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The Gross Injustices of the Neoliberal World Order
To understand current economic realities new language is being used. Naomi Klein calls neoliberalism 'disaster capitalism'.
By Sherry Ortner
Editor's Note: The term "neoliberalism" is increasingly being used to refer to the American economic system since the administration of Ronald Reagan by scholars in other countries and academics in this country. It is a helpful term since it is a complete misnomer to refer to the American economic system as "conservative" as happens in contemporary political discourse. Neoliberalism is more akin to what today is called "libertarianism" than conservatism. I have placed this article on the website at this time because it also helps to understand the current debt crisis debate and the role of "crisis" in creating conditions for the implementation of what Naomi Klein calls "disaster captialism." The debt crisis was manufactured by Tea Party Republicans to force on the president and the Senate and the American people their view of financial deficits and their desire to destroy social welfare programs for working people and the poor. To understand what is happening it is necessary to set the current debate within the context of global movements over the past thirty years or so.
(This article discusses two books and a film, The Shock Doctrine by Naomi Klein, A Brief History of Neoliberalism by David Harvey, and Inside Job a film by Charles Ferguson.)
Whatever happened to “Late Capitalism”? It became neo-liberalism. - Marshall Sahlins (2002: 59)
I begin with Marshall Sahlins’s little koan because I remember being somewhat mystified myself by the shift in terminology around the year 2000, from “late capitalism” to “neoliberalism.” Writing this brief review essay has given me the opportunity to think about this, and to suggest an answer. In addition I am interested in bringing together some of the grand narratives of neoliberalism on the one hand, and a range of ethnographic work on the other. I apologize in advance for a certain U.S. bias in the discussion.
From one point of view, there is no hard-and-fast distinction between late capitalism and neoliberalism, and in many ways neoliberalism is simply late capitalism made conscious, carried to extremes, and having more visible effects. The real break is generally agreed to have been between the kind of capitalism in place in the U.S. from about the 1940s to the 1970s (there is no established term for this; Lash and Urry  call it “organized capitalism”), and what came after (i.e., late capitalism or neoliberalism). This break involves two somewhat interrelated shifts. The first is a shift from a so-called Fordist to post-Fordist framework defining the relationship between capital and labor: under Fordism there was a kind of truce between capital and labor, and (organized) labor did fairly well in terms of pay and job security; under post-Fordism, the truce is over, and labor has become dispensable, disposable, and replaceable. The second is a shift from a Keynesian theory of the relationship between the government and the economy, to a post-Keynesian (“neoliberal”) theory: under Keynesianism, the government was expected to play a role in regulating the economy and in sustaining social programs for the general well-being; under post-Keynesianism/neo-liberalism the government is supposed to do neither (key texts from this period were Mandel 1978, Harvey 1989, and Lash and Urry 1987).
But if late capitalism and neoliberalism are two names for more or less the same set of changes in the capitalist system, the terminological shift from the first to the second signals – I suggest – a change in the story or narrative in which the changes in question are embedded. The phrase “late capitalism,” which was the dominant term in the 1980s and 90s, was embedded in a narrative of “globalization,” a concept that had positive as well as negative aspects, while “neoliberalism,” which has become the dominant term since about 2000, is embedded in a much darker narrative, a story of a crusade powered by ideology and/or greed, to tilt the world political economy even more in favor of the dominant classes and nations.
I want to make it clear that the economy known as “late capitalism” in the 80s and 90s was not really much more benign than the economy we now call “neoliberalism.” Either/both emerged from the dual turn from Fordism and Keynesianism, that is, from the metaphoric social contracts that had protected industrial labor as well as the citizenry in general from the worst excesses of capitalism. But in the 80s and 90s, accounts of late capitalism were closely tied up with “globalization,” and while globalization was certainly understood to have its down sides (labor outsourcing, unemployment, and deindustrialization at the sending end; extreme labor exploitation at the receiving end, etc.), there was also a fairly influential set of arguments about the ways in which other aspects of globalization (flows of technology, information, media, etc.) could be seen as positive and liberating (see especially Appadurai 1990). Globalization remains real and indeed as multi-layered and multi-valent as ever (see Hannerz 1996; Inda and Rosaldo 2002; Tsing 2005). But neoliberalism is now embedded in a different, and more consistently dark, set of stories, to which we now turn.
NEOLIBERALISM: THE BIG PICTURE
On the recommendation of a friend, I picked up a copy of Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism (2008) in Heathrow Airport a year or so ago, and read it on the long flight back to Los Angeles. The book gave me nightmares.
Klein tells the story, in deep and extensive detail, of an ideologically driven and often quite intentional campaign of “erasing and remaking the world” (2008:3) on the part of a network of true-believer neoliberal economists and politicians. The book reads like a John Le Carré novel, in which concealed nefarious forces seek world domination, and in fact Le Carré wrote a blurb for the cover. The sober academic might feel the book has a certain paranoid tinge, especially since it starts with some mind-control experiments funded by the American government during the Cold War. But keep reading. When Klein gets into the well-researched and highly specific details of particular cases of economic “shock therapy” that have been imposed on many countries (and some cities) of the world, with mostly disastrous results for almost everyone but the very rich and the banks, the reader comes to know in his or her gut what “neoliberalism” is all about.
By the phrase “disaster capitalism” in her title, Klein means not only the general ways in which extreme free-market capitalism is an economic disaster for many people and countries, but the more specific fact that real disasters (the debt crisis of New York City in the 70s, the collapse of the Soviet Union in 1989, Hurricane Katrina in 2005) are explicitly seen as the best breeding grounds and opportunities to transform old economic regimes into neoliberal ones. A large part of “transforming old economic regimes” involves selling off state-operated properties, goods, and institutions to private buyers, and replacing those state operated entities with private, for-profit ones. In the wake of Hurricane Katrina, for example, the city of New Orleans was persuaded to sell virtually the entire public school system to private, for-profit operators. Discussing the New Orleans case as her opening example, Klein sets up the premise of the book: “I call these orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, ‘disaster capitalism’”(p. 6).
If social or natural disasters do not offer themselves up, Klein shows convincingly that they will be manufactured, the war in Iraq being the latest case in point. Let us follow the Iraq war thread into David Harvey’s 2007 book,A Short History of Neo-Liberalism, where it is his opening example. Like Klein, Harvey sees “the management and manipulation of crises” (p. 162), whether floods, wars, or financial melt-downs, as part and parcel of establishing the neoliberal agenda. And like Klein, he provides abundant evidence to show that the war in Iraq was a crisis manufactured to “impose by main force on Iraq… a state apparatus whose fundamental mission was to facilitate conditions for profitable capital accumulation”(p. 7).
Harvey offers a clear definition of neoliberalism as a system of “accumulation by dispossession,” which has four main pillars: 1) the “privatization and commodification” of public goods; 2) “financialization,” in which any kind of good (or bad) can be turned into an instrument of economic speculation; 3) the “management and manipulation of crises” (as above); and 4) “state redistribution,” in which the state becomes an agent of the upward redistribution of wealth (159-164 passim).
Harvey places particular emphasis on the last point, the upward redistribution of wealth. He takes issue with other writers who argue that the enormous growth of social inequality since the beginnings of neoliberalization in the 1970s is an unfortunate by-product of what is otherwise a sound economic theory. Instead Harvey sees the vast enrichment of an upper class of capital owners and managers at the expense of everyone else as an intrinsic part of the neoliberal agenda: “Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalization as to be regarded as structural to the whole project.” (p. 16).
I have heard Klein and Harvey dismissed as “conspiracy theorists,” and both books do have something of this quality, Klein’s somewhat more than Harvey’s. In part the effect is created, I think, because both writers eschew a language of abstract social forces, and show that real individuals in real times and places expressed clear intent and understanding about what they were doing. Harvey also shows a kind of massive patterning in the redistribution of wealth that he says cannot be understood in any way other than as part of a fairly intentional project. I myself found the data very convincing but the reader will have to judge for him- or herself on this point.
In any event one does not need to buy Klein’s and Harvey’s histories to see neoliberalism doing its work in both wealthy and poor nations of the world. The polarization of wealth, including both the amassing of huge fortunes at the upper end of the class structure, and the increasing impoverishment of many people and countries at the lower end, is a fact. We can see it in the statistics, which are apparently robust and indisputable. We can also see it ethnographically, and here we return to the anthropology.
NEOLIBERALISM ON THE GROUND: ETHNOGRAPHIC PERSPECTIVES
Ethnography does many things that cannot be accomplished by overarching works like those just discussed. Ethnographies – of course I don’t have to say this to anthropologists, but it is worth putting on the record anyway – provide depth, richness, complexity, humanity, even humor, to bring to life abstract accounts of “economic restructuring” and “polarization of wealth.” But most of all – as I reflect on various studies of people and places at the short end of the neoliberal stick – ethnographies remind us that people live in worlds of meaning as well as of material conditions. I want to look briefly here at three different anthropological examples of what people make of their lives and of the world as they experience in various ways the massive dislocations of late capitalism/neoliberalism/globalization.
James Ferguson writes of the people of the Copperbelt of Zambia (2002), where a nascent industrial economy has collapsed under “declining terms of trade, increasingly worked-out mines, and the crushing burden of a debt crisis” (p. 137). The depleted mines are part of a local and specific environmental history, but the declining terms of trade and the debt crisis are clear effects of neoliberal restructuring. Ferguson describes the economic hardships that have come about as a result of all this as “staggering” (p. 139), but he moves beyond that to try to understand the larger sense of profound loss people are experiencing. He argues that, within the earlier discourse of “modernization,” people saw themselves and their nations as moving toward some kind of “modern” future, including a sense of joining a “world society” and connecting up with what Ferguson calls “the grid of modernity.” Now however they feel themselves disconnected from the grid, both literally and metaphorically, and with a sense of abjection or “humiliating expulsion” from the global modern community (p. 140).
Jean and John Comaroff show us another face of the ways in which people suffering under the effects of late capitalism/neoliberalism (2001) make sense of the new world in which they find themselves. They use the phrase “millennial capitalism” to call to mind not only the real timing of the economic transformation in the late 20th and early 21st centuries, but also to capture the magical, supernatural, fearful overtones associated with the turn of the millennium. Drawing on earlier ethnographic research by themselves and others, in South Africa and many other parts of the world, they call attention to the recent proliferation of “occult economies,” magical (by way of, say, wealth-sucking zombies) and quite practical (by way of, say, extravagant Ponzi schemes) ways of gaining great wealth without productive labor. While cautioning that it is difficult to measure any real growth in the frequency with which such beliefs and practices are appearing, they argue nonetheless that these beliefs/practices have become part of the public discourse in ways that are new, and have taken on new meanings in an economic order in which speculative financialization – what has elsewhere been called “casino capitalism” – has become normalized.
For a final example of how people try to make sense of the effects of neoliberalization of their lived world, we may look at Steven Gregory’s study of everyday life and local politics in the Dominican Republic. Where Ferguson’s study conveys a sense of the profound wounding of identities and loss of faith in the future brought about by the collapse of the modernist project under neoliberalism; and where the Comaroffs’ discussion shows us what might be called the deep irrationalities, which nonetheless have a kind of rationality, triggered by an out-of-control economy; Gregory focuses on the ways in which the neoliberal order generates new forms of (state) power, and new points of friction between the more and less powerful, on the ground. In this context, Gregory’s actors appear more political, more willing to take on the authorities under particular conditions, and more active in keeping specific injustices clear and well in view. For example, when the state sold off the national electrical utility to a private company, and the company began imposing blackouts to get people to pay their bills, people took to the streets “in widespread, unrelenting protests throughout the country”(p. 14).
For poor communities within rich nations, as well as for poor nations in an increasingly unbalanced world, it is likely that we see manifestations of all of these ways, and no doubt more, of making sense of the craziness and the gross injustices of the neoliberal world order. A sense of humiliation and abjection, a great deal of magical and irrational thinking, as well as a certain clear-eyed sense of injustice and the necessity for standing up to it when it is not too dangerous to do so – all of these and many other ways of understanding/experiencing/reacting to/dealing with the pitilessness of neoliberal theories and practices can no doubt be found, in various mixtures, in most parts of the world.
I confess it is easy to be pessimistic about the state of the world today, and very hard to see a way out. But I take some small measure of heart from a recent story in the New York Times about the impact of a new documentary by critical filmmaker Charles Ferguson. Ferguson has a PhD in political science, made millions in Silicon Valley, cashed out and began making politically critical documentary films. He first made a spectacular award-winning documentary on the Iraq war called No End in Sight (2007), and more recently made a documentary about the 2008 near-crash of Wall Street, Inside Job (2010).The latter is a powerful critique of the economists, bankers, and politicians who basically saw what was coming and proceeded with what they were doing anyway. One of the story lines in the film concerns academic economists who sit on the boards of major banks and financial corporations but fail to disclose this in their C.V.’s, on their web sites, and presumably in their classrooms. There is a stunning moment in the film when Ferguson is interviewing the Dean of the Business School at Columbia University, and pressing him about his failure to reveal his potential and real conflicts of interest. The dean suddenly realizes that he has been exposed on film, gets very angry, and calls a halt to the interview. But the damage has been done.
I saw the film when it came out in October. Recently, I opened my morningNew York Times and found the following story on page one of the business section: “Academic Economists to Consider Ethics Code.” The proposal for this code, according to the Times reporter, “is partly a response to ‘Inside Job,’ a documentary film … that excoriates leading academic economists for their ties to Wall Street as consultants, advisers or corporate directors.” The reporter goes on to say that “the film has rattled the [economics] profession,” and he quotes an M.I.T. professor who said about the proposal for the ethics code, “’You could call this the ‘Inside Job’ effect.” (Chan 2010). It’s important to note that the proposal for the code of ethics has not passed yet, and indeed may not pass. Thus one must recognize the ways in which the Times reporter and his editors are adding value and impact to the film by giving the (possible) code of ethics story this kind of coverage. The story itself is a political act.
I find all of this encouraging on a number of counts. I am encouraged that there are wealthy persons like Ferguson who have both a critical intelligence and a conscience, as well as the talent to make a powerful film. I am encouraged that the film had the power to expose and shame an influential person, his field, and his institution, and possibly bring about some small but real change. I am encouraged that the Times covered, and indeed constructed, the story. It will only be out of some complicated conjuncture of people and forces like this – between wealthy and powerful renegades like Ferguson, powerful media like the New York Times (and smart reporters like Sewell Chan), anthropologists and others writing and teaching about what is going on, and ordinary people themselves, in their infinite practical wisdom, in every part of the globe – that some kinds of solutions may emerge.
Appadurai, Arjun. 1990. “Disjuncture and Difference in the Global Cultural Economy.” Public Culture 2(2):1-24.
Bell, Daniel. 1974. The Coming of Post-Industrial Society. New York: Harper Colophon Books.
Chan, Sewell. 2010. “Academic Economists To Consider Ethics Code.” New York Times, December 31: B1, 2.
Comaroff, Jean and John L. Comaroff, eds. 2001. Millenial Capitalism and the Culture of Neoliberalism. Durham: Duke University Press.
Dudley, Kathryn Marie. 1994. The End of the Line: Lost Jobs, New Lives in Postindustrial America. Chicago: University of Chicago Press.
Ferguson, James. 2002. “Global Disconnect: Abjection and the Aftermath of Modernism.” In J.X. Inda and R. Rosaldo, eds., The Anthropology of Globalization, pp. 136-153. Malden, MA: Blackwell Publishing.
Gregory, Steven. 2007. The Devil Behind the Mirror: Globalization and Politics in the Dominican Republic. Berkeley, CA: University of California Press.
Hannerz, Ulf. 1996. Transnational Connections: Culture, People, Place. London and New York: Routledge.
Harvey, David. 1989. The Condition of Postmodernity. Oxford: Basic Blackwell.
2005. A Brief History of Neoliberalism. Oxford: Oxford University Press.
Inda, Jonathan Xavier and Renato Rosaldo, eds. 2002. The Anthropology of Globalization. Malden, MA: Blackwell Publishing.
Jameson, Fredric. 1984. “Postmodernism, or the Cultural Logic of Late Capitalism.” New Left Review 146, July-August, pp. 53-92.
Klein, Naomi. 2008. The Shock Doctrine: The Rise of Disaster Capitalism. London: Penguin Books.
Lash, Scott and John Urry. 1987. The End of Organized Capitalism. Madison, WI: University of Wisconsin Press.
Mandel, Ernst. 1978. Late Capitalism. Trans. J. De Bres. New York: Verson.
Ortner, Sherry B. n.d. Not Hollywood: Independent Film as Cultural Critique. Manuscript.
Sahlins, Marshall. 2002. Waiting for Foucault, Still. Chicago: Prickly Pear Press.
Taylor, Timothy D. n.d. “Music in the New Capitalism.” In A. Valdivia, ed.,International Companions to Media Studies. Malden, MA: Blackwell.
Tsing, Anna Lowenhaupt. 2005. Friction: An Ethnography of Global Connection. Princeton: Princeton University Press.
1 See also Taylor n.d. for another sorting out of these and related terms. I am grateful to Timothy Taylor for excellent comments and suggestions on this article. ↩
2 The title of Harvey’s 1989 book, The Condition of Postmodernity, signals the connection between late capitalism and postmodernity, a major theme in the 80s literature (see also Jameson 1984). I had hoped to include a discussion of postmodernity in this essay, but I have run out of time and space. The connection between the two phenomena is central to my book on the independent film scene in the U.S. in the 1990s and 2000s. See Ortner n.d.↩
3 “Deindustrialization” and the related “post –industrial society” are part of an earlier vocabulary of “late capitalism” (see Bell 1974, Dudley 1994). ↩
4 Ferguson and his films play a significant role in Ortner n.d. ↩
This article appeared in Anthropology of This Century.
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