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Thought for Day: Competitiveness in Popular Neoliberalism

Thought for the Day: Competitiveness in Popular Neoliberalism


Keith Rankin, 12 February 2015

I have been reading Guy Standing's The Precariat: The New Dangerous Class (2011).

Standing gives a very interesting account (pp.132-3) of the philosophical origins of neoliberalism as a 'panopticon' utopia inspired by the late eighteenth century writings of Jeremy Bentham. It's an essentially 'utilitarian' philosophy, and it works by giving the illusion of choice and freedom, while competitive forces actually create discipline. In this kind of utopia you are free to choose, but punished if you make any choice other than the 'correct' choice.

So competition is critical to the neoliberal vision. However, we live in a world where the concept of competition has been popularised, essentially by the Social Darwinists (not really interested in the equilibrium notions that underpinned utilitarian philosophy) who were very influential in the late nineteenth century. This is a competition of winners (the competitive) and losers, and was epitomised in its most extreme form in the writings of Ayn Rand. (Social Darwinism also created the nationalism that gave us World War 1 and World War 2.) Further, in popular neoliberalism, the goal of economic activity, and of the competitive process, is economic growth.

Guy Standing fails to distinguish popular neoliberalism – the neoliberalism common amongst journalists, politicians, public servants and business leaders – from neoliberalism's anti-libertarian Benthamite philosophical roots.

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In Standing's first paragraph (p.1), elements of both philosophical and popular neoliberalism are intertwined:

"In the 1970s, a group of ideologically inspired economists captured the ears and minds of politicians. The central plank of their 'neo-liberal' model was that growth and development depended on market competitiveness, and to allow market principles to permeate all aspects of life."

Philosophically, 'growth' originally meant 'progress', but has in popular neoliberalism come to mean 'output'. And 'competition', originally seen as a mechanism to promote efficiency and stability, has morphed in popular neoliberalism into 'competitiveness', a destabilising race to the bottom.

At best competitiveness is a zero-sum concept. When I become more competitive then you become less competitive. (In proper academic economics 'competitiveness' is a meaningless concept. The meaningful concept is 'productivity' – as economist Paul Krugman in particular has noted – which is not a zero-sum concept.)

In reality 'competitiveness' is a negative-sum concept. It essentially mean that I can sell more than you can sell if I cut my costs more than you cut your costs. Cost-cutting involves two systemically negative consequences. First, it typically means cost transfer rather than cost elimination. For example, pollution represents costs that someone else must bear. Second, one person's costs represent another person's market income. Competitive cost-cutting means income-cutting in practice.

A mixture of third-party costs and the cutting of most people's incomes is what we mean by the 'race to the bottom'. When we get to the bottom, even the winners become losers.

ENDS

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