military alliance appears to include the free market among its core values. All its actions are, at least partly, directed at the imposition of these values. It is certainly unthinkable, that a US or NATO force would supervise the introduction of a Soviet-type economy.

The entrepreneur

The free market, certainly the modern version, cannot exist without the entrepreneur. A liberal market society stands in opposition to an ethical society, and the entrepreneur stands in opposition to the ethical individual or organisation.
___Definition of an entrepreneur A familiar example of a pre-capitalist ethical organisation is the mediaeval monastery, where the monks worked for the glory of God. At least in theory - in reality the monasteries were often proto-firms, active in the commercialised sectors of the mediaeval economy. Nevertheless, it is clear that an ethical organisation can exist, and that individuals can act ethically (in accordance with some ethical goal). In contrast, the entrepreneur acts in accordance with market forces. This is so central to the activities of the entrepreneur, that it can be used as a definition. An entrepreneur is a person who, as a profession, acts in accordance with market forces. In modern economies, 'the entrepreneur' is usually an organisation rather than an individual. There are still many individual entrepreneurs, but their share of the Gross National Product is small, compared to that of firms. An 'entrepreneurial organisation' or enterprise, normally meaning a business firm, exists for the purpose of acting in conformity with market forces.
___Characteristics of an 'enterprise'
In practice, all enterprises have certain characteristics which clearly distinguish them from an ethical organisation, even when both operate in a market society:
  1. the enterprise competes for market share with other similar organisations
  2. it is prepared to damage the interests of its competitors, for instance by reducing their market share
  3. it sells products at more than cost price
  4. it seeks to ensure its own continued existence, even when that contradicts ethical goals, and it makes no provision for its own dissolution on moral grounds
  5. it excludes from decision-making persons of good will, who might seek its dissolution on moral grounds
  6. it does not distinguish on moral criteria, among its customers, or suppliers, or clients, or in the selection of its personnel
  7. it internalises the principle of competition, by for instance competitive selection among job applicants - so creating a new market within the market, the 'labour market'.

The enterprise culture and the firm


The entrepreneur seeks primarily to act in accordance with market forces within a free market economy: nevertheless certain sub-goals logically follow from that. In addition, an enterprise culture has emerged, which can not always be logically derived from the original ideology of market liberalism.
___Entrepreneurs are liberals There must be a market, or the existence of the enterprise makes no sense: therefore the enterprise is pro-market. This may seem a trivial point, but it is important to realise that every enterprise is at the same time a political organisation. Every entrepreneur is a market liberal, in the general sense. In mid-19th century Europe, this was a political reality: the 'industrialists' supported the dominant liberal parties. The rise of the mass parties - nationalist, Christian, socialist - eroded the political role of those liberal parties, but their model of economy and society remains triumphant.
___Businesses are pro-business
Again it may seem trivial, but by definition an enterprise must support its own existence, and therefore the existence of enterprises as a class of organisations. Entrepreneurs act collectively as a lobby, to demand facilities for entrepreneurs. As mere private individuals, in a non-market society, they could not achieve much. Their demands are addressed to the state. That may seem inconsistent - but only the state can structure itself as a facility for entrepreneurs, it would be pointless to demand that from the clergy, or from the art world.
___'Business' as such exists
The 'business community', as it is called in the United States, does exist as a community, and it is a pro-business community. It exists as a social factor, beyond the economic activities of its individual members. It influences society, by the way it spends its money. Business, for instance, will not sponsor left-wing parties: business supports the right in politics, including the nationalist and racist right. The personal preferences of the businessman and businesswoman are generally conformist and conservative, as is visible at any business conference. In contrast to their own mythology, they are unadventurous. There is even a collective style in clothing - the business suit is one of the few voluntary uniforms in modern societies. The business world has its own language and social style, it is a complete subculture. The question is: why should this particular minority have total control of the economy?
___Glorification of the entrepreneur
In a typical market society, the entrepreneur is assigned a heroic role, and is glorified as the source of wealth and innovation. Non-entrepreneurial activity, for instance idealistic activity, is seen as secondary or even parasitical. This vision is not only promoted by entrepreneurs themselves: ideological praise of the entrepreneur is as old as market liberalism itself. Modern neoliberals, such as Tony Blair, are especially active in glorifying the entrepreneur, and explicitly demanding an 'enterprise culture'. The heroic entrepreneur is also a central theme of libertarian propaganda.
___Market demand and the customer
Market societies tend to view the market as norm, a view which is itself propagated by market liberals. In a market society, market forces are treated as if they were an ethical goal in themselves: indices such as the Dow Jones or the FTSE are idolised. The staff of the business firm are told that "the customer is always right" or more recently, that the shareholder is always right. Assuming, of course, that neither threatens the firm itself. Again this is a deliberate substitution of the aggregate customer and shareholder, for ethical judgment and moral principles.

The effects of the market


The free market has effects on the course of history, and on society. The Dutch word 'marktconform' is useful in describing these effects - it means 'in conformity with the market' or 'determined by market forces'. A 'marktconform' housing policy, for instance, means that houses are built by entrepreneurs, where and when they want, in whatever size or form they think they can sell, and without regard to planning or environmental considerations. The result - generally suburban sprawl - is also 'marktconform'. The market is not neutral, and can not neutrally order preferences: its own preference is for a 'marktconform' world.
___The market limits positive and negative possibilities Despite the propaganda, the free market limits choice - it produces only goods and services which are marketable. Try to find a supermarket stocked entirely with un-marketable goods, or an enterprise which produces them for years on end. The logic of the market is, by definition, that the unmarketable is competed out of existence. So the market prevents the existence of the unmarketable: a limit on possibility. The propaganda of market liberals presents the market as innovative, or at least as a facilitator of innovation. Nevertheless, a free market will inherently suppress any innovation which is unmarketable. A market society is by definition permanently in a 'marktconform' state, and contra-market innovation can not exist there. Once a market society has become a perfect outcome of market forces, then it will remain stable, unless an external shock disrupts its 'marktconform' stability. In a negative sense that is also true - it is impossible in a free market to abolish anything which is 'marktconform'. If I want to forbid Disney products, for instance, I can not trust the market to achieve this goal: so long as they are so successful and marketable, they will be available. Only the state can effectively prohibit marketable goods: that is why drug and alcohol prohibitionists use the state, not the market, to enforce their values.
___Adaptive, non-innovative, conformity
A market society creates and encourages a mentality of adaptation to the existing world. This is most evident in the labour market, in the behaviour of job-seekers, especially students. Many students choose their courses, not for personal or idealistic reasons, but simply for 'good career prospects'. The career-seeker does what the employer requires, and refrains from what the employer dislikes. The resulting attitude is a strangely aggressive form of conformity. The 'aggressive adapter', the successful career-maker, equates personal success with meeting the demands of the employer. In a shrinking labour market, this can sometimes translate into a radical conservatism, in which business culture is idolised. An excessive admiration for small product changes, to the exclusion of larger radical innovation, is often part of this radical conservatism. Approximately this line of thought: The free market brought us striped toothpaste, this is the greatest innovation in human history, we must all dress conservatively and try to become an entrepreneur, that is the true global revolution!
___Harm by competition
Harm is an integral part of any free market, and this harm is not limited to the entrepreneurs. Market liberals say that the entrepreneur should seek to advance his own interests. In a free market, that must consist of damaging the position of others. Each entrepreneur competes with other entrepreneurs for a limited resource - market share. Whatever happens to the Gross National Product, the combined market shares are always equal to 100%. To increase share (advance his own interests), an entrepreneur must, by definition, reduce the market shares of others. In any case, by the market-liberal definition of success, a successful business competes its rivals out of existence. At first, the rival firms suffer financial loss. Ultimately, they can not meet their financial obligations: they collapse, usually via a bankruptcy procedure. Their employees lose their jobs. This is how a free market works - its supporters understand that job security undermines it. The threat of job loss through competition is always present, even if only in the background: constant pressure on labour is a characteristic of a free market. If the market functions as it is intended, then employees will work harder, for less pay, in order to secure their jobs. They too, are forced to be competitors of each other, in order to get a job and keep it.
___Harm to others as a social value
It seems dangerous to ground a society on the value of trying to disadvantage others. That is exactly what market liberalism proposes, and the results are predictable. Since the entrepreneur has no other interest other than his own, he will not seek to protect others. When he benefits, he will seek to actively harm others - if he thinks he can get away with that. An endless series of scandals show that entrepreneurs are indeed prepared to injure and kill others for their gain. The sale of contaminated food is probably the most typical example of entrepreneurial behaviour. Governments find it necessary to restrain entrepreneurs in the food industry, by regulation, to prevent them from poisoning the population. That in itself ought to say enough about the entrepreneurial mentality. Nevertheless, entrepreneurs continue to evade these regulations. Recent epidemics of animal diseases in Europe illustrate that. Although everyone in the sector is familiar with the risks, there are always some who use contaminated feed, or transport animals illegally, and so spread the disease. The entrepreneur seems incapable of self-regulation - and that is not surprising, since liberal market culture abhors regulation.
___Selection by competition
The free market generates a form of Darwinian selection: the survival of the competitive. Non-competition, or incomplete competition, is failure. The market produces a hierarchy of failure, with the most competitive firms and individuals at the top. Not necessarily those with the best products, or the most honest advertising, or the best treatment of their employees - but those who can best compete in a free market. The least competitive are at the bottom of the hierarchy, or simply dead - in many parts of the world, no job means no food. The market is not the only social structure which generates inequality in this way: modern educational systems, for instance, are structured as a competition of intellectual talents. They also produce hierarchy, inequality and failure, although they are not a market. They are part of a general category of liberal structures, where the aggregate outcome of competition determines the final structure. The formal equality of such liberal structures (everyone can participate) does not reflect the real inequality of the 'talents' required. Not everyone can compete like Bill Gates - and not everyone should.
___The triangular form of selection
In market-liberal propaganda, the market is represented as a fair two-party transaction, typically buyer and seller in free contract. In reality the free market can never function with two parties - it has a 'triangular' character. At least three parties are required - one buyer and two competing sellers, for instance. Only in such a triangle can competition and market forces exist: the two sellers compete, and market forces drive their prices down. As a result, one party can be disadvantaged, even by a free and fair contract between the other two. The buyer may like the price, and the seller may like the price, but the third party (who failed to sell) might starve. In the real free market there are billions of parties, and repeated transactions: the effect of disadvantage is cumulative.
___Centering
The free market extends the power of selection to many, although their individual effect on the outcome is small. That is not necessarily a good thing: the evidence is that the market selects against innovation. Conformity, conservatism, and middle-of-the-road taste are typical of consumer behaviour, in the western market democracies. The selective effects of the market are themselves cumulative. Whatever is marginalised by the operation of market forces, becomes less attractive and more marginal - as a result of that status. What already sells well, becomes more marketable. This is a general characteristic of all liberal social structures, not just the market. Repeated transactions and interactions, on the basis of the outcome of previous transactions and interactions, have a centering effect. Deviations from the norm are 'punished' by such regimes, and innovation is by definition a deviation from the existing norm. In western societies, it is easier to sell a Disney DVD than innovative music, it is easier for a person with Disney-DVD tastes to get a job, it is easier to start a business selling Disney DVD's than to overthrow the WTO. The market society brings the 'general consensus' to bear on the individual - more effectively than any other society in history. As a result, it strengthens that consensus, and tends to produces a stable conformist society, with little deviation from the core culture.

The morality of the effects


The free market is grounded in a value system: its morality can be questioned simply by stating alternative values.
___Universality The free market has no end, its duration is indefinite: in principle it is forever. So far as I know, no theorist of the market has ever fixed a time limit, or named a structure which will replace it. The duration of the market is a universality in time: the market is also intended to be universal in space. When market liberals advocate the market, they advocate a permanent global market - an implicit claim that it represents the highest possible form of society. However, the market should not have a planetary monopoly, nor should it last for ever, nor should it intensify itself, by centering society on a core culture which is itself a market culture.
___Interactivity
Like other liberal structures, the market promotes interaction and transaction: it is grounded on the premise that these things are inherently good. They are not, and neither goods nor ideas exist solely to be exchanged. Market liberals implicitly claim, that all humans should be linked by transactions, to the greatest possible extent. There is no basis for such a claim: transaction-maximisation is not inherently right. A collective decision-making process, with a great number of transactions, destroys the moral autonomy of the subject. In such a process, there is no causal relationship between the decision of an individual, and the aggregate outcome of global market forces. Ethical action is impossible in such a society.
___Conservatism
The market blocks the innovative transition to a non-market world. It structures the world in a particular way, as the outcome of market forces, and it keeps it that way. Stability, balance, and harmony are not inherently good, and it is wrong to order the world in accordance with these values. Order is not inherently good, and the creation of order can form no justification for the market. The ordering of preferences is not inherently good, and it is wrong to order human society merely as a preference order. Whenever the market inhibits or obstructs innovation, then innovation should take precedence over the market. Innovation as a value overrides order, stability, balance, harmony, and any non-innovative preference order.

Neoliberalism: origins, theory, definition


Neoliberalism: origins, theory, definition

Since the 1990's activists use the word 'neoliberalism' for global market-liberalism ('capitalism') and for free-trade policies. In this sense, it is widely used in South America. 'Neoliberalism' is often used interchangeably with 'globalisation'. But free markets and global free trade are not new, and this use of the word ignores developments in the advanced economies. The analysis here compares neoliberalism with its historical predecessors. Neoliberalism is not just economics: it is a social and moral philosophy, in some aspects qualitatively different from liberalism. Last changes 02 December 2005.
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Neoliberalism inadequately defined?

The definition of neoliberalism presented here is more abstract than usual - but it also suggests that neoliberalism has been underestimated. A widely quoted example of those 'usual definitions' is What is "Neo-Liberalism"? by Elizabeth Martinez and Arnoldo García:
Neo-liberalism is a set of economic policies that have become widespread during the last 25 years or so. Although the word is rarely heard in the United States, you can clearly see the effects of neo-liberalism here as the rich grow richer and the poor grow poorer....Around the world, neo-liberalism has been imposed by powerful financial institutions like the International Monetary Fund (IMF), the World Bank and the Inter- American Development Bank....the capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate elite to revive economic liberalism. That's what makes it 'neo' or new.
This sense of the word 'neoliberalism' is widely used in Latin America. However, neoliberalism is more a phenomenon of the rich western market democracies, than of poor regions. That is why I emphasise the historical development of liberalism, in those western market democracies. The IMF and the World Bank are not the right places to look, to see the essence of neoliberalism. And the WTO ideology - free trade and 'competitive advantage' - is 200 years old. There is nothing 'neo' in their liberalism.

Seattle and Genoa?

The image of 'neoliberalism' has been heavily influenced by the protests against it: people think of the violent protests at Seattle and Genoa, and the associated social movements. If you only thought about that, then neoliberalism would be an ideology of the riot police, and that's not accurate.
It's true that the Genoa G8 summit was intended as a show of force. The organisers knew that violent demonstrations were probable in an Italian city, but chose to confront them. Democratically elected leaders "should not run from demonstrators", said Tony Blair. (However, when it was Britain's turn to organise the G8 summit, the hypocrite choose the isolated Gleneagles hotel in Scotland). 20 000 police and soldiers were deployed at the Genoa G8 summit - NATO used 42 500 troops to occupy Kosovo. This show of force was out of all proportion to the political strength of anti-market forces, but it emphasised the legitimacy of the market-democratic states.
It is possible for 'the state' to suppress 'the market', but also to promote it. In fact, the free market emerged in Europe under the protection of the state, and the market needs the state, more than the other way around. The market needs internal regulation, in order to function: the state, in the form of the legal system, ensures contracts are enforced. In the form of the police, it prevents theft and fraud. It establishes uniform systems of weights and measures, and a uniform currency. Without these things there would be no free market, no market forces, and no resulting market society. Bill Gates disputes the US Government's authority over his business - but if there was no government at all, the poor would soon steal his wealth. The attack on the World Trade Center provided some images of this dependency - the reopening of the New York Stock Exchange by police and firefighters, for instance. (In turn, at least in the United States, the market is integrated in the national identity: the NYSE reopening was seen as an act of national defiance).
The free market is itself a form of social organisation: it is neither spontaneous nor endemic to humans. If no-one ever promoted or enforced it, there would be no free market on this planet. For thousands of years, there was none. The modern free market came into existence primarily because liberalism demanded its existence. This demand was a a political demand, and it was enforced through the state.
The general functionalist starting premise is only modified to the extent that the "system" is comprehended as capitalist, in a specific way "form-determined". The state and the political system function as a form of an 'ideal all-around capitalist', who must uphold not just the society as such, but the 'capitalist element'. The different forms of state interventionism are explained both as an expression of functional needs of the accumulation and reproduction process of capital. The general requirements of capital accumulation such as basic infrastructure, functioning law systems and legitimization mechanisms are tasks that cannot be carried out by individual capitalists due to the competition relations, but instead systemically require a "fictive all-around-capitalist". This "capitalist referee" must guarantee the fulfilment of these tasks in the interest of maintaining the system of capitalist society..
Business and the State: Mapping the Theoretical Landscape
Volker Schneider and Marc Tenbuecken, 2002.
If everyone on this planet was a liberal, an enthusiastic supporter of the free market, then that would be the end of the matter. But of course some people oppose the market, and its effects - especially the resulting inequality. The market is a political and social regime, and like any other regime, it must be enforced against opposition. That is true even of democracies: democrats overthrow dictators, and dictators overthrow democracies. If either side wants to avoid their own overthrow, they must use force. Democrats do use democratic force, and do fight democratic wars, as they know in Iraq.
The relationship between supporters and opponents of the free market, is similar to that between democrats and anti-democrats. They are enemies, inherently. On the very existence of the market, no compromise is possible. The free market either exists, or it does not exist. It can disappear by consent - which is absurdly unlikely - or without consent. Any attempt to end the free market is, by definition, an attempt to overthrow a fundamental social structure. Certainly, in the long-established western market democracies, it would mean a collapse of the existing social structures. The effect would be dramatic - comparable to occupation by a foreign power.
So it is not surprising that force is used in the face of a threat, and it is not surprising that it is the force of the state. That is after all, a typical task of the state - the preservation of the regime itself, the preservation of the nature of the state. Anarchist propaganda speaks of "the State", as if all states were interchangeable, but they are not. A market democracy is not interchangeable with a Bolshevik regime, simply because they both have a government, an army, and a police force. A market democracy will use force, state force, against an attempt to overthrow either democracy or the market. That is what the riot police did: defend the state, and defend the market - without contradiction between them.
In historical perspective 'Genoa' was an absurd over-reaction. The western market democracies are the most stable and successful societies in history. The principle of the free market is accepted by well over 90% of their population, probably closer to 99% in western Europe. The tensions can be explained by the underlying sense of threat, but they are not specifically related to neoliberalism, and they certainly do not explain it. For that, a long-term and ideological perspective is necessary.

Liberalism

Liberalism as a coherent social philosophy dates from the late 18th century. At first there was no distinction between political and economic liberalism (economics was not considered a separate discipline until about 1850). Classic liberal political philosophy has continued to develop - after 1900 as a purely conservative philosophy. The basic principles of all liberal philosophy are:
  • Liberals believe that the form of society should be the outcome of processes. These processes should be interactive and involve all members of society. The market is an example, probably the best example, of what liberals mean by process. Liberals are generally hostile to any 'interference with process'. Specifically, liberals claim that the distribution of wealth as a result of the market is, in itself, just. Liberals reject the idea of redistribution of wealth as a goal in itself.
  • Liberals therefore reject any design or plan for society - religious, utopian, or ethical. Liberals feel that society and state should not have fixed goals, but that 'process should determine outcome'. This anti-utopianism became increasingly important in liberal philosophy, in reaction to the Communist centrally-planned economies: it anticipated the extreme deregulation-ism of later neoliberalism.
  • Liberalism is therefore inherently hostile to competing non-liberal societies - which it sees not simply as different, but as wrong. In the last 10 years, Islamic society has replaced the Communist state, as the perceived 'opposite' to a liberal society.
  • Nevertheless liberalism has compromised with one specific form of non-liberal ideology: nationalism, in the ethno-national form which underlies most present nation states. A political community based on common origin, history and language is not liberal, but liberals never tried to form the voluntarist, contractual, non-historical state - which liberalism would logically imply. The nation state was simply taken for granted, as the political and economic arena for liberal process.
  • Liberals define liberalism itself as 'freedom', so they rarely think consent is required for the imposition of a liberal society. In fact, most would say it can not be imposed, inherently. After the Cold War this belief has acquired a geostrategic significance: many western liberal-democrats now believe, that a war to impose a liberal-democratic society is inherently just. This belief influences interventionist policy, but as yet no war for the sole purpose of liberalisation has been fought.
  • Classic political liberals reject the idea that there are any external moral values: they say that there are only opinions. They feel that these opinions should be 'expressed' in public, and that in some way this 'market of opinions' will favour the truth. (The idea that truth can be revealed by discourse is much older than liberalism).
  • The liberal rejection of external moral values is formally expressed in the liberal idea of human rights: both good and evil humans have equal rights, which apply equally when they facilitate good or evil actions. Classic liberal philosophy advocated 'liberty' as a value, even if they did not call it a value. In effect it places liberty as a value above good (and evil).
  • Liberals believe in formal equality among participants in a liberal society, but almost all liberals also believe in inequality of talent. Many liberals were therefore sympathetic to biological theories of inequality. (Theories of hereditary racial differences in intelligence are now popular among US neoliberals).
Liberalism is a universal ideology, and in principle liberals seek to apply it to the entire planet, and the entire human population. Most liberals have supported the expansion of liberal society, although in the 19th century that meant among the 'civilised nations'. For a long time the free market was considered the only cross-cultural and 'exportable' element of liberalism. Only recently have liberals advocated, that African and Asian societies should become 100% liberal-democratic societies. 'Liberal missionaries', such as George Soros, were unknown or marginal in the 19th century.

Market liberalism

The free market is not simply 'exchange' or 'trade'. Two people who exchange products can not form a free market in the liberal sense, even if their transactions are monetarised. The element of competition is missing in this two-person society.
A minimal liberal free market needs at least three parties, with two of them in competition - for instance, two competing sellers and one buyer. The resultant pressure on the two sellers to lower prices, is the simplest type of 'market force'. Such a force comes into existence without any conscious action on the part of the three parties. In modern markets there are millions of parties, and complex market forces. Market-liberals value this characteristic of the market. Their belief in the moral necessity of market forces in the economy, is probably the first defining feature of market liberalism. The second is the belief in entrepreneurs themselves, as a good and necessary social group. To summarise:
  • For all liberals, interactive process legitimises outcome: in market liberalism, the market is the primary process, and market transactions are the interaction.
  • Market liberals believe that economic transactions should take place in a framework which maximises the effect of each transaction on every other transaction. (That is an abstract definition of the free market, but it makes the later transition from liberalism to neoliberalism easier to understand).
  • Liberals see the market as good, and often as semi-sacred. They want the market to be as large as possible, involving all of society. In modern liberal-democratic states almost all adults participate in the market. A private club in a Communist state, where members can hold a closed free market, would satisfy no liberal.
  • Liberals are hostile to economic self-sufficiency - so strongly, that they believed in war to 'open up markets'. The most famous example is the Opium War, when Britain forced the Chinese Empire to allow the import of opium. This liberal belief in market expansionism has revived after the end of the Cold War.
  • Market liberals are hostile to trade barriers: "free trade" is a classic slogan of market liberalism. That meant traditionally, the free flow of goods and capital: neoliberalism later developed a more diffuse version, where 'flow' and 'interaction' are treated as quasi-ethical values.
  • Market liberals believe that important aspects of society should be determined by the market, certainly the distribution of income and wealth. Neoliberalism later extended this belief, claiming that all social life should be determined by the market.
  • All market liberals are hostile to interference in the market, by church, state or others - although since the 19th century only the state has sufficient power to interfere. Market liberals are clearly anti-utopian, in the sense of opposing economic planning, especially centralised state control of the entire economy. They believe that the market produces the best 'design for society', and that is is wrong to substitute any other design.
  • However, market liberalism is itself a utopia, despite its anti-utopianism. In the 'ideal world' of market liberalism, no goods or services exist which are not the product of market forces, but all goods or services which are market-responsive do exist. This is in itself a utopian project, implying a total structuring of society. Neoliberalism goes even further - extending the market principle beyond the production of goods and services.
  • The social institution of the entrepreneur is central to market liberalism. An entrepreneur is a person whose profession is, to respond to market forces. In the 19th century most entrepreneurs were still private individuals, later the business firm took over this function. The enterprise/firm is a permanent organisation, structured to respond to market forces. An entrepreneur is not a farmer, or a manufacturer, or a consultant: in theory an entrepreneur changes activities in accordance with the market. In reality most entrepreneurs retained a specialisation for some specific products or services: but neoliberalism now demands, that the theoretical flexibility should become standard practice.
  • Without the entrepreneur there is no free market, therefore market liberals demand a privileged social status for the entrepreneur. The early liberal theorists were hostile to the urban guild economy of mediaeval Europe: they saw it, in effect, as a conspiracy not to compete. In their historical vision, the entrepreneur rescued Europe from the poverty of the Middle Ages. (This vision was shared by Karl Marx, who admired the cultural dynamism of the free market). Not just mediaeval Europe, but all societies without an entrepreneurial caste, were seen as failures.
A central but rarely explicit political demand of market liberals is therefore, that entrepreneurs should have control of the economy. This has not only been accepted, but has become so incorporated into the culture of western liberal-democratic societies, that few people ever think about it. But it would not be any less logical, to hand the economy to engineers, or priests - or not to privilege any one group. The choice depends on underlying values, and liberals value the entrepreneur. This value preference of liberals, and its widespread acceptance, has created what in the US is called 'the business community'. That is a real and identifiable social elite - with specific cultural preferences, specific clothing, and often a specific form of language (sociolect). It does in fact control the economy, in liberal-democratic states. Although this was probably not foreseen by early liberals, market liberalism has become an ideology in support of this elite. Their culture, attitudes, and ethics have greatly influenced neoliberalism.

Neoliberalism

If Adam Smith returned and saw the more extreme aspects of neoliberalism, he would probably find them bizarre. Nevertheless, they derive from the ideas of early liberalism. The belief in the market, in market forces, has separated from the factual production of goods and services. It has become an end in itself, and this is one reason to speak of neoliberalism and not of liberalism.
A general characteristic of neoliberalism is the desire to intensify and expand the market, by increasing the number, frequency, repeatability, and formalisation of transactions. The ultimate (unreachable) goal of neoliberalism is a universe where every action of every being is a market transaction, conducted in competition with every other being and influencing every other transaction, with transactions occurring in an infinitely short time, and repeated at an infinitely fast rate. It is no surprise that extreme forms of neoliberalism, and especially cyberliberalism, overlap with semi-religious beliefs in the interconnectedness of the cosmos.
Some specific aspects of neoliberalism are:
  • A new expansion in time and space of the market: although there has been a global-scale market economy for centuries, neoliberals find new areas of marketisation. This illustrates how neoliberalism differs from classic market liberalism. Adam Smith would not have believed that a free market was less of a free market, because the shops are closed in the middle of the night: expansion of trading hours is a typically neoliberal policy. For neoliberals a 23-hours economy is already unjustifiable: nothing less than 24-hours economy will satisfy them. They constantly expand the market at its margins.
  • The emphasis on property, in classic and market liberalism, has been replaced by an emphasis on contract. In the time of Adam Smith, property conferred status in itself: he would find it strange that entrepreneurs sometimes own no fixed assets, and lease the means of production.
  • Contract maximalisation is typically neoliberal: the privatisation of the British railway network, formerly run by one state-owned company, led to 30 000 new contracts. Most of these were probably generated by splitting services, which could have been included in block contracts. (A fanatic neoliberal would prefer not to buy a cup of coffee, but negotiate separately for each microlitre).
  • The contract period is reduced, especially on the labour market, and so the frequency of contract is increased. A service contract, for instance for office cleaning, might be reduced from a one-year to a three-month contract, then to a one-month contract. Contracts of employment are shorter and shorter, in effect forcing the employee to re-apply for the job. This flexibilisation means a qualitatively different working life: many more job applications, spread throughout the working life. This was historically the norm in agriculture - day labour - but long-term labour contracts became standard after industrialisation.
  • Market forces are also intensified by intensifying assessment, a development especially visible on the labour market. Even within a contract period, an employee will be subject to continuous assessment. The use of specialised software in call centres has provided some extreme examples: the time employees spend at the toilet is measured in seconds: this information is used to pressure the employee to spend less time away from the terminal. Firms with contracts are also increasingly subject to continuous assessment procedures, made possible by information technology. For instance, courier services use tracking software and GPS technology, to allow customers to locate their packages in transit. This is a typical example of the new hyper-provision of business information, in neoliberal economies.
  • New transaction-intensive markets are created on the model of the stock exchanges - electricity exchanges, telephone-minute exchanges. Typical for neoliberalism: there is no relationship between the growth in the number of transactions, and the underlying production.
  • New forms of auction are another method of creating transaction-intensive markets. Radio frequency auctions, such as those for UMTS frequencies, are an example. They replaced previous methods of allocation, especially licensing - a traditional method of allocating access to scarce goods with no clear private owner. The complex forms of frequency spectrum auctions have only been developed in the last few years. Neoliberals now see them as the only valid method of making such allocations: they dismiss all other methods as 'beauty contests'.
  • Artificial transactions are created, to increase the number and intensity of transactions. Large-scale derivative trading is a typically neoliberal phenomenon, although financial derivatives have existed for centuries. It is possible to trade options on shares: but it is also possible to create options on these options. This accumulation of transaction on transaction, is characteristic of neoliberalism. New derivatives are created, to be traded on the new exchanges - such as 'electricity futures'. There is no limit to this expansion, except computer power, which grows rapidly anyway.
  • Automated trading, and the creation of virtual market-like structures, are neoliberal in the sense that they are an intensification of "transaction for transaction's sake". However, a world in which all entrepreneurial activity was automated would not be neoliberal, or liberal.
  • This expansion of interactivity means that neoliberal societies are network societies, rather than the 'open societies', of classic liberals. Formal equality and 'access' are not enough for neoliberals: they must be used to create links to other members of the society. This attitude has been accurately labelled 'connectionist'.
  • Because of contract expansionism, transaction costs play an increasing role in the neoliberal economy. All those 30 000 contracts at British Rail had to be drafted by lawyers, all the assessments have to be done by assessors. There is always some cost of competition, which increases as the intensity of transactions increases. Neoliberalism has reached the point where these costs threaten to overwhelm the existing economy, destroying any economic gains from technological change.
  • The growth of the financial services sector is related to these neoliberal characteristics, rather than to any inherent shift to service economies. The entire sector is itself a transaction cost: it was almost non-existent in the centrally planned economies. In turn, it has created a huge demand for office space in the world's financial centres. The expansion of the sector and its office employment are in direct contradiction of propaganda about 'more efficiency and less bureaucracy' in the free market.
  • The speed of trading is increased. Online market data is expensive, yet it is now available free with a 15-minute delay. The markets move so fast, that the data is worthless after 15 minutes: the companies can then give it away, as a form of advertising. Day-traders buy and sell shares in minutes. Automated trading programmes, where the computer is linked direct to the stock exchange system, do it in seconds, or less. It is this increased speed which has led to the huge nominal trading volumes on the international currency markets, many times the Gross World Product on a yearly basis.
  • Certain functions arise which only exist inside a neoliberal free market - 'derivative professions'. A good example is the profession of psychological-test coach. The intensity of assessment has increased, and firms now regularly use psychological tests to select candidates, even for intermediate level jobs. So ambitious candidates pay for training, in how to pass these psychological tests. Competition in the neoliberal labour market itself creates the market for this service.
  • The creation of sub-markets, typically within an enterprise. Sub-contracting is itself an old market practice, but was usually outside the firm. It is now standard practice for large companies to create competition among their constituent units. This practice is also capable of quasi-infinite extension, and its promotion is characteristic of neoliberalism. A few companies even required each individual employee to register as a business, and to compete with each other at the place of work. A large company can form literally millions of holdings, alliances and joint ventures, using such one-person firms as building blocks.
  • Supplier maximalisation: this extends the range of enterprises that compete for each contract. The ideal would be that every enterprise competes for every contract offered, maximising competition and market forces. In the case of the labour market, the neoliberal ideal is the absolutely flexible and employable employee, who can (and does apply) for every vacancy. In reality, an individual can not perform every kind of work - but there is a real development towards non-specialised enterprises, especially in the producer services sector. In neoliberalism, instead of the traditional 'steel tycoon' or 'newspaper baron' there are enterprises which "globally link people and knowledge, and cultures" or "advise and implement solutions to management issues". (In fact these are quotes from the accountants Price Waterhouse, but you can not guess this from the descriptions).
Neoliberalism is not simply an economic structure, it is a philosophy. This is most visible in attitudes to society, the individual and employment. Neo-liberals tend to see the world in term of market metaphors. Referring to nations as companies is typically neoliberal, rather than liberal. In such a view Deutschland GmbH competes with Great Britain Ltd, BV Nederland, and USA Inc. However, when this is a view of nation states, it is as much a form of neo-nationalism as neoliberalism. It also looks back to the pre-liberal economic theory - mercantilism - which saw the countries of Europe as competing units. The mercantilists treated those kingdoms as large-scale versions of a private household, rather than as firms. Nevertheless, their view of world trade as a competition between nation-sized units, would be acceptable to modern neoliberals.
Competition for inward investment, on the other hand, was generally unknown until the late 19th century. This competition is often seen by activists as the core doctrine of neoliberalism, especially since the neo-mercantilist policies are easy to understand and very unpopular: wage cuts, less money for public services, less tax on the rich. The neo-mercantilist nation, in other words, behaves like a caricaturally mean and nasty capitalist. It is not relevant either for these policies, or for opposition to them, whether they have any effect at all. Perhaps investment decisions are not made on this basis, perhaps there is no real mobility of capital, perhaps no investor is interested in Argentina, for instance. But so long as the Argentine government believes that it should pursue certain polices to attract investors, then it will do so. So long as it believes that the 'SA Argentina' is a business firm, then it will run Argentina accordingly.
The market metaphor is not only applied among nations, but among cities and regions as well. In neoliberal regional policy, cities are selling themselves in a national and global marketplace of cities. They are considered equivalent to an entrepreneur selling a product, but the product is the city (or region) as a location for entrepreneurs. The successful 'sale' of the product is the decision of an entrepreneur to locate there, not simply the sale of land or factories. This view of cities as sub-firms within the fictive 'national firm' parallels the creation of sub-markets within real firms. The difference is, that those sub-markets really exist - neoliberal city governments, on the other hand, act primarily on a belief in a metaphor. Again, there is no hard evidence that the global marketplace of cities exists: for most economic sectors complete mobility of plant and labour is an illusion. Most firms can not simply move from city to city, across continents and ignoring language and cultural barriers, in pursuit of locational advantage. Here too, the neoliberalism is a philosophy, an attitude - rather than an economic reality. It has influenced European politics - the fear of this neoliberalism dominated the French campaign against the European Constitution. There is certainly a neoliberal lobby within the EU, represented by the Lisbon Council, although it sees the world in terms of competing trade blocks rather than competing cities or regions. However, it is not clear how a continent could be run as a business firm - even its inhabitants wanted that. (More on neoliberal economic geography below).
A good example of the underlying attitudes is the basic policy document of the city of Düsseldorf - the Leitbild, equivalent to a 'mission statement' in English. It was adopted in 1997, and is no longer online at the city website, but parts are quoted at http://stattbuch.de/_themen/leitbild/...
Düsseldorf bekennt sich zum Prinzip des Wettbewerbs. Der Erfolg von Städten entscheidet sich im Wettbewerb nach innen und aussen. Düsseldorf will besser sein.
Wettbewerb ist treibende Kraft unseres gesellschaftlichen Systems. Im zusammenwachsenden Europa gilt dies in hohem Masse auch für die Beziehungen zwischen den Regionen, die als Wirtschaftsstandort, als Lebensraum für die Bürgerinnen und Bürger und als Kulturstandort miteinander konkurrieren. Sich hierzu bekennen heisst, den Wettbewerb aufnehmen und aktiv gestalten zu wollen.
Im Wettbewerb besteht nur, wer gut ist. Düsseldorf will Wettbewerb. Im Interesse der vielen Millionen Menschen des Lebens- und Wirtschaftsraums: Düsseldorf will besser sein.
...
Düsseldorf is committed to the principle of competition. The success of cities is decided by competition, internal and external. Düsseldorf wants to be better. Competition is the driving force of our social system. In a Europe which is becoming more integrated, this applies increasingly to the relations between regions. They compete with each other as investment location, as residential choice for the citizens, and in cultural activity. Our commitment means that we will actively and structurally enter into this competition. In a competitive world, only the good can survive. Düsseldorf wants to compete! In the name of the millions of people in our economic and residential region: Düsseldorf wants to be the best!
The neoliberal urban vision was adopted, without debate, by many city governments in the 1990's. At some point, a belief in 'competition by population structure' was incorporated - the idea that a successful city is inhabited only by successful people. This belief, nonsensical or not, has had an effect in a negative sense: some cities now pursue active policies aimed at relocating low-income households outside the city. In the Netherlands, a new law allows large cities to legally ban poor people, from certain areas, or from the entire city..
As you would expect from a complete philosophy, neoliberalism has answers to stereotypical philosophical questions such as "Why are we here" and "What should I do?". We are here for the market, and you should compete. Neo-liberals tend to believe that humans exist for the market, and not the other way around: certainly in the sense that it is good to participate in the market, and that those who do not participate have failed in some way. In personal ethics, the general neoliberal vision is that every human being is an entrepreneur managing their own life, and should act as such. Moral philosophers call this is a virtue ethic, where human beings compare their actions to the way an ideal type would act - in this case the ideal entrepreneur. Individuals who choose their friends, hobbies, sports, and partners, to maximise their status with future employers, are ethically neoliberal. This attitude - not unusual among ambitious students - is unknown in any pre-existing moral philosophy, and is absent from early liberalism. Such social actions are not necessarily monetarised, but they represent an extension of the market principle into non-economic area of life - again typical for neoliberalism.
The idea of employability is characteristically neoliberal. It means that neoliberals see it as a moral duty of human beings, to arrange their lives to maximise their advantage on the labour market. Paying for plastic surgery to improve employability (almost entirely by women) is a typical neoliberal phenomenon - one of those which would surprise Adam Smith.
Eileen Bradbury, a psychologist who advises surgeons at the Alexandra Hospital in Cheadle, Cheshire, said she was particularly worried that Jenna wanted the operation so that she could be successful. "That is a very disturbing belief for a 15-year-old girl to have, and also a false one," she said. "I have seen women coming for surgery who work in television and they say they have to have it done or they won't get the work. I usually go along with that because it is probably true".
Guardian: Parents defend breast implants for girl, 15.
In practice many 'workfare neoliberals' also believe that there is a separate category of people, who can not participate fully in the market. Workfare ideologies condemn this underclass to a service function for those who are fully market-compatible. Note however, that by recognising a non-market underclass, neoliberals undermine their own claims about the universal applicability of market principles.
The general ethical precept of neoliberalism can be summarised approximately as:
  • "act in conformity with market forces"
  • "within this limit, act also to maximise the opportunity for others to conform to the market forces generated by your action"
  • "hold no other goals"
If everyone lives by such entrepreneurial precepts, then a world will come into existence in which not just goods and services, but all human and social life, is the product of conformity to market forces. More than traditional market liberals, neoliberals therefore have a quasi-heroic attitude to the entrepreneur, and to engagement in the market. A 1998 speech by German entrepreneur Jost Stollmann is typical: his neoliberal ideas played a prominent role in the national elections in Germany in that year. Stollmann includes his personal moral philosophy, such as it is...
Ich möchte die Lust und Bewunderung unternehmerischen Erfolgs in den Augen der jungen Menschen sehen. Ich möchte den Stolz und den Zuspruch der Eltern spüren, wenn sich Sohn oder Tochter tatenvoll in das Abenteuer Selbständigkeit stürzen.
....so gut sein, wie wir nur können - getreu der bewährten Formel, die ich während meiner Zeit in Amerika verstehen gelernt habe: 'BE THE BEST YOU CAN BE'
Jost Stollmann
The idea that everyone should be an entrepreneur is distinctly neoliberal. Early liberals never expected the majority of the population to own property, let alone run a business. (The participation of the poor in the market was limited to accepting any work they were offered). The practices on the flexibilised labour market would seem strange to the early liberals. For instance, individuals set up a one-person employment agency with one person on the books, themselves - partly for tax reasons, but also to meet the ideal of the entrepreneur. Policy to increase the number of entrepreneurs is typically neoliberal, although ironically it must be implemented by the State. A classic market-liberal would not say that a free market is less of a free market, because only 10% of the population are entrepreneurs. For neoliberals it is not sufficient that there is a market: there must be nothing which is not market.

the neoliberalism joke
Marxist: "The workers have nothing to sell but their labour power"
Neoliberal: "I offer courses on How to Sell Your Labour Power Like A Shark"
There is therefore no distinction between a market economy and a market society in neoliberalism. With the attitudes and ethics set out above, there is only market: market society, market culture, market values, market persons marketing themselves to other market persons. In a sense neoliberalism has returned to the position of early liberalism - which also combined culture, values and ethics with economics. But neoliberalism brings a far more intensive 'market' - replacing not only traditional social forms, but also the concept of private life. At the same time this 'market' is increasingly remote from the necessity of production, which was so real for the early liberals - when there were still regular famines in Europe. In fact it is so remote from the existing cultural perception of a 'market', that it would perhaps be better to use some other word.
Finally, neoliberalism has become associated with specific cultures (especially US culture) and a specific language (English). This is not surprising: Anglo-American liberalism had the most influence on neoliberalism. Neoliberalism as ideology is not tied to any culture or language. It is true that a single global language would facilitate free trade - but that could be Esperanto, as well as English. In practice, the promotion of the English language, neoliberal policies, and pro-American foreign policy, usually go together: this was especially true in Central and Eastern Europe.

Globalisation and neoliberalism

Often the terms 'globalisation' and 'neoliberalism' are used as if they were interchangeable. That is only correct in a limited sense, for the neo-mercantilist aspects of the neoliberal ideology. I will try to clarify the perceived and actual relationship between the two - especially for the South American use of the term 'neoliberalism'.
The neoliberal ideology sees the nation primarily as a business firm, as explained above. The nation-firm is selling itself as an investment location, rather than simply selling export goods. If no-one in government believes in this ideology, it will have no consequences. If however, a neoliberal government is in power, it will pursue policies designed to make the nation more attractive as an investment location. These policies are generally pro-business, and are perceived as such by the opponents of the policies.
But remember that the ideology is neo-mercantilist: the policies are national policies, directed ultimately at the welfare of the nation and not of the market. Paradoxically, they are a form of protectionism: if there is a global market of investment locations, then it is 'unfair competition' for governments to artificially increase the attractiveness of their own country. Such governments are, strictly speaking, not good market liberals. Hard-line classic market liberals would shrug their shoulders at the election of an anti-business government. "Business will go elsewhere, the country will become poor, that's the way the global market works, leave the market alone", they would say. They would not waste their time trying to get a pro-business government elected there. In reality few liberals are so consistent, neoliberals certainly are not. But their rhetoric of 'national competitiveness' is a form of economic nationalism: it is a modern version of the old nationalist insistence, that the whole nation should work together. It revitalises jingoism, chauvinism, flag-waving and foreigner-bashing: Tony Blair is probably the best example.
Don't tell me that a country with our history and heritage, that today boasts six of the top ten businesses in the whole of Europe, with London the top business city in Europe, that is a world leader in technology and communication and the businesses of the future, that under us has overtaken France and Italy to become the fourth largest economy in the world, that has the language of the new economy, more brilliant artists, actors and directors than any comparable country in the world, some of the best scientists and inventors in the world, the best armed forces in the world, the best teachers and doctors and nurses, the best people any nation could wish for. Don't tell me with all that going for us that we do not have the spirit to meet all the challenges before us.
Blair conference speech, 26 September 2000
Now, a neoliberal government will almost certainly appeal to 'globalisation' as a justification and legitimisation of its policies - Tony Blair certainly does. By globalisation they mean, more or less, that the global market of investment locations now exists, and that it is an inevitable historical development. The opponents of the neoliberal government will, in turn, oppose this 'globalisation'. However, that does not mean that the global market of nations actually exists. The existence of neoliberal governments, pursuing neoliberal policies justified by an appeal to globalisation, does not mean that a new global order has superseded the order of nation states. The very fact, that it is still primarily the nation state which is being 'marketed' in this way, shows that the nation has not disappeared.
Before considering the reality of the global order, it is also necessary to consider the beliefs of the opponents of such a neoliberal government. Again paradoxically, many of them accept without question the neoliberal claim that there is a long-term historical process of 'globalisation', transforming the nation into a business firm on a global market of nation-firms. Worse, if the nation is a business then it is often clearly weak - everyone can see that Argentina is economically worse off than the United States. A neoliberal government will therefore try to convert a nation such as Argentina into a 'strong player', which means worsening the living conditions of much of the population. Now here is the next paradox: the response of the opponents is also an economic nationalism, this time with the emphasis on protectionism. The opposition perception of globalisation differs in one respect: for them it is a historical but not spontaneous development. For them it is a policy imposed by a non-national global elite, directed against the individual nations.
In their view, the international financial institutions are equivalent to an imperial power, which has de facto colonised countries such as Argentina. In caricatural form: they believe that a new and powerful empire has come into existence, the Empire of IMF-ia, at an indeterminate location. The neoliberal government, in this view, is a traitorous elite acting as a colonial Viceroy for the IMF-ian Empire. The opposition wants to replace it with a government which will 'liberate' the nation from the global market, from its colonial status. That 'liberation' is generally understood as: withdrawal of the nation-firm from the global market of nation-firms, protectionism, economic nationalism, and self-sufficiency instead of trade. Here too there is a paradox: the oppositional movements are not anti-business: they generally see national business as a victim of global business. (Local business in South America is in the comfortable position, that both neoliberals and anti-neoliberals want to help it, for different reasons).
The 'IMF-ia model' is partly correct: the global financial institutions are indeed a bastion of neoliberal ideology, and they can bully some poor countries into adopting neoliberal policies. But they can't do that to the rich western powers, in fact they would not exist without the support of these powers. They are not a force outside nations, they are not an imperial power. The global financial institutions are, in the simplest terms, an instrument of US policy - and if there is a quasi-imperial power, it is the United States.
The point is, once again, that the truth of beliefs about globalisation is itself irrelevant. If the government and people all believe that a country is being attacked by fire-breathing dragons, then the government might distribute asbestos suits to the population, and the opposition might complain that there were not enough of them. Ideologies and politics can operate on a completely fictive basis. Millions of Europeans died to 'resolve' theological issues such as the Virgin Birth of Mary, Mother of God.
So the perceptions have themselves generated a political reality: on the basis of a belief in 'globalisation' some governments pursue neoliberal policies, which are neo-mercantilist in their logic and aims. In such circumstances opposition to globalisation and neoliberalism coincides, rather than neoliberalism being identical or synonymous with globalisation. Both sides share a common fallacy: that trade and sovereignty are opposites, a zero-sum pair. The neoliberals believe that national success - "in today's global market" - requires the abandonment of national economic autonomy and sovereignty. Their opponents believe that national welfare requires minimisation of trade and external links: they believe that trade and invasion are equivalent, although no-one will say that outright. Once again, the equivalences and perceptions on both sides are false. Most of the Gross Global Product is tied to individual nation states for technical, climatic, logistical, and cultural reasons. For most investment decisions, there is no global market of locations. And sovereignty is not necessarily inverse to trade volume and trade regime. A powerful country such as the United States can have a high trade volume relative to GNP. Many colonies - by definition not sovereign - had a low trade volume relative to GNP, because the bulk of 'GNP' consisted of peasant agriculture. But even a fallacious belief can apparently support not just one, but two competing forms of economic nationalism.
So what is the reality behind the perceived globalisation? One reality is that nation states still dominate global social and economic structures. However these nation states themselves form a specific arrangement of a specific type of state. Globalisation claims appear logical if you see nation states as isolated islands, but that is not the historical reality. The very existence of a world of nation states, indicates some form of global order of nation states. What these nation states do - trade or no trade, capital flows or no capital flows - is irrelevant to that issue. What is already global can not logically be globalised: therefore there is no globalisation, in the widely used sense. There is no transition underway, or recently completed, to a fundamentally different global structure. Because the existing order of nation states is already global, intensification of global flows, or global trade, or global communication does not undermine it, or fundamentally alter it. If some part of the world were to break with this global order - for instance a future autarkic caliphate - that would be a radical change. When nations trade with each other, that simply indicates that the global order of nations is functioning as expected.
The false premise in the globalisation thesis is in fact the standard nationalist claim, that each nation is a separate and particular entity. In reality nations collectively are a global and universalist structure: the functional equivalent of a nationalist world state. The world functions as if a nationalist world government had seized power in the 19th century, led by Mazzini and Garibaldi and friends. Most existing states were indeed established by nationalist groups. Nationalists co-operate to maintain one (nationalist) world order and exclude others. The nation state is not a particularity, existing by itself in isolation, but part of a global design. Supporters of the globalisation thesis claim, that a world of isolated nation states existed in the recent past - before 1989, or more approximately before 1950. They claim that these isolated nation states are now being eroded in a global process: it includes the formation of the neoliberals claimed 'market of nations'.
Economic globalization represents a major transformation in the territorial organization of economic activity and politico-economic power....The sovereignty of the modern state was concentrated in mutually exclusive territories and the concentration of sovereignty in nations...economic globalization has contributed to a denationalizing of national territory...
Saskia Sassen. Losing Control: Sovereignty in an Age of globalization (1996).
But is the global order of nation states disappearing, anywhere? In reality, there is no collapse of the nation state to be seen. Nation states have not suffered anything comparable to the dissolution of the Austro-Hungarian or Ottoman empires. All that remains of those empires are oversized palaces in Vienna and Istanbul. The rest of their institutions have completely disappeared: there is not a square metre of Habsburg or Ottoman territory left in Europe. There is no longer an Austro-Hungarian imperial army, or police, or courts, or parliament. The nation states succeeded the multi-ethnic empires, seized all their territory, and remodelled all society on that territory. The replacement was total. Where is the equivalent 'collapse' of the nation state? There are few places on earth without the institutions of a nation state - perhaps Somalia, but that is not the result of globalisation. If the world was truly 'globalised' then it would be full of disused national parliament buildings - and not a national army in sight. The world is not like that, and will not be like that in the immediate future.
In other words, 'globalisation' remains a belief rather than a reality. It is an instrumental belief with great political influence and effect. It is appealed to by both neo-mercantilist neoliberals and their economic-nationalist opponents. Nationalists have a tradition of appealing to external threats to enforce national unity. The nation must unite and work together, they said - to defeat the Hun, or the Bolshevik threat, or the Yellow Peril, or the enemy within the gates, or Osama bin Ladin. The instrumental use of 'globalisation' is in the same dishonourable category.

Summarising neoliberalism

To conclude, here are summaries of neoliberalism in two forms. First a list of key points in neoliberalism:
  • transaction maximalisation
  • maximalisation of volume of transactions ('global flows')
  • contract maximalisation
  • supplier/contractor maximalisation
  • conversion of most social acts into market transactions
  • artificial maximalisation of competition and stress
  • creation of quasi-markets
  • reduction of inter-transaction interval
  • maximalisation of parties to each transaction
  • maximalisation of reach and effect of each transaction
  • maximalisation of hire/fire transactions in the labour market (nominal turnover)
  • maximalisation of assessment factors, by which compliance with a contract is measured
  • reduction of the inter-assessment interval
  • creation of exaggerated or artificial assessment norms ('audit society')
A final summary definition of neoliberalism as a philosophy is this:
Neoliberalism is a philosophy in which the existence and operation of a market are valued in themselves, separately from any previous relationship with the production of goods and services, and without any attempt to justify them in terms of their effect on the production of goods and services; and where the operation of a market or market-like structure is seen as an ethic in itself, capable of acting as a guide for all human action, and substituting for all previously existing ethical beliefs.