The limits of neo-liberalism.
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William Davies' The Limits of Neo-Liberalism: Authority, Sovereignty and the Logic of Competition (Sage, 2014) provides a searching new investigation of the meaning and implications of the neo-liberal project. Davies identifies neo-liberalism as centrally concerned with the replacement of politics by economics. He examines the consequent efforts of economic experts to make government amenable to measurement, and to re-model society and state in terms of competition. By picking apart the neo-liberal conflation of economics and politics, Davies poses the question: to what extent can economics provide government legitimacy? Renewal gathers here three reflections on the book, and a response from William Davies.
The free economy and the sovereign state
Bob Jessop, Distinguished Professor of Sociology, Lancaster University
This rich and provocative book develops many lines of critical inquiry into actually existing neo-liberalism in 'advanced' capitalist societies. Together these insights provide a novel perspective on what is a very familiar, albeit depressing, topic, especially in the wake of the North Atlantic Financial Crisis, which was prepared in large part through the imprudent pursuit of neo-liberal doctrine and principles. Here I focus on the author's attempt, as the title indicates, to locate the limits of neo-liberalism in the complex and contradictory relation between the virtues of unfettered market competition and the imperatives of state sovereignty. Davies explores this tension-ridden relation through a more general account of the normative, motivational and structural power of competitiveness as a principle of social organisation--a principle based on the over-extension of the alleged economic rationality of markets as a way of coping with uncertain futures. This narrative has a clear political as well as scientific purpose: to demonstrate the coercive power of the treadmill of competition and its crucial role in extending and consolidating neo-liberalism even as it generates some benefits to economic and political subjects.
This approach to neo-liberalism raises two initial sets of questions. First, given the institutional separation between the market economy and sovereign state, how are they related in practice in neo-liberalism? Here Davies examines the state's role alongside other factors and actors in creating the conditions for neo-liberalism; its role in the routine reproduction of neo-liberal conventions and rules of the game; and its role in compensating for market failure during crises. He notes that the state is more visible in the first and third of these roles but does not disappear in 'normal' periods. On the contrary, the survival of a state with sovereign authority, rather than its withering into a mere night-watchman, is essential to its resurgence during economic emergencies. Only a sovereign state, with its unique, if often latent, powers, could pursue the exceptional policies deemed necessary to 'rescue the national economy', even though they contradict neo-liberal market principles. This important counter-narrative is typically ignored or denied in analyses that endorse neo-liberalism and even aim to shrink the state so much that it can be drowned in a bathtub.
Second, one might ask how neo-liberal solutions to social problems emerge and get consolidated and whether they are as rational as neo-liberals proclaim? Here Will Davies draws critically on the French theory of 'conventions'. This combines economic and sociological analysis to explain the emergence of collective rationality, institutions and practices to steer individual action in the face of uncertain outcomes and feedback effects. Whereas many convention theorists assume that conventions emerge in a rational search for efficient solutions to given collective action problems, Davies emphasises the struggles that occur over problem definitions and solutions and, hence, their social and political contingency. This goes some way to allaying my initial worry that convention theory tends to emphasise the mutual benefits from working within agreed rules of the game and thereby neglects the asymmetries of hegemony and domination inscribed in entrenched institutional structures and power relations. More is at stake here, however, than recognising that competition within agreed rules of the game generates inequality; for the forms and stakes of competition are embedded in much wider structures of power and domination.
Davies provides a genealogy of neo-liberalism from the 1930s onwards, focusing on the gradual development and dissemination of the neo-liberal doctrine and practice of economic freedom, especially as manifested in the alleged virtues of competition, and its extra-economic preconditions. He is concerned neither with the microeconomic foundations of competitive market forces that allegedly derive from the self-interested calculation of rational economic agents nor with the emergent macro-political logic of neo-liberalism considered as a more or less successful expression of a hegemonic project intended to recreate the conditions for capital accumulation and bourgeois domination after the economic, political and social crises of the 1970s. Instead Davies examines some of the crucial meso-level complexities of the institutional and normative construction of neo-liberal practices and neo-liberal subjects around competition and competitiveness as idealised but nonetheless constraining principles of social organisation. This enables a nuanced analysis of the many tensions, fault-lines, and crisis-tendencies of this project.
Competition and legitimacy
Competition and competitiveness are key themes in the justifications offered to legitimate neo-liberalism and motivate people and organisations to comply with its imperatives. In part, these justifications resurrect the foundational categories of classical political economy: the laws of supply and demand, their role in the efficient allocation of capital among competing ends, and their mediation through market competition. But neo-liberal intellectuals and think tanks have tried to reformulate and revalidate these categories in the light of the crisis-prone economic, political and social development of capitalism. To explain how they secured social acceptance of the neo-liberal project, Davies explores the artefactual contingencies of negotiated social norms, socially constituted rules of the game, and emergent practices of competitive markets. Far from being a single, spontaneous, interconnected and self-equilibrating mechanism, markets are heterogeneous products of institutional design, depend on specific forms of expertise, authority, commensuration, and calculation, and require adherence to norms and regulations that are widely accepted as legitimate. Given the great diversity of coordination problems and solutions, convention theorists typically seek to explain the specificities of particular cases rather than derive them from general principles. While this is a valid procedure, it risks losing sight of the wood by focusing on the trees. This is a special challenge to anyone who wants to describe, explain and critique a social project that is as wide-ranging in its fields of application and as global in its ultimate reach as neo-liberalism. The key to this conundrum is, for Davies, the polyvalent nature of competition and competitiveness as an organising principle--a principle with a productive fuzziness that can be used to justify different kinds of social norms and practice in different contexts whilst retaining some semblance of overall coherence and that is consistent with certain kinds of state action that are oriented to promoting competition, entrepreneurship, and local, national, or even macro-regional competitiveness.
Thus, economically, neo-liberalism endorses the virtues of formally free, monetised exchange among autonomous economic agents but also recognises that these virtues will be realised in different ways in different contexts. The core set of neo-liberal economic policies comprise: liberalisation (make markets more competitive), deregulation (reduce state intervention in the operation of market forces), privatisation (bring state-owned or state-funded activities into the private sector), the use of market proxies in the residual public sector (to simulate and stimulate the efficiency-generating benefits of competition), internationalisation (to promote competition and the spread of best practice), and cuts in direct taxes (to enable consumers greater freedom to choose how to spend 'their' money). While broadly consistent, these policy principles are sufficiently complex to create a broad field for debate among experts, trial-and-error experimentation in institutional design and normative negotiation, efforts at coherence or commensuration across different social fields, and so forth. Davies takes the field of 'law and economics' to show, in a fine case study of these complexities, how neo-liberal conventions and practices reorganised the crucial interface among the market, the legal profession, and legal and judicial institutions at international as well as national scale. A parallel study shows how the competitiveness agenda penetrated the state's executive branch.
The political and ideological aspects of neo-liberalism also vary but can be linked, at least rhetorically, to the same fuzzy principles of formal freedom and competition. Politically, competition for votes and political support in liberal democratic regimes should occur within constitutional limits to prevent the tyranny of the majority (at least in regard to the sanctity of private property, freedom of contract, and sound money). In this context, economic competition and conflict would occur within the limits of market rationality and political competition and conflict would occur within the limits of a constitutionally-regulated transfer of power and exercise of...
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