Neoliberalism in Crisis

Carey James Mickalites (bio)

A review of Van Tuinen, Sjoero, and Arjen Kleinherenbrink, editors. The Politics of Debt: Essays and Interviews. Zero Books, 2020.

As I write this, governments the world over are calling boisterously for the “reopening” of global, national, and local markets in the face of the biggest pandemic since the 1918 influenza. The reasoning is familiar: work and consumption must return to recent levels of growth lest we slip into an unprecedented economic depression. Perhaps nowhere has this persistent and hysterical call been more pronounced than in the U.S., where sickly and irrational reactions to catastrophe have come to define the current regime. A healthy economy trumps public health. What we’re witnessing is an insistence on the ultimate kind of debt: the demand for the sacrifice of countless human lives—particularly those lacking financial security of any kind—to prop up a fiction of economic and political credit. Of course, immediate history points to several indicators that make this fiction (and the burden it demands) both palpable and predictable. The dismantling of postwar public health protocols. The dangerous privatization of medical care. World leaders ignoring the advice of medical experts on the likelihood of a pandemic. Forced austerity. Gross polarization of wealth and access, such that the credit and health of the few are paid for by the debts and diseases of the many. All of this is deeply entrenched and familiar, its realities taking hold during the Reagan-Thatcher era and sticking while we collectively failed to consider structural change during and following the 2008 crash, instead letting our leaders bail out the culprits with public money. I could go on, but the point is that the “unprecedented” impact of COVID-19 is a symptom of the neoliberal policies that enslave governments and citizens to financial markets, in turn exacerbating one of the plainest contradictions of contemporary capitalism: the inevitability of the next crisis. At the risk of sounding like a historical (or hysterical) determinist, the current economic collapse was prepared for. If the coronavirus pandemic signifies the latest global crisis—and one in which finance markets and tech industries are ready to exploit threats to public health—then it also resoundingly affirms one of the key assertions running through van Tuinen and Kleinherenbrkink’s The Politics of Debt: “more than a decade after the [2008] crisis, scholars, journalists and politicians alike agree that it is not a matter of if, but when the next crisis will hit” (11).

The volume, consisting of six essays and five interviews, brings together the work of philosophers, economists, political scientists, and politicians to create a chorus of multidisciplinary voices that addresses the effects of the 2008 crash ten years on. (The volume was first published in 2018, and reissued in January 2020.) With the political normalization of debt at center stage, the editors, authors, and interviewees address the perils and supposed necessity of debt and crisis through historical, theoretical, and political-economic lenses. At first sight, the texts that make up The Politics of Debt may appear a fairly loose compendium. Topics include ancient and Christian moral injunctions against enforced debt; Hobbes and other early theories of sovereignty based on power as credit; genealogies of debt and guilt or sin à la Nietzsche; and the precarious financialization of every aspect of our political economies, public and private. Yet the book appears more unified when considered as part of a general intellectual trend on the left and center- (or liberal-) left that seeks to intervene in the injustices and contradictions of our contemporary political economy through historical and theoretical analyses. The Politics of Debt returns to the works of Foucault and Deleuze from the late 1970s and offers commentary on recent influential work by David Harvey, Wolfgang Streeck, Philip Mirowski, and Thomas Picketty, among others. Most of the essays and interviews share a few important assumptions and argumentative threads, at times by implication. Foremost is the specific historical entrenchment of neoliberal policy beginning in the 1960s, whose tendency to produce bubbles, crashes, mass unemployment and the like became all-too-evident during the last major global recession (more on this below). In short, what ties the collection together is an insistence that the politics of (enforced) debt is part of a long history of the political erosion of public support in favor of high finance, and that this bad history has come to a head since 2008. As some of the more progressive essays and interviews hold, we are now at a crucial historical threshold.

The editors’ introduction provides a solid historical grounding, beginning with the collapse of the subprime mortgage market in the U.S. and its symptomatic structural spread throughout the European and, ultimately, the global economy. Following the work of Harvey, Streeck and others, the introduction and many of the pieces rightly insist that, since the prominent incursion of neoliberal policies into national governments in the 1970s (also adopted by supposed liberals and laborites like Clinton, Obama, Blair, et al.), economic crisis is not merely a symptom but the norm arising from the corresponding shift away from social democracy. The collapse that “began” in 2008, the editors argue, led to policies like bank bailouts that precipitate subsequent crises. These crises “result in part from the continued application of a solution that in fact only exacerbates the problem,” turning citizens into mere “entrepreneurs of the self,” ever in debt. Thus, “under neoliberalism, crisis itself is actively wielded as a tool by corporate and financial elites” (3). This argument, which reverberates throughout the book, rests on the important insistence that debt and credit function in a dialectic: capitalism has never been about production for subsistence, but about the creation of credit out of debt. This position problematizes or makes reductive the old moral associations with credit and with debt. (For a bad popular example of this, recall The Wolf of Wallstreet; for an even worse example currently unfolding, witness what’s happening to public universities and higher education.)

This historical opening is further enriched by several essays in the collection, most notably by Philip Goodchild in his “The Politics of Credit.” Goodchild begins with The South Sea Company as a case study to explain what he calls “the debts of politics” (a tweak on the volume’s title), and to show how private debts in the form of taxation and investment—and sovereign authority based in credit (the promise of returns)—come to mutually reinforce each other in a system that relies on the regulatory functions of the banks. In a Hobbesian vein, the history of this tripartite development indicates that sovereign authority is premised on a fiction of the promise of returns on shared debt; at the same time, that fiction, when governed by mutual constraints on power, leads to moments of national cohesion and increasing prosperity (65-7). And yet there’s the rub. The system of faith in future returns, and the speculative bubbles it generates, makes periodic economic and social crises inevitable, and this longish history takes us to our current phase of global debt and credit. For Goodchild, this spells a crisis of faith: “Once the circle of reliable debtors shrinks to a few state, corporate and financial institutions, then it no longer offers a source of prosperity and longer time horizons for the populace at large” (72).

Other essays offer theoretical complements to such historical analyses. Drawing on the sociological work of Marcel Mauss and Pierre Bourdieu, Émilie Bernier outlines the notion that debt—in the form of gifts and implied reciprocity—has been understood as a basis for social cohesion. Such forms of general economy have long structured religious and ethical systems of social cohesion, but with the rise of modern finance, those moral codes have given way to a system organized strictly around “financial obligation” (17). In Bourdieu’s analysis, the gift becomes insidiously immoral, “a mode of political subjugation” in a restrictive economy that inscribes everyone within a hierarchical structure of indebtedness, a social system that binds and enslaves (18, 21, 27).Richard Dienst’s similarly speculative essay returns to theories of Utopia, from More to Marx and Engels, to ask how we might rethink the necessity of debt. Withholding any firm conclusions or prescriptions, Dienst acknowledges that debt as we know it has no place in the Utopia called communism (52). He asks readers to consider “something like a form of indebtedness that allows people to share their lives without appropriating each other’s possibilities” (49), in which the necessities of work, consumption, and indebtedness might be reimagined as pursuits in common (58).

Several contributors working at the intersections of recent history and theory extend the argument that, as policy and ideology, neoliberalism as a politics of debt makes recurring waves of crisis inevitable. Drawing on the work of Streeck and others, Jean-François Bissonnette’s essay focuses on credit as a “political technology” that has normalized debt by shifting the burden from states to individuals and private households during the transition from social democracy to neoliberalism over the past three decades. And whereas the postwar Keynesian policies were by no means innocent or ideal—they involved, as Streeck argues, a “class compromise … meant to secure the allegiance of workers to the capitalist system” (32)—the full-blown extension of markets into government and public institutions has altered social subjectivity to its core, forcing us all to view debt as a speculative investment in future security and wages without any guarantee. In this system, debt comes to be understood as a form of “economic empowerment,” most legible in the case of student debt that reframes subjectivity “to make the entire arrangement seem acceptable” (39). A few chapters later, Steven Shaviro offers a logical extension of some of these arguments, tracing the political normalization of indebted individuals to the end of the gold standard and the beginnings of our current free-floating exchange system in the early 1970s. Around this time, Foucault and Deleuze begin to theorize what comes to be called neoliberalism: a shift from classical economics of exchange to “the financialization of human life” in general. This shift makes debt “our universal condition” and ushers in the new order of social control under which, as Deleuze argues, “a man is no longer a man confined but a man in debt” (qtd. in Shaviro 83). This generalized economy utterly depletes former models of civil society so that we’re all calculating entrepreneurs of our own subjectivities, and spells disaster for labor. If all life is leveled to “‘investing’ my ‘human capital'” in return for subsistence, then labor disappears as a politically viable category. On this view, neoliberalism “does not provide an alibi for exploiting workers”—it doesn’t need to—”so much as it positively works to make the status of the worker, and the process of labor-asexploitation, literally unthinkable” (80, 81). (Or, at the moment, evades thought by calling exploitation “essential”?) Finally, and following the concern with the transformation of labor value to “human capital,” Elettra Stimilli argues that the transformation of the state to a commercial enterprise, coupled with the shift from public spending to private debt, helps to account for the oppressive neoliberal version of freedom that expects everyone to be an “entrepreneur of himself” (91, 89). Think, for example, of the current state of affairs in higher education: students are compelled to take on enormous debt for the profit of government lending institutions and “public” universities in order to gamble on the promise of a lucrative but increasingly precarious future.

Were I to quibble with any of this, I would note that these essays do not address the longer history of neoliberalism and its corollary, financial globalization. While I don’t have space to do so here, others have traced the origins of current financial regimes to developments throughout Europe following World War I and the demise of empires.¹ Consider, for example, that the interwar period witnessed the emergence of the likes of Friedrich Hayek and Ludwig Mises, who (with the aid of the Rockefellers) established the Geneva School and the neoliberal model that renders states and their legal institutions subject to denationalized global finance in the name of “free markets.” This small quibble over the question of a longer history of political economy raises the political specter that now haunts the term neoliberalism itself, mostly addressed from the left (the apparent position of the contributors) but not openly taken up in The Politics of Debt. As some have recently argued, the term has become so ubiquitous—basically the name for everything bad about our new world order—that its efficacy is questionable.² In the most overstated cases, this logic can look like a backhanded affirmation of what it opposes, the kind of sweeping assumptions associated with Thatcher’s TINA (“there is no alternative” to free-market capitalism, or here, to the pernicious ontological spread of neoliberalism). That paranoid logic doesn’t apply to this volume—indeed, much of it aims at undermining financial totality—but another recurring assumption in the collection has recently been problematized by writers on the left. Contributors are right to argue that neoliberal policy and the encroachment of finance, high and low, into every aspect of political and private life have seriously clouded the horizon of social democracy, eroded the power of collective labor, and suppressed wages towards a state of desperate precarity for most citizens of a polarized global economy. However, in several essays (especially Bernier, Bissonnette, and Shaviro), this necessary critical history depends on a potentially idealized view of the postwar consensus or the welfare state prior to the evolution of today’s neoliberalism. Wendy Brown’s Undoing the Demos: Neoliberalism’s Stealth Revolution shares this tendency; one astute reviewer characterizes it as “a markedly nostalgic work … since it hearkens to the imperiled values of a previous era of political liberalism” (Grattan). Yet this previous era’s processes of accumulation too depend on extraction, exclusion, and exploitation, as always. Writing in the immediate wake of the 2008 crash, Marcellus Andrews returns to Milton Friedman and the establishment of the Chicago School of Economics—set up in opposition to the then-widespread Keynesian model—to argue that their calculus obscures market capitalism’s tendency towards depression and mass unemployment. This kind of obfuscation reaches back to eighteenth century laissez-faire thinking and forward to current government reluctance to admit (or better: to deny outright) that the predominance of risky finance necessitates bubbled and crashes, a central tenet of “classical models of a self-regulating market economy” (Andrews 58, 59)—self-regulating, that is, with the powerful structural support of government subsidies, tax cuts to corporations, outsourced labor, etc. None of this is to argue for the wholesale denial of the neo-, but to suggest with others on the left that defining its glaring contradictions and necessary creation of crisis against some better, older form of liberalism risks a reductive elision of the long march of debt-driven financialization in Western capitalist societies.

To be fair, the volume asks where we are ten years after the last crash rather than giving such a full history. The collected essays and interviews admirably synthesize a large body of economic scholarship and political theory, from Hobbes to Nietzsche to the most recent work on the subject. And as a means of thinking about how we got here, the historical work the volume carries out also compels us to ask the equally important question: what is to be done? As a counter to the old Thatcherite proclamation that “there is no alternative,” each of the interviews that closes The Politics of Debt offers measures for structurally reframing a global dependence on debt-driven neoliberal policy.³ Clearly, the EU impositions of austerity on countries like Greece is not a solution but rather more of the same, a neoliberal effort on the part of powerful countries (Germany) to offset debt by increasing it (premised on scapegoat logic). Mark Blyth makes this point alongside the modest proposal of actually taxing corporations (104-5, 106, 108). Andrea Fumagalli argues for a widespread end to channeling public expenses to big finance. Similarly, Costas Lapavitsas proposes a sweeping definancialization of society in noting that our age of finance is merely an historical period. How exactly this is to be done is unclear, but Fumagalli seems keen on the institutionalization of Universal Basic Income (UBI) (123-7). While UBI might take us a step towards redistribution, it is also little more than a slight readjustment from within existing financial structures, not a push for socialism. Maybe we can rethink work itself, imagining it outside the abstractions of contemporary capital. Or, in the face of such abstractions—which we can’t effectively “occupy,” as Maurizio Lazzarato observes—we need models for refusing to work (153, 156). Finally, as Tomáš Sedláček suggests, we may revisit old myths (including Christian parables) as a counter to the prevailing fictions of finance and life-as-debt, potentially allowing an “ethical dimension” made seemingly unthinkable by the immoral “redemption” of big banks (159).

Whether thought in isolation or in some creative combination, each of these proposals m akes sense. Together, they remind us that we have the tools, wealth, and imagination to challenge the apparent ubiquity of neoliberal policy. This volume contributes to the larger discourse on the left in which neoliberal policies not only precipitate serial crises, but are perhaps approaching an historical precipice. We are in a moment fraught with tension. As Stuart Hall, Doreen Massy, and Michael Rustin suggest in a 2013 essay, “The economic model that has underpinned the social and political settlement of the last three decades is unravelling but the broader political and social consensus apparently remains in place” (8). If it takes ideology a minute to catch up with material devastation, then Philip Goodchild’s essay offers a complementary response: “we stand at the threshold of a crisis of faith for the politics of credit and debt,” he writes, speculating that “Founding political life on the riskiest forms of venture capitalism, although immensely successful for 3 centuries, may prove to be just a bubble” (72-3). I can invest some faith in that. With the historical analyses and theoretical interventions laid out in The Politics of Debt, we have some reason to believe that our future is not necessarily an increasingly precarious version of our present. COVID-19 may or may not be the crisis gone viral, as it were, but if nothing else, its spread has lifted the veil on the contradictions and inherent crises that decades of neoliberalism have cemented in place, not least the gross polarization of wealth and the enforced austerity on which it depends. The Politics of Debt leaves us with the hope that something genuinely unprecedented—structural change somehow independent of financial capitalism—might be imminent.

Footnotes

1. See, for example, Slobodian’s book, or Zevin for a shorter option.

2. Within my own field of literary and cultural studies, for example, Bruce Robbins suggests that neoliberalism “always seems to be discoverable lurking behind or beneath whatever piece of culture happens to be under discussion [in this case, the state of contemporary literature], and once discovered, it never seems all that enlightening, perhaps because it is so taken for granted, and perhaps because, like capitalism itself, it has been pulled and stretched so as to signify too many different things” (840). Robbins is reviewing Mitchum Huehls’s and Rachel Smith’s edited volume, Neoliberalism and Contemporary Literary Culture. He notes that their claims for an ontologically totalizing neoliberal society (since about 2000) would preclude precisely the kind of outside critical position necessary for their analysis (841).

3. Another notable response is Mark Fisher’s Capitalist Realism, published in the same series as this one.

Works Cited

• Andrews, Marcellus. “Burying Neoliberalism.” Dissent, vol. 56, no. 3, Summer 2009, https://www.dissentmagazine.org/article/burying-neoliberalism. Accessed 8 July 2020.
• Fisher, Mark. Capitalist Realism: Is There No Alternative? Zero Books, 2009.
• Grattan, Peter. “Company of One: The Fate of Democracy in an Age of Neoliberalism.” Los Angeles Review of Books, 15 July 2015, https://lareviewofbooks.org/article/company-of-one-the-fate-of-democracy-in-anage-of-neoliberalism/. Accessed 8 July 2020.
• Hall, Stuart, Doreen Massey, and Michael Rustin. “After neoliberalism: analysing the present.” Soundings: A Journal of Politics and Culture, vol. 53, Spring 2013. Project MUSE, muse.jhu.edu/article/522108. Accessed 8 July 2020.
• Robbins, Bruce. “Everything Is Not Neoliberalism.” American Literary History, vol. 31, no. 4, Winter 2019, pp. 840-49, doi.org/10.1093/alh/ajz034.
• Slobodian, Quinn. Globalists: The End of Empire and the Birth of Neoliberalism. Harvard UP, 2018.
• Zevin, Alexander. “Every Penny a Vote.” London Review of Books, 15 August 2019, pp. 27-30.