Why Neoliberalism seeks to undermine Democracy.

Neo-Liberalism has always been thoroughly unattractive to the voter. In normal times cuts to the public sector, choosing to reform the tax system to be more regressive and getting less for your tax money at the expense of corporate profits would never get into government but in a crisis can be delivered to government, as the UK knows only too well.

During times of crisis, Neoliberalism breeds mistrust amongst people in elected representatives through its many outlets in the media. By portraying the state as bankrupt, neoliberal institutions such as the ECB and IMF have implemented constitutional reform in countries, normally on the matters of debt, to reduce and limit the ability to borrow for public spending.

For example, in Greece and Italy, the Budget deficit must not be more than 3% of GDP per annum. This is a fundamental mechanism to enabling neoliberalism to come to fruition, representatives are portrayed as corrupt and inept to make economic decisions, hence power is transferred to market institutions, such practices are taken to lock-in neoliberal governance.

A look back on history shows financial bail-outs are key to understanding how neoliberal policies are applied in democracies. The Structural Adjustment Programmes implemented during the 1980’s coincided (incidentally) with the debt crisis in the developing world. The IMF provided finance for debt, in return for the restructuring of the economy, and cementing of neoliberal governance in such countries. Such policies included, the privatisation of national industries, removing subsidies in agricultural and focusing on export-led growth, the result being the vicious exploitation of such states and its people by Transnational Companies.  The ECB has used similar means in the modern-era, where during the period of the Greek debt crisis bail-outs were used to implement constitutional reforms because during normal times neoliberalism cannot garner the consent for it policies through democracy. In the UK, for example, there is little support for policies of austerity, and in addition, there is growing support for public ownership, for example, 89% of Brits, want to renationalise the railways. The last few years have seen the NHS being tipped to breaking point, through underfunding and in other public services it is worse still, all because of loyalty to an ideology. The Conservative government effectively used the crisis of the global financial crash to deliver policies that without the scaremongering about debt and overspending would have been vastly unattractive.

The Greek debt crisis of 2010 shows how Neo-Liberalism uses crisis to undermine democracy. A report analysing how leading mainstream media outlets reported on the Greek crisis showed that the blame was laid squarely on two factors. Overspending and malpractice of the state. Journalists argued that the Greek state had been living beyond its means, public spending was overly generous, as was its pension system, they deemed corruption to be rife. This is fundamental in how neoliberalism works, it allows the ideology to breed mistrust amongst voters in democracy, for who do you blame when your pension has disappeared, or you cannot access money at the ATM, the state of course. Representatives are left as the enemy and the cause of the crisis.

The central belief of neoliberals in the Mont Perlin Society was that the market was always more efficient in its allocation of resources than the state. Neoliberals during the latter half of the 20th century saw representatives having to cater to the various demands of the electorate, often promising increases in public spending. Which explains the view of neoliberals that the problem with the dominant political system in the ‘West’ was democracy itself. Buchanan saw the promises to increase public spending as an encroachment on the freedom of the individual, hence, his resolution to a conflict between democracy and ‘freedom’ is to always rule in favour of ‘freedom’.

The encroachment he saw was that rich men, and it was men he referred to, would end up paying for such public services through higher taxation, he saw it as a discriminatory, as did his bankrollers, the Koch brothers. Charles Koch, in particular, was a devoted neoliberal and its noted that he asked Buchanan to study Vladimir Lenin’s tactics of rule, including the methods used to oppress the masses and then apply it to the Libertarian cause. Consider then that, Ordoliberals (a strand of neoliberalism), were opposed to democracy as they thought representatives and officials were prone to corruption, they saw representatives doing the bidding of special interest groups following the collapse of the Weimar Republic. Yet the Koch brothers and other neoliberals have lobbied representatives for decades, to implement neoliberal policies, one of the Koch brothers even tried his hand at the US Legislature himself.

Although there is no definitive figure to sum how much Charles Koch has given to advance his cause, he funded James Buchanan’s Centre for Study of Public Choice, lobbied representatives for decades and in 2016 alone, the Koch brothers announced they had a $900 Million kitty to spend on the campaign. How to explain this? Neoliberals have exploited democracy and its representatives during times of crisis, this idea that during times of financial distress, neoliberal policies are a necessity. Yet, that is the key revelation, because during normal times such policies are rejected, no one votes to receive less for their tax money.

Democracy is a political system that gives power to the people, for all its flaws, quite simply it is a political system that can bring about change. Neoliberals know this, Buchanan and co. saw representatives bring about desegregation because that was the will of the people, to put it bluntly, democracy is an obstacle to neoliberal policies. Yet, in 2018 most major economies are neoliberal. Take for example in Italy where they are resisting change, the discourse and commentary on the crisis has begun, Jean Michel Barnier called the Italians ‘corrupt.’ This then is the incompatible relationship between democracy and neoliberalism.


Seb Chromiak

I was born 09.10.1997, I currently study Economics and Politics at the University of Manchester and have an interest in Neo-liberalism, Russian Politics and Current Affairs.

Seb Chromiak has 54 posts and counting. See all posts by Seb Chromiak

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