PHEW! Thank goodness for Jim Walker’s letter about Michael Fry and neoliberalism today. I was beginning to think I was the only person in the world who didn’t know what the word means.

After all, philosophers and economists, from Ludwig Ehrhard to Noam Chomsky, from Milton Friedman to Hayek, from Austria to Australia with Chicago in between, have all had different explanations of the word. So I reckon it’s one of those portfolio words that can mean anything you want it to mean.

On that basis maybe Michael Fry IS a neoliberal! Oh dear!

Peter Craigie

DR Jim Walker’s defence of Michael Fry was and excersise in reductio ad absurdum.

He claims that neoliberal economics doesn’t exist. Neoliberal economics were a product of the Chicago School. A group of economists inspired by Hayek’s seminal Road to Serfdom, under the tutelage of Milton Friedman rejected Keynesianism in favour of monetarism.

Their ideas found favour with Pinochet the military dictator of Chile who took power in a bloody coup in 1973.

The “experiment” was a disaster. unemployment went from 4.3 per cent to 22 per cent. Real wages declined by 40 per cent.

In 1970, 20 per cent of Chile’s population lived in poverty. By 1990, the year “President” Pinochet left office, the number of destitute had doubled to 40 per cent.

These failures however did not stop Friedman’s neoliberal ideas from finding favour in under the Thatcher and Reagan regime.

The Big Bang in 1986 took down the wall between speculation and retail in the banking sector. This lead directly to the 2008 crash.

Walker repeats the favoured fairytale that the private sector, left alone will provide jobs and growth.

This again is nonsense. Since 1979 skilled manufacturing jobs have been offshored to India and China.

How can economy dependent on consumer demand grow when real consumer incomes and real retail sales do not grow?

Walker must believe that the entire corpus of macroeconomics taught since the 1940s is simply incorrect. If not, he could not possibly support the growth fairy tale.

Walker claims that none of your “left-wing” readers ever say anything about the role of Gordon Brown in the financial crash. Again this is wrong. I have documented many times the culpability of New Labour in light touch “regulation” and the looting of the taxpayer to pay for the bank bailout.

His defence of Fred Goodwin is laughable. Walker should read Ian Frazer’s Shredded to see the shocking practices going on at RBS under Goodwin’s tenure.

Since 2008 a massive bubble has been built up by quantitative easing. Historically, capitalism was justified on the grounds that it guaranteed the efficient use of society’s resources. Profits were a sign that resources were being used to maximize social welfare,and losses were a sign of inefficient resource use. This is no longer the case when the economic policy of a country serves to protect institutions that are “too big to fail”.

Capitalism no longer serves society and the worsening distribution of income proves it.

Alan Hinrichs

WHILE Dr Jim Walker makes important points regarding The National’s decision to give column space to his friend, Michael Fry, he claims that there is “no such thing” as a ‘neoliberal’ school of thought except in the minds of the uninformed political and media class”. Well perhaps there is no such school of thought, yet the concept of neoliberalism has existed since it was first proposed by Alexander Rustow in 1938, as a response to laissez-faire. The definition of neoliberalism has changed in the eight decades since then, and indeed the precise definition of what neoliberalism is is the subject of debate. However, to casually assert that there is “no such thing” seems to be precisely the type of “fuzzy thinking” Walker bemoans.

I’m no economist, nor am I part of the political and media class, but I did have a quick glance at the rather comprehensive Wikipedia entry on neoliberalism. Perhaps the learned Doctor would care to similarly enlighten himself before making silly assertions.

David Myers

... and an academic weighs in on the topic

WRITING in Saturday’s National (Fry Will Contribute Common Sense and Clear Thinking), Jim Walker writes: “As an economist, I have no clue what a neoliberal is.” In Jim’s view we should therefore stop using the term, because “there is no such thing and you don’t have a clue how to define it.” Actually, there is and I can.

The term neoliberalism can be used in three ways. First, it is an ideology which emerged in Central Europe during the 1930s in opposition to what was mistakenly called “socialism” (ie state planning and ownership) and which later migrated to the economics department at the University of Chicago. The adherents of this conception of neoliberalism actually adopted the term as a self-description; indeed, Milton Friedman wrote a paper in 1951 called Neoliberalism and Its Prospects.

The difference between the neoliberals and more conventional supporters of neo-classical economics was that the former did not believe that the market order they desired was a spontaneous result of human activity, but one which would have to be brought into being by the state. The notion that neoliberalism is about markets as opposed to the state is simply a myth – it is rather about changing what the state does.

Second, neoliberalism is also the strategy adopted by the alliance of state managers, politicians and employers which began to emerge from the mid-to late-1970s, first in Chile, the UK and the USA. This responded to the return of economic crisis in 1973 by seeking to shift the balance of power in the workplace from labour to capital, in the first instance by weakening the trade unions through artificially raising unemployment levels, attacking key groups of workers (miners in the UK, air-traffic controllers in the US), and moving production to greenfield, non-union sites (the “M4 Corridor” in the UK, the “Sunbelt” in the US).

The strategy was not, however, the implementation of a master plan derived from neoliberal ideology: it was largely improvised. But once Keynesianism and other forms of state capitalism had proved themselves no longer able to raise or even maintain the rate of profit, ruling classes had a limited set of options. It is therefore unsurprising that most arrived at the same set of responses – privatisation, outsourcing, deregulation, unrestricted capital flows, indirect rather than direct taxation, and all the rest. The ideologists could claim this as their work, but, without successful resistance, it would almost certainly have happened even if Friedman and co had never written a word.

Finally, neoliberalism is the entire period in the history of capitalism since this strategy began to be applied in the 1970s. There have of course been variations in the regime: the “social” neoliberalism of Blair (or Sturgeon) is different in many ways from the “vanguard” neoliberalism of Thatcher and Reagan, not least in relation to identity politics, but the underlying economic doctrines have remained remarkably consistent.

The problem with Jim’s argument is that it assumes there are underlying economic “laws” which are eternally true for all of human history. On the contrary, every single statement he makes has to be prefaced by the words “under capitalism”. Ironically, Von Hayek, one of the forerunners of neoliberal ideology, knew better than this. He argued in several places that for most of human history we sought cooperation rather than competition – and that this attitude had to be stamped out of us if capitalism was ever to be truly secure. Neoliberalism is an attempt to create a world in which all human relationships are forced to conform to a model of economic competition; but what can be created can also be destroyed – and as far as neoliberalism is concerned, the sooner the better.

Neil Davidson, School of Social and Political Science
University of Glasgow

Letters I: Treatment of the Brains is nothing short of repulsive