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The Democratic Revolution and Neoliberalism

    Again, I am trying to finish Hayek’s, The Road to Serfdom, (R2S) in order to better understand the political logic of the political right. Certainly, this work is a seminal tome in the history of the liberal-right and offers the most provocative defense of the existing system; it is not unlike the Communist Manifesto of Karl Marx, in that it stakes the claim most important to the intellectuals and practitioners of this ideology. Though having read both, albeit R2S is still a work in progress, one can sense that there is a serious ontological disconnect between the two authors, which makes a debate between them difficult.

    Reading Hayek’s work, it becomes obvious that Hayek associates ‘liberty’ with consumerism, not citizenship.  What is citizenship? Citizenship is the ability of every individual, who is formally equal in their possession of political power, to dictate the terms of society’s political and ideological teleology. Citizenship purposefully negates the differences of wealth and income between individuals in order to better get the ‘general will’ of the people. This equalization in the political sphere, or the so-called ‘public sphere’, has a knock-on effects in that it forces the question of equalization in other parts of society--’the private sphere’; this ideological effect is known as the ‘democratic revolution’. It is no coincidence that with the extension of the franchise, the inequality in society decreased dramatically, and public services increased significantly, in tandem. And it is not a coincidence that in the early-1970s, when the ‘democratic revolution’ reached its apogee, coup d’etat’s against democratically elected regimes became the norm and reactionary organizations like the Trilateral Commission commissioned the anti-democratic diatribe, ‘Too Much Democracy’.

    What is the neoliberal alternative? The consumer, as Wendy Brown argues:
 with the hollowing out of a democratic political culture and the production of the undemocratic citizen. This is the citizen who loves and wants neither freedom nor equality, even of a liberal sort; the citizen who expects neither truth nor accountability in governance and state actions; the citizen who is not distressed by exorbitant concentrations of political and economic power, routine abrogations of the rule of law, or distinctly undemocratic formulations of national purpose at home and abroad.

The neoliberal citizen is merely interested in its ability to consume, which is actually their condition of freedom. The point is to take substantive questions of power relations, democracy, justice, etc., off the table and to subsume everyone to the same commodity fetishism, which creates a false allure of equality. The ideological belief is, as E.K. Hunt notes, “all human actions and interactions are reduced to a simple, rational, utility-maximizing exchanges. The world is, by the definitions and assumptions of their [neoliberals] theory, always in a state of Pareto optimum bliss. Everything is always rational and efficient”, of course, until the government and mal-informed people interfere. There must be a hedge against this interference of the misinformed masses, and there is, the elite.

    Therefore, there is an appeal to the ruling classes--yes, they exist--to protect ‘civilization’ from the hordes of the uneducated who do not know what is 'right' in this world, but merely their animal desires and needs. This line of argumentation has been with us since the times of the Greeks, the inherent class-antagonism embedded in all propertied systems has meant that this robust notion of citizenship could lead to some form of socialism or totalitarianism, depending where you stand on the ideological fault-line. There have been two main lines of attack against the ‘democratic revolution’: the first, technocratic rule and the second, debasing citizenship and democracy as the ‘nodal point’--structuring principle--of society. Indeed, according to Hillary Wainwright that is the conscious effort of the neoliberals like Hayek to reverse the ‘democratic revolution’: “In historical terms, the intellectual project of Mises and Hayek was self-consciously to re-Iay, in the disarray of the twentieth century, the intellectual tracks that would guide society back to the civilized order which ignorant, primitive social forces had disturbed.”

    In ancient Athens, this threat was headed off, ideologically, with the belief in the superiority of the propertied and the inferiority of the working masses. As Geoffrey Ernest Maurice De Ste. Croix in his work, The class struggle in the ancient Greek world, notes:

 The most common form of the type of propaganda [interpellation] we are considering is that which seeks to     persuade the poor that they are not really fitted to rule and this is much better left to their     ‘betters’ (‘the best     people’, hoi beltstoi, as Greek gentlemen liked to call themselves): those who have been trained for     the job and have the leisure to devote themselves thoroughly to it...In fact Plato would have     entrusted all political power to those men who were in his     opinion intellectually qualified for ruling     and had received a full philosophical education--and such men would     necessarily have to belong     to the propertied class. (411-412)

This argument serves as the first layer against socialism, it basically argues that only the already existing ruling classes are best able to govern the existing state of affairs, and, if defined in this sense, they are right. If one takes the idealist notion of Plato or of liberals--that there is a transcendent state of right and there is a true form--and the current state of affairs best approximates that--’civilization’--; then, as a consequence, the rich--who have benefitted within the existing order are the closest to the ideal--should govern and raise the bottom layers of society to their level of enlightenment, read J.S. Mill’s insistence on the poor getting a proper ‘education’ before being able to vote. This all assumes some level of ‘truth’, or in liberal speak, ‘universality’ and ‘inalienability’, which exists independent of social relations and is pre-political. Hayek has his own version, with a proto-Philosopher King methodology, as Wainwright notes:

According to Hayek's constitutional prescription there would be a higher body made up of male     citizens     of mature and expert judgement, preferably over 40 years of age, to guard the products of     social evolution.     They should be up for election every 15 years, so that they would not be     susceptible to the kind of     political pressures which might lead to tampering in the particular     interest of a vociferous group. A     military junta or well-protected Prime Ministerial government     have, it seems, been the nearest actual     equivalents to this ideal arrangement. 

    However, if one takes the opposite tack, the anti-humanist/materialist route, then once can clearly see that this is hubris and the very height of the ideological by denying its own ideological character. For instance, J.S. Mill’s insistence of achieving some high level of education that would enable individuals to have the ‘proper’ requisite knowledge prior to being fully integrated into the political system is actually the most important ideological operation, what some may call ‘re-education camps’, of infusing the working class with what Gramsci calls ‘contradictory consciousness’. The implication here being that, once persons are educated in the virtue of the Enlightenment, rational, liberal, private property system they will not be so easily duped into the populist diatribes of atavistic or utopian socialists. Even in Rawls you have, in my opinion, the damning qualification of ‘general facts’ in his ‘original position’; ironically, he assumes the persons under the ‘veil of ignorance’ aren’t so ignorant:  “It is taken for granted, however, that they know the general facts about human society. They understand political affairs and the principles of economic theory; they know the basis of social organization and the laws of human psychology” (137).

    However, these positions are only cogent if you assume that the education that individuals receive in schools, or the ‘general facts’ are not their own form of ideological indoctrination, but are the ‘truth. Indeed, neither Mill or Rawls question what is being taught in those schools, or what is assumed in the ‘original position’ is actually itself an ideological operation to eliminate the socialist alternative; which is the critique of Althusser in his work, Ideological State Apparatuses. The role of the ISAs--like schools, or the ‘general facts’--is to interpellate individuals subjectivity in such a way to fit the hegemonic order’s interest. Their operation of denying the stench of ideology and placing the onus on the ‘other’ as the ideological one, is the essence of a hegemonic operation. As Zizek argues:

 ...ideology is always, by definition, ‘ideology of ideology’. Suffice it to recall the disintegration of real     Socialism: Socialism was perceived as the rule of ‘ideological’ oppression and indoctrination, whereas the     passage into democracy--capitalism was experienced as deliverance from teh constraints of ideology--    however, was not this very experience of ‘deliverance’ in the course of which political parties and     teh market economy were perceived as ‘non-ideological’, as the ‘natural state of things’, ideological par     excellence? Our point is that this feature is universal: there is no ideology that does not assert itself by     means of delimiting itself from another ‘mere ideology’. An individual subjected to ideology can never say for     himself ‘I am in ideology’, he always requires another corpus of doxa in order to distinguish his own ‘true’     position form it.

    Therefore, the interest of liberals, analytical philosophers and other status quo types is the propagation of idealism and natural-ness, as the basis of society and the denial of contingency. Socialists reject this and insist on the structuring principles of historical materialism, which argues that the material basis--the economy--structures the horizon of the debate, which sets-up the basis for  hegemonic operations between two antagonistic camps--with a Post-Marxist twist, this does not necessarily mean the bourgeoisie/proletarian dialectic--that determine the outcome of social conflict. As Alex Callinicos states,

Reduced to its rational kernel, historical materialism is a theory of possible production relations, an account     of what     can be placed on the historical agenda, in view of the level of development of productive forces...[It]       will     not by itself explain historical change; nor will it predict the outcomes of class struggles. But it does give     an account of the     conditions for the possibility of change and of the options available to classes in struggle.

    What is the consequence, well let us take Rawls’s Theory of Justice; if we accept the precepts of historical materialism, we can say that the outcome of the ‘original position’, with different ideological assumptions embedded in the ‘general facts’, could lead to very different conclusions, since reason is itself structured via the filter of ideology. Some may find the use of term ‘ideology’ as a negative, however, ideology is actually the positive condition of existence, it cannot be transcended, in Gramscian terms it serves as the ‘cementing’ subject positions of individuals in society into a coherent totality.

    The lesson here for the first, and most ancient, critique of democracy and citizenship is that there is nothing natural or ‘real’ about the existing state of affairs, rather the current state of affairs is very much a political/hegemonic operation to sustain the existing power relations. Thus, the denial of citizenship rights to the majority is an unjust denial of rights and artificially presupposes the ‘unnaturalness’ of their rule. It also questions the idea that those who are currently in charge are inherently better to rule; rather it contends that their position is due to contingent factors like property ownership, that do not bequeath upon them any special attributes, other than an interest in the propagation of the existing order, which they erroneously call ‘civilization’. Lastly, it rejects idealist notion that there exists a humanist/Enlightenment notion of a ‘rational’ reality that is immutable and structures human relations throughout all time and we just have to discover it, or implement it--technocracy.

Hayek: A Totalitarian in Sheep's Clothing.

    Although, for Hayek, the critique goes beyond this, he cleverly changes the very nature of the debate itself. Hayek focuses, not on the citizenship-centric notion of freedom, but the consumerist notion and creates an alternative to socialism and liberalism: catallaxy, or the rule of instrumental reason and market exchanges in all of our lives, secured by a strong constitutional order that is safe from the ‘irrationalities’ of the masses and their ‘atavistic’ notions of social justice so that the ‘invisible hand’ may distribute according to merit not need. For Hayek, it is the commodity form, money, and the free market, which gives us the ability to ‘choose’ within the economic sphere and this becomes the definition of liberty. As Hayek argues: “It would be much truer to say that money is one of the greatest instruments of freedom ever invented by man.” Deprived of this ‘economic freedom’, we are thus denied liberty itself and are lead on a R2S. Again, as Hayek states,
This is really the crux of the matter. Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends. And whoever has sole control of the means must also determine which ends are to be served, which values are to be rated higher and which lower, in short, what men should believe and strive for. Central planning means that the economic problem is to be solved by the community instead of by the individual; but this involves that it must also be the community, or rather its representatives, who must decide the relative importance of the different needs...Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes we can turn to another. But if we face a monopolist we are at his mercy. And an authority directing the whole economic system would be the most powerful monopolist conceivable.

Here is the fundamental flaw of Hayek’s argument. His entire argument, or ‘the crux of the matter’, rests on the assumption of a classical liberal, neoclassical model of a ‘competitive market’ society, which means that no single firm has market power and the economy is at full employment. As Adam James Tebble notes,

    In the market decisions about what needs to be done are ‘taken’ by the price     mechanism     under a     regime where people enjoy freedom of contract but where,     due to what Hayek calls the     ‘impersonal compulsion’ of the market process, they     have an infinitesimally small degree of     control     over the economic context in which     they must act (1978, p. 189). By contrast, in the     case of the state     individuals are freed from the impositions of the price mechanism but at the cost of being directly told     what to do so that a socially just outcome may be achieved...For Hayek, of course, the choice is easy:     that being commanded what to do is indeed worse than having the economic nexus at large act as the     constraining context upon one’s opportunities and decisions.

The absurdity of that statement cannot be overemphasized in the context of monopoly capitalism.

    The capitalist system inherently tends towards concentration, even before the ‘government’ intervention of the corporation. How? If one firms gains enough of a differential advantage--be it through innovation, branding, etc.--it  is in its interest to merge and acquire other firms or, drive other firms out of the market and take over more market-share, and thus, have pricing power. As capital aggregates, our scope of effective choice decreases and the ‘totalitarian’ concentration of power rests with corporations, not the state. The existence of monopolies/oligopolies creates a condition described by Nobel-Prize winning, neoclassical economist, Paul Samuelson: “In appraising oligopoly we must not that the desire of corporations to earn a fair return on their past investments can at times be at variance with the well being of the consumer”. One need only to look at the creation of monopolies during the mid-to-late 1800s in America, the era of the ‘Robber Barons’, to see that it is possible to have a stable monopoly without a massive, interventionist state propping up that monopoly. The response from the state to this was the creation of anti-trust legislation to break-up these monopolies, most famously applied to Standard Oil. Paul Samuelson sums up the rationale, “We cannot expect competition to become everywhere ‘perfectly perfect’...But we must strive for is what the late J.M. Clark years ago called ‘workable competition’...But laissez-faire cannot be counted on to do this. Public vigilance and support for antitrust will be required.” However, Hayek would not allow such a mechanism, why? Well, we have to refer to his notion of the Rule of Law (RofL)--no pun intended.

    In his chapter on the Rule of Law, he declares that a ‘free’ society can only exist where the laws are universal, generalizable, stable and, most importantly, devoid of democratic demagoguery. These laws find their basis in the Constitution, or equivalent documents, of the nation-state that effectively restrict the scope of political choice from the outset. Before I go on, this part is really an indication of the ‘real totalitarianism’ embedded in Hayek’s thought. He does not care, it seems, whether or not the Constitution is setup by a undemocratic dictator--like Pinochet, or the Honduran military junta--just that it was established and it respects the basic liberal principle of property rights. Hayek is delimiting the possibility of citizens to change the unfair imposition of the RofL on them by largely unelected, plutocratic elites, who are effectively living under a residual dictatorship of Constitutionalism. It is to the great credit of Chavez, Morales, and other neo-leftists that they are attempting to correct this historic injustice by creating popular constitutional assemblies to democratically and legitimately base the RofL on the will of the citizens.    

Regardless, once these laws have been established it is imperative  that “whatever form it [the Rule of Law] takes, any such recognised limitations of the powers of legislation imply the recognition of the inalienable right of the individual, inviolable rights of man.”--note, how Hayek is forced to use the idealist, liberal notion of this pre-political concept of “invioable rights” to defend this anti-democratic position. In order for the RofL to work, the individuals in the society must know what the laws are and that they are unchanging so that “the individual can foresee the action of the state and make use of this knowledge as a datum in forming his own plans”. 

    The problem for Hayek emerges when he states,
 The Rule of Law thus implies limits to the scope of legislation: it restricts it to the kind of general     rules  known as formal law, and excludes legislation either directly aimed at particular people,     or at enabling     anybody to use the coercive power of the state for the purpose of such     discrimination. It means, not that     everything is regulated by law, but, on the contrary, that the     coercive power of the state can be used only     in cases defined in advance by the law and in such a     way that it can be foreseen how it will be used.

If this is the definition of the RofL, then there is no hedge against monopoly capital and thus, corporate totalitarianism. Hayek can maintain this position on the, disproven, belief that capital does not automatically aggregate and that ‘free market’ pressures are strong-enough to counteract that aggregation of capital. Antitrust legislation is directly “aimed at particular people” and the victims are chosen, arbitrarily out of the value-judgments of the state, to coercively break-up a firm. There is no way a firm could know it is going to be victim of antitrust, because there is no way to define ‘in advance’ the specific criteria for the enactment of antitrust. Ultimately, Hayek’s entire work rests on the kernel of anti-government, he ultimately does not care about totalitarianism, as long as its privatized.

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