When freedom is a dirty word

by · December 17, 2011

Whatever criticism one may have of the Occupy Everywhere movement, its central idea that ‘We Are the 99%’ speaks to the many people who sense a deep injustice in the current socio-economic system. People do not feel they have it ‘better than ever’, even in Australia, and many point to the diminished freedom they feel — economically and politically — as a key source of their grievances. The movement has been raising concerns about both the economic situation of the majority compared to the very wealthy in society, but also about the decreasing ‘buy-in’ they have to mainstream politics. Despite the promise of freedom in the neoliberal era people feel more and more curtailed and personally diminished.

This article looks to assess what lies behind the term ‘freedom’ when it is deployed by the neoliberal ideologues. When the concept is raised in Australian political circles, it leads many to think almost exclusively of economic libertarians and hard Right think tanks who enjoy an almost hegemonic usage of the term at the moment. Traditionally it was the Left, and not the Right, that was concerned with free will and justice, at the forefront of the fights against exploitation and subjugation. Politics for the Left was supposed to represent a festival of the oppressed.

Such a project of the progressive side has been sidelined in recent decades, replaced by Francis Fukuyama’s famous phrase that we are at ‘the end of history’. He argued that the old ideologies were dead and capitalist ‘liberal democracy’ was the final stage of socio-cultural evolution. In response, I would argue, The Left has failed to adequately mount a case for its project in more recent times, and even as protests break out across the developed and developing worlds many are at sea and without a critique of contemporary capitalism. While Occupy Everywhere is a movement for these times, it is one that (as Žižek warns) cannot afford to fall in love with itself.

The neoliberal false promise

Under the names economic rationalism and neoliberalism, many of the key policy prescriptions of neoclassical economics have been implemented. Free trade, abolishing investment barriers, privatisation, corporatisation, decreasing the social wage, decreasing the welfare net and contracting out — these are the public policy initiatives embodied by the neoliberal project. While such initiatives are touted as necessary, and necessarily good, they are little more than dogma for many politicians and members of the media. TINA is the name Margaret Thatcher gave to it: ‘There Is No Alternative’. Even for many economists, the reliability and social benefit of economic rationalism is accepted at face value.

Proponents of neoclassical-neoliberal economics across the political spectrum have argued the state needs to cede ground to the market in order to have an internationally competitive economy. It was argued by its proponents from the late 1970s onwards that three important things would result from this policy shift: (1) That minimal involvement in the market would avoid economic crisis (such as the one in the 1970s) as there is no natural tendency to crisis in capitalism; (2) That it would raise global living standards; and (3) that as government removed itself from the economic field there would be liberty as the market (made up of the choices of individuals) would reign unhindered.

On the first promise it is clear the neoclassical-neoliberal policies did not just fail to avoid such a predicament, but that this era was the harbinger of the deepest crisis since the Great Depression. While politicians crow about Australia escaping the economic recessions elsewhere, the fact the global economy is yet to emerge from its widespread collapse, and things look increasingly shaky in China, should give anyone pause for concern. The current crisis was preceded by neoliberalism’s failure to restore global growth rates to pre-1970s levels, even if some countries (like Australia) have maintained relatively higher rates of accumulation.

GDP growth per capita: No recovery with neoliberalism

On the second promise, there has been growing distance between the richest percentile and poorest percentile globally and within almost all countries in the neoliberal era. Not only has the wealth gap grown, millions remain in poverty in both the majority and developed worlds.

In relation to the third promise, that neoliberalism would bestow an economic system based on freedom and liberty, the current era has in fact seen the very denial of that freedom. Contemporary capitalism is not simply a system captured by unsavoury greedy individuals (as some critics argue) but one that operates at its core in the interests of the wealthy and powerful.

Individuals versus societies

Since the end of the Keynesian consensus and the post-WWII boom, neoliberals have forcefully and successfully argued that a particular conception of human freedom, found in various guises in neoclassical economic theory, must be the methodological focus of the modern economic project. Their project has been one based in notions of rational, utility maximising individual agents and the minimal intervention of the state in the economy. The neoclassical tradition sees freedom as inexorably linked to ‘the individual’, rather than a wider social or class project.

Methodological individualism sits at the heart of neoclassical and neoliberal economics, and has its origins in the work of classical liberal theorists such as Jeremy Bentham and John Stuart Mill. Ludwig von Mises (an Austrian economist, philosopher, and classical liberal) makes this connection clear saying methodological individualism is the ‘principle…involv[ing] the recognition that all actions are performed by individuals’ and ‘a social collective has no existence and reality outside of the individual members’ actions’. Put another way, social explanations are in the end reduced to individual-level reasons. This is the theoretical underpinning of neoclassical economics. From here, we can understand why neoclassical theorists are primarily concerned with the impact of individuals and their choices on the economy. It is not that individualism denies the existence or influence of institutions or organisations, but that these are the creation of the actions of an individual or sum of individuals and can be altered by them.

The emphasis is therefore on mathematical models and equations, which predict the marginal behaviours of individuals as a way to understand the overall functioning of the economy. Heterodox and Marxist theorists, however, see such models to be of limited use and their emphasis falls on social situations and historical circumstances. For them, often adherents of methodological holism, it is a different approach ‘that holds that meaningful social science knowledge is best or more appropriately derived through the study of group organisations, forces, processes and/or problems’ (Warren J Samuels). For heterodox theorists, conceptualising the economy begins with the whole — in Marx’s idiom, the world exists as a ‘differentiated unity’ rather than a collection of distinct and disconnected observable facts. They argue that for those who do not begin with ‘totality’, there is a potential trap of reifying individual actions (seeing them for something in and of themselves and not connected to a wider economic, social or cultural phenomena). It is not that this approach fails to recognise a two-way relationship between individuals and society, but that without a methodological holism you can only see individual actions for their isolated meaning and not for their more inherent nature as part of a social whole.

It is with this nexus in mind that we can best appreciate some of the central tenets of the neoclassical theory, which focuses on the actions of individuals within markets. The economy is understood as consisting of markets that naturally arise through what Adam Smith says is a ‘certain propensity in human nature…to truck, barter, and exchange one thing for another’. Wealth is not extracted by one class from another, but rather ‘the distribution of income to society is controlled by a natural law, and that this law, if it worked without friction, would give to every agent of production the amount of wealth which that agent creates’ (John Bates Clarke). The market, which is connected directly to the agency of individual subjects, therefore distributes goods and wealth in a manner that is natural, just and efficient. The price mechanism will guide the market towards an equilibrium point where the market ‘clears’, because ‘if an exchange between two parties is voluntary, it will not take place until both believe they will benefit from it’ (Friedman and Friedman). Utility maximisation by individuals (who have finite income), and the necessity of a firm’s efficiency (given it must ensure profit), leads to goods having a price (and only one price) at which a market clears.

This explains why neoclassical theorists argue the economy manages itself without extensive intervention, by way of setting prices and the self-interest of economic actors. Yet, as Michael Krätke notes:

Free-market liberalism is based on a ‘theoretical error’, on the belief that ‘economic activity belongs to civil society and the State must not intervene to regulate it’. In liberal thought, a methodological and analytical differentiation, between ‘politics’ and ‘economics’, is reified and raised to a political norm. In order to avoid this conclusion, it is necessary to understand that the free market and the liberal market-economy is ‘a “regulation” of a statal nature, introduced and maintained by means of law and compulsion’.

Thus, as David Harvey argues, capitalism does not in fact deliver freedom but its debasement through the establishment of capitalist relations of production:

This neoliberal debasement of the concept of freedom ‘into a mere advocacy of free enterprise’ can only mean, as Karl Polanyi points out, ‘the fullness of freedom for those whose income, leisure and security need no enhancing, and a mere pittance of liberty for the people, who may in vain attempt to make use of their democratic rights to gain shelter from the power of the owners of property’.

This alludes to Marx’s analysis of the commodity form in Capital, where he observed (with bitter irony) that a ‘double freedom’ was the necessary condition for labour-power to become commodified in order that profits could be extracted: A person is required to be free to sell their labour-power (in that they are no longer bonded to another as under feudalism), but they must also be free from the ability to subsist (lacking control of the means of production). In this way, Marx analyses the rise of capitalism as a political act requiring coercion, and not something that spontaneously arose through the unfolding of market logic.

Freedom beyond the market

In neoclassical theory there is also integration of the economic and political — of a type — through the weight given to individual choices as a direct expression of a free society. While some argue the neoclassical project is an attempt to demonstrate scientifically and mathematically the ‘laws’ of markets, it is instead distinctly political with an embedded contradiction between the universal claim of personal and economic freedom and the exploitation of the majority in the interests of a minority. 

Nowhere are the political implications of the focus on individuals in the neoliberal era clearer than in the increased discipline of the labour force in the neoliberal period. Naomi Klein’s book No Logo (2000) reflects on the paradox of promotion of consumer ‘choice’ at the same time as those commodities are produced in sweatshops, where freedom is in short supply for the workers involved. Terry Eagleton suggests that the contemporary individual is shaped by such contradictions:

Capitalism needs a human being who has never existed, one who is prudently restrained in the office and wildly anarchic in the shopping mall.

This scenario mirrors, at the level of ideology, Marx’s argument in Capital that ‘in the society where the capitalist mode of production prevails, anarchy in the social division of labour and despotism in the manufacturing division of labour mutually condition other’. Neoclassical theory articulates an ideal of freedom through atomised exchange, based in individual self-interest, while dashing that ideal against the cold, hard rocks of collective exploitation where: ‘the silent compulsion of economic relations sets the seal on the domination of the capitalist over the worker’. Neoclassical economics thus maintains a lacuna around the fact that capitalist production is irreducibly social and collective but also organised as ‘many capitals’ which — because of the operation of the law of value — must each deny individual freedom to their workers.

In contemporary debates this remains clear in the assumption that there should be freedom for capital from state intervention or collective workers’ organisation. Yet ‘labour market deregulation’ actually means greater state intervention to regulate labour, which became obvious in the debate over WorkChoices legislation. The legislation saw the intensification of orthodox neoclassical principles in the arena of industrial relations, sold on the basis of its necessity for international competitiveness and economic strength. Yet the ‘logic suggests that the government’s purposes in redesigning the industrial relations legislation can be interpreted as an ideologically driven attempt to force down wages, remove workers’ conditions and emasculate the power of trade unions’ (Hartman and Darab). One example of the ideological nature of the policy was its intervention into the labour market in higher education to mandate and ‘encourage’ change through potential benefits and losses to income, as well as to limit (as it did for all workers) dismissal protection, ‘no disadvantage’ tests for new enterprise agreements and the choice to take industrial action.

Because of the inequalities of power between capitalists and their workers, increasing freedom for the latter can only come from greater collective rights in the workplace. Neoclassical economists and their neoliberal counterparts in public policy making remain wedded to the idea that the denial of collective rights is the precondition of individual freedom — but limited to a freedom to act in self-interested ways in the marketplace.

Marx counterposes to this the idea of a struggle for the ‘dictatorship of the proletariat’, whereby the (majority) working class collectively imposes a radically different type of freedom, but one based in eliminating the atomism implicit in capitalist social relations, thereby freeing individual creativity and potential through an irreducibly holistic social act. He thus sees collective working class struggles to subvert the power of market relations as creating the ground for the emergence of real individual freedoms for the vast majority.

Freedom, or the denial of it, is more than a sociological, philosophical or juridical concern — it is a subject of and for political economy. The debasement of freedom in neoclassical theory and contemporary neoliberal ideology is embedded within the capitalist mode of production. By looking at processes arising in class relations rather than individual choice, we can point the way to a broader and deeper conception of human freedom — a conception more satisfactory than the neoclassical economics’ focus on freedom to engage in atomised market exchanges, which necessarily favour the few. This doesn’t just describe the limits on freedom created by class society but points to a collective alternative: a movement of the immense majority, in the interest of the immense majority. Something raised by Marx and Engels many years ago but echoed in the new emerging Occupy Everywhere movement. It seems important though for progressive voices to move beyond the idea of ‘We are the 99%’ and to talk of how we came to this point: the point where freedom is debased because of capitalism. It is time for alternatives.