Never Let a Serious Crisis Go to Waste

by Philip Mirowski

  146 Hayek, The Constitution of Liberty, p. 378, my italics. This explains why neoliberals tend to diverge from their predecessors: “most nineteenth century liberals were guided by a naïve overconfidence in what mere communication of knowledge could achieve” (p. 377).

  147 Hayek, The Road to Serfdom, pp. 204–5.

  148 Hayek reveled in the tough-minded stance of the scholar who disparaged any recourse to the Third Way, most notoriously in his denunciation of the welfare state as just the slippery “Road to Serfdom.” This sets him apart from his contemporary figures like Walter Lippmann, or Keynes, or their modern epigones like Cass Sunstein or Joseph Stiglitz.

  149 Hayek, The Constitution of Liberty, p. 377, 112, 110, 22.

  150 Schneider, “The Role of the Category of Ignorance in Sociological Theory,” p. 498.

  151 Ibid., p. 500.

  152 Hayek entertained the possibility of blaming “the engineers” for the frustration of the neoliberal project in his Counterrevolution of Science (1952), but subsequently came around to the position that it was politically unwise to demonize such a powerful constituency in the twentieth-century economy. See Mirowski, “Naturalizing the Market.”

  153 Hayek, Road to Serfdom, p. 162.

  154 Hayek, Studies in Philosophy, Politics and Economics, p. 178. Attacks upon “intellectuals” were a common refrain in the history of Mont Pèlerin, and not restricted to Hayek. See, for instance, Hartwell, A History of the Mont Pèlerin Society, p. 161; Friedman, Capitalism and Freedom, p. 8. But of course the neoliberals don’t renounce all expertise—just the stuff they don’t like.

  155 Hayek, Studies in Philosophy, Politics and Economics, p. 169; Christi, “Hayek and Schmitt on the Rule of Law,” p. 532; Scheuerman, Carl Schmitt: The End of Law, chapter 8.

  156 Hayek, Studies in Philosophy, Politics and Economics, p. 161.

  157 Hayek, The Constitution of Liberty, p. 13.

  158 Hayek, Individualism and Economic Order, p. 24.

  159 Interestingly, here is where Hayek rejected the maximization of utility as the standard equilibrium concept in neoclassical economic theory. Markets don’t maximize happiness, rather, “the use of the market mechanism brings more of the dispersed knowledge of society into play than by any other [method]” (Studies in Philosophy, Politics and Economics, p. 174).

  160 Scheuerman, Carl Schmitt, p. 216.

  161 Davies, “When is a Market Not a Market?” p.24

  162 Quoted in Christi, Carl Schmitt and Authoritarian Liberalism, pp. 31, 34n7; Hayek, The Constitution of Liberty, p. 32.

  163 Christi, Carl Schmitt and Authoritarian Liberalism, p. 23.

  164 Milton Friedman, in an interview transcript posted at www.thecorporation.com/media/Friedman.pdf.

  165 Arnsperger, Critical Political Economy.

  166 The Graph and data courtesy of Gilles Christoph.

  167 Consult my discussion “Why Is There a Nobel Prize in Economics?” at www.youtube.com/watch?v=dLtEo8lplwg.

  168 Davidson, “Prime Time for Paul Ryan’s Guru”; Lahart, “The Glenn Beck Effect.”

  3. Everyday Neoliberalism

  1 Wallace, Consider the Lobster and Other Essays, p. 288.

  2 McGuigan, “Neoliberalism, Culture and Policy,” p. 229; Sandel, “What Isn’t for Sale?”

  3 Konings, “Social Scientists and Economic Life at the Start of the 21st Century,” pp. 715–16. One indication that it is short-sighted to restrict neoliberal movements strictly to the sphere of the “governmental” is the historical fact that “privatization” movements preceded the birthdate of neoliberalism: the Italian Fascist government instituted a broad program of large-scale privatization in 1922–25 (Bel, “The First Privatisation”).

  4 Walzer, Spheres of Justice; Radin, Contested Commodities; Satz, Why Some Things Should Not Be for Sale; Sandel, “What Isn’t for Sale?”

  5 Shteyngart, Super Sad True Love Story, pp. 90–92.

  6 Or, as Foucault put it in the manuscript of his first lecture of January 1979, “Studying Liberalism as the General Framework of Biopolitics” (The Birth of Biopolitics, p. 328). However, few have noted that this is a free translation of the ordoliberal term Vitalpolitik, which hints at its National Socialist genealogy (Deuber-Mankowsky, “Nothing Is Political, Everything Can Be Politicized,” p. 141).

  7 Foucault, The Birth of Biopolitics, p. 131.

  8 Ibid., p. 241.

  9 Ibid., pp. 268, 270; Moreton, To Serve God and Wal-Mart, p. 156.

  10 The following quote may seem contrary to this claim, but I believe it sets the stage for it: “Economics is an atheistic discipline; economics is a discipline without God; economics is a discipline without totality; economics is a discipline that begins to demonstrate the pointlessness, but also the impossibility of a sovereign point of view” (Foucault, The Birth of Biopolitics, p. 282).

  11 In Payne, The Consumer, Credit and Neoliberalism, p. 91; Hackworth, Faith Based, p. 9.

  12 Foucault, The Birth of Biopolitics, p. 228.

  13 Ibid., pp. 252–53.

  14 Ibid., pp. 279, 280, 283.

  15 Or better yet, The Island of Doctor Moreau.

  16 Some of the better examples of literature that explores this possibility: Tellmann, “Foucault and the Invisible Economy,” “The Economic Beyond Governmentality”; Behrent, “Liberalism Without Humanism”; Barnett, “The Consolations of Neoliberalism”; Deuber-Mankowsky, “Nothing Is Political, Everything Can Be Politicized”; Brocking et al., Governmentality.

  17 “The analysis of wealth is to political economy what general grammar is to philology and what natural history is to biology” (The Order of Things, p. 168).

  18 Foucault, The Birth of Biopolitics, p. 31, 17, 13, 92.

  19 Behrent (“Liberalism Without Humanism,” pp. 545 et seq.) points to the salience of the 1973 economic crisis in France, in conjunction with Foucault’s previous antihumanism and suspicions concerning state power—both resonant themes for the neoliberals. Paras (Foucault 2.0) raises his support for the Iranian Revolution. Cooper (“Foucault, Neoliberalism and the Iranian Revolution”) argues that he fused neoliberal ideas with admiration for Islamic repression of feminine sexuality. Donzelot and Gordon (“Governing Liberal Societies”) refer to his break with French Socialist Party figures.

  20 Tellmann, “Foucault and the Invisible Economy,” p. 22. One example of an author “more Foucauldian than Foucault” would be Bernard Harcourt (“Radical Thought from Marx, Nietzsche and Freud through Foucault, to the Present”), who argues that the idea of a small limited government hemmed in vis-à-vis the market is itself a spurious construct, “‘false,’ but not because its opposite is ‘true’” (ibid., p. 15). In this reading, Foucault himself was a cog in the neoliberal regime of truth, promulgating the notion that “government” was in fact being limited by neoliberal interventions, when in fact it was expanding in both size and power.

  21 Barnett, “The Consolations of Neoliberalism.”

  22 Foucault, Discipline and Punish, p. 194.

  23 Jacques Donzelot has admitted this in a backhanded fashion: “In Anglo-Saxon countries where Neoliberalism was imposed from the start of the 80s, Foucault studies provide the means of a sophisticated critique, albeit one which is visibly lacking a capacity to propose alternatives. Does this political ambivalence in the notion of governmentality not condemn it to serving an ideological function?” (Donzelot and Gordon, “Governing Liberal Societies,” pp. 55–56).

  24 Foucault, Dits et Ecrits, vol. 3, p. 991; translation in Deuber-Mankowsky, “Nothing Is Political, Everything Can Be Politicized,” p. 160).

  25 These were not concocted out of thin air. Honestly. I witnessed them on ABC News the evening of December 18, 2008. The reporter, Gigi Stone, ambivalently presented these options as real solutions to economic distress.

  26 Cowen, Create Your Own Economy.

  27 Frank, What’s the Matter with Kansas? p. 136. Or even better: “Because some artist decides to shock the hicks by dunking Jesus
in urine, the entire planet must remake itself along the lines of the Republican Party.” You have to admit, Frank can turn a phrase.

  28 Ehrenreich, Bait and Switch; Schulman and Zelizer, Rightward Bound; Frank, What’s the Matter with Kansas? p. 245.

  29 See, for instance, Bartels, “What’s the Matter with What’s the Matter with Kansas?”; Ansolabehere et al., “Purple America.” Some of these were members of the “rational choice” strain of political science, which had become the neoclassical economics outpost in that discipline. Of course, given the freedom in defining the “economic,” which we described in chapter 1, these academics had tremendous leeway in defining their categories in such a way that their assertion of the primacy of the economic was not impugned. But more to the point, this type of argument dates back to the neoliberal denial that advertizing could ever bamboozle anyone into buying something they didn’t want (Dunn, The Economics of John Kenneth Galbraith).

  30 Frank, Pity the Billionaire, pp. 9–10, 154.

  31 Frank, One Market Under God, p. 15; Hackworth, Faith Based; Foucault, The Hermeneutics of the Subject, p. 252.

  32 Frank, Pity the Billionaire, pp. 35–36, 101, 127.

  33 See, for instance, Kingfisher and Makovsky, “Introduction: The Limits of Neoliberalism”; Ong, Neoliberalism as Exception; Clarke, “Living with/in and without Neoliberalism”; and authors cited in Gershon (“Neoliberal Agency”).

  34 Radin, Contested Commodities, pp. 58, 60.

  35 Some instances that document this tendency: Emily Martin, Flexible Bodies and “Designing Flexibility”; Swan and Fox, “Becoming Flexible”; Swan, Worked-up Selves; Urciuoli, “Skills and Selves in the New Workplace”; Gershon, “Neoliberal Agency”; Moreton, To Serve God and Wal-Mart.

  36 Vaidhyanathan, “Planet of the Apps.”

  37 Hochschild, The Outsourced Self.

  38 Urciuoli, “Skills and Selves in the New Workplace,” p. 217; Martin, Flexible Bodies; Ehrenreich, Bait and Switch, p. 79.

  39 Swan, Worked-up Selves, p. 140.

  40 Ehrenreich, Bait and Switch, p. 103; ibid., chapter 5; Moreton, To Serve God and Wal-Mart, p. 94.

  41 Some of the better ethnographies exploring these issues are Turkle, Life on the Screen and Alone Together; Gershon, “Un-friend My Heart.”

  42 Gershon, “Un-friend My Heart.”

  43 Turkle, Alone Together, p. 273.

  44 Frank, One Market Under God, p. 244.

  45 Bowmaker, Economics Uncut; Lipman, “Why Is Language Vague?”

  46 This argument is made with great perspicuity by John Davis in his The Theory of the Individual in Economics and Individuals and Identity in Economics.

  47 It seems to have escaped most economists that these resorts to tautology in economic theory have leached the Prime Imperative of Pareto Optimality of any meaning whatsoever. In any event, the supposedly fixed repertoire of roles and types to be emulated by the agent has also been eroded by the neoliberal ascendancy. This is yet another example of the Zombie Neoclassical Economist lurching aimlessly across the landscape.

  48 Davis, Individuals and Identity in Economics; Mirowski, Machine Dreams, pp. 443–52.

  49 There are a fair number of books written by MPS members denying any salience to class. For instance, Lord Peter Bauer wrote a pamphlet, Class on the Brain: The Cost of a British Obsession (1997), which asserted, “for about eight centuries Britain has not been a closed society, much less a caste society,” that there have been few class barriers to wealth in Britain, and that to the extent that Britain became less open and flexible in the postwar years, “it needed the reforms of Mrs. Thatcher’s governments to re-open the road of opportunity.”

  50 O. Jones, Chavs, p. 167.

  51 Data from http://quickfacts.census.gov/qfd/states/00000.html. Last consulted August 7, 2011. The mean was so far below the median because the distribution of income had become so skewed to the bottom, and expanded labor force participation: see the data presented at http://elsa.berkeley.edu/~saez/.

  52 Linden, “Addictive Personality?”

  53 Ailon, “The Discursive Management of Financial Risk Scandals,” pp. 264–65.

  54 Ibid., p. 267.

  55 The narrative that blamed the crisis on Fannie Mae and Freddie Mac and improvident home owners is covered below in chapter 5. However, even Payne admits that parts of this story comes perilously close to that propounded by the American Enterprise Institute and Peter Wallison (Payne, The Consumer, Credit and Neoliberalism, p. 169).

  56 Gravois, “Too Important to Fail.”

  57 “The only problem is that, in all likelihood, such a world would be one where banks only get more sophisticated, powerful, and centralized. And herein lies the main philosophical shadow lurking over the bureau. By setting out to match the analytical prowess of the financial industry, the CFPB is implicitly giving its assent to a world where finance is governed by complicated models, big data, and the statistical masters of the universe who command them—as opposed to an older world where finance was governed by the personal relationship between a borrower and a lender.” (Gravois, “Too Important to Fail”)

  58 For the video, consult www.huffingtonpost.com/2010/09/20/rick-santelli-i-sparked-t_n_731249.html. See also Frank, Pity the Billionaire, pp. 44–45. This attack on the poor for taking on the debt foisted upon their neoliberal selves is explored in the next section.

  59 Lanchester, “Once Greece Goes . . . ,” p. 6.

  60 For a general discussion of the issues, see Quinn, “The Transformation of Morals in Markets.” Some dedicated viatical firms, which sold investment shares in units dedicated to monitoring the deathwatch of their policies, such as Mutual Benefits and Kelco, Inc., have been the subject of prolonged lawsuits.

  61 Quinn, “The Transformation of Morals in Markets,” p. 771.

  62 In practice, the three largest consumer rating agencies in the United States—TransUnion, Equifax, and Experian—all use somewhat different scoring algorithms, although all are treated as comparable because they are issued under the FICO brand label.

  63 See www.washingtonpost.com/wp-dyn/content/article/2006/06/09/AR2006060900027.html.

  64 Poon, “From New Deal Risk Institutions to Capital Markets.”

  65 I am assured it was not an attempt to revive or promote the Dead Kennedys song from 1979. And it is noteworthy that the limo was not cruising Harlem or the Bronx. For the relationship of such contempt for the poor to the origins of the Tea Party, see note 58 above.

  66 I can’t make this stuff up. See www.tednugent.com/news/newsDetails.aspx?PostID=940937.

  67 Nietzsche, Genealogy of Morals, p. 64.

  68 Veblen, Theory, p. 40.

  69 Couldry, “Reality TV, or the Secret Theatre of Neoliberalism.”

  70 http://tpmdc.talkingpointsmemo.com/2011/08/nebraska-ag-jon-bruning-compares-welfare-recipients-to-scavenging-racoons.php.

  71 “Today, we face an unsustainable trajectory of government spending that is accelerating the nation toward a ruinous debt crisis. Mounting debt also threatens our poorest and most vulnerable citizens, because those who depend most on government would be hit hardest by a fiscal crisis. Harsh austerity would be the only course left. A broke government unable to finance its spending commitments would be forced to make indiscriminate cuts affecting current beneficiaries of government programs—without giving them time to prepare or adjust.” Paul Ryan, Christian Science Monitor, May 18, 2011, archived at http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=241970. It is astounding that, implicitly, Ryan is allowed to state in a national newspaper that mounting debt does not threaten the rich.

  72 www.thedailyshow.com/watch/thu-august-18-2011/world-of-class-warfare---the-poor-s-free-ride-is-over. See this meme repeated by Stephen Schwartzman, CEO of Blackstone Group, in Lofgren, “Revolt of the Rich”; and also Weigel, “Republicans for Tax Hikes,” for how this entire echo chamber meme was concocted by one of the outer layers of the neoliberal Russian doll, the so-called Tax Foundation.
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br />   73 Rivlin, Broke, USA, pp. 27, 30.

  74 Rivlin, Broke, USA.

  75 Diamond, “The Return of Debtor’s Prisons.”

  76 Konings, The Great Credit Crash.

  77 Ibid., pp. 120–21.

  78 Ehrenreich, “Turning Poverty into an American Crime.”

  79 See www.indybay.org/newsitems/2010/02/05/18637084.php.

  80 Knight, “Gary Lures Hollywood with a Bounty of Decay.”

  81 Lieber, “Last Plea on Student Loans.”

  82 Hacker and Dreifus, “The Debt Crisis at American Colleges.”

  83 One must acknowledge that there have been various “epicycles” proposed to the neoclassical model to supposedly cover these phenomena, from “search costs” to ‘“asymmetric information” to “lemon models” and beyond; but two observations render them moot. First, they really are epicycles, and have never been incorporated into the core microeconomic model. One reason may be that there is no consensus technique to correctly incorporate “information” into the model of the economic agent (Mirowski, “Why There Is (as Yet) No Such Thing as an Economics of Knowledge”). But second, it has proven almost impossible to maintain a neoclassical model where someone is “bamboozled” into belief in an untruth, and justified in acting upon it. This has something to do with the colonization of neoclassical theory by neoliberal doctrine (Mirowski, ScienceMart, chapter 7). Both considerations bear consequences for orthodox accounts of the crisis.

  84 Galbraith, New Industrial State, p. 206.

  85 Ibid., p. 219.

  86 Dunn, The Economics of John Kenneth Galbraith, chapter 9.

  87 R. Walker, Buying In, pp. 64, 104.

  88 Wallace, Oblivion, p. 61.

  89 Walker, Buying In, pp. 168–73, 179.

  90 Marazzi, The Violence of Financial Capitalism; Ross, “A Capitalist’s Dream.”

  91 Pinch and Kessler, “How Aunt Ammy Gets Her Free Lunch.” “The sale of the Huffington Post to AOL in February 2011 prompted a sharp reaction from the hundreds of bloggers whose unpaid work had built up the site’s cachet. It provoked outrage (and a class-action lawsuit) because the owner, Arianna Huffington, had made so much money out of the bloggers’ work: AOL paid $315 million for the site.” (Ross, “A Capitalist’s Dream”)