This is an excerpt concerning the rise of totalitarianism within (neo)liberal societies published in my 2008/2011 book, Governmentality, Biopower, and Everyday Life:
Totalitarianism and fascism take hold when populations organized around common articulations of national or racialized identity are mobilized by fear and anxiety. Yet, even while liberal rights are stripped, the liberal imagination cannot readily come to terms with creeping totalitarianism.
The banality of many domestic sovereign technologies, as illustrated by computerized surveillance, mystifies the consolidation of sovereign power (see Arendt, 1963).
In my 2016 book, Crisis Communication, Liberal Democracy and Ecological Sustainability, I set out to identify the dissolution of liberal principles of government in the context of three crises, arguing that we see the rise of a predatory-state complex consisting of ruthless corporations and government agencies caught up in their own power-games, regardless of long term impacts for ecological sustainability (which is an existential crisis, as evidenced by the BP oil spill and the Fukushima disasters).
Here I discuss what comes after neoliberalism:
The trajectories and contradictions of U.S. neoliberalism have been rehearsed thoroughly elsewhere, but one important conclusion drawn from this literature is that the contemporary neoliberal state risks degrading into fascism, defined as the merger of corporations and government, especially in a global context of warring states and collapsing eco-systems.[i]
Concerns about fascistic tendencies corrupting liberal democratic ideals are not new. For example, economist James Galbraith contends U.S. democracy is threatened as government devolves toward a fascistic “predator state,” devoid of public purpose because of its capture by a transnational class of “relentless opponents of the regulatory framework on which public purpose depends.[ii]
Decision-making by the predator state lacks transparency and selectively benefits special interests capable of influencing policy from behind-the-scenes. The predator state feeds through contracting a vast array of private corporations that exploit public purpose for private gain with added risks and liabilities for citizens.
The predator state aligns globally with likewise states and powerful organizations in order to optimize greater power consolidation, disrupting markets, lives, and eco-systems with the externalities of their reckless and profit-driven enterprises.
It must be acknowledged that the neoliberal, predatory complex described by Harvey and Galbraith diverges from the idealized descriptions of economic neoliberalism envisioned by disparate advocates, such as Austrian economic philosopher Friedrich Hayek[iii] (1899-1992) and U.S. economist Milton Friedman[iv] (1912-2006), both whom believed in principle that competition and market discipline were necessary in laissez-faire capitalism to ensure a “free market” and to temper risk seeking and malfeasance.
Hayek missed the unrelenting chain of financial crises – ranging across the 1980s era Savings and Loan Scandals, the 2001 Dot.com burst, and culminating in the 2007-2008 Financial Crisis, which derived from a deregulatory fervor legitimized in neoliberal economic philosophy.
In contrast, Milton Friedman did see the crises wrought by unregulated capitalism; moreover, he arguably played a role in its creation by promoting financial deregulation and a “monetarist” policy orientation to the national money supply that prioritized financial liquidity for the most powerful financial institutions in times of crises, over the concerns and interests of everyday citizens.[v]
As deployed in practice in the U.S. and abroad, neoliberal economic policy deployments have resulted in unprecedented financial risk, crises, and government bailouts, while simultaneously reducing competition and encouraging moral hazard. All of these outcomes are inconsistent with classical liberal ideals of the free market.
Moreover, failure by governmental entities to break up monopolistic complexes, such as the contemporary U.S. financial complex, in the wake of unprecedented crisis suggests regulatory capture and an unravelling of the social contract upon which democratic societies are legitimized.
In is predatory form, the neoliberal state encourages, rather than discourages, moral hazard by protecting privileged risk-seekers from absorbing their losses, while shifting crises externalities to citizens. Externalities are defined as “indirect effects of production or consumption that produce risk for individuals who are not the originators of the activity.”[vi]
As viewed from the perspective of classical economic capitalism, externalities distort markets because they hide the true costs of production, distorting pricing. Lack of transparency erodes market efficiencies and disciplines (such as bankruptcies). The lapse of market disciplines encourages ever-more risk taking and monopolization.
The state colludes in this process by failing to ensure transparency and competition, while also failing to prosecute fraud, for example, by leveling civil penalties rather than criminal charges in all but the most obvious instances of malfeasance.
The argument developed in this book is that oligarchic collusion between the state and powerful special interests precludes the type of “free market” democracy envisioned by liberal and neoliberal economists, while failing to protect western rights of personhood carved out historically by the Magna Carta and liberal philosophers, before being constitutionally enshrined by western nation-states.
This book challenges the widespread assumption that liberal democracies in economically developed countries are primarily organized to ensure competitive, transparent markets and protect human security by demonstrating empirically how citizens have been abandoned, or dispossessed, by powerful states and corporations, forcing them to face massive environmental and economic disasters without adequate remediation and support, despite the clear role of corporate malfeasance and regulatory capture.
[i] Majia Nadesan, Governmentality, Biopower and Everyday Life (New York: Routledge, 2008), 183-216.
[ii] James Galbraith, The Predator State: How Conservatives Abandoned the Free Market and Why (New York: The Free Press, 2008), 131.
[iii] Friedrich Hayek, Economic Freedom: (IEA Masters of Modern Economics) (Oxford, UK: Blackwell, 1991).
[iv] Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago, 1962).
[v] Paul Krugman, “Milton Friedman, Unperson,” The New York Times, August 11, 2013, accessed August 12, 2013, http://www.nytimes.com/2013/08/12/opinion/krugman-milton-friedman-unperson.html?_r=0.
[vi] Jean-Jacques Laffont, “Externalities,” in The New Palgrave Dictionary of Economics 2nd edition, ed. Steven Durlauf and Lawrence Blume (Basingstoke: Palgrave Macmillan, 2008), http://www.dictionaryofeconomics.com/article?id=pde2008_E000200>.