Sunday, 31 July 2011

Buying and Not Buying - A Primer on Neoliberalism and the Free Market

You have probably heard this comeback a thousand times already. Whenever anyone dares to raise an issue about the evil practices of evil businesses, it’s only a matter or time before someone chimes in: “If people stopped buying, it would have to close down”.

Ah, if only people stopped buying… Why can’t people just stop buying from those evil companies? If only everyone stopped buying, we would no longer have Tescos and Starbuckses. And our world would be inhabited only by small, friendly businesses, where kittens and puppies would greet us at the door, lead by the Churchill Dog.

This is “the” number one justification for not controlling corporations and businesses. It cuts to the core of the present economic system. We have to understand how this system works if we want to change it. In this particular case, we have to understand how it colours our perception of the world and what we can in it.  

Ok, kids, gather round for Mary’s short talk on “Economy 101”

(NOTE: If you are encountering these ideas for the first time, don't panic. It takes time to understand all this properly, and I'm still not all that clear on it myself. Have patience with yourself, don't obsess over what you don't understand (unlike me) and feel free to ask me anything you don't quite get).   

You may have heard that we live in a Capitalist system. It’s true. Now, Capitalism has many variants, and our current one is called Neoliberalism. It wrecked my country and it’s wrecking the world.
Neoliberalism’s motto is “let businesses do what businesses do”. This system is powered by the belief that if we just let businesses do whatever they want, things will eventually turn peachy. The name for this belief is “market fundamentalism” or “free market fundamentalism” and it is the most “fundamentalist” set of beliefs out there. Its basic assumption is that “markets regulate themselves”. Ok, what the Hell does that mean? It means this:

A business opens. People buy from it or not buy from it. If people buy, the business prospers. If people don’t, the business goes bust. This means that in time the only businesses that stay around are those that people liked. Which means that, in time, the only businesses that stay around are those which are “teh awesome”. The universe where “businesses” and “customers” interact with each other, is called “market”. Saying that “markets regulate themselves” means saying that this interaction between businesses and customers works into making things better for everyone. The Government, therefore, needn’t do nothing at all. In fact, it should take a hike, Mike. And that is, in short, the way the “free market” works.

Neoliberalism is now 30 years old. And we are still waiting for “teh awesome”

Now you may have read the above explanation and concluded “hey, that makes a lot of sense”. Yes, it does… when presented this way. This is the way market fundamentalists define the whole “markets regulate themselves” dynamic. It is also “the way things work / the way the world works” according to the vast (vast) majority of the population, who have either never lived under a different system, or haven’t heard of an alternative.

This is not “the way things work”. It’s the way we are told that things work. We are never presented with an alternative, are we?

If you have been following the banking crisis then you may have spotted the problem with the whole “markets regulate themselves” dealio. You may have raised an eyebrow when I said that “if people don’t (buy), the business goes bust”. After all, weren’t the banks in the proverbial sh*t when the estate stepped in and rescued them from total bankruptcy? Why yes, indeed. It turns out that in the real world, markets don’t actually regulate themselves very well.

So what exactly is wrong with this system? Well, approximately everything. But let’s start with the basics. The problem with the explanation of how things work is that it’s incomplete. So, let’s add the ending.

A business opens. People buy from it or not buy from it. If people buy, the business prospers. If people don’t, the business goes bust. This means that in time the only businesses that stay around are those that people liked.
The businesses get bigger, and buy out the competition. They start buying the government, which in turn gives them more power to do whatever they want. With more power and more freedom to do whatever they want, these businesses grow even bigger. Eventually, no other business stands a chance in competing with them. They become giants. Because no new businesses can compete, in time, they are the only ones running the show. Which means that whether people “buy or not buy”, becomes more or less irrelevant.

And here we have arrived to our initial problem. The comeback from the people who don’t like it when we complain about evil companies was “If people stopped buying, it would have to close down”.

It is true that whether people buy or not buy has an impact on whether businesses prosper or go bust. The problem is that when companies get so, so big, they have millions and millions of customers. This means that they can fare well if you stop buying. They can fare well if you and your family stop buying. They can fare well if you, your family, your friends, your community, your nation stopped buying. So in order to stop one of this giant corporations, you and your army need to convince millions and millions of people around the globe to stop buying. And that’s where our problem lies.

Now I’m going to explain one direct consequence of believing that “markets regulate themselves”. It’s important to understand this because it explains a lot about modern society. Here it is.

People are hammered consistently throughout their lives with the idea that “people buy, business grows; people don’t buy, business stops”. Eventually, people believe in this unquestioningly. They come to accept that “if people stopped buying, the business stops”. More importantly, they believe in the “opposite” of this statement: that all and every business that hasn’t stopped is popular with customers. Try and wrap your mind around this because it is that relevant to the way we have come to see the world. People believe that every business they see is well liked, its products are bought a lot, and, by extension, they come to accept that this business is good and moral. (Don’t worry for the moment if you don’t understand that last bit).

This means that people go through life accepting everything they see. This idea is literally a bottleneck in people’s minds. Nobody can question anything that is because everything is as it should be. If you go down the high street of your choice and dare mention to someone that “this business is doing something wrong”, the reply you are more likely to get back is “people buy it”. This idea has got in-built complacency. Nobody can question reality because if it’s real, it must have been chosen by lots of people. And that automatically makes it good, because nobody would dare suggest that anything which has been chosen by millions of people could possibly be wrong.

Spend some time with this idea. It explains so many things. Imagine what it does to people’s minds to not be able to question any aspect of the world around them because “people buy it”. If you can, read about the way that neoliberalism shapes people’s thinking. I wish I could suggest a book to you, but everything I know I’ve learnt it through reading bits and pieces here and there, and then putting the whole thing together myself.

How to break away from this “bottleneck”. If I had an answer to the comeback “people buy it”, I would be a famous writer. Unfortunately, I don’t. I don’t know of anyone else who does either. But I can help you chip away at this poisonous idea. 

And that's exactly what I'm going to do in my next post. (This one is too long already). Stay tuned!

(Hat tip to the ragged robin for getting me to explain the "free market" to an actual human being. Hope I've done a better job here)


Robert said...

"Have patience with yourself, don't obsess over what you don't understand (unlike me)"

Ha! not just me then, still trying to get my head around the concept of money being debt, I know it's at the heart of capitalism and what some people say means the global economy is a ponzi scheme, hopfully I'll understand it soon. Good article nicely explained.

Anonymous said...

I think Jean Kilbourne's work gets at some of how consumer culture/advertising shapes people's thinking, though more from a feminist and less from a socialist or economic perspective.

Great set of posts Mary.