Neo-liberal fallacies

By Samir Amin
The dominant discourse of our era repeats endlessly and ad nauseam the principle of equality between political democracy and the market activity of the economy -- without any further concern for establishing its reality, or even its rationale. But it is not so. On the contrary, there is conflict rather than convergence between democracy and the market.
The reason for this is quite simply that the economic system of the existing modern world cannot be reduced to the concept of a "market economy", since it is a capitalist economy based on the private ownership of property and the means of production. Private property is necessarily to the benefit of a minority, and excludes all others. So real society is not constituted as a sum of "individuals" but constructed from distinct social classes. Their negation, though quite fashionable, has the consequence of eliminating right away the important question: What are the interests and motivations of those particular individuals?
The principle according to which democracy and the market are supposed to be naturally convergent is itself based on the separation of the different domains of social life: that of the management of power, organised on the basis of democracy (the principles of the plurality of political expression, election as the mode of choosing governments, the so-called rule of law, etc), and that of the management of the economy entrusted to private property and to competition, as well as the market in which it is all given expression.
This separation is considered to be "self-explanatory," even though all of history strongly denounces this claim and even though the mechanisms of economic life are always embedded in social relationships which, in turn, make the realities of political power clear. But what do history and reality matter? The legitimation of the neo-liberal system needs this conceptual separation.
The "natural" agreement between the results of democratic choices and those of the market has been real only in as much as democracy was historically poll-tax based, i.e. reserved only for citizen-proprietors. This, however, changed when workers and popular struggles spread to the entire population ("national", males and much later females), when the conflict appeared between motivations and available democratic choices on the one hand, and what the mechanisms of accumulation of capital generated and the markets on the other hand. This conflict reminds one that, quite simply, the domains of the political and the economic cannot be separated.
Another contemporary fallacy is the separation of "culture" and "nature": of the human being, as a subject of history, from nature as object of human action.
The historical societies of the past have almost always been conscious of the fact that they had to preserve their environment and the natural resources on which their wealth depended, even if they did not always understand how to do that with great efficiency. When they accepted the irreversible destruction of certain agricultural land, for example, they did so generally because they knew that they could relocate to new land. In a general way, the collective social management of the resources which nature offered to pre-modern societies guaranteed that the long term was taken into account, obviously with more or less success.
In contrast, capitalism generalises the calculation of short-term profitability and thereby ignores the collective social costs associated with the exhaustion of the resources exploited by it. The ideology of modernity legitimises this waste with the thesis (actually a debatable hypothesis) that the progress of scientific knowledge and the technological inventions fostered by it neutralise the dangers associated with the exhaustion of natural resources in the long run.
"One will always end up inventing the means for managing without." And, in fact, during the century and a half since the industrial revolution, accelerated technological progress has recorded rhythms which were unknown before and which almost always made it possible to ignore the destruction of resources associated with the new industrial expansion.
The optimistic slogan seemed to be effective. It seemed so, we know, but it will not stay so any longer. Without turning to the systematic pessimism of certain "ecological fundamentalists" or the declared optimism of the "apostles of science," today one cannot ignore any longer the destructive effects on the scale of the entire planet of uncontrolled accumulation of capital and the short-term calculation on which it rests.
The logic of the accumulation of capital produces, and cannot but produce, an increasing social polarisation -- wealth at one pole, misery at the other. Under globalisation, massive polarisation constitutes the most glaring historical fact. The negative phenomena -- the crises and their consequences: unemployment, poverty, insecurity, marginalisation, the underdevelopment of the peripheries of the world system -- are being attributed either to specific causes outside the field of operation of the logic of capital expansion (demography, political errors in the management of the capitalist expansion, special cultural factors) or to the "imperfect" functioning of the markets. If they were perfect, it is argued, the markets would produce sustained and continued growth beneficial to all humans.
Here neo-liberal economics turns to a second mythology which renders it incapable of understanding that there is no "law" which governs a tendency for markets to approach a general equilibrium whatsoever. The economic "science" which undertakes to discover the "laws" which govern the functioning of "markets" (in fact, capitalist markets) is a false science, the science of a non-reality, of an imaginary world which has nothing in common with the really existing capitalism, historical capitalism. "Pure" economics is the pseudo-theory of that imaginary world. In that pseudo-science, there is obviously no longer any destructive aspect associated with the functioning of capitalism, only accidents, temporary and limited, attributable to the imperfection of the concrete systems across which it spreads.
The no-less-pseudo social philosophy which accompanies that pure economics of a non-existing system claims, in turn, all kinds of myths which crowd the dominant discourse. According to those views, the market generates also the conditions for political democracy, with market and democracy becoming the two inseparable faces of the same thing in this myth. According to those views, progress which benefits all, by definition, eliminates the reality of social classes and ends up producing that marvellous state of affairs in which "the individual has become the very subject of history."
That illusory economic science sets out to discover the laws which govern the functioning of markets, beginning with an examination of the behaviour of individuals. The method which is employed is of an appalling platitude: the individual compares the benefits which he can derive from a choice among several others which he can make, with the costs associated with that choice. Focusing on the individual eliminates with a single stroke of the pen any reflection worthy of this name about the collective behaviours of the competing social forces and of the state through which they act.
Extracted from a paper entitled The destructive dimension of the accumulation of capital, given at the World Social Forum's Library of Alternatives.
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