The left's common sense on neoliberalism is a lightning rod for anti-semites

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It’s been ten years since the collapse of Lehman Brothers. With its implosion, the starting gun for the worst financial crisis in living memory was fired.

For many on the left, the Great Recession which followed marked the beginning of the end for “neoliberalism” as a widely accepted economic and political doctrine. This breakdown of authority was underscored when neoliberal ideologist-in-chief Alan Greenspan went in front of the US Congress during the height of the crisis and admitted that, despite his promises, economies had been at catastrophic risk all along. The left emerged from 2008 convinced of having identified a historic opportunity. The public was, and remains, furious at having been lied to about the power of “free markets” to guarantee prosperity. The left seemed well-positioned to offer a dose of righteous truth. Telling the tale of neoliberalism and its crimes then became standard procedure whenever the left has needed answers to hard questions about jobs, inequality, climate change, or debt. This is seen as a vote-winning narrative.

But the left’s common sense on neoliberalism is fundamentally flawed, and this has had profound implications for its ability to offer a compelling political vision. Worse, it has made the Labour Party in particular into a lightning-rod for conspiratorial thinking, often anti-Semitic in nature. To really rid itself of such limitations, the left must develop a genuine understanding of capitalism’s historic evolution.

When Jeremy Corbyn announced his party’s new industrial strategy in July, the spectre of neoliberalism revealed itself when he said that “for the last forty years a kind of magical thinking” has shaped economic policy. Since the era of neoliberalism coincides with the era of deindustrialisation, we are told that it is synonymous with the unchecked power of finance. It began with the capture of the government by bankers and their political puppets, and resulted in de-regulation, privatisation, and the outsourcing of good industrial jobs. This created a regime of low wages and poor working conditions which hollowed out the economy. This is the story told in definitive works like David Harvey’s Brief History of Neoliberalism. Labour’s industrial strategy is meant to reverse this history by bringing high-paying industrial jobs back to the UK, in order to form a tax base on which to rebuild the post-war welfare state along modern lines.

The mechanisms by which neoliberalism functions can be described in terms of austerity and financialisation. But the history that actually made it possible cannot. It only makes sense to present neoliberalism as the cause of all our problems if we avoid a more serious critique of capitalism, one which involves looking back further than forty years. If neoliberalism really begins with being “forged by Thatcher”, as Corbyn claims, everything which brought Thatcher to power becomes irrelevant.

Neoliberalism did not come from nowhere. It was a response to the opportunities created by the collapse of an earlier form of hegemony: the post-war social-democratic consensus which rested on strong unions and a generous welfare state. And what made post-war social democracy’s collapse possible was not a spell cast by evil bankers. Structural changes to production under capitalism which had been underway since the end of WWII guaranteed it.

The explosion of productivity on a world scale after the Japanese and German economies began to recover from post-war devastation contributed to a worldwide oversupply of goods and labour-power. These were economies experiencing rapid innovation, mechanisation and automation in manufacturing. In the US, the vast majority of industrial jobs were lost to automation, not outsourcing. All through the 1950s, British industry was attempting to do the same. Workers were up in arms over this as far back as 1956. Containerisation, which replaced labour-intensive loading and unloading, decimated the powerful dockworkers’ unions. All this brought new levels of competition to the labour market, which damaged old bonds of union solidarity, despite economic growth. When the crisis of the 1970s struck, unions had already been put on the back foot, and their situation got worse through the decade. The moment was ripe for a confrontation, from which neoliberalism emerged victorious. Thatcher’s crushing of the unions was, infamously, a battle which neoliberalism had to win in order to defeat organised labour’s political expression.

UK manufacturing productivity is higher today than in the 1970s, despite employing far fewer people. And industrial automation, already advanced, continues to intensify. This makes it difficult to believe that manufacturing alone will reverse neoliberalism. But treating inequality and austerity as if they are simply an outcome of the consolidation of the power of finance, which can be overcome by the power of industry, continues to hold sway over the left political imagination.

Without a critical theory of society, it has become necessary to recount conspiracy theories of society. Globalisation becomes a simple problem of neoliberal employment laws which allow British employers to roam the earth in search of the cheapest labour. This makes it all but inevitable that immigrants and foreigners will be blamed for our low wage regime, rather than structural changes to capitalism. Meanwhile, treating finance as the arch-conspirator behind all the dilemmas of modern political economy makes it impossible to keep anti-Semites away from the party. This story of “Jewish bankers” is simply too engrained in anti-Semitic ideology, and it has deep roots in the left. Early socialists like Charles Fourier and Pierre-Joseph Proudhon embraced anti-Semitic tropes that can stand alongside the worst Nazi invective. The notion that industry is good, while finance is bad, is a truism for many, but until we overcome it, the left will remain out of power, going from scandal to scandal. Now more than ever, criticism of capitalism, not neoliberalism, is what’s needed.