Academic journal article Review of Social Economy

Knowledge at Work: Some Neoliberal Anachronisms

Academic journal article Review of Social Economy

Knowledge at Work: Some Neoliberal Anachronisms

Article excerpt

Abstract With a predilection for market solutions, neoliberalism upholds that the individual is generally the best judge of his or her interests. Yet markets are never universally applied as a mechanism of allocation and there are reasons, in principle, why capitalism will always have "missing markets." Concentrating on the application and appropriateness of neoliberal theory to the workplace, this article argues that firms are not markets, despite some tendencies in modern theory to conflate the two. The employment contract is a key characteristic of modern firms, but neoliberal theory is often silent on the distinction between an employment contract and a contract for services, and largely ignores the asymmetrical rights of authority within contracts of employment. Furthermore, the social nature of knowledge represents a challenge to neoliberal theory and policy, because it sometimes makes it more difficult to define individual property rights. Accordingly, with the growth of the knowledge economy, neoliberalism to some extent is an anachronism.

Keywords: neoliberalism, firms, markets, employment contracts, knowledge, Veblen, Hobson


Neoliberalism upholds that the individual is generally the best judge of his or her interests, and that economic ends are generally best pursued through a market system involving private ownership and contractual exchange. It revives aspects of the classical liberalism of Adam Smith and others of two centuries ago. (1)

In the second half of the twentieth century, the two most important proponents of this market individualist vision were Milton Friedman and Friedrich Hayek. These authors argued that a market system, based on individual property rights and contracting, provided the best guarantee of individual liberty. Such a system, as Hayek (1948: 18) put it, requires clear "rules which, above all, enable man to distinguish between mine and thine." These rights and rules provide the basis for a mutually advantageous system of contract where, as Friedman (1962:13) argues, both parties in a transaction "benefit from it, provided the transaction is bilaterally voluntary and informed." Under such conditions, markets are alleged to provide the best available means of maximizing both individual liberty and economic welfare. (2)

I shall pass over the important observation that a thorough-going market individualism would be incompatible with prominent conservative, authoritarian and anti-libertarian values, such as the prohibition of drugs, restrictions on the trading of sex, capital punishment, a preference for the incarceration rather than rehabilitation of criminals, and patriarchal family values. In practice, individual rights are diminished in the case of children, criminals and the insane. Furthermore, militarism and armed invasion can only be justified within such a philosophy by treating it as an exceptional and peculiar case, where the authoritarian means of war are somehow warranted by the end of establishing or restoring a market individualist regime, despite the fact that the population will resist or be deprived of the means of expressing its individual views on the matter, even though military force is a lethal, coercive, authoritarian and state-run enterprise. Notwithstanding these contradictions, the political triumph of market individualism in several countries since the 1970s, including in Britain and the United States, has entailed a coalition with prominent conservative and authoritarian values. But the focus here is on the rationale of modern neoliberalism, not its implementation in practice.

I shall also decline to elaborate the well-established but insufficiently acknowledged fact that the classical liberalism of earlier thinkers, including Smith and John Stuart Mill, was much more qualified in its individualism and advocacy of markets than many neoliberal propagandists acknowledge. Smith, for example, proposed a significant regulatory role for the state (Pack 1991), whereas Mill advocated worker cooperatives and argued that individual satisfaction was not the universal metric of human welfare. …

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