Sunday, 30 March 2014

The Age of Neoliberal Austerity: Part 2: The Impact of Neoliberalism

Copyright: John Sturrock/
In the first article in this series, ‘The crisis of the system’, I argued that we face a crisis in the history of humanity, and that it is rooted in growing corporate power, ‘globalisation’, or what Marx called ‘the centralisation and concentration of capital’. I further argued that neoliberal capitalism’s dominant features – financialisation, privatisation, austerity, the race to the bottom, precariatisation, permanent mass unemployment/under-employment, etc – are now integral to the system’s functioning.

A number of conclusions seem to flow from this analysis: that there is a major contradiction between the scale of the crisis and the weakness of working-class political organisation ; that there are no credible ‘middle way’, ‘Keynesian’, or ‘left-reformist’ solutions to the crisis; that financialisation and privatisation have partially reconfigured class exploitation in such a way that the workplace is no longer the sole primary locus of struggle; and that contemporary experience of exploitation, oppression, and disenfranchisement involves numerous, diverse points of collision between rulers and ruled.

Here I want to explore the way in which neoliberalism has remodelled the wider social order.         

The decline of union power

The neoliberal counter-offensive tested in Chile in the mid 1970s, pioneered by the Thatcher government in Britain and the Reagan administration in the United States in the 1980s, and in due course rolled out across the rest of the world, especially after 1989 revolutions, was an attempt to restore profitability and competitiveness by breaking union power, dismantling welfare states, and redistributing wealth from labour to capital.

The bargaining power of workers was undermined by mass unemployment. The size of what Marx called ‘the reserve army of labour’ – the mass of unemployed and workers in various forms of low-paid, insecure, and often part-time employment (what have been dubbed ‘McJobs’) – was restored to the point where it became an effective constraint on the militancy of core unionised workers. The state, above all in Britain, then mounted a series of massive class battles to smash the unions, culminating in the year-long struggle waged by the Thatcher government against the National Union of Mineworkers in 1984-1985.

The defeat of the miners weakened organised labour in Britain. The NUM had twice defeated the previous 1970-1974 Tory government in national pay strikes and was widely considered to be the union movement’s strongest battalion. Its defeat, at a time when unemployment had risen above three million, shattered the confidence of organised workers across Britain.

The strike rate is a key measure of the industrial class struggle. The comparative figures make for grim reading.

Average annual strike-days ‘lost’ in Britain by period, 1900-2007

Average annual strike-days (in millions)
Great Unrest
First World War
Post-war upsurge
General Strike
Great Depression
Second World War
Beginning of Great Boom
Middle of Great Boom
End of Great Boom
Heath government
‘Social Contract’
‘Winter of Discontent’
First Thatcher government
Great Miners’ Strike
Third Thatcher government

The sharp fall in confidence and combativeness inside the workplaces represented by the falling strike rate translates into falling union membership. Historically, in the long run at least, union membership tends to track the strike rate: when workers fight, the unions recruit; when they do not, the unions shrink. Union membership has halved in Britain since the 1970s, and the basic reason is not that unions failed to sell enough insurance to their members, but that they failed to make sufficient gains through collective action.

It is important not to exaggerate. Often concessions have been achieved simply through threatening strike action; votes for action in strike ballots have made a difference. Union membership has held up well in the circumstances and the unions remain, by a long distance, the biggest voluntary organisations in British society. They are mass democratic organisations rooted in the working class.

The decline of old industries explains much of the fall. Public-sector unionism remains relatively strong. There has even been some modest recruitment over the last year or two, partly because the unions have taken a lead against austerity – through mass demonstrations and in alliance with other social groups – and partly because workers are seeking a measure of security in union membership. Initiatives like Unite Community indicate the potential for trade unions widening their reach beyond the workplace.

Since the 2008 Crash the unions have repeatedly demonstrated their mobilising power in a series of one-day strikes and mass street protests, with an extraordinary half a million people taking to the streets in March 2011 and, several months later, a national strike involving an unprecedented level of co-ordination. More recently there have been further national strikes, sometimes – as with higher education workers and teachers – involving a degree of co-ordination by different unions.

However, great swathes of modern industry are effectively un-unionised. Only 15% of private-sector workers are in a union, and millions of younger workers have never been union members. The meaning of union membership, moreover, has changed: fewer members now think of it in terms of collective activity in the workplace; many see the union as a provider of individual services and an occasional organiser of token strikes and demonstrations; there is still a substantial layer of workplace union reps, but many spend virtually all their time doing casework.

Britain had one of the strongest labour movements in the world in the early 1970s; the neoliberal counter-revolution was spearheaded in Britain during the 1980s and was driven through with exceptional ruthlessness; and the unions suffered a series of major defeats in set-piece class battles. If events were less polarised and dramatic elsewhere, the underlying trends – sharp falls in the strike rate and union membership – have been similar in many of the more developed capitalist countries.

Two caveats should be entered. One is that austerity has produced explosions of union-led struggle in some places. Greece is an obvious example, with a succession of general strikes. The other is that the trajectory of class struggle in the newly industrialising countries may be significantly different. China is experiencing an epidemic of strikes and other forms of protest that go almost entirely unreported in world media. Several other Asian countries have seen very impressive large-scale strikes in the last few years. But the focus here is on Britain, where many of the characteristics of what might be regarded as ‘classical’ neoliberalism seem to find clear expression. New Labour, for example, is an archetype of a social-liberal party.

Reformism without reforms

Social-democratic (or ‘reformist’) political parties reflect the rise and fall of the industrial struggle in a much less direct way than union membership. Nonetheless, there is a relationship. Strong unions and successful mass strikes tend to move workers to the left, and political parties in which unions and workers are influential tend to get pushed in the same direction.

But reformist parties are highly contradictory. They seek to run the state and manage capitalism, yet at the same time seek votes mainly among the working class. The tension between ‘nation and class’ can become acute in periods of heightened class struggle. When the class struggle diminishes, on the other hand, the balance shifts. The dominant influence on reformism is then that of the ruling class. The state and capital shape the reformist party more than the unions and the workers.

Enough of a difference usually still exists for class to remain the single most important determinant of voting behaviour; and the working-class electoral base continues to be a constraint on the behaviour of politicians. Witness ‘Red Ed’ Miliband’s recent slight tack to the left. And this matters, in that a small gap in mainstream politics can create a big space for debate at the base. But the fact remains that Labourism has shifted ground hugely under the impact of neoliberalism.

During the Second Great Boom (1948-1973), state-managed capitalism and relatively high growth-rates provided reformist governments with the opportunity to combine economic interventionism with spending on infrastructure, public services, and welfare provision. There was space for reform within the system, as well as pressure from below to deliver it.

Under neoliberal capitalism, the opposite has applied. The internationalisation of capital has undermined the capacity of national governments to direct and regulate economic activity; on the contrary, the masters of ‘old capitalism’ in the Global West are locked into a ‘race to the bottom’, competing with low-wage economies in the Global East for investment by multinational banks and conglomerates. At the same time, the decline of union power has removed the primary pressure for reform.

The effect, sustained over an entire generation, has been to turn mainstream reformist parties into pro-neoliberal parties staffed by technocratic career politicians advocating ‘free markets’, privatisation, and corporate power. This decay of the mainstream social-democratic tradition, its growing acceptance of bourgeois ideology, is the essential reason for the hollowing out of parliamentary democracy – the ‘democratic deficit’ – and the widespread disenchantment with, and disengagement from, mainstream politics documented by Ady Cousins in ‘The crisis of the British regime’ (at

The centrality of class

The (closely related) declines in industrial struggle, union membership, and social-democratic politics do not alter in the smallest degree the class character of modern society. Mainstream commentators conflate the political organisation of the working class (what Marx called ‘class for itself’) with the social existence of the working class (‘class in itself’). The former depends upon class-based industrial and political organisation (a subjective matter), the latter upon the socio-economic structure of society (an objective fact). We live in a capitalist class society as surely now as in the 1970s; one in which around 1% form the ruling class, around 20% the solid middle class, and the rest the working class.

On the other hand, there is another kind of confusion on much of the Left: a presumption that working-class struggle necessarily takes the primary form of strong workplace organisation and mass strikes. History suggests otherwise. The power of workers may often be in the workplace; but not necessarily. Sometimes the power of workers is on the streets; sometimes the streets lead and the workplaces follow.

If our historical view is restricted to 1970s Britain, we experience an optical illusion: a form of mass struggle which arose in very specific circumstances is magnified out of proportion. But we may not see these circumstances replicated in our lifetimes. A unique conjuncture at the end of the Second World War made possible the Second Great Boom (see ‘The crisis of the system’). A key factor was an embittered and radicalised working class, millions of them veteran wartime service personnel, who, after ten years of slump and six years of war, were not prepared to take any more shit from their rulers. The pressure for full employment and social reform was, as the more intelligent members of the ruling class at the time realised, irresistible. Fortunately for them, the post-war conjuncture – US dominance, Cold War arms spending, ‘Keynesian’ economic management – made possible the Second Great Boom.

The ‘reserve army of labour’ evaporated during the 1950s and 1960s, when workers found they could leave a job one week and start another the next. Security of employment meant strong unions and rising real wages. The most characteristic form of class struggle became the short, sectional, unofficial (or ‘wildcat’) strike led by shop stewards, directly elected workplace representatives.

The explosion of mass strikes between 1969 and 1985 was a collision between two highly organised class forces. The employers and the state were determined to weaken workplace union organisation in order to drive down wages and restore the rate of profit and the competitiveness of British capitalism. The unions were not only massive, with well over half the working class in membership, but also firm-rooted in strong sectional organisation, with a third of a million shop stewards, developed rank-and-file networks across many industries, and a tried-and-tested tradition of independent workplace action. It cannot be stressed enough that this was a result of the exceptional conditions of the Second Great Boom. We live today in very different times.

The authoritarian state

In the 1980s, under the Thatcher government, both major social classes – the ruling class and the working class – were organisationally and ideologically strong. Today, after a generation of defeats, the working class is organisationally much weaker. The ruling class, on the other hand, is ideologically weak, the political and business elite being more unpopular than at any time since the 1930s, and virtually the whole of its core programme facing deep-rooted hostility.

On the one hand, we have the relative decline of the unions, the long-term rightwards shift of the Labour Party, and the hollowing out of parliamentary democracy. On the other, we have deregulation, financialisation, privatisation, austerity, and the dismantling of the welfare state. A corollary of this contrast is what we might call the ‘authoritarianisation’ of the state.

The core of the state comprises armed bodies of men and women – soldiers who form a military apparatus for projecting imperial power abroad, and police who form a paramilitary apparatus for internal repression. Were the state simply a coercive apparatus, however, it would not long endure. The ruling class are too few, the exploited too many, for stable polities to be based on repression alone. Capitalist class rule always depends upon a mix of coercion and consent (‘force and fraud’).

The balance between the two varies, from regime to regime, and from period to period. Western state-managed capitalism during the Second Great Boom was notable for the consensual character of its politics and policing. The system could afford rising living standards, improved public services, and welfare reforms. Strong unions meant strong social-democratic parties and pressure on the ruling class to negotiate and compromise. Top trade union leaders were frequent visitors to prime ministerial offices. Elaborate arbitration procedures were employed to mediate between employers and workers. Even right-wing party manifestos declared support for economic regulation and progressive taxation. Demonstrations were commonly met by police in soft helmets with linked arms.

All this has changed. The balance has shifted from consent to coercion. Ministers and union leaders rarely meet. Labour parties offer little meaningful reform for working people. A chasm has opened between government policy and popular aspiration. Mainstream politicians have abandoned the rhetoric of social reform and equality in favour of that of the market, privatisation, and ‘incentives’. And demonstrations are met by riot police with batons, tasers, pepper-spray, and tear gas.

This shift is a direct consequence of neoliberalism, financialisation, and the internationalisation of capital. The state can no longer regulate its own national economy; instead, it must offer a range of incentives to attract investment. Power has shifted from the imperial blocs that dominated the world economy up to the 1970s to the giant global banks and multinational conglomerates of neoliberal capitalism.

Mainstream politics has become a froth of lies, spin, and broken promises because the waters beneath are churned by the dynamics of international capital accumulation. Prices must be cut and profits must grow at the expense of wages. Taxes on business must be slashed. ‘Red tape’ (environmental, welfare, and health-and-safety protection) must be reduced. Public services and welfare are unaffordable. Labour must become more ‘flexible’ (precarious) and ‘competitive’ (low paid). All baggage must be shed to increase speed in the global race to the bottom.

Parliamentary democracy is hollow because the nation-state has been disembowelled by international capital. A majority in Britain votes for parties opposed to raising university tuition fees. One of those parties is elected to government and immediately raises them. An overwhelming majority in Britain is opposed to privatisation of the NHS, and no party dare declare this its policy. Yet an elected government passes a bill to privatise the NHS.

The growing gap between aspiration and actuality, between promise and policy, becomes a widely perceived ‘democratic deficit’. The contradiction – to stress the point – is rooted in the shift of economic power from the nation-state to multinational capital. It is therefore insoluble for the system. The collapse of the social-democratic consensus and the increasing authoritarianism of the state are the consequences. Police rule on the streets is simply the contradiction’s most visceral expression.

We also find here an explanation for the growing corruption and cronyism of the system. Union leaders representing millions of workers have no access to ministers, but bankers, bosses, and sundry ‘consultants’ do. Billions are spent on bank bailouts, arms contracts, and subsidies to privatised companies. A ‘revolving door’ moves over-paid politicians who fiddle their expenses into over-paid executive posts that pay eye-watering bonuses for ‘work’ without social purpose. The state becomes a junket at the centre of a vast mesh of zombie banks, vampire conglomerates, and multi-millionaire social parasites. Gargantuan prestige projects – sports stadiums, luxury shopping malls, conference venues, cultural facilities – are merely the most visible symbols of the corrupt state-capital nexus at the heart of the neoliberal order.

The neoliberal state is undemocratic, corrupt, and violent. It has therefore become as much a target of the accumulating anger at the base of society as capital itself. But alienation from the state is only one dimension of a wider alienation from the neoliberal social order as a whole.


Neoliberal capitalism has engineered economic changes which have hollowed out collective institutions and atomised social life. At root, this is a sociological – and, to a significant degree, psychological, cultural, and ideological – artefact of the ongoing ‘centralisation and concentration of capital’ analysed by Marx in Capital (see ‘The crisis of the system’).

The growing size of global corporations means that the main centres of economic power are ever more remote from everyday human experience. There is a pervading sense of disempowerment due to the decoupling of economic control and social existence. There is an irreducibly local aspect to the way in which human beings experience the world. Each of us has a limited geographical range and social network. Improved communications do not alter this in any fundamental way; our lives – work, family, leisure, sex, culture, politics, and so on – still take the primary form of direct human interactions with a relatively small number of others. Yet power is more global and remote than ever before. Possible human action and the historical tasks to be performed seem disconnected.

Marxism allows us to perceive this contradictory reality in a joined-up way, since it is, in its very essence, a holistic way of looking at the world. The phenomenon of disempowerment is best grasped with reference to Marx’s concepts of reification and alienation. Reification is the way in which human relationships and activities are ‘fetishised’ and turned into things. The concept of ‘the market’, conceived as an impersonal force dominating our lives, is an obvious example. Alienation is the corollary of reification at the level of everyday human experience. The reification represented by corporate and state power leaves us feeling detached, powerless, at sea in an ocean of swirling forces we cannot control.

Marx’s theories of reification and alienation are much less discussed than his economic theories. This no doubt reflects the centrality of economics in Marx’s corpus of published work. He devoted himself to understanding the processes of competitive capital accumulation that were beginning to transform the whole of human social experience. He did not have time to develop his ideas about reification and alienation, and they are often treated as little more than sociological descriptions of the human experience of exploitation; they are rarely discussed as dynamic contradictions in their own right.

Yet reification is Marx’s overarching conception of humanity’s entire state of being in class society; his sense of the way in which economic processes and social relationships are transformed into malignant forces of exploitation, oppression, and violence that operate outside any framework of conscious, collective, rational control. Human beings are then alienated precisely because they have lost control over their own creativity and the products of their own collective labour.

As public services are privatised, as education and health are commodified, as ever more routine human interactions are commercialised, the realm of reification expands. As unions, communities, and civic institutions decay, as social life risks being reduced to the separate activity of millions of human atoms, alienation rises.

We are social beings who thrive in free collective work; solidarity is an instinct. But the system hates solidarity because when the many combine the few are threatened. So the drive is always to break up solidarities, to fragment society, to counterpose ‘the individual’, ‘the citizen’, ‘the consumer’ to the idea of a collective. For in isolation there is fear – fear of unemployment, fear of homelessness, fear of unpaid bills, fear of the consequences of answering back. And when there is isolation and fear, bullying at work can become routine, stress turn into an epidemic, and effective resistance dissolve.

Growing reification and alienation, though challenged, are key features of the neoliberal phase of capitalist development. They are reflections of the ongoing centralisation and concentration of capital. Let us explore this in a little more detail.

Centralisation and atomisation

Neoliberalism wears two faces, one turned to the corporations and the state, the other to the masses. On the one hand, corporate and state power becomes more concentrated. On the other, civil society is broken down into its smallest components – the worker, the consumer, the individual, the household, the family – and the existence of each of these components becomes more inward-looking and self-obsessed.

The trend towards a more atomised and privatised lifestyle has been characteristic of capitalist society in the developed world since at least 1945. But until the 1970s, workplace union organisation was an important exception, not least in Britain. That is less true today, and a number of studies have discussed the atomisation and privatisation characteristic of the neoliberal social order.

A recent example is Philip Mirowksi’s Never Let a Serious Crisis Go to Waste (2013). His argument is that neoliberalism is not simply an economic theory and a programme for restructuring capital and the state. It has sunk roots into society, seeking to transform social life as a whole and the very way in which individuals think about themselves and their relationships with others. It has sought to destroy any sense of society as a collective, and to replace this with a sense of it as an amalgam of atomised, isolated, vulnerable individuals. Mirowski writes of ‘the rise of the neoliberal agent’ in a world where the distinction between economics, society, politics, and culture have all broken down, and everything has become crystallised into two primary entities, ‘the market’ and the ‘entrepreneurial self’.

This view has limitations and problems, but it is nonetheless important stuff. It is about a mindset linked to alienation from ‘politics’, suspicion of formal organisation, and a generalised tendency to individualise problems, to seek personal solutions, and to remain oblivious to the social character of exploitation and oppression and the consequent need for collective responses. It provides part of the explanation for ‘apathy’; for the fact that so many people seem to be the passive victims of an all-powerful corporate juggernaut, obsessing about consumption, lifestyle, celebrities, and electronic gadgets.

Both of the central features of neoliberalism discussed here – disempowerment and reification in the economic sphere, atomisation and privatisation in the social sphere – feed into what might be described as ‘the retreat from politics’ among self-declared opponents of the system. The sense of powerlessness encourages withdrawal into a personal space which one feels one can control, while the erosion of collective organisation and experience makes this seem a natural, indeed the only conceivable, form of political action. Identity politics, ethical consumerism, online ‘activism’, alternative lifestyles, and one or another variant of moralism are contradictory, but they represent a broad acceptance of the basic neoliberal premise that all life is a matter of individual choice and action.

This is one reason we have a low level of organisation and effective resistance despite a high level of generalised anti-capitalist and anti-war consciousness. Joining organisations to fight the system – unions, parties, campaigns – still happens, but it is no longer an instinct embedded in a long tradition of struggle from below, as it unquestionably was in the 1930s, or even the 1970s.

We have to win the argument that classes exist, that class-based struggle is of primary significance, that class struggle from below is inherently collective, and that effective resistance always requires a high degree of unity, solidarity, and organisation. We have to defeat an ‘autonomist’ argument that is itself a product of neoliberalism.

A loose vanguard?

The starting-point of revolutionary politics is to locate oneself within the minority that is fighting back (always a minority this side of the revolution; when the majority of the class moves into action, we enter a revolutionary crisis). The starting-point, in other words, is to be embedded in some sort of ‘vanguard’ (an unfashionable and problematic term, but possibly still the best we have). Revolutionaries seek influence in the vanguard as a transmission-belt to influence in the class. A revolutionary party is therefore a party of the vanguard. It is a party of activists recruited from among the most class-conscious and combative people in the unions and the movements.

In the past, the vanguard has usually been relatively easy to identify. When there is a high level of class organisation, with strong unions, parties, and campaigns, the vanguard comprises mainly activists operating within and around these more-or-less permanent bodies. The hollowing out of labour and left organisation in the last 30 years or so has reduced the size of this vanguard group.

But the protest movements of the last 15 years have created a new vanguard. Though it overlaps considerably with the first, this second group, which includes many young activists new to political struggle, tends to be less well-defined, more amorphous, more changeable in composition. The Occupy Movement provides an obvious example.

A rough, if perhaps overly simplistic, distinction can therefore be made between ‘traditional’ activists and ‘new’ activists. The vanguard still includes many thousands of ‘traditional’ activists rooted in the unions, the movements, and the left parties. But it also includes thousands of ‘new’ activists, represented by looser groupings like UKUncut, the Occupy Movement, and a wide range of radical single-issue campaigns. A much higher proportion of the vanguard now belongs to the category ‘non-aligned’. This reflects a generation of defeat and retreat for formal labour and left organisation.

The relationship between the two categories is a critical question. Both groups are diverse and there is much overlap: lots of young workers join unions; many older activists are involved in the new campaigns; protests often involve both traditional and new activists. And revolutionaries, naturally, seek to unite the vanguard organisationally as a mechanism for uniting the class in struggle. But first we need clarity about the differences.

The new activism is rooted in the shift from industrial action to street protest as the dominant form of struggle since the end of the 1980s. The Poll Tax Revolt in Britain (1989-1991) may represent a turning-point, since it was a community-based tax strike sustained by direct action and militant street protest, culminating in the biggest clash between demonstrators and police in Central London since the 1930s. It was followed by a massive London demonstration against pit closures in 1992. Then, in 1999, the Seattle ‘Turtles and Teamsters’ demonstration gave birth to the anti-globalisation movement. Since then, across the globe, we have seen street demonstrations on a scale without historic parallel, most famously, of course, on 15 February 2003, when anti-war protests in more than 60 countries involved perhaps 15 million people in total, with up to two million on the streets in London.

The anti-capitalist and anti-war movements – and the wider anti-system mood they reflect – have, since the 2008 crash and the imposition of programmes of austerity, accelerated privatisation, and increased social inequality, spawned a succession of explosive urban uprisings. In the case of the Middle East, of course, these merged with long-standing hatred of corrupt dictatorships and swelled into full-scale revolutions.

The higher the level of class struggle, the deeper the insight into society’s primary fracture-lines. In the third and final article in this series, I will consider the rash of new urban uprisings in a little more detail as we attempt to define the vanguard of the class struggle under modern capitalism.

Again, as with the first article, I want to suggest some tentative conclusions:

1. The traditional distinction between economics and politics in the analysis of class struggle has to a degree broken down. The centralisation of corporate power, the financialisation of class exploitation, the growing authoritarianism of the state, and the profound alienation experienced by millions of people living under the domination of neoliberal capital have had the effect of fusing anger and resistance into a generalised opposition to ‘the system’.

2. At the same time, however, the degradation of civil society, most importantly the weakening of workplace trade unionism, and the partial sundering of the social world into two contrasting poles – corporate and state power on the one hand, the atomised individual on the other – has somewhat disoriented resistance, encouraging many people to think in terms of individual choices rather than collective action.

3. The vanguard from which revolutionary organisation must be built comprises a much reduced pool of ‘traditional’ union and movement activists alongside a large, diffuse, shifting layer of ‘new’ activists. The character of each, and the relationship between the two, must be understood and mediated – if we are to rebuild the revolutionary left.

Thanks are due to James Meadway, Alex Snowdon, and Alastair Stephens for specific comments on this series of articles, and to other Counterfire comrades for more general comments that have helped shape my thinking. It will also be apparent that I am indebted to two generations of theorists associated with Monthly Review; their ongoing analysis of capitalist development is, in my view, indispensable. I must also acknowledge a debt to the insights of David Harvey.

The third article in this series will explore the character of the new urban uprisings as exemplars of contemporary class struggle.

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