Neoliberalism vs the Deep State

Neoliberalism vs. the Deep State

1. Summary.

This began as an article called ‘What is neoliberalism?’ after I read an article by Gerry Hassan criticising radical independence campaigners for using neo-liberalism as ‘a blanket term of catch-all abuse used by people to identify what they don’t like from Gordon Brown and New Labour to the City of London; in this strange world neo-liberalism is seldom defined and understood…’

This straightforward aim got complicated when I found a recent book by two French authors which gave a more Eurocentric account of neoliberalism- ‘The New Way of the World-On Neoliberal Society’. Then, before I’d finished, I read an account in the Guardian of the referendum campaign which mentioned the role of the ‘deep state’ (via the queen) in the campaign. This made me wonder if there is tension between neoliberalism and the deep state in the UK.

Finally, I have now read the book by Michel Foucault which inspired ‘The New Way of the World- On Neoliberal Society’. This is briefly mentioned at the end of the article which is now nearly 5000 words long so more detailed discussion of Foucault’s book will be the subject of my next post here.
2. What is neoliberalism?

My introduction to neoliberalism was through David Harvey’s 2010 book ‘The Enigma of Capital and the Crises of Capitalism’. Harvey had previously written ‘A Brief History of Neoliberalism’ in 2006. In Harvey’s version, although the ideas which influenced neoliberalism had been kicking around since the late 1940s, the practice of neoliberalism only gained traction in the 1970s. In the UK, Margaret Thatcher’s government was inspired by neoliberal theory in the 1980s while Ronald Reagan’s government was likewise inspired in the USA. Neoliberal policies were then continued in the 1990s by Tony Blair’s government in the UK and the Clinton government in the USA.

For Harvey, neoliberalism was a counter-revolution, designed to restore the power of big business which had lost out during the period of the post WW2 social democratic consensus. In the UK, the post-war consensus can be linked to the demands of total war, when national survival depended on fusing society and economy. This had to be achieved against very recent memories of mass unemployment in the 1930s and the hollow claims that victory in WW1 would create a ‘land fit for heroes’. The victory of the Labour party in 1945 indicated that voters in the UK were determined that sacrifices made in this second world war would, ‘lessons having been learned’ would be rewarded in peace time.

So a national health service was introduced, key industries were nationalised, new houses (including thousands of local council owned properties) were built and a comprehensive welfare system was introduced. Both Labour and Conservative governments also pursued economic policies designed to ensure full employment. This post-war consensus between Labour and Conservatives lasted until the 1970s when it began to break-down as the sense of solidarity shaped by war faded and rapid increases in the price of oil in 1974 (and again in 1979) gave rise to industrial conflict. While Labour tried to maintain the post-war consensus, the Conservatives, influenced by neoliberal theory, decided that it gave too much power to organised labour and the state via nationalised industries.

Britain was broken, they argued and to make Britain great again the dead hand of ‘socialism’ had to be lifted in order to liberate the spirit of free enterprise. In this interpretation then, neoliberalism can be described as an attempt to wind the clock back to the golden years of capital in the nineteenth century before it was contaminated by socialism. It was the doctrine adopted by Thatcher in the UK and Reagan in the USA in the 1980s and which has now gone global. This was the version of neoliberalism set out by David Harvey in ‘A Brief History of Neoliberalism’ in 2006. However…in 2009, French authors Pierre Dardot and Christian Lavall came up with an alternative understanding of neoliberalism which was published in English in 2013 as ‘The New Way of the World-On Neoliberal Society’.

Dardot and Lavall trace neoliberalism back to the later nineteenth century when Herbert Spencer (1820-1903) came up with the phrase ‘survival of the fittest’ as a simplification of Charles Darwin’s theory of evolution. This simplification was challenged by Friedrich Engels in 1875.

The whole Darwinist teaching of the struggle for existence is simply a transference from society to living nature of Hobbes’ doctrine of bellum omnia contra omnes [a war of all against all] and of the bourgeois-economic doctrine of competition together with Malthus’s theory of population. When this conjurer’s trick has been performed…the same theories are transferred back again from organic nature into history and it is now claimed that their validity as eternal laws of human society has been proved.

By the 1870s, Britain’s supremacy as the first industrial nation was threatened by Germany and the USA. Dardot and Lavall suggest that this led to a shift from the idea of the market as a place of exchange to the idea of the market as a place of competition. By the 1930s, as old fashioned liberalism was threatened by the rise of ‘state capitalism’ via fascism and Stalinism, a new liberalism based on the need to ensure competition began to emerge. The outlines of what was to become neoliberalism were established at an economic conference in Paris in 1938 but had to wait until after WW2 to take root- in post-war Germany and in what was to become the European Union.

Dardot and Lavall go on to argue that neoliberalism has moved on from being an economic doctrine or ideology to becoming a ‘rationality’. Within this rationality the necessity of ‘competition’ has become so deeply embedded that, for example, the idea of cooperation is considered irrational and therefore impossible. Taken to its logical conclusion, what this means is that, as Margaret Thatcher once said ‘there is no such thing as society’, there are only individuals competing with each other as economic agents. In which case human beings are not social animals, rather we are calculating atoms existing within a global market place in an economic war of all against all. In this war the fittest, those who maximise their economic advantages, survive and prosper while the unfit, those who fail to compete successfully, must resign themselves to lives of enduring poverty.

Part of the difference between Dardot and Lavall’s version of neoliberalism and Harvey’s version is down to timing. Harvey’s book was published in 2006. In 2007, Andrew Marr concluded his television History of Modern Britain overlooking an apparently booming London with scarcely a cloud on the horizon. Then came 2008 and a global crash which briefly threatened to reveal the irrationality of neoliberalism- until it was reinvented as ‘austerity’, as a modern morality tale in which a moment of excess by the Labour party had undone the good work of the Conservative party requiring (in 2010) another period of strict Conservative rule before the good times could return.

Except, as Dardot and Lavall’s post-2008 analysis of neoliberalism shows, the UK’s experience of neoliberalism was only part of a more complex story.

3. Neoliberal Scotland

First set out in ‘Neoliberal Scotland – Class and Society in a Stateless Nation’ in 2010 by Neil Davidson and his co-authors the tension between social democratic and neoliberal Scotland became a key element of the 2014 Scottish independence referendum campaign. Thanks to the Radical Independence Campaign, the ground on which the grassroots Yes campaign fought was not nationalism but neoliberalism. The argument made by RIC was that the UK is a neoliberal state so a vote for independence was also a vote against neoliberalism. RIC accepted that the SNP were a neoliberal party, but made the point that a Yes vote in 2014 would make another, post-neoliberal, Scotland possible.

This argument gained traction because the Labour party in Scotland aligned themselves with the Conservatives and Liberal Democrats as part of the No campaign. As a result many present and former Labour party supporters were forced to recognise that their party was a neoliberal party. Gradually over the course of the referendum campaign opinion polls showed the Yes vote rising and the No vote declining. Then, at the beginning of September, a shock poll showed Yes in the lead.

4. The UK Deep State

The taken-for-granted assumption until then had been that no more than the 30% of Scots that consistent opinion polls had shown favoured independence would vote Yes on 18 September. A further assumption was that all the Labour party in Scotland had to do was blow on their anti-SNP dog whistle and their supporters would fall in line and vote No. According to a recent Guardian article, Downing Street went into melt-down and the UK ‘deep state’ became involved…

Senior figures in Whitehall were so worried by the prospect of a collapse of the union that it was suggested to the palace that it would be immensely helpful if the Queen could say something publicly. Sir Jeremy Heywood, the cabinet secretary, and Sir Christopher Geidt, the Queen’s private secretary, embarked on discussions to work out how the Queen might register her concerns at the prospect of a yes vote while upholding her constitutional duty to remain wholly impartial. The Whitehall machinery was fully apprised of the prime minister’s concerns that the yes side was developing an ominous momentum.

The talks between the most senior civil servant in the land and the palace’s most senior official, the two key figures at the heart of what the Whitehall source described as the “deep state”, focused in the first place on the wisdom of a public intervention by the monarch, who has been scrupulously impartial during her 62 years on the throne. Once it became clear that the Queen was minded to speak out, Geidt and Heywood then needed to fashion some words that would ensure that the she remained within the bounds expected of a constitutional monarch…

This mention of the UK’s ‘deep state’ intrigued me. I then found a reference to it from 2010 in an article by Anthony Barnett in the context of the Chilcott Inquiry and a quote from Carne Ross, one of the witnesses.

I testified last week to the Chilcot inquiry. My experience demonstrates an emerging and dangerous problem with the process. This is not so much a problem with Sir John Chilcot and his panel, but rather with the government bureaucracy – Britain’s own “deep state” – that is covering up its mistakes and denying access to critical documents.

Barnett was surprised since, as he explained

The “deep state” has a specific meaning and origin in Turkey where an Ataturkist (ie secular, nationalist and anti-democratic) element of the Army penetrated the state and conspired to control it, organising coups and in effect running a shadow military dictatorship limiting the freedom of political parties and retaining a stranglehold on Turkish democracy.

Barnett went on to explain that although he had heard a Minister in Gordon Brown’s government refer to ‘the deep state in the Home Office’, he had not taken this seriously until Carne Ross as ‘an experienced insider’ also used the term.

I then looked to see if anyone has connected neoliberalism with the deep state. The answer is yes, but for the USA not the UK. See here

The “deep state” is simply symptomatic of something more ominous, the rise of a new form of authoritarianism, a counter-revolution in which society is being restructured and advanced under what might be called the neoliberal revolution. This is a counter-revolution in which the welfare state is being liquidated, along with the collective provisions which supported it. It is a revolution in which economics drives politics.

The question of resistance haunts almost all theories of the “deep state,” which often conflate power with domination and offer nothing less than a dystopian vision of society and the future. Resistance either degenerates into nostalgia for the good old days of the past or it suggests that those who wish to change the world should work within the current bankrupt political system. Or, even worse, it suggest that the call for radical change is ultimately an act of bad faith, if not a form of political infantilism. Rather than dissolve power into unshakable forms of domination, I think these new modes of power have to be understood in terms of their limits and strengths and challenged accordingly not as an act of reform but as an act of revolution—a going to the root of the problem in order to create strategies for fundamental social, political, and economic transformation.

Applied to Scotland and the UK, the movement for Scottish independence takes on a revolutionary aspect, but one which has deep historical roots. If the UK deep state embraces the monarchy then it is older than neoliberalism. It may even be older than the Union of 1707. If ‘Scotland’ ceased to exist after the union while England continued, as has was claimed in February 2013, then the UK deep state is a continuation of the English deep state. Alternatively, if both Scotland and England were dissolved in the new united Kingdom of Great Britain as was also suggested, then the UK deep state is a product of the Union. [Wales being considered part of England by 1707 and formal Union with Ireland not taking place until 1801]

One possible origin for the English deep state is when Henry VIII made himself head of the church as well as head of the state. By 1603 the English deep state was strong enough to ensure a smooth transfer of power when Henry’s daughter Elizabeth died and the Scottish king James VI became the English king James I. There was a wobble when Charles I lost his head but after a brief interlude, Charles II was restored to the throne. In 1688, when James II and VII started to be seen as a liability the English deep state responded by sending a letter to William of Orange in June 1688, inviting him to England. The letter was signed by 6 leading politicians and the bishop of London.

While William of Orange’s ascent to the throne took place fairly smoothly in England, the changeover was less smooth in Scotland. Supporters of James VII had to be defeated in battle before William’s position was secure. This suggests that Scotland did not have a deep state. A possible explanation for this is that in Scotland the Reformation developed in opposition to the state during the reign of queen Mary who remained a Catholic. This tension between church and state persisted until 1689. Even then, divisions between Episcopalians and Roman Catholics who supported James VII and Presbyterians who supported William II persisted into the eighteenth century, only ending with the final defeat of the Jacobites in 1746.

The nearest Scotland came to possessing a deep state was in the group which had benefited from the Revolution Settlement of 1689. For this group, the biggest threat to the continuity of their power was a second Stuart restoration via the Jacobites. Unlike England, in Scotland the Jacobites were a very real threat to the Revolution Settlement. The new (shallow?) Scottish deep state therefore came to see union with England as the only way to ensure its survival.

To an extent, the union of 1707 succeeded in preserving key elements of the Scottish deep state. While the Scottish parliament was absorbed into the English parliament, Scottish landowners, the Scottish church, Scots law, Scottish universities, Scottish banks and Scottish local government retained their privileges and power.

From the Scottish perspective, this persistence of significant features distinguishing Scotland from England, Wales or Ireland was and is important. From the perspective of the English deep state they are irrelevant. In this view since 1707 Scotland has been a region of a united kingdom which is an English kingdom, an English state. Great Britain is England, an England made up of historic regions like Yorkshire, Wales …and Scotland. This equation was confused for a century or so by the existence of a British Empire, but the empire was ruled by a parliament in Westminster which had taken on its ‘modern’ form during the reign of Henry VIII.

If the UK was a truly neoliberal state, it would have been indifferent to Scottish independence. As Neil Davidson in ‘Neoliberal Scotland‘ and James Foley and Pete Ramand in ‘Yes- the Radical case for Scottish Independence’ have pointed out, an SNP governed independent Scotland would be a neoliberal state and therefore not a threat to the global hegemony of neoliberalism.

However, an independent Scotland determined to rid itself of Trident missiles would be a threat to the status and power of the UK/English deep state and its allies in the USA deep state. This would explain why the UK/English deep state saw support for the No campaign as vital to its interests.

The implication of this is that for all its apparent dominance, neoliberalism has not yet penetrated to level of the deep state, where perceptions of ‘what is in the national interest’ and how best to maintain national influence still prevail.

This in turn has implications for the relationship between Scotland and the rest of the UK.
Are there tensions between the UK as a deep state and the UK as a neoliberal state? If the deep state is archaic and has its roots in the pre-1707 English state the answer is yes. In this model, the deep state is carry-over from feudalism represented today by the queen/royals and the house of lords. Although the deep state has adapted to various reforms, these reforms did not lead to a French style revolution as Georg Hegel thought they might when he wrote on ‘The English Reform Bill’ back in 1831. So the UK’s bourgeoisie revolution had to wait until Margaret Thatcher and Tony Blair adopted a rather English version of neoliberalism. But their revolution is incomplete. To be fulfilled it requires London to break free from the feudal deep state to become a free floating city state like Singapore or Hong Kong.

The problem is that to maintain London as a global business/finance centre only minimal levels of taxation can be levied. These minimal levels of tax are not enough to maintain the infrastructure of London- public transport for example. London’s essential infrastructure has to be financed by UK wide taxation. Therefore neoliberal UK has to pay at least lip service to deep state UK.

However, a side effect of the Scottish independence debates has been to highlight the imbalances between London and the English regions. This has the potential to create a fracture in the unity of deep state and neoliberal state, weakening both. From a Scottish perspective it would be useful to build up alliances with regional groups in the rest of the UK which are campaigning for a more equal distribution of resources and power away from London. Even in London there are groups campaigning against the take-over of London by the super-rich.

This is particularly a strategy the Radical Independence Campaign should explore and develop. Our focus on neoliberalism and our critique of the SNP as a neoliberal party deepened and broadened the grassroots Yes campaign away from a focus on Scottish nationalism. The danger as the 2015 general election campaign starts to take off is that this step forward will be reversed as we all hold our noses and vote SNP ’in the national interest’. We must not forget that our engagement with the grassroots campaign in Scotland inspired many people in the rest of the UK with a powerful sense of possibility. The UK deep state has survived the loss of Empire and of Ireland. In theory then it could have survived the loss of Scotland as the United Kingdom of England Wales and Northern Ireland. In the Houses of Lords and Commons, business would have continued as usual. Likewise, it would have been business as usual for the neoliberal state. The danger would have come from within England, from demands for radical constitutional and economic reform from ‘the regions’ awoken to the fact that change is possible, that there are alternatives to the status quo.

Historically, the City of Westminster in London has been the centre of political power in England for 1000 years, ever since king Edward the Confessor had a palace and an abbey built there before the Norman invasion. Then through the nineteenth and into the twentieth century an industrial revolution in south Wales, Scotland, the midlands and north of England created an economic and political counterbalance to centralised power.

The decline of heavy engineering and manufacturing industry was slow and long drawn out. It also affected the nationalised coal and railway industries which shifted from expansion via expensive modernisation programmes in the 1950s to contraction and closure in the 1960s. The end result by the 1990s was that there was no economic counterbalance to the City of London and its neoliberal influence. Politically, while the Labour party could still rely on mass support in former industrial areas, to win power at Westminster it had to attract ‘floating voters’ in marginal constituencies. Under Tony Blair, Labour targeted these voters by shifting the party to the right. This strategy worked in electoral terms, but meant that Labour no longer acted as a regional counterbalance to the Tories.

Labour’s rightward shift was exploited by the SNP in Scotland and the resulting success of the SNP triggered last year’s independence referendum. The Noes won it, but the desperate measures required to secure the No vote exposed the hollowness of the democratic alternatives offered by the neoliberal state with Labour supporting the Conservatives and Liberal Democrats. This alignment will make it very difficult for Labour in Scotland to fight the 2015 general election.

The constitutional complexities of a likely hung parliament in May will also challenge the deep state. In constitutional theory it is the queen who asks the leader of the largest party elected to form a government. But by intervening in the independence referendum, the queen (=deep state) has already breached the bounds of constitutional neutrality. If Ed Miliband can only become prime minister with the support of SNP Mps this would threaten the continuity of the deep state. An alternative, a Labour/ Conservative government of national unity, has already been floated as a possibility. At the same time, any failure of the May general election to deliver a clear winner would create economic uncertainty. This would threaten the neoliberal state with a loss of global financial confidence in the UK.
5. Foucault on neoliberalism and liberalism

Finally, since Dardot and Lavall’s book on neoliberalism was influenced by Michel Foucault’s ‘The Birth of Biopolitics Lectures at the College de France 1978-1979’(Paris, 2004, English translation New York 2008), I am now reading the Foucault book. Foucault’s key argument (p.116) distinguishes between liberalism and neoliberalism.

Liberalism as it emerged in the eighteenth century said ‘let us establish a space of economic freedom and let us circumscribe it by a state that will supervise it.’

Neoliberalism as it emerged in the twentieth century reversed this so that the free market is the organising and regulating principle of the state. ‘In other words: a state under the supervision of the market rather than market under the supervision of the state.’

For Foucault, the main example of such a neoliberal sate was West Germany. Here the deep state (not a phrase Foucault used) could not be invoked by the new state since Nazism was seen as the culmination of the German deep state. Unfortunately since Foucault was writing/lecturing before the rise of Thatcher in the UK we don’t know if he would have revised his analysis in the light of later developments.

If neoliberalism took root in Germany as a response to the collapse of the deep state, was UK neoliberalism a response to if not a collapse, at least a crisis, within the UK deep state? But the new Germany was and is a federal state- unlike the UK. The difference between German neoliberalism and UK neoliberalism might therefore be that rather than being the foundation for a new state, as it was in West Germany in the late 1940s, neoliberalism in the UK was an attempt to prop-up an existing state.

If one sign that the UK deep state was in crisis in the 1970s was increase in support for the SNP and demands for a Scottish Parliament, then it is now obvious that UK neoliberalism has failed to solve this UK deep state crisis. Or perhaps, if Germany is a model for a stable neoliberal state, the continuing crisis is a result of the UK deep state’s inability to follow through its conversion to neoliberalism by creating a federal UK by breaking up England into semi-autonomous regions plus Scotland Wales and Northern Ireland.

Indeed, to the extent that devolution allowed a successful neoliberal Scotland to emerge after 1999, the UK deep state’s partial embrace of neoliberalism has intensified the crisis. Prior to the Radical Independence Campaign’s intervention, the main thrust of the official (SNP led) Yes campaign was based on a vision of independence leading to a prosperous (neoliberal) Scotland.

6. Conclusion

In 1978-79, Michel Foucault’s lectures on neoliberalism preceded the UK’s adoption of neoliberalism under Margaret Thatcher and Tony Blair. Foucault’s work has been extended by Dardot and Lavall, creating an account of neoliberalism which is more complex than that provided by, for example, David Harvey. This complicates popular versions of recent history in which neoliberalism began with Margaret Thatcher’s policies in the UK.

At the same time, as the Scottish independence referendum revealed, the UK still possesses a deep state which exists in tension with the UK as a neoliberal state. The UK deep state is haunted by its past as a great power and perceives Scottish independence as a signifier of final loss of great power status. Neoliberalism was adopted in the belief that it would restore the UK’s former economic power and influence. However, by concentrating the UK’s economic power and influence in the City of London, neoliberalism now threatens the unity of the UK. Questions raised during the independence referendum about Scotland’s relationship with the rest of the UK are now inspiring demands for significant and substantial devolution by regions of England as well.

In his final lectures, having discussed neoliberalism, Foucault turned to the origins of liberalism. Although Foucault locates the origins of liberalism in the work of ‘English’ thinkers, the works he discusses in depth were the product of the Scottish Enlightenment represented by David Hume, Adam Smith and Adam Ferguson and their conceptions of civil society and political economy. Unfortunately, because does not make a Scottish connection to these developments, Foucault fails to link them up to the preceding loss of Scottish statehood. The importance of civil society is a theme I have explored previously -see here 

In my next article I will use Foucault’s lectures as a starting point for further exploration of civil society and its relationship to liberalism and neoliberalism.

Finally, professor Terry Flew of Brisbane University has written a very useful analysis of ‘The Birth of Biopolitics’

This quote is from Flew (p.33)

One of the reasons why Germany presents itself as being of interest to Focuault in these lectures is that it allows him to think about historical capitalism from within a Weberian rather than a Marxist problematic, as a system that can develop economic consistency and coherence, but one that in doing so generates new contradictions and tensions in the social plane, as a ‘principle of dissociation’ within civil society with regard to community, compassion, benevolence etc. (Foucault, 2008: 302).

Since Neil Davidson, James Foley and Pete Ramand have worked from a Marxist perspective in their critiques of Scottish and UK neoliberalism, it may be that Foucault’s Weberian perspective will provide alternative understandings of how neoliberalism has impacted on Scottish civil society and the extent that support for independence is a response to the resulting ‘dissociation’ rather than an upsurge in nationalism.


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