An historian’s messy attempt to understand neoliberalism

“The time has come,” the Walrus said,
“To talk of many things:
Of shoes–and ships–and sealing-wax–
Of cabbages–and kings–
And why the sea is boiling hot–
And whether pigs have wings.1

“… And homo economicus,
and sanctions that might sting
the many college presidents
who’d rather dance and sing
for supper from the wealthied class.
Grab not the brassy ring!2

At the risk of bloggy immolation, I’m going to jump into the boiling water of ongoing debates over President Obama’s few words on higher education in the 2012 State of the Union Address, wherein he said nothing of Pell Grant awards and yet talked about constructing new policies to make it easier to afford college, especially ones attempting to give institutions incentives to slow down tuition hikes. While I define neoliberalism here in fairly bold strokes, focusing on market rhetoric, public disinvestment, and inconsistencies between rhetoric and reality, this is a tentative judgment for someone who is not an intellectual historian. I am well aware that many terms of political economy are fuzzy or malleable, and my understanding of neoliberalism as a post-WW2 construct is tentative. Yet the term has some core uses in understanding how people talk about and use talk about markets.

New School professor Clare Potter (aka Tenured Radical) quickly called Obama’s State of the Union proposal a piece of neoliberalism. Ed Sector staffer Kevin Carey thought Potter was nuts, and Wisconsin-Madison professor Sara Goldrick-Rab is dressing down Carey for his snarky rejection of Potter and his rejection of the term neoliberalism to apply to Obama.

“But stop!” the Walrus added,
“We haven’t yet the math
to weigh the souls of students
and to measure grassy paths
through Walker and Hieronymus
and Milton and DuBois.
Let’s quantify philosophy,
then leave it all to choice.

Trying to pin down a useful definition of “neoliberal” is not quite like nailing jello, but I can understand if folks can be frustrated by it.3 At the end of the 1980s, the Peterson Institute’s John Williamson described what he termed the Washington Consensus (of debtor countries’ fiscal policy reform), and his quasi-manifesto is one reasonable definition of neoliberalism in the international NGO context. In Williamson’s view, policy mandates opened capital flows and markets in the 1980s as well as restricted public spending in debtor countries. What is striking about Williamson’s condensation of this alleged neoliberal consensus is not just its macroeconomic rigidity but its fundamental untruthfulness at the level where many people live: while International Monetary Fund staffers and others imposing these reforms on debtor countries in Latin America and elsewhere had legitimate concerns about corruption, the crackdown on public spending undermined rather than supported critical public investments in education and public health. I try to keep my eye on this type of inconsistency: the rhetoric of investment and human capital frequently turns into imposed disinvestment in practice.

“We have to live more frugally
and to that end decree
that monitors of spending
will henceforth be free
to roam the towns here and yon
until the spendthrifts flee
the good people who will watch and save
until they’re screaming ‘squee!'”

In industrialized countries’ domestic policy, neoliberalism is more closely associated with a narrower version, the abandonment of social welfare policies and explicit balancing acts addressing the interests of people in different social classes and positions. In some cases, proposals for abandoning social welfare and regulation came with proposals for using markets to advance the same goals. Milton Friedman’s proposal for a negative income tax fits in that category, and after various twists and turns we have the Earned Income Tax Credit–a pretty efficient income-transfer program if not a panacea for poverty. So, too, with proposals for a pollution market instead of pollution regulation, which has seen success in a market for sulfur pollution but political blockage of carbon cap-and-trade policies. Again, as with the role of the Earned Income Tax Credit in anti-poverty policy, a pollution market does not eliminate the need for environmental regulation and should best be seen as an added tool in the kit available for policy ends.4

But much industrial-country rightward policy movement in the 1980s and 1990s did not create markets to solve social problems; instead, it used the rhetoric of the market to justify the shrinking of the public sphere and regulatory protections without compensating market-like mechanisms. At the same time, the rhetoric of the market became a crutch to justify policies that putatively serve market mechanisms. Attacks on union rights in the 1980s were justified by reference to competition and were not accompanied by any clever market-like devices to protect people who would suffer a diminishment of protection in one realm. Nor were there any mechanisms that would encourage demand-side labor market turnover; the division of health care from employment at the time would have been an example of that type of tradeoff, but it didn’t happen in the U.S. Creating a national right to one or two years of college would have been another compensatory investment, but it didn’t happen5.

To the inconsistencies of investment rhetoric/disinvestment reality and the paucity of new-market creation, one should add the mirage of a shrinking government authority, something both Reagan and Thatcher advocated (the rhetoric, not the observation that it was a mirage). In his review of Raymond Plant’s The Neo-Liberal StateJohn Gray points out that among the inconsistencies of Thatcherism was the bloating of government authority.

An increase in state power has always been the inner logic of neoliberalism, because, in order to inject markets into every corner of social life, a government needs to be highly invasive. Health, education and the arts are now more controlled by the state than they were in the era of Labour collectivism. Once-autonomous institutions are entangled in an apparatus of government targets and incentives. The consequence of reshaping society on a market model has been to make the state omnipresent.

One tiny fragment of this inconsistency is the illusion of fewer public employees. As the federal government has sloughed off officially-counted federal employees in the past 40 years, it has shuttled billions to various contractors who hire people who do public jobs, often enough just to avoid their being called public employees. An acquaintance of mine worked for several decades at the Ames Research Center in California doing NASA work under a rotating set of contractors. But he was not allowed to call himself a NASA employee, no matter that he really was, with the fig leaf of a contractor who skimmed off a profit so politicians could claim that my acquaintance was Not a Federal Employee. There are plenty of Fig-Leaf private employees in the D.C. area who really are doing the work of the U.S. Department of Education, and likewise in many states.

“I weep for you,” the Walrus said:
“I deeply sympathize.”
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

“O Students,” said the Publisher,
“You’ve had a pleasant run!
Shall we be trotting home again?”
But answer came there none–
And this was scarcely odd, because
They’d eaten every one.

Where do we see neoliberalism in education? In the past two years, Wake Forest University professor Scott Baker has been drawing a line between the end of commitments to desegregation policies in the 1970s and 1980s, on the one hand, and the rise of accountability, on the other. I would be skeptical of an argument that there was a crude and conscious swap–I certainly don’t think that former Florida Governor Rubin Askew encouraged the beginnings of school accountability policy in 1970s Florida as a deliberate switch. But on the other hand, there has been an important substitution in the past 40 years, away from the explicit regulatory and balancing of interests involved in desegregation and towards top-down mandates that have often been justified as serving the needs of the market… and a tiny bit by civil rights without reference to desegregation. You see the parallel in higher ed with the erosion/abandonment of affirmative action and the rhetoric of serving the labor market (often regardless of the evidence on whether a particular program is likely to benefit either the specific labor segment involved or students). In the early 1980s, advocates of school reform used the spectre of German and Japanese supremacy just a few decades after World War 2 (albeit economic supremacy):

Our Nation is at risk,
Our giant lead erased,
And worse is with our schools,
for all their flaws we just efface.
A tide of mediocrity,
our future, and great threats!
Dear reader: please panic
and then our goals abet.

To use trade competition as the lever for massive social change was fallacious then and is still fallacious now: our largest trading partner today is Canada, and the $50 billion in total annual trade with the Beast of the North compares to a total GDP of $14.5 trillion in 2010. There are plenty of reasons why we should improve education, but it shouldn’t be out of fear of Canada, Germany, Japan, India, or China.6 The truth is that most of the output of economic activity is sold within internal markets.7 Yet the bogeyman of failure in international economic competition has become the Erectile Dysfunction of education politics, justifying all sorts of advertisement for educational nostrums.8

Beyond the argument that one must reform schooling to serve international market competition, where can you find the signal traits of neoliberalism: a combination of market rhetoric with public disinvestment and the end of explicit protections for public goods or for disadvantaged groups?

  • You see it in arguments that teachers and other public employees must give up significant job protections and benefits as a package deal with huge chunks unrelated to the substantive debates over teacher quality; see Wisconsin, Ohio, etc. As Dana Goldstein and others have pointed out, the attacks on public employees and their unions are attacks on a predominantly female workforce.
  • You see it in advocacy of voucher and charter-school expansion that is at the expense of local public school resources (especially in and since the Lesser Depression).
  • You see it in declining funding of public two- and four-year colleges, with costs being shifted to students and their families.
  • You see it in thinly-evidenced ratings and rankings games with the ratcheting of so-called consequences and a publicity cycle that feeds a “failing public schools” discourse.
  • You see it in Congressional testimony that cheers on mostly untested for-profit teaching models and then dismisses concerns about state disinvestment in public higher education.9
  • You see it in the proposal of competitive grants that are large enough to replace national programs and designed to spur permanent policy changes rather than foster experimentation.

The last is the focus of the back-and-forth between Potter, Carey, and Goldrick-Rab. Does it count as neoliberalism to go after tuition and other privatized costs of higher education? No. But the way the president and Arne Duncan are going about it is. In the State of the Union address, President Obama entirely ignored key higher-ed policies he had advocated for most of his first term: a better Pell Grant program, the end of the private subsidized-loan program, and the American Graduation Initiative. Instead, out of nowhere came a Race to the Top on affordability. I’m fine with going after Penn State for charging more to in-state students than many for-profits charge their students.10 But the plunge into a higher-ed Race to the Top is a different kettle of fish.

The political context of this is important: the president has waffled in his first term between a defense of the public sphere and joining in on the attacks. The Bowles-Simpson Committee and the debt-ceiling crisis are important pieces of that waffling. He’s been a champion of increasing the Pell Grant maximums and making subsidized student loans be entirely direct from the federal government, he’s funneled billions of dollars to states to prevent teachers and many other public employees from being laid off in 2009-11, but he’s abandoned the American Graduation Initiative, his vice president is spouting nonsense about faculty salaries being responsible for increased tuition, and in his personal history is the fact that President Obama has never been a direct stakeholder in public education in the United States.11 It is entirely fair game to point out where his policy positions are neoliberal.

None of this has really surprised me. When in late 2008 Rahm Emanuel said, “Never let a serious crisis go to waste,” he was echoing the opportunists whom Noami Klein described in The Shock Doctrine. Obama is not a rapacious corporate executive, but neither he nor crucial aides and appointees have had any modesty in using federal power to make sure the Lesser Depression did “not go to waste” in education and other topics. That hubris is troubling to me; not surprising in the least, but troubling. That hubris fits into the picture I have of neoliberalism: the rhetoric of investment and the frequent reality of disinvestment, the rhetoric of markets and the reality of few effective markets, the rhetoric of shrinking government authority and the reality of increased state power.

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  1. Lewis Carroll, The Walrus and the Carpenter, in Through the Looking Glass and What Alice Found There, 1872 []
  2. Blame me for the add(l)ed doggerel and for the twisting of the twisted end below. []
  3. If you want to be frustrated, peek at Paul Treanor’s attempt at a purist definition of neoliberalism. []
  4. The topic of school vouchers is relevant in the broader context but a distraction at this point. My goal is not to address where market mechanisms work or don’t but how the rhetoric of markets works. []
  5. A right to some college could be consistent with neoliberal rhetoric (even if I am skeptical of panaceas–the point here is the inconsistent application of principles). []
  6. The international competition smacks loudly of old-fashioned xenophobia. We want Germany consumption to grow to be a markets for our goods, and that means the Germany economy has to grow. We want Indian engineers to invent lots of stuff, because we might not be able to save the world from global warming just with American scientists and engineers. Much of the displacement of jobs has happened because other countries have lower wages and fewer protections for workers, and then the type of convenience clustering you see with Apple suppliers, not because their secondary-school graduates are better educated than our high school graduates. []
  7. Most of our public and private debt is also internal; you can ignore the hysteria about either Japan or China owning New York City. []
  8. Make sure to ask your consultant about Test Enhancement Formula today. []
  9. See the first paragraph on p. 6 of Carey’s testimony. []
  10. Disclosure: I’m in a university that has lower tuition and fees than the Community College of Vermont. []
  11. He attended a private secondary school in Hawaii, then two private colleges and a private law school before he had kids, who have attended only private schools. []

8 responses to “An historian’s messy attempt to understand neoliberalism”

  1. Kevin Carey


    Here’s what I wrote about state disinvestment in higher education:

    “There is no doubt that colleges have raised their prices in recent years because states reduced their subsidies for higher education. Some states have hacked hundreds of millions of dollars from public university budgets, and universities have responded by reducing access to courses and imposing dramatic price increases on students and parents. They’re counting on the fact that families will still scrimp and save to send their children to college–and that the federal government will come through with more financial aid. Many of your colleagues
    in state legislatures are passing the higher education bill to you.”

    I then went on to note that “over the long term, college prices have gone up in
    good economic times and bad.” Am I incorrect?

    As for “cheering on mostly untested for-profit teaching models” — the testimony cites the teaching models employed by Virginia Tech, a public university, the University of Minnesota – Rochester, another public, and Carnegie Mellon and MIT, both private non-profit institutions. It also cites Straighterline, a for-profit company that operates very differently than most for-profits in that it takes no federal financial aid dollars and charges less than even community colleges per course. As to whether Straighterline is “untested,” I would say no more or less so than the teaching methods employed by typical public institutions.

    1. CCPhysicist

      You are correct to note that college costs have gone up well in excess of what is needed to make up for cuts in state funding. I have documented this for one R1 university:

      Identifying the causes (be they faculty salaries and teaching/research loads, health insurance costs, administrative growth, or a combination of the above) I leave to researchers like yourself, but I’d sure like to know if there were 2.5 students per staff back then like there are now!

  2. Kevin Carey


    In other words, what is true in the aggregate for a large population may not be true for certain subsets of that population. And?