By Michael Hoexter

In an industrial or post-industrial society, a civilization with a complex division of labor dispersed throughout a network of metropolitan regions connected with each other and with smaller cities and rural areas, a class of connecting goods and services is required to keep the society and economy cohesive and functioning. Unlike the goods bought and sold on markets, these mediating or connecting goods are not themselves often objects of desire for purchase by those who use or otherwise benefit from them. In the hypotheses of social theorists and politicians influenced by neoclassical economic ideals, these goods, they think, ought to be delivered via markets and people ought to pay directly for them in market-like cash transactions. As it has turned out in reality, without a social and political commitment and social pressure to fund these goods and services, individuals in isolation and businesses as a group tend to want to “free ride” and not pay for connective goods and services that are usually the frame but not the focus of everyday consciousness in a modern society. Despite the lack of consistent private markets for most connective goods and services, these “in-between” goods and services are vital and fundamental to the existence and maintenance of something like a civilization, a livable complex society with a strong economy.

As it turns out, government is by far the largest supplier and/or funder of these goods and services, functions that make it possible for large-scale local, regional and national communities to come into existence in the first place; they enable a post-tribal society, as noted above, a civilization and a complex economy. While lately the growth and successes of various social entrepreneurs and voluntary non-profit leaders have been celebrated, the work of these voluntary groups is tied to the changeable desires and attentional economy of private citizens and investors to invent and donate to these ventures: less glamorous mediating functions still fall through the cracks in societies increasingly starved of the public goods and public financing provided by government. Social entrepreneurs and voluntary non-profits are for the most part focused on the more telegenic, “marketable” connective services from which they can raise funds from philanthropies or a newer class of social investors/philanthropists rather than the mundane connective services provided by government. If these services were funded largely or entirely by philanthropies or social venture capitalists, we would find ourselves completely in a neo-feudal order, where public services would be directly subject to the whims and interests of a wealthy elite. A neofeudal outcome is unfortunately not an impossibility given the current state of affairs in our society.

Most obvious among these connective functions, various social assets are built and/or maintained by government that form physical connections between the components of the society and enable people to physically interact with each other and come into possession of or experience goods and services they desire. Sometimes this means creating or maintaining “central places”, like town squares, central marketplaces, parks or community centers in cities, though some of these central hubs are now formed by privately developed and owned shopping malls. As societies expand their reach and engage in trade with distant trading partners, infrastructure like roads and bridges are required, and more recently in many countries there is an assumption that an adequate public transportation system is necessary that is affordable for a majority of the people.

If such connections were owned and controlled entirely by profit-minded corporations as has been flirted with over the past few decades, they could easily strangle the economy via the exertion of monopoly power and pricing. The resulting “tollbooth economy” would be a neofeudal outcome, with owners of infrastructure exacting tolls on commerce and on society as a whole as did the feudal lords a millennium ago. This is why government has been, in the successful mixed economy model that emerged during the 20th Century, the most common supplier, owner and operator of critical portions of the society’s infrastructure, the “in-between” places that connect people’s and corporations’ private properties. The strong mixed economy model, typified by the European social democracies, Australia, the mid-20th Century US, and Canada, with a government regulating the private sector and providing many vital services, is actually the only successful model of a complex industrial or post-industrial society and economy. Departures from a strong mixed-economy model are in the developed world necessarily speculative social experiments on a grand scale, even though these departures from what has worked in the past are almost never announced as such.

The still much-celebrated market forces in complex societies also happen to produce interpersonal relationships with a degree of anonymity which are characteristically “modern” and therefore removed from some of the dependencies and mutual aid associated with village and extended family life. Market relationships are necessarily contingent on variable prices and, consequently, the time-bound desires of the buyer for the product or service on offer are by definition inconstant: the potential buyer moves on to another potential seller if they see no prospect of satisfying their wishes at the desired price point with the first potential seller. When the service offered for sale is the labor of an individual, that individual must often move to find employment or take advantage of the potential for better employment, often removing themselves physically from the traditional support network in which they grew up. Because of the anomie and physical displacement produced by market relationships, we have seen a trend toward the growth of bureaucracies and civil servants, who are funded to deliver various connective services which are viewed by most people who use them as either a “good” or a “necessary evil” to supplement the functions of families and spontaneously-arising communities and relationships.

The current struggle in the US over benefit levels and accounting mechanisms of the Social Security retirement income system is just one poignant and central example of the role of government in providing a connective service (as well as provide adequate liquidity in demand-starved social sectors) in a market economy. A market economy tends to attenuate the support networks of the extended family for many of those who sell their labor for a living as well as for small business owners that do not earn enough income from their property or business to employ or support their extended family via the family business. The labor market in an advanced or internationalized market economy requires individuals to be more mobile than the physical support networks that many families can provide. Younger people move away from their families in search of opportunity or to increase personal fulfillment, sometimes across national boundaries.

In this context, older people into their years of infirmity must often pay for goods and services which previously were supplied by younger relatives or not supplied at all, the latter result leading to “Dickensian” levels of abject misery and squalor. A public elder pension system is an accommodation to a number of realities related to the lifetime earnings and saving potential of the average worker as well as the increased real demand for monetary income in a context where older people must buy goods and services rather than live entirely within the non-monetary reciprocity network of an extended family. One cannot have a market economy without labor mobility and attenuated extended family networks; ultimately a secure elder pension system that covers the basic expenses of the old is a compassionate, civilized solution that does not rely upon extraordinary good fortune, wealth, or familial cohesion in every family.

Inspired by the schematic social and economic theory of neoclassical economics laced with “Austrian” economics, the neoliberal political trend of the last 40 years has idealized the market and demonized government leading now during the current post-financial crisis austerity, to a hollowing out of government’s role in society and the economy. Attacking the connecting functions of government in society both through propaganda and also through changes in government policy, neoliberals in combination with their more idealistic libertarian faction have acted as agents of a chronic “wasting disease” that “eats” the connective functions of government and society more generally. We are now seeing the results of these attacks, as physical and social infrastructure crumbles under the false pretense that there are not enough financial resources to bring to bear on these vital social needs.

There is. in the current organized political attack upon the costs of supplying these connective goods and services, the assumption of an extraordinary social order, a utopia, which is often not openly and frankly discussed by its advocates or, for that matter, its critics. This fantasied social order would have the dynamism and mobility of a market economy with the traditional family cohesion of a tribal society, a physical impossibility and an historical novelty.

Empathy and Human Solidarity

The connectivity offered by government-provided or –funded goods and services is not just, as described above, an economic function alone but an outgrowth of human sociality, in which both cooperation and competition are necessary components. Conventional neoclassical economic theory assumes away human sociality and cooperation, seeing them, if recognized at all, as encrustations upon a fundamentally isolated and competitive being, upon which all explanations of human social and economic phenomena must be based or refer back to.

Against the assumptions of neoclassical, mainstream economics, the human capacity for empathy and the resulting social solidarity that comes from this capacity are fundamental to understanding the complex societies and economies that we build. Government’s contribution to the economy is not just the imposition of laws from above upon a supposed unruly and asocial individual nature but also the expression of human bonds and connectivity, transformed for an age of more impersonal interaction and a society that necessarily involves relationships between people who do not know each other personally. In precincts of the Left and the Right, some view government as necessarily always an imposition on some organic pre-governmental community, which suggests that government’s functions are always optional or the pure expression of the will of rulers and not commingled with the desires of the ruled. Contrary to anarchistic strains in contemporary thinking on the Left and Right, the historical record does not show large scale civilizations without some form of governmental structures, even if very few of these civilizations look utopian or ideal.

Contemporary political disputes about the nature of government and its role in the economy can, in part, be boiled down to whether the parties involved believe that empathy is at all important to the functioning of society and, for that matter, is even worthy of attention. The traditional Right sees empathy, except in certain extraordinary circumstances, as a sign of weakness or as a phenomenon of the “private sphere”, traditionally organized around the household and considered to be “feminized”, linked to the (misogynistic) notion of the feminine as being inferior in value to the masculine. Movements identified with the Left have tended to fight for the role of a generalized empathy with basic human needs and human solidarity within the public sphere, focusing for the most part on equal rights and “treating others as you would want to be treated”. By contrast, the Right has often celebrated cruelty as a sign of toughness or loyalty to a cause, making room for empathy only in the context of mystical bonding rituals between for the most part men or between a leader and his followers.

Despite an attractive set of ideals, a problem for the Left in claiming virtue as opposed to the anti-empathic, cruelty-obsessed Right has been that there have been here some disastrous perversions of its ideals over the years particularly in societies where left revolutionaries have overthrown a corrupt ancien regime. The lack of an effective theory of how government works in the Left’s theoretical toolbox (and the Right has no answers here either) has contributed to among other things the Terror after the French Revolution as well as the failures of many Communist regimes that emerged in the 20th Century to forge a “good society” which had political and economic legitimacy among the governed. The Right has held up the repressive and occasionally disastrous political outcomes of some Left-identified revolutions as a “Medusa’s head” to scare politicians and the public from ever again imagining that empathy and human solidarity should be values in the public sphere. The Right has tended to glamorize old aristocratic and oligarchic regimes as against the efforts of the Left in both its reformist and revolutionary tendencies to change society for the better; the message of the Right: “better leave well enough alone”.

While in Western democracies, the Left oriented towards reform has had little to do with the formation of totalitarian regimes under Communism, the contemporary Left has not decisively countered this fear-mongering with a new but realistic vision of how a just society and government would function. This has led to 40 years of various efforts to form a “Third Way” or post-partisan theory of governance and regulation of the economy that supposedly overcomes the Left-Right division. The “third way” tactic has mostly involved a triangulation or “mix and match” intellectual strategy of increasingly mindless “centrism”.

The Hidden Utopia of Neoliberalism

In the late 1970’s, there emerged a right-wing reaction to the generally left-of-center movements for social change from the 1960’s and 70’s, a reaction that many have come to call “neoliberalism”. Shorn at least superficially of some of the negative image of the old racist or xenophobic right, neoliberalism put itself forward as the defender of individual liberty against the tendencies of both the still-existing Communist states as well as against Western social welfare states. Neoliberalism became the first “internationalist” right-wing movement since the Second World War and the Axis/fascist alliance in the 1930’s and 1940’s.

Over a period of about two decades, neoliberalism won dominance as an ideology among the policy elite because of a number of factors both ongoing and historically specific to that era. In the 1970’s, the “liberal” Keynesian consensus had become morally and politically compromised on both the national and international levels. The moral and political legitimacy of leaders of the US “welfare-warfare State”, the leader of the Western military alliance, was undermined by the Vietnam War. A series of post-colonial wars of national liberation and guerilla wars against regimes installed by the US or former colonial powers pointed to an insufficient place given to the strivings for political and economic self-determination of peoples from outside the West within the post-War Keynesian model. The 1973 OPEC oil embargo, rising oil prices, and declining yields from oilfields in the United States were key causes of a period of economic stagnation plus inflation, called “stagflation”. The role of energy was overlooked as old political-economic antagonisms from the 1930’s between Keynesians and anti-Keynesians were revived against the backdrop of the world in the 1970’s.

The supposedly Keynesian remedies for stagflation and imperial decline, attempted by a series of leaders who no longer clearly remembered the great financial crises of the 1920’s and 1930’s, did not seem to work or were dismissed out of hand by those who always were philosophically opposed to Keynes’s solution of government activism during economic downturns. In the United States, “liberalism” and radicals of the left turned away from a focus on an economic program and the vision of an economically qualitatively “better” society. The moderate and radical Left in the West became increasingly focused on a strategy of simply redistributing more equally existing political, social and economic resources among new political actors (women, people of color, less developed nations, gay people) and the dominant Euro-American white male elite, assuming that an already existing “affluent society” could be enlarged or its benefits more justly distributed. Among the liberal left, the development of a political program for the society as a whole regarding the economy and politics became a secondary concern. What came to characterize the established American “liberal” Left was that concern and policy would focus on sets of “others” who were downtrodden and not focus on either self interest as a generalized concept or more specifically as applied to Euro-American “white” males.

As a consequence, a discourse of “self-interest” for swaths of the population in the developed countries of the metropolitan center was not addressed politically by the moderate Left, while a small radicalized New Left splintered off, reviving the notion of a radical or revolutionary working class, within which most in developed societies, particularly in the United States, could not recognize themselves. Thus the political-economic field was left open for a re-definition of socially-acceptable self-interest nominally independent of race, ethnicity or gender, into which the Right stepped with neoliberal ideology.

There emerged various economic theories, which formed the “business end” of neoliberal policy recommendations that suggested that cutting taxes on the wealthy and loosening regulations would spur economic growth and also, in the wishful thinking of early supply-side theory, paradoxically increase tax collections because of that growth. The model-individual within neoliberal political and economic theory was the entrepreneur or investor who needed to be given the maximal “freedom” from government intervention or influence to make judicious business or investing decisions. The institution that should rule society according to neoliberalism was “the market”, the social area in which self-interested economic actors interacted, which should be likewise “freed” from government support or intervention.

Neoliberal politicians also sought alliances with more traditional conservatives with whom they shared a common political enemy, the remains of the old and new lefts that were identified for the most part as either social democratic or Western Marxist in Europe or various flavors of “liberal” in the United States. Traditional or “social” conservatives in the United States were based in areas of the South, Midwest and West where fundamentalist Christianity was experiencing a resurgence, itself in part a reaction to the social upheavals of the 1960’s and 1970’s. While not as interested in economic issues as neoliberals, both social conservatives and neoliberals shared a distaste for and opposition to the rapid changes in cultural norms regarding individual self-expression, sexuality, forms of recreation and dress which were the most profound and lasting outcome of the social and political upheavals of the 1960’s and 70’s.

The resulting neoliberal synthesis was best expressed by Margaret Thatcher, now recently deceased, when she declared in a 1987 interview that “there is no such thing as society. There are individual men and women, and there are families”. While at the time, Thatcher’s statement was viewed as a political effort to push society in a right-ward direction, it also stands as a statement of neoliberal philosophy. Viewed as a worldview and a psychology rather than simply a polemic, belief in this statement would lead to selective misperception of the world and in particular a willful blindness to the connective activities of government and other social institutions. In Thatcher’s comment, which she later attempted to back down from, a utopian idea was expressed: that the activities of government do not exist or should not exist yet, implied or stated as the goal of neoliberalism, complex societies should go on and prosper as they have in the past or go on to still greater prosperity. Alternatively a “limited government”, a much “smaller” government than common in all advanced industrialized societies, would provide the same or better quality of life while commanding fewer resources for its own operations and services to the public.

Neoliberalism’s worldview is utopian in this regard because neoliberals, as well as the extreme libertarian version of neoliberalism, have for the most part assumed as “givens” the already-existing benefits (to them) offered by a very substantial government and generated by the complex internetworked society it enables, yet wishing government itself would disappear or diminish, leaving its effects behind. Thus in a form of magical thinking or “splitting”, neoliberals have come to believe as if it were accomplished fact that they can create a society that is “purified” of government but leaves what they value from government, its products and services or their positive effects, behind, very much like Lewis Carroll’s Cheshire Cat. Neoliberals and libertarians do not for the most part want to return to a society that is composed entirely of extended family networks, a tribal society in fact, or at least most of the Right’s mainstream does not have a taste for the likely emergence of a Mad Max style world.

Neoliberalism, like traditional reactionary conservatism, also shuns the role of empathy in the public sphere, seeing in it a weakness or a trap, from which the “clean” purity of the market and competition would free us. In the neoliberal worldview, everybody is almost entirely self-interested and no one, including political leaders, is doing anything out of a sense of human solidarity or obligation to humanity as a whole but rather out of a self-interested calculus. The ultimate neoliberal theory of politics, James Buchanan’s public choice theory, marginalizes or rules out the role of altruistic or public-spirited motivation in the actions of political leaders. One wonders whether or when this theory based on neoclassical economics becomes a self-fulfilling prophecy, once the assumption of self-interest as a sole motivation in politics is made. More altruistically minded people are certainly discouraged from entering government service within the current system of legalized corruption in American government.