How John Weeks misunderstands neoliberalism

by Jehu

Professor John Weeks has written some papers on neoclassical economics that have been useful to me in understanding its core assumptions. In particular, I have found his paper on neoclassical theory of money to be extremely helpful. In Margaret Thatcher-1507907that paper, Weeks made it clear that since in neoclassical economics anything can be money, the fascist state must ensure its currency alone is money. Which means what serves as money within the world market cannot be open for negotiation. This argument goes a long way toward showing why the United States will not give up the special place of the dollar in world trade. I don’t always agree with Weeks conclusions, but I think his grasp of neoclassical theory is extremely worthwhile.

So, when I came across this three part interview on neoliberalism that Weeks held with The Real News Network it piqued my interest. Unfortunately, it turns out to be another example of how Week’s mastery of the assumptions of of neoclassical theory often has to be separated from his conclusions.

According to the interviewer (I have not yet read the book), the central argument of Weeks’ book is that “the inherent inefficiency and intrinsic malevolence of governments at all levels.” Against this neoclassical view of government, Weeks argues:

“The government sector needs to be larger. Just about all of the basic things governments do they do more effectively and cheaper than the private sector. One of the best examples is pensions. The U.S. Social Security system is much more efficient than anything in the private sector. And that is because the government doesn’t charge you a handling fee and doesn’t run a profit doing it.”

There are several problems with posing the question of government this way. The first is that “government”, i.e., the state, is the capitalists’ own state. Weeks never quite offers any real explanation for why, at least in theory, the capitalists have such hatred and disdain for their own state. But certainly no capitalist I have come across advocates abolition of the present state and the whole of policy discussions are concerned with what the state should be doing — not how to get rid of it. If the state is malevolent and inefficient, it seems the capitalists need this sort of malevolent inefficiency as a matter of policy.

Second, Weeks never quite explains how the capitalists go about indoctrinating the majority of society to the view the state is malevolent and inefficient beyond asserting this is being done:

“The reason they believe it is because it’s beaten into people every day, because–think about it for a moment. [government spending] … is peanuts compared to the private sector. I mean, you have these executives who oversaw the collapse of the financial system, and each year they’re getting bonuses of up to $100 million, $300 million. Well, I mean, if this isn’t a waste, what is?”

Since the collapse of the financial sector was so clearly an expression of private sector waste, how can people be convinced government is even more wasteful? Obviously the fact that the private sector is wasteful has nothing to do with whether or not the public sector is also wasteful. For one thing, it is not at all clear people are making a comparison between relative scales of public and private waste to form their opinion on the state.

Moreover, when Weeks argues, “many of these companies produce things that are absolutely useless for the economy, making billions of dollars out of producing so-called financial products which led to the collapse of the economy”; he conveniently ignores the fact the customer for much wasteful ‘production’ is often the state itself. It is difficult to understand the hostility of the capitalist to government waste and inefficiency, when that same government is the market for capitalists’ production. Why would the capitalists demand an end to the wasteful state when it is, by far, their largest and most important customer? I mean, it is not as though there is a huge market for Trident nuclear submarines.

Nevertheless, Weeks insists the capitalists have sold the American people on the idea government is wasteful:

“But the idea’s been sold. You know, government is inefficient. We’ll make it as small as possible. It ought to be leaner and more effective.”

This idea, Weeks explains, is “nonsense”:

“The U.S. Social Security system is much more efficient than anything in the private sector. And that is because the government doesn’t charge you a handling fee and doesn’t run a profit doing it.”

Really? Is this true? Of course not.

Every year Washington charges a ‘handling fee’ that it assures us is being set aside for future Social Security needs. This ‘fee’ is supposed to be set aside in a ‘locked box’ for future generations — but is it? Clearly not: it is spent on Trident nuclear submarines. The so-called trust fund is used to finance military procurements and every other sort of waste. This mass of consumed revenue continues to appear as an outstanding debt on the ledger books of the fascist state, but, in fact, it has been consumed entirely. Thus when it comes time to actually make use of the funds, they will be gone.

And how then will the funds be secured?

With an increase in FICA taxes and a reduction in benefits, of course. For some reason beyond my limited understanding, Weeks deliberately buys into the myth of the Social Security trust fund; and since he has bought into the myth, he cannot explain why some folks might be less than enthused by fascist state spending. Nor can he explain why they might be opposed to the state for their own reason — quite apart from bourgeois propaganda.

Thus he completely dismisses our own independent experiences in the same way so many stupid Leftists do:

“people out there watching, they might have had bad experiences going down to the post office, having to stand in line, all that sort of stuff, but they sure had bad experiences with the private sector.”

Our own direct experience with the fascist state is denigrated because we run into the same shit when we deal with Comcast customer support. But here the thing: one of the “inefficiencies” of the fascist state is to regulate Comcast — just as it was supposed to be regulating those “executives who oversaw the collapse of the financial system”. In fact, the fascist state is not only inefficient in its own right, it doesn’t even prevent the capitalist from driving the financial sector to the brink of total collapse. Moreover, when the capitalists drive the financial sector to the brink of collapse, the state allows those very same executives to walk off with bonuses for a job well done.

You would think Weeks could connect the dots on this sort of state “regulation”, but he simply dismisses it:

“The idea that markets should exist without government regulation is absurd.”

But Weeks never shows that markets are being regulated by the fascist state at all — not a single piece of evidence to this effect. I am not sure why it is, but it seems the Left cannot and will not see reality as the average worker does. The average worker sees the Social Security trust fund spent on the military; the complete unwillingness of Washington to regulate capitals; the increase in wealth concentration, etc. Yet, when the worker reacts to this horror show by becoming suspicious of the fascist state, she is accused of being “indoctrinated” by market ideology.

Weeks argues markets could not exist without government regulation:

“The idea that markets should exist without government regulation is absurd. You know, say a supermarket, which is a concrete form of a market–how do you get there? You’re driving your car. In order to drive that car, you have to have a licence. You get the license from the state government. You’re going to drive on a road. The government will have built that road. There will be regulations about how fast you can drive so you don’t kill each other, other people when you do it. The government is doing all of that. That supermarket could not exist. That supermarket chain could not exist without the role of local and federal government. It’s not that the federal government intervenes in markets. It’s that they are the facilitator by which markets exist.”

You may have noticed something very odd in Weeks’ example. In his example, the supermarket is referred to as a “concrete form of a market”, when actually it is a capitalist firm. If we substitute the term “capitalist firm” for “market”, his example becomes a little less naive. Weeks is arguing a capitalist firm cannot exist without the state; the state is the necessary complement to the production and private appropriation of surplus value. As the necessary complement of the production and private appropriation of surplus value, it should come as no surprise to Weeks that the worker, whose labor is being appropriated, might just identify the state as representing an interest inimical to her own — the capitalist.

And, if this is true, we don’t need to rely on the absurd idea the worker is convinced by the capitalist to hate the state — particularly when it is obvious the capitalist himself does not hate the state, but sees it as his best customer.

The capitalist, moreover, knows the state does not exist to regulate him, but to “facilitate” the production of surplus value. Which explains why, when financial capitalists killed the financial system, they turned to the state to bail their firms out.

What is really so difficult for Leftists to get this through their thick skulls? The state does not exist to “regulate markets” but to “facilitate” capitalist production. The idea that neoliberalism implies a market fetish of some sort, or a reduction in the size of the state, is silly — but this is the Left’s ideal conception of neoliberal ideology.

Neoliberalism, like any other bourgeois ideology, is concerned about one thing and one thing only; namely, capital, i.e., the production of surplus value.