Neoliberalism and the challenge for student protesters.
or: what we’ve learnt:
In the mid 1970s, a small group of influential economists from the University of Chicago used the excuse of an oil crisis and the backing of the mega-rich to launch an experiment. They ended what has become known as the ‘social democratic consensus’. They launched an era of “neo-liberalism”. Let’s look at how it’s gone.
And let’s start off with the measures they like to use. Per capita income growth rates in the UK were 2.4% in the 1960s and 70s. From 1990-2009, they were 1.7%.
We are always told that our country suffered “British disease” in the ’60s and ’70s – that until Thatcher set our markets free, they were stagnant. If that’s the case, then they have become a cesspit. The experiment here hasn’t worked so well.
The same is true globally. Cambridge University economist Ha-Joon Chang gives us the figures: In the US, growth rates have fallen from 2.8% to 1.8% since the advent of modern neo-liberalism. In the developing world in general growth rates fell from 3% per capita in the 60’s and 70’s to 1.7% from 1980-2000. More specifically, Latin America’s growth has stagnated: dropping from 3.1% in the 60’s and 70’s to 1.1% from 1990 to 2009. And this figure was pulled up by those ‘radical’ countries (Venuluela, Argentina, Ecuador, and Uruguay) who refused to privitise and open their borders to foreign capital. Sub-Saharan African countries have tended to comply with free market rules. They have seen growth rates drop from 1.2% to 0.6%. For twenty years, and despite the legacy of colonialism and often corrupt leaders, Africans were lifting themselves out of poverty. Now, many countries are going backwards. There are some significant exceptions. As Chang points out, India and China have studiously ignored the pleas of neo-liberal economists to fully de-regulate their markets. Like 19th century America and Europe, they have only set free those industries which they believe are ready to compete. They have maintained strict regulation. Their economies have continued to grow. Otherwise the growth has stagnated since the Reagan revolution drove radical neo-liberal policies to the heart of the world’s governments.
We often say that neo-liberalism is unjust. We say that it kills, that it violates rights. We say that it generates inequality, and that it destroys the planet. But here’s something that we don’t say very much:
It has failed. In its own terms, and by its own measures, it has monumentally failed.
So, if we weren’t getting much richer, why did it feel like we were? One word: Credit. Rather than increasing wages, credit was de-regulated. We were, many of us, lent vast amounts of money. We could continue to buy cheap shoes and electronic goods. But this has turned out to be a con. The house of credit cards has collapsed. The mask of easy loans has slipped, and we’ve seen what it was hiding: a stagnating economy, and the biggest transfer of wealth from poor to rich in modern history.
But growth rates are a terrible way to measure the success of an economy. So let’s look at some measures which actually matter. Here’s one:
Between 1950 and 1975, unemployment in the UK was never higher than 500,000. Since 1975, it has never dropped below 500,000.
Or what about this?: In Britain, people’s reported happiness has dropped. Across Western Europe, wages have stagnated. In the USA, compensation packages have actually fallen for most people, while the number of hours worked by those with jobs has gone up.
Here’s another: the last 30 years has seen record carbon emissions. Unchecked, these will cause run away climate change within the lifetime of my generation. At best, millions will die. At worst, most of civilization will be wiped out.
Or, let’s talk about things the right care about. In the UK, 29% of adult men under 35 now live at home. They can’t afford to leave. unsurprisingly, they struggle to hold down relationships. Neo-liberalism is making ‘traditional family life’ near impossible for much of my generation. So much for the phrase ‘conservative family values’. Or look at housing policy more broadly. Thatcher’s right to buy was supposed to create a home owning democracy. In truth, the poorest 10% are now much less likely to own their home than they were when she came to power in 1979.
Or, let’s look at the more radical neo-liberal governments – because the truth is that Britain and America aren’t the extreme end of this spectrum. South Africa, and Russia were forced into neo-liberalism in the early 90s. They have discovered that if you allow the strongest to rule then criminal gangs will run your streets. Mexico is collapsing into a failed state. Rwanda, the African darling of the right, survives through mass murder and plunder in the Congo. Ultimately, the maxim “the government which governs best is the government which governs least” is best seen in Somalia. But perhaps that’s a cheap shot.
So, if we have learnt anything in the last decade, it is that the right was wrong. This experiment started ten years before I was born. It had stopped meeting its key performance indicators by the time I started school. At the same time, it has delivered the most unequal British society in more than a century, stopped progress in most countries, and risks our planet. Its time is over.
Those University of Chicago economists were famous for arguing economics is a science, not one of the humanities. Science works by testing ideas, and revising them based on results. The results have come back. It’s a negative.
And so the job of my generation in the next decade will first be to end this failed experiment before it destroys us. Across Europe, we are marching on the streets, and shouting from the rooftops. But we must begin to appreciate the scope of the fight we face. Because the truth is that our government’s aren’t just wrong about education. They are run by leaders who were politicized in a previous era – and who are tied to a tired, failed mantra.
Once this system has been dismantled, the real work will begin. Because together, we must build a new economy. Neo-liberalism was an invention. The social democratic consensus was a construction. Our task is to establish, together, what comes next. And time is running out.