Several people have asked me about the term “neoliberalism.” I’ve tried to provide good defnitions of this term, but I recently came across a very good one, written by, of all people, Noam Chomsky. This definition decomes from his book, Profits Over People, a title that is in itself a fairly apt description of neoliberalism. But Chomsky’s definition is this:
The Washington Consensus
The neoliberal Washington consensus is an array of market oriented principles designed by the government of the United States and the international financial institutions that it largely dominates, and implemented by them in various ways-for the more vulnerable societies, often as stringent structural adjustment programs. The basic rules, in brief, are liberalize trade and finance, let markets set price (“get prices right”), end inflation (“macroeconomic stability”), privatize. The government should “get out of the way”-hence the population too, insofar as the government is democratic, though the conclusion remains implicit. The decisions of those who impose the “consensus” naturally have a major impact on global order. Some analysts take a much stronger position. The international business press has referred to these institutions as the core of a “de facto world government” of a “new imperial age.”
Whether accurate or not, this description serves to remind us that the governing institutions are not independent agents but reflect the distribution of power in the larger society. That has been a truism at least since Adam Smith, who pointed out that the “principal architects” of policy in England were “merchants and manufacturers,” who used state power to serve their own interests, however “grievous” the effect on others, including the people of England. Smith’s concern was “the wealth of nations,” but he understood that the “national interest” is largely a delusion within the “nation” there are sharply conflicting interests, and to understand policy and its effects we have to ask where power lies and how it is exercised, what later came to be called class analysis.
The “principal architects” of the neoliberal “Washington consensus” are the masters of the private economy, mainly huge corporations that control much of the international economy and have the means to dominate policy formation as well as the structuring of thought and opinion. The United States has a special role in the system for obvious reasons. To borrow the words of diplomatic historian Gerald Haines, who is also senior historian of the CIA, “Following World War II the United States assumed, out of self-interest, responsibility for the welfare of the world capitalist system.”
You can see that this definition comes dangerously close to the pseudo-Heideggerian or conspiracy theorist’s “They,” as in “They” are pulling the strings of world government. And indeed, these “They” are somewhat phantomish. But the description is apt. All of us, at least all of us in America or in the west, participate in the neoliberal system to some extent. But many people profit greatly from the system, and seek to protect it. Thus the close ties between American policy and global economics. This is the essence of neoliberalism; it is important to realize that the economic policy goes hand in hand with the state power and associated military might to protect it. Hence perpetual war, most recently in Iraq.