Lorenzo on Why Intellectuals Dislike Markets

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To the extent the term has a useful meaning, neoliberalism is economic liberalisation in the context of an expansive state: either the welfare state (in the developed world) or the development state (in the developing world). Key underpinning ideas in the original “neoliberal turn” include Milton Friedman’s rehabilitation of monetary economics (pdf) and his critique of (pdf) policy reliance on a presumed trade-off between inflation and unemployment, Friedrich Hayek’s analysis of the uses of knowledge in society, the development of public choice theory, feeding into (pdf) the analysis of rent-seeking (pdf), Ronald Coase’s development of (pdf) the concept of transaction costs and its application to property rights (pdf), and the development of supply-side ideas (pdf).  The Lucas critique (plus rational expectations) and Fama’s efficient-market hypothesis came along a bit too late to have much influence on the original “neoliberal turn”.

What these key ideas have in common is that they cast strong doubt on belief in the omni-competent state, either directly or by comparison with market-based alternatives. Hence the “neoliberal trifecta” of corporatisation (restructuring of state institutions), privatisation (transfer or creation of property rights) and de-regulation (reduction of transaction costs). Plus the adoption of inflation-targeting by central banks, as a way of operationalising their responsibility for inflation as a monetary phenomenon. The critique of the widely assumed omni-competence of the state also encouraged taking gains from trade more seriously, while the policy premium for economic efficiency (see below) put the issue of opportunity costs in sharper policy focus.

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A particular difficulty is that the ideas behind “neoliberalism” flow from the Sceptical Enlightenment. French intellectuals generally do not “get” the Sceptical Enlightenment. The longstanding worship of French and German intellectualism among many Anglosphere academics has meant that many of them don’t “get it” either. One of the fundamental ways in which they don’t get it is, steeped in Radical Enlightenment notions of a perfectible society, they presume grand system when there is something much more like a conjunction of values, principles and ideas held to be true, or at least useful. If you like, a working acceptance of ambivalence. ”Neoliberals” very much embrace Kant’s dictum that, from the crooked timber of humanity, nothing straight can be built. The classical liberal tradition, which is a key source for “neoliberalism”, famously views the state as a necessary evil: in what universe is that the basis for any strong expectation of social harmony?

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That the anti-”neoliberalism” literature presents us with Western intellectuals and academics more hostile to expansion of private commerce, markets and private property than the Central Committee of the Chinese Communist Party is somewhat striking, but said Central Committee has to struggle with genuine policy problems. (Just as dependency theorist Fernando Cardoso engaged in economic liberalisation and privatisation as President Cardoso.) All the academics hostilely pontificating on “neoliberalism” have to worry about is their own glowing moral soundness. Where the failure of command economies also goes down the memory hole, creating no problem they have to wrestle with. These are people who are so tied up in a proper conception of History that they cannot see history right in front of them. (And folk who habitually analyse the motives of others in the most hostile and dismissive terms will, of course, be outraged at their own obvious moral nobility being treated somewhat sceptically.)

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We are dealing with very different responses to the paradox of politics (or the paradox of rulership): that the state is the most dangerous social predator but need we it to protect us against other predators (in order to permit a certain level of social amenity). A paradox sharpened by the constant temptation to use the state for one’s own predatory schemes–from rent-seeking corporations blocking competition or seeking other special benefits to projects of social outcasting and exclusion. The Sceptical Enlightenment accepts that the paradox can never be resolved, just managed more or less well. The Radical Enlightenment lives in the false hope of final solution. The tension between the two has created much tragedy, but has also helped fuel the Emancipation Sequence. (Though, even there, the practical Sceptical Enlightenment goal of inclusion and normalisation has constantly triumphed over the grander Radical Enlightenment goal of subversion and transformation).

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What is so often portrayed as merely a fight over who controls the lever of the state, and which way it is pulled, is something much more fundamental than that. It is and was about wrestling with what is practicable to do with that lever, and at what cost to whom. The much more fundamental nature of what has been going on in the “neoliberal turn” is not faced because it is too confronting. Remaining within their dogmatic slumbers is much more comforting.

Hence we get the products of humanities and social science academics who rarely, if ever, meet, still less directly engage with, those involved in the above wrestling. SF author Orson Scott Card observed in a podcast interview with Glenn Reynolds (aka Instapundit) and Dr. Helen Smith (DrHelen) in November 2006 that military officers are generally more intellectually open and flexible than academics, as they have to deal with people with wide range of views; academics just vote against tenure of those they disagree with. It is much more congenial that way: particularly if you wrap your sense of personal identity up in a common notion of being morally and cognitively “sound”. So narrowness of range of views and perspectives becomes a feature, not a bug. It is much more congenial to be part of the progressivist hegemony of academe, rather than a trouble-making outlier. Particularly if you can parade as a morally heroic “exposer” of a malign, society-dominating, “neoliberal” hegemony.

Source: Lorenzo, "Ahistorical Pomposity and Gnostic Sneering: Why Academics Write Deep Crap About “Neoliberalism,” SkepticLawyer, August 27, 2014