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The myth that neoliberalism produces poverty reduction and increases social wellbeing for all has become an alibi for the dismantling of the welfare state and with it, an accomplice to the dismantling of social rights, on the one hand, and to the channeling of state coffers into private interests to the benefit of banks, financial institutions, and private business, on the other.
This selection from part of the manuscript Poetics of Opposition. Politics and the Work of Culture in Contemporary Spain,
Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction. […] We recognize that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems. These principles are essential to economic growth and prosperity and have lifted millions out of poverty, and have significantly raised the global standard of living. Recognizing the necessity to improve financial sector regulation, we must avoid over-regulation that would hamper economic growth and exacerbate the contraction of capital flows, including to developing countries. We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.I.-Declaration from the G-20 Washington Summit 2008
Amid the burgeoning financial crisis, the Group of Twenty (G-20) met in 2008 for the Washington Summit, attended by then President Rodríguez Zapatero of the ruling Socialist party (PSOE), where the world’s wealthiest nations called for concerted international cooperation to reform the financial sector, favorable to reviving global flows of capital. The many points identified in the declaration (the need to strengthen transparency and accountability, enhance regulation, promote integrity in the financial markets, reform international financial institutions, and foster prudential oversight and risk management), may have been a legible indicator that the world’s leading economic powers were coming to terms with the responsibility of unethical business practices and systemic flaws, among other factors, in the successive tumbling of international markets in a domino effect (
Declaration of the Summit
). Yet, despite the different nuances of policy positions in the European Union at large, political and financial powers have upheld ‘structural reform’ as the basis from which to pursue deeper austerity measures and labor reforms that favor precarity, thereby dismantling the welfare state and social rights in Spain under the aegis of neoliberal reform. In the neoliberal policies of the EU, reducing the deficit by cutting public expenditures on social measures (on public healthcare, education, pensions, social programs, and so on) while leaving others untouched (investments in private enterprise, the military, national security programs, and so on) has been expressed, and indeed imposed, as part of the only solution to the crisis in Spain, as elsewhere.According to this logic, as the G-20 declaration asserts, greater competition, private investments, and the surveillance and tempered regulation of the free market in sum, free market activity with minimal state intervention, as deemed necessary equate directly to greater opportunity, entrepreneurship, and prosperity that deliver poverty reduction and a higher standard of living on a global scale. And yet, in extensive literature on the effects of neoliberal policies in general and of austerity in particular, nothing could be farther from the social reality experienced by world populations, as these reforms have correlated to greater inequality, unrest, disease, and mortality.
In the forging of its myth, neoliberal policies are asserted by the G-20 as providing a better quality of life for all. On what bases is the claim made that a higher standard of living follows naturally from austerity and the flexibilization of labor, among other neoliberal reforms? Myth, writes Roland Barthes, bears an ideological mechanics that ‘naturalizes’ its constructed character in order to assert and legitimize itself as truth.Exemplified in Barthes’ reading of a magazine photograph in which a soldier of African descent salutes the French flag, myth produces a sleight of hand here, forged from an image of colonial subservience to the French Empire that collapses the signified into a signifier “If I focus on a full signifier, in which I clearly distinguish the meaning and the form, and consequently the distortion which the one imposes on the other, I undo the signification of the myth, and I receive the latter as an imposture” (128). See Roland Barthes, Mythologies .Trans. Annette Lavers. New York: Hill and Wang, 1972.
These reforms have proved historically “damaging [to] the welfare of the common people in those countries, causing enormous suffering,” writes Vicenç Navarro. “[T]hese policies had consequences for the welfare and quality of life of ordinary people, creating death, disease, and social unrest” (“The IMF’s Mea Culpa?”). Also see Basu and Stuckler; Blyth; Harvey, A Brief History of Neoliberalism; and Lustig and her contributors, to name a few. by reducing its connotative meaning into a self-evident truth: “that France is a great
Empire, that all her sons, without any color discrimination, faithfully serve under her flag, and that there is no better answer to the detractors of an alleged colonialism than the zeal shown by this Negro [ sic] in serving his so-called oppressors” ( Mythologies 116). By attributing the constructed character of presumptions to nature, myth may become an accomplice to legitimize power relations by forging an alibi. Here, to the ‘natural order’ of the cultural (and ethnic) ‘ superiority ’ of the metropolis and its right to (military) rule over the colonial subject, demonstrated in the subordinate’s allegiance to the empire. In this sense, as in Barthes’s reading, myth may adopt or invert the arguments of its opposition, despite the lack of veracity in its production of meanings or claims. “Myth is a value, truth is no guarantee for it; nothing prevents it from being a perpetual alibi: it is enough that its signifier has two sides for it always to have an ‘elsewhere’ at its disposal”— an elsewhere which Barthes locates in the empire’s benevolent intentions as its alibi to implicit racial subordination and colonial oppression (123). Thereby myth becomes indisputable material if its alibi is taken literally, at once passing itself off as a natural order that has always been and that bears a malleable disposition to be appropriated in further myth-making, say, in Barthes’s reading, at the service of imperial power and its legitimacy of rule. Let us return then to the assertion that neoliberal governmentality delivers greater good on a global scale.The myth that neoliberalism produces poverty reduction and social wellbeing for all has become an alibi for the dismantling of the welfare state in Spain and with it, an accomplice to the dismantling of social rights, on the one hand, and to the channeling of state coffers into private interests to the benefit of banks, financial institutions, and private business, on the other. Such a polemic has been flagged by economist Vicenç Navarro, who argues that Spain’s ‘soft’ multi-billion euro bailout from the European Central Bank (ECB) does not alleviate the crisis of credit-lending in Spain, as this capital is destined for Spanish banks to pay off interest on loans from European financial institutions abroad, while the Spanish state incurs this burden of debt, on the one hand, and must also adopt austerity policies to dismantle social welfare programs, on the other (“The Euro Is Not in Trouble”). Public funds, in other words, are redirected to private interests in neoliberal practice at the expense of labor rights, social programs, schools, hospitals, and so on. On the other hand, Navarro notes, the ECB and the International Monetary Fund (IMF) have placed conditions on Spain’s eligibility to receive financial assistance by urging the government to pursue measures that would increase the flexibility of labor, reduce public expenditures on pensions, and privatize the welfare state —in sum, neoliberal reforms (“The Euro Is Not in Trouble”). One form of what David Harvey calls the “accumulation by dispossession” of capital, these measures entail the “reversion to the private domain of common property rights won through past class struggles (the right to a state pension, to welfare, or to national health care),” which often, if not exclusively, benefit the greatest fortunes at the expense of social programs (“The ‘New’ Imperialism” 75).
That is, where the private accumulation of capital reaches its limits of projected growth, the sustainability of a given enterprise must be secured through dispossession, through takeovers, expropriation, the payment of private debts from public funds, and so on. However, one should not presume that these reforms are adopted coercively alone, as government officials in Spain’s predominant left and right parties (PSOE and PP, respectively) have welcomed likeminded policies, historically, in order to meet the accords for Spain’s adhesion to the European Union after the Maastricht Treaty of 1992. Amid neoliberal governance, contemporary times have witnessed the rise of new transnational actors and financial players. The state, in other words, experiences a crisis of sovereignty for its accentuated lack of autonomous decision-making on fiscal and labor matters, in which government officials and policy-makers often succumb to corporate, banking, and financial interests beyond the state, and sometimes do so voluntarily. This circumstance is not new, however, nor is it unique to Spain. In the 1970s, foreign credit lending from financial institutions in the United States would wield powerful leverage to reshape strategically the economic policies of indebted countries. As David Harvey notes, after Mexico was pushed into default on its debt to New York financial institutions in 1982-84, this circumstance provided the test case for the IMF and United States government to work in concert to demand neoliberal reforms of Mexico towards greater labor ‘flexibility’ (the deregulation of labor protections for workers), free market laws, and privatization ( Brief History of Neoliberalism, 28-31). Echoing the test case of Mexico, today the European Commission (EC), the IMF, and the ECB, known popularly as the Troika, have urged the European member states of intervened economies to pursue further neoliberal “structural adjustments”— termed
