The Failed Dogma of Neoliberalism

In the 1980s, British Prime Minister Thatcher and President Reagan depicted neoliberal or “free market” capitalism as the ideal system, a dogma that extends to the present despite its horrific failures and other options, says Sam Ben-Meir.

By Sam Ben-Meir

Oct .13 marked the birthday of the late British Prime Minister Margaret Thatcher – so perhaps it would be  fitting to take a moment to consider how Thatcherism still rules the global capitalist landscape.

During her political prime in the 1980s, Thatcher said she was out to change the soul, to change the conceptual universe in which people live, and her idea that “there is no alternative” (TINA) became so deeply embedded in our psyches and in our consciousness that it seems we could no longer imagine that there is an alternative to capitalism.

British Prime Minister Margaret Thatcher

British Prime Minister Margaret Thatcher

The neoliberalism of Thatcher was characterized by deregulation (especially in the financial sector), the suppression of labor, attacks on trade unions, and the privatization of state-owned corporations. Both Thatcher and Ronald Reagan oversaw the shift toward a more laissez-faire version of capitalism, which in effect reversed the post-1929 movement towards increased state-intervention and social-democratic capitalism.

It is long overdue that we lay this TINA concept to rest. Consider this: in the 1930s there was a clear sense that there was an alternative. After World War II, an alternative emerged in which the state was heavily involved; and taxation rates in the U.S. were very high. One of the persistent lies that we hear from Republicans is that high taxation rates destroy growth.

Donald Trump repeated this fallacy in the second presidential debate, but the record speaks differently. In 1945, that taxation rate on the top income brackets was 92 percent; it never fell below 70 percent until Ronald Reagan brought it down to 30 percent.

In 1981, Reagan significantly reduced the maximum tax rate, which affected the highest income earners, and lowered the top marginal tax rate from 70 percent to 50 percent; in 1986 he further reduced the rate to 28 percent. Between 1945 and Reagan, the average rate of growth in the U.S. was around 4 to 5 percent per year: one of the most successful boom periods of American history, when the top tax rate was always at 70-odd percent.

Since Ronald Reagan, the top tax rate has hovered around 35-39 percent and the average rate of growth since the 1970s has been 2 percent. Despite Trump’s absurd claims to the contrary, Americans remain among the least taxed citizens of advanced industrial nations, with 28 percent of gross domestic product taken for taxes versus an average of 36 percent for the 38 member countries of the Organization for Economic Cooperation and Development.

So what is the alternative? The fact is that we are currently facing a bankruptcy of ideas. There is an overload of negative critique of capitalism; and relatively little positive critique. To begin with, we should take a hint from CUNY economics professor David Harvey, and look inside the factory system itself for potential solutions.

Observe, for example, how corporations today manage and direct: they have a command-and-control system back through their supply chain. Their operations are centrally planned in a highly sophisticated and efficient way. One can easily imagine adopting that methodology and directing it to a social purpose other than merely enhancing bottom lines.

Another Way

There is one further element of any viable alternative that needs to be mentioned; and it will serve to balance the need for centralized planning – namely, worker self-management (WSM). Worker self-management involves the extension and reinforcement of democratic principles beyond the political realm.

President Ronald Reagan with Budget Director David Stockman. (Photo credit: Reagan Library)

President Ronald Reagan with Budget Director David Stockman. (Photo credit: Reagan Library)

Each enterprise is managed by those who work there, and it is they who hold the decision-making power when it comes to determining, for example, what is to be produced, how much and for whom; how net proceeds are to be distributed; and how the firm is to be organized and administered. WSM is a collective process drawing on the common goals of people joined together in a cooperatively managed productive organization.

The first essential condition for the existence of WSM is that management of the company is entrusted to all people who work in it. The crucial point here is that the firm is controlled by the workers themselves and not by capital owners: in other words, the people who are most involved in production of goods and services have control over that production.

This is sine qua non for worker self-management. To meet this condition a democratic process is called for; where goals can be internally defined, and there is equality of voting power among all who work in the company and, ideally, equal opportunity to participate democratically in managing the organization’s affairs.

Economic democracy is a central pillar of legitimacy in any fully democratic system. The workplace has to be a space in which individuals acquire the participative skills, values and experiences which make for a vibrant democratic polity. This kind of “social training” is severely hampered by the prevailing forms of alienation.

Self-management is critical to the formation of an unalienated work-community and productive process – it shapes a space in which people come together, not only to meet their financial needs but also their need for community, dialogue and fulfillment from work. The topic of worker self-management is especially timely: in the era of global capitalism, economic democratization is more relevant than ever. Fortunately, there is a great deal of empirical evidence to show that worker self-managed firms perform as well as, if not better than, traditionally managed firms.

We also know that managers who are employed in firms where workers have some influence tend to be supportive of greater worker empowerment: that would hardly be the case if these projects were not seen as successful. Workplace democracy is able to satisfy the “imperative of efficiency” – of that there can no longer be any doubt. Otherwise, no one would want democratization extended to the workplace. WSM would remain at best a worthless bit of theory.

According to the U.S. Federation of Worker Cooperatives, there are over 300 democratic workplaces in the United States alone, employing thousands of individuals and generating over $400 million in annual revenues. The fact is that more and more ordinary people want workplace democracy, and such an attitude toward social change is an absolutely necessary prerequisite for activism.

So, in honor of Margaret Thatcher’s birthday, let us prove to ourselves, the world, and to future generations hence that there is indeed an alternative to a global capitalistic system that increases poverty, misery and destitution; that despoils the environment and robs man of a human environment fit to live in, all in the name of an insane imperative that can be summarized in a single word: growth.

Dr. Sam Ben-Meir teaches philosophy at Eastern International College. His current research focuses on environmental and business ethics. sambenmeir@hotmail.com  Web: www.alonben-meir.com

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15 comments for “The Failed Dogma of Neoliberalism

  1. Bill Bodden
    October 13, 2016 at 10:58 pm

    Thatcher said she was out to change the soul …

    She and Reagan helped change the souls of those fool enough to believe them so that to the list of human frailties was added the concept that greed is good. Like racism, xenophobia, bigotry and other vices greed is good will be part of the credo of many Americans and Brits for many years to come.

    Capitalism, communism, liberalism and other -isms are human constructs. As such they are capable of good or ill. The same applies to worker self-management (WSM).

    • Cal
      October 13, 2016 at 11:16 pm

      Capitalism and communism aren’t that different.
      Both systems have rulers at the top and workers at the bottom.
      In communism however all the ‘workers’ are in the ‘same boat.
      In capitalism all the workers are in many ‘different boats.

  2. Brad Owen
    October 14, 2016 at 3:44 am

    Thanks for the good word, Dr. Ben-Meir. Yes the cold, heartless “ice age” of TINA is beginning to break up in the warmth of a genuine populism blowing across the Globe…good Green life is returning.

  3. F. G. Sanford
    October 14, 2016 at 7:19 am

    I was a little worried when I started to read the introductory blurb to this article. “Laissez faire” immediately popped into my mind, and I wondered why the the author hadn’t chosen the imperfect, but nevertheless more accurate descriptor. The economic strategy embodied by “globalization”, “free trade”, the “cashless society”, “neoliberalism”, and “neocolonialism” are really just aspects of a neo-feudal economic strategy. “Thirdworldization”, as some have called it, seeks to impose the same low-wage, sweatshop economy unbrokered by collective bargaining or union representation on the U.S. as the countries we currently exploit. The “service economy” promised by the Reaganites will leave no one in the general population financially capable of purchasing “services”. Americans are dimly aware that their jobs are gone, their children have no future, and they lack the liquid cash to “buy in” to the only activities which may provide remunerative benefits. Yet they continue to vote against their own interests. This frustration has led to the “Trump Phenomenon”, but neither are his proposals adequate to solve the problems. They will be exacerbated. Hillary clinton has been exposed as a tool of laissez faire capitalism with her own words. The “I’m with her” crowd will remain recalcitrant to the truth. Trump is no “populist”, but the populist frustrations and yearnings will remain. Despite all the scandals on both sides, I suspect that Clinton will win. But the margin of victory may be closer than anyone anticipates. Without wider war as cover, she will not be able to conceal the mechanisms responsible for continued economic disenfranchisement. Her “lame duck” presidency will commence on January 21. Another “populist” will eventually emerge, one more shrewdly deceptive and dangerous than the one currently threatening the status quo. That is, if Clinton’s foreign policy blunders don’t destroy us first.

  4. Cletus Rothschild
    October 14, 2016 at 8:56 am

    Amazing how so many leftist or left-leaning pontificators are willing to call out neoliberalism without mentioning the fact that the Democratic Party is 100% on board with it. The truth is that they’re every bit as complicit as the Republicans at this point, but as long as the victims of these policies are represented by a rainbow of diversity, we can all sleep well and be thankful that at least the Democrats saw fit to include everybody in the disaster. Except their leaders and their 1% puppetmasters of course.

    • Bill Bodden
      October 14, 2016 at 12:33 pm

      The Democratic and Republican Parties have been jointly complicit in many travesties for generations and will continue to be so as along as they are bought by the same plutocracy..

    • Texas Aggie
      October 16, 2016 at 11:39 pm

      People who call out neoliberalism also fail to mention that the sun shines during the day and not by night. Some things are so obvious they don’t need to be mentioned.

  5. Tom Welsh
    October 14, 2016 at 12:26 pm

    Mrs Thatcher reacted violently against the status quo in Britain from 1945 until 1979 – dull, passive, socialism. I am not saying that socialism must be any of those things, but in the Britain of the 1950s, 1960s and 1970s it was all of them. I myself vividly remember helping a colleague to deliver a three-cabinet computer system about the size and weight of three large refrigerators, to a major British publishing company in about 1975. As soon as the van arrived, we were urgently warned not to touch a single one of the boxes until all the necessary union reps had arrived. This took about three hours. When they had gathered – seven or eight of them, one from each union that could conceivably be involved – they stood and watched as my colleague and I laboriously unloaded the boxes and wheeled them into the building, up in the freight elevator and to the machine room. When they went off for a tea break, we had to stop work until they had all returned. Not once, during the two-day installation and testing process, did one of them offer to lend a hand with anything. Until that experience, I had thought the Peter Sellers film “I’m All Right Jack” to be grotesquely exaggerated. But it turned out to be a pretty accurate portrait of trade union procedures.

    Later, I worked for a boss who has spent many years in the British car industry – before union inertia killed it. He told me once how a certain complicated procedure had taken three days to carry out because each union rep had to be called to perform the tasks reserved for his “guild”. In Japan, he said, the same task was routinely done in 20 minutes.

    I remember the experience of travelling by British Rail, with “employees” who were sure of their pay and their pension, whatever they did or didn’t do. Weary travellers arriving with heavy trunks and suitcases would routinely be left to shift for themselves while the “porters” stood and watched, sometimes offering colourful or insulting advice or sexual taunts.

    None of this makes Thatcherism perfect. It was the opposite end of the pendulum’s swing. Neither was good; perhaps there is a better equilibrium somewhere in between, but it’s hard to be sure. But it is worth remembering the old saying that, “Capitalism is the exploitation of man by man; communism is the opposite”.

    • nexusxyz
      October 15, 2016 at 3:36 am

      The car industry was killed by useless management and a lack of investment. So get off your hobby horse. Mass car manufacturing in the UK now achieves some of the highest quality in the world. Pity its foreign capital that wants to invest. UK investors are obsessed by finance and property that adds no ‘competitiveness’ to the economy.

  6. Herman
    October 14, 2016 at 12:54 pm

    We’re pretty good as a nation at doing things. Agriculture, manufacturing, transportation, communications, health services, education and on and on. Government and private enterprise have created a nation which works pretty well. The highway system, air service, rail service all involved both central direction and economic stimulation by the government and regulation where and private enterprise. Is that socialism, certainly. Does capitalism play a role, certainly. Tension over too much or too little government will always be there. What has weakened our nation is the continuing rise of the current crop of interest groups who can control our political system and determine domestic and foreign policies and which foul up a pretty good system.

    The failure we have in the fair distribution of our wealth and with our unfettered defense and security institutions and our aggressive behavior overseas are caused by the ability of special interests to determine the government’s behavior. It has always been that way to a degree but now the efficiency which interests groups determine who not only will be elected but even who gets to compete for election is far more dangerous.

    Meanwhile our lives are bombarded with entertainment to titillate and divert our attention, something we do without regret. Part of the entertainment is regrettably that provided by the media regarding our elections. Go back to interest groups determination of the candidates and the media’s competition for watchers and what you see is what you get.

  7. nexusxyz
    October 15, 2016 at 3:39 am

    Crony capitalism (Neoliberalism) will only exist up to the point when there are no more other people’s assets to steal. Then society will implode.

  8. October 15, 2016 at 6:23 am

    This article is BS. We don’t have free markets. We have economic central planning combined with fascism, which merges corporate and government powers into one. We as people are fleeced by both as a result. You cannot have free markets when government tells you what you can and cannot do. You cannot have free markets if when you decide to do something, the government tells you how to do it. There is no such thing as a central bank is a free market. You do not have free markets when the government takes half you income and uses it to line their own pockets and the pockets of their constituents through corporate or personal welfare. To keep you distracted they use your hard earned money to wage war. I could go on and on.

    I agree that everything is messed up, but it has nothing to do with freedom and free markets. We do not have free markets and not since 1913 when the Fed was created to centralize wealth and economic power into the hands of a few.

    Oh, and by the way, you need private property in free markets. These are some things we truest own like the cloths on our back or our education. But make no mistake, you do not own the structure you live in called a house. You

  9. October 15, 2016 at 6:31 am

    The system did not let me finish. So I continue here.
    You have to get permission to make a change to your house. Stop paying your property tax and you will find out who really owns your house.

  10. Texas Aggie
    October 16, 2016 at 11:49 pm

    Something that needs mentioning is that the famous “free market” when allowed to run to its conclusion results in monopolies, and none of the famous “invisible hand” rules apply to monopolies. We have so many examples of that already in the US resulting in distortions in the marketplace that it is needless to mention all of them, but a few that have resulted in definite harm to Americans are the concentration of the internet in two companies that divide the market between them, the banking system, pharmaceutical corporations that collude to gouge the client beyond any justification, oil companies that prevent competition from renewable energy, Microsoft windows, insurance companies in some markets, the credit card companies, and many others. This is the result of neoliberalism aka the Washington consensus.

  11. Oliver
    October 17, 2016 at 10:23 pm

    WSM is Titoism from former Yugoslavia. EU is Titoism from former Yugoslavia. Shame Yugoslavia is no more.

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