Academic journal article Journal of Australian Political Economy

Unravelling the Neoliberal Paradox with Marx

Academic journal article Journal of Australian Political Economy

Unravelling the Neoliberal Paradox with Marx

Article excerpt

There is a sense that we are now living through [events that mark a turning point between one epoch and the next, when one orthodoxy is overthrown and another takes its place]: barely a decade into the new millennium, barely 20 years since the end of the Cold War and barely 30 years since the triumph of neoliberalism - that particular brand of free-market fundamentalism, extreme capitalism and excessive greed which became the economic orthodoxy of our time. The agent for this change is what we now call the global financial crisis ... We therefore need a frank analysis of the central role of neo-liberalism in the underlying causes of the current economic crisis (Rudd, 2009).

The economic crisis (2008-) has raised more questions about the nature of neoliberalism than it has answered. While the term neoliberalism has become common parlance in left circles, contention about the validity and content of the concept remains; nowhere more so than amongst Marxists. The global embrace of Keynesian stimulus in the early stage of the crisis is now turning to the imposition of savage austerity. This turn has brought together economic policies (such as stimulus spending and fiscal austerity), within the term of single governments or even within a period of months, which have previously been seen as mutually exclusive.

For many hopeful commentators the Keynesian revival of 2008/09 brought with it hopes of a break with neoliberalism. As such hopes fade, and neoliberalism proves its dogged persistence, the need for Marxists to clearly define and explain it becomes paramount.

As a contribution towards clarifying a materialist understanding of neoliberalism this article will contrast two competing accounts of the global economy since the 1970s, both of which mobilise Marxist concepts. One of the clearest ways to understand the important differences between these two approaches is to ask whether, from the perspective of capital, neoliberalism should be considered a success or a failure.

The answer seems inevitably paradoxical. Neoliberalism is, rightly, seen as a period of defeat for the interests of the working class. But the current crisis--understood by Rudd and others as a crisis of neoliberalism--suggests that it has not been wholly successful for capital either. This important paradox is embodied in the record of exploitation and capital accumulation since the 1970s. Increased exploitation indicates the successful domination of capital over labour, but falling capital accumulation points to constraints on employers that have somehow disrupted the circuit of capital.

One explanation for this paradox is found in the work of Dumenil and Levy. They argue that capital accumulation has suffered as a product of the actions of a resurgent class of financialised capitalists and upper-level managers. Neoliberalism is seen by Dumenil and Levy as the successful strategy by these sections to enrich themselves, at the expense of productive investment. So while the incomes of the majority declined and exploitation rose, this failed to benefit capital accumulation. Instead increasingly obscene dividend payments accrued wealth to the top 1%.

A rival explanation in the Marxist literature, I will argue, is exemplified by Harman and Brenner, who see the increased exploitation of neoliberalism as part of an unsuccessful attempt to restore falling profitability. This failing 'motor' of capital accumulation--profit-rates too low to provide incentive to invest--is identified as the cause of sluggish accumulation rates and ultimately the current crisis.

I conclude that it is the latter account, organised around the question of profitability, which provides the most consistent basis on which to understand the course of neoliberal capitalism into the future. In contrast, I argue that ultimately the top layers of capital in Dumenil and Levy's depiction act more like feudal rulers (in their propensity for personal luxury consumption) than like capitalists as understood by Marx. …

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