“Don’t want to question, don’t want to complain
Rather keep riding on this runaway train”
(Eliza Gilkyson, Runaway Train, 2008)
One of the most pernicious aspects of neoliberalism - the political / economic orthodoxy which insists on the need for GDP growth, population growth, low taxes, a small state, and balanced budgets - is the way its myths have permeated collective consciousness, so that alternatives are hard to contemplate let alone act on. Associated initially with the specific economic policies introduced in the 1980s by Margaret Thatcher in the UK and Ronald Reagan in the US, neoliberal attitudes now dominate the political landscape throughout the Global North. Different political parties may interpret the orthodoxy with different degrees of harshness, but few have the courage to challenge its core beliefs.
Humanity has to start valuing caregiving, to its elderly and unwell, and to its planetary home. If it does not become more respectful of nature, quickly, it is going to crash through key planetary boundaries, with disastrous consequences. Mainstream politics is vaguely aware of this, but the persistence of myths rooted in neoliberal orthodoxy prevents it from doing anything effective about it. Exposing those myths is essential if we are to have any chance of navigating away from catastrophe.
Myth 1 - the ‘need ‘ for economic growth
Of all the myths that sustain the neoliberal project, the ‘need’ for economic growth is both the most accepted by political elites and the most directly in conflict with what is required to remain within critical planetary boundaries. Growth is measured by GDP (Gross Domestic Product), the total value of marketed goods and services in an economy. This measure ignores non-marketed services produced by households, such as the care provided by family and friends that I explored here, and it ignores the unequal distribution of income earned from market activities. Evidence that pursuit of GDP growth widens inequality is dismissed by referring to another myth for which evidence is lacking - that the benefits of growth trickle down from the rich to the rest of the population.
The goal, economic growth, targets profits, not well-being. Indeed the pursuit of growth is often counter to well-being. A growth-oriented economy rewards the firms that create pollution, and the firms that are hired to dispose of it. The growth imperative encourages the consumption of addictive products that damage health, such as ultra-processed foods and cross-sex hormones, and it requires increased expenditure on the healthcare services that are needed to treat the resulting ill health. GDP grows, but well-being suffers.
There is a rational reason why economic decline has such a bad press. In an economy that depends on growth, recession is harmful, particularly for people whose living standards are already low. But in an economy oriented to thriving within natural limits, degrowth would be needed. Managing degrowth to protect basic needs would be a challenge, but one that could be met by redistributing resources from rich to poor, and strengthening the foundational economy.
A subset of the growth myth suggests that we can have ‘green growth’ - economic growth that is decoupled from environmental damage. Green growth advocates are enthusiastic about renewable energy, and its capacity to decarbonise the economy. But replacing fossil fuels with renewable energy requires a huge increase in the mining and processing of rare minerals and metals. Expanding and ‘greening’ the grid to fuel continued growth adversely impacts nature, as is acknowledged in this article in the Economist magazine, which urges us to “hug pylons, not trees” and celebrates that “we had to loot the planet in order to save it”.
“The culture we live in is one where industry reigns supreme. It has perverted the very concept of environmentalism, turning it into something unrecognisable. Instead of protecting the planet and the natural world, it has become a tool to further corporate profit margins.”
(Elisabeth Robson, A perverted movement, Substack 9 April 2023)
Myth 2 - the ‘need’ for population growth
When my father was born, in the late 1880s, world population was around 1.5 billion. It is now over 8 billion - a more than five fold increase in just a couple of generations. Consumption growth has been more damaging, but ecological damage from population growth has been considerable. One of the challenges of implementing the degrowth that is needed to stay within planetary boundaries would be how to reduce population pressures in a way that is consistent with personal liberty. Here, again, neoliberal thinking is a barrier.
Continued population growth is not as important as economic growth to the neoliberal mindset, but concerns are increasingly being expressed that the share of the world’s population of working age (which rose from 57% in 1966 to 65% in 2011) has started to decline, and that in many high income countries birth rates are falling below death rates (so that without immigration population would decline). These concerns are two fold - that economic growth will be slowed, and that care for the elderly will become more problematic.
Environmentalists are often cautious about suggesting that there should be a decline in human population numbers, for fear of being perceived as supporting coercive birth control policies based on racist eugenics. In a strange twist, a counter argument has emerged, combining neoliberal worship of growth and eugenic fear of being swamped by other cultures, to suggest that the environmentally aware should have more children. Louise Perry, for example, recognises, here. that declining birth rates won’t reduce environmental impacts quickly enough to avert catastrophe. She goes on to suggest that only bright green technology will save us (a widely held belief, that, as I explained here, ignores the material impossibility of extracting and processing the required minerals and metals within the time scale that is available). Environmental activists, Perry urges, should raise bright, environmentally aware children that will be capable of developing the technological innovation needed for low carbon energy development at the required scale:
“If you have the sort of personality, intelligence and temperament that disposes you towards being a climate activist, there’s a fairly good chance your children will as well…If you’re the type of highly educated person who really cares about the environment and is going around saying ‘I’m not going to have kids because of the planet’ you are exactly the sort of person who is likely to have children who are going to develop the next form of energy that we need. The worst thing you can do is refuse to procreate.”
(Louise Perry, Motherhood in Crisis, Spectator TV, 18 April 2023)
The eugenics/effective altruism link is made explicit in Perry’s interview with Simone Collins, here, ( Pronatalist.org, the organisation that Collins co-founded with her husband, lobbies governments and provides a number of services to improve ‘fertility outcomes’, including ’optimized’ dating, surrogacy, egg freezing, embryo testing, artificial womb development, and special education for gifted children)
“The psychographic profile of someone who cares about the environment will be systematically bred out of the population if these people choose not to have kids.”
(Simone Collins, Could Having Kids Save the Planet?, Maiden Mother Matriarch podcast, 22 April 2023)
Myth 3 - the ‘need’ for low taxes
When neoliberals assert the need for lower taxes, they invariably mean lower taxes for the rich. They believe that high taxes for the rich reduce incentives to work, that tax revenues will increase as tax rates are cut, and that benefits from increased incomes for the rich will trickle down to the poor. There is no evidence to support any of these beliefs.
There is considerable evidence, though, that progressive taxation (taxing the rich at a higher rate than the poor) creates greater social cohesion, and can ensure fairer adaptation to climate change:
“The accelerating climate crisis is largely fuelled by the polluting activities of a fraction of the world population. The global top 10% are responsible for almost half of global carbon emissions and the global top 1% of emitters are responsible for more emissions than the entire bottom half of the world’s population ……. Relatively modest progressive taxes on wealth ownership could yield hundreds of billions of dollars of tax revenues every year given the very high level of wealth concentration ….. A ‘1.5% for 1.5C’ progressive tax on extreme wealth (individuals owning over US$ 100 million) would raise about US$295 billion per year, more than enough to fill the current adaptation gaps reported by the United Nations Environmental Programme.”
(Lucas Chancel et al, Climate Inequality Report 2023)
Effective implementation of the degrowth that can avert climate and ecological catastrophe needs everyone to be able to enjoy an adequate standard of living, while overall consumption is held within limits set by nature. This can only be achieved by massively reducing economic inequalities, both within and between countries. It is hard to imagine this happening without progressive taxation, of both income and wealth.
Myth 4 - the ‘need’ to shrink the state
Neoliberalism insists that the state should be only minimally involved in the direct provision of goods and services, because, it claims, the private sector will operate these goods and services more efficiently, and access to private capital will reduce the need for taxation. Regulation, it suggests, can ensure that service quality is maintained and that consumers will not be overcharged.
Regulation to ensure that privatised utilities meet service standards has largely failed, most notably in the English water supply industry. This is a collection of regional monopolies, where the main argument for privatisation, the supposed efficiency gains from competition, cannot apply. Instead, regulation was supposed to ensure that targets set by the state were met. But a price formula intended to pay for clean up has been used to enhance dividends for shareholders, and investment has been financed instead by long term debt paying higher rates of interest than would have applied if state ownership had continued. Public sector type absence of competition has been coupled with private sector rewards for shareholders, and has resulted in under-investment in new sources of supply, self-monitored dumping of raw sewage into protected maritime habitats, and huge pay increases for company executives. These issues have come to a head with the financial crisis at Thames Water, but a recent analysis suggests that all water companies in England are environmentally insolvent - none can raise sufficient finance to provide clean drinking water and be able to avoid dumping raw sewage from storm outflows into rivers and seas.
Although neoliberal policies favour a small state, it would be an error to assume that the role of the state has reduced. Instead, the state has absorbed a corporate mindset, creating the legal framework within which corporate interests can flourish:
“Simplistic definitions of neoliberalism (not just the province of the political right) that treat it as a byword for a spontaneously created market order, or an ideology absolutely hostile to the state, will not get us very far. Instead, neoliberalism is best understood as a particular configuration of state and market, where the state internalises the interests of the corporations that dominate the market, to the extent that identification with other value systems is progressively eroded.”
(Sean Phelan, ‘It’s Neoliberalism Stupid’, Counterfutures 2016)
This changed role of the state under neoliberalism helps explain why governments have been so active in promoting synthetic sex identities and services which administer harmful pharmaceutical products such as puberty blockers and cross-sex hormones to young people - an otherwise puzzling recent development that has been analysed extensively in Jennifer Bilek’s 11th hour blog.
A state whose role has been reduced to being little more than a conduit for the pursuit of corporate interests is far removed from the sort of state that would be needed to respond fairly and effectively to the climate and ecological emergency.
Myth 5 - the ‘need’ for balanced budgets
If the growth myth is the one that is most powerfully believed in by political elites, the balanced budget myth is the one that most resonates with ordinary citizens. We are told, repeatedly, that the government ‘has maxed out its credit card’, or that ‘there is no magic money tree’, or that ‘there is no such thing as public money, only taxpayer money’. These homilies are trotted out whenever a politician proposes to use the government’s capacity to create money to fund a better future. They are based on a pretence that a government is like a household - that it has to balance its budget, and that if it runs up debts these have to be repaid at some point in the future,
This is total myth in most modern economies, where sovereign currencies are ‘fiat’, established by legal declaration and not backed by gold or any other physical material. Here governments, via their central banks, create money to finance expenditure. How much they create is a political choice, a choice that is constrained by the resources that are available and by the need to avoid encouraging inflation. They minimise the inflationary consequences by taking money back in the form of taxes. When they spend more than they tax, the result is a government deficit - a deficit that is matched by a private sector surplus.
How much money governments take back in taxes is another political choice, constrained by whether or not there is spare capacity in the economy, or how quickly available resources can be re-oriented towards desired ends. Ignore this constraint, and the result is increased inflation. Within this constraint, though, much is possible. This is something Maynard Keynes understood in a BBC address he gave in 1942, in the middle of the second world war - “Anything we can actually do, we can afford”. That simple insight, that in reality our choices are limited not by money but by the real resources at our disposal, is hugely relevant to our present situation.
“We have let our imaginations become far too limited, and it is holding us back. We have been far too restrictive in public policy out of unwarranted fears about numbers recorded in government agency spreadsheets.”
(Stephanie Kelton, The Deficit Myth, 2020)
The reality of money creation in a modern economy with a fiat currency makes any ‘fiscal discipline’ which insists on balanced budgets both unnecessary and undesirable. Fiscal rules that are set by political elites are choices that they make about what outcomes they want to achieve. They are choosing a straitjacket of ‘balancing the books’, requiring expenditure to equal tax revenues, whatever the circumstances. Such a straitjacket is presented as a necessary limit on their freedom of action. It disguises the choice they are making - to further the overall aims of neoliberalism, and rule out the possibility of creating an economy which distributes resources fairly and respects planetary boundaries.
This week, there were by-elections in three English parliamentary constituencies. It was widely expected that the Conservatives would lose all three, despite having won large majorities in those constituencies in the 2019 General Election. This was an opportunity for voters, in different parts of the country, to deliver their verdict on one of the most incompetent and disaster-prone governments in decades. But the opportunity was not taken. Labour and the LibDems each won one seat from the Conservatives, and the Conservatives held the other seat. But there was little enthusiasm for any of them - in each of the three constituencies, most of the electorate didn’t vote.
To understand this, the pernicious influence of neoliberalism must share at least part of the blame. If they are persuaded to believe that the state must shrink, and that the budget must balance, many will think that their vote wouldn’t make any difference. This was highlighted in the week before the by-elections when Labour announced that it would continue with the Conservative policy of restricting Child Benefit to two children (and allowing payment to a third child only if that child was the product of rape). The Shadow Culture Secretary’s explanation was nonsensical, but rooted in neoliberal dogma; “There just, frankly, is no money left…. we just can’t make promises that we can’t afford to keep, and that means some difficult choices.” (ITV News, 18 July 2023). When the choices made by the two main political parties include condemning children in large families to a life of poverty, in order to demonstrate ‘fiscal responsibility’, it should be no surprise when few of the electorate turn out to vote.