Neoliberalism replaced democracy as the American citizen was replaced by a faceless consumer


Neoliberalism replaces the citizen with the consumer — pushing people out of political life and into the marketplace.

Visitors walk through the newly opened luxury shopping mall at the Hudson Yards development on the West Side of Midtown Manhattan on March 18 in New York City. PHOTO/Spencer Platt/Getty

Since the crisis of 2008, “neoliberalism” has been denounced from all sides — blamed for the explosion of inequality and the crisis itself.

But the idea remains vague and often used at random. Is it just an economic program? Or is it a true political project? Does it aim, as we often hear, to get rid of the state for the benefit of the market? And what is its relationship to democracy?

To answer all these questions, Daniel Zamora recently caught up with the historian Niklas Olsen, who recently published an intellectual history of neoliberalism entitled The Sovereign Consumer.

DZ How do you define “neoliberalism” and “consumer”?

NO I proceed from a pragmatic definition. I understand neoliberalism as the ideological product of processes in which self-identified liberals, from the interwar period onwards, have attempted to renew liberalism as an ideology that claims to promote societal orders based on free markets and individual freedom. In other words, neoliberalism refers to efforts to construct new liberalisms.

Many of the neoliberals that I study were related to the Mont Pèlerin Society, and they shared the ambition of rethinking how the functions of the state could be redefined to secure a free market and individual freedom. The positive notion of the state — and other political institutions — as the guarantor of a competitive order is crucial to the way in which these neoliberals sought to distinguish their project from the political economy of so-called classical liberalism.

Finally, its proponents referred to the figure of the sovereign consumer as a tool to salvage and renew liberal ideology. Let me stress that I do not understand the sovereign consumer as a real individual or as a fixed concept but as an analytical umbrella term for a range of ideas asserting that free consumer choice is the defining feature of the market economy. Indeed, the figure has been assigned different meanings and served different purposes across space and time.

DZ What does it mean for the consumer to be “sovereign”? Was it a way to replace the state sovereignty with a consumer one? You also speak of giving to neoliberalism “a new mode of sovereignty” — what do you mean by that?

NOThe sovereignty aspect is very interesting. Its meaning and significance has to be understood in the contexts in which it emerged. Here we are back in the early 1920s, when Austrian economist Ludwig von Misesinvented the notion of the “sovereign consumer.”

In his defense of liberal ideology, Mises was forced to answer those, such as the German jurist and political thinker Carl Schmitt, who criticized liberalism for its lack of a clear source of social order. He did so by coining the figure of the sovereign consumer, effectively investing the liberal order with a new symbol of authority that explains and justifies the particular political organization of liberalism.

This source of authority was supposedly unrestricted by religious or political norms and institutions. It answered only individual desires and the formal freedom of laws and markets. And yes, given that the growing power and authoritarian tendencies of the state were the main concern of neoliberals in the interwar era, the sovereign consumer was put forward to undercut state sovereignty.

Quinn Slobodian also makes this argument in his excellent Globalists: The End of Empire and the Birth of Neoliberalism,which illustrates how neoliberals have directed their efforts toward reconstructing capitalism on a global scale. In Slobodian’s words, consumer sovereignty trumps national sovereignty. Overall, the sovereign consumer denoted an essentially individualist, but well-ordered, efficient, and democratic market society.

DZIn what sense was this notion of the consumer qualitatively different from former definitions?

NO The sovereign consumer has always served as a key figure in the legitimation of the neoliberal project. Virtually all proponents of neoliberal ideology, from Ludwig von Mises to Milton Friedman, have portrayed free consumer choice as the defining feature of the desired market economy, and the sovereign consumer as an agent who is capable of dictating economic production and driving political activity.

By making a direct parallel between choice in the marketplace and at the ballot box, neoliberals not only depicted sovereign consumers as the key drivers of capitalism and of liberal democracy, but also described the daily voting on the marketplace as the real driver of individual representation and participation in society. Choosing between available “products” became a central approach to political activity.

Now, you certainly find precursor ideas in liberal political economists such as Adam Smith or Jean-Baptiste Say and in marginal economists such as William Jevons and Carl Menger. However, the neoliberal version differs markedly from earlier definitions. The crucial difference is the strong moral and political implications neoliberals attached to the figure, and the ways it legitimizes the neoliberal political order. This is why I label the sovereign consumer the key actor of neoliberalism.

DZYou also explain how this figure was used to reinvent the market as the democratic place par excellence — the price system becoming a mechanism to register a “continuous election,” as Mises put it. Reading this history, it’s difficult not to think about Wendy Brown’s argument about how neoliberal rationality undoes democracy, how it transforms democracy into a marketplace.

NOI think Wendy Brown is right to argue that neoliberalism undoes democracy as we know it by turning it into a marketplace. In this process, neoliberals have obviously contested (and some have outright rejected) traditional meanings of democracy that emphasize public deliberation and majority voting as the primary sources of legitimacy in political decision-making.

But we also need to grasp neoliberalism as a positive program that to a great extent has rallied popular support through appeals to democratic legitimacy. Most importantly, for many neoliberals, the market represents a superior solution to securing the individual citizen’s representation and participation in sociopolitical processes.

This solution supposedly allows for individual choice unbound by the will of the majority and eclipses the idea social movements, unions, and organizations can empower segments of the population to improve their living conditions and promote sociopolitical rights.

Neoliberals wanted to constrain the mechanisms of traditional politics on behalf of market democracy, which is focused on consumer choice and the price mechanism. This ambition is reflected in the building of international institutions that have been immunized against the pressure of mass democracy to protect the market order.

William Davies correctly speaks of neoliberalism as “the pursuit of politics by economics.” The point is that neoliberalism rehabilitates and re-enchants the market and its virtues on behalf of traditional sites of democracy and gives primacy to the economic rather than the political.

DZ Your account gives us a fascinating understanding of why so many neoliberal economists, like Mises or Milton Friedman, supported at different moments in their career authoritarian or even fascist regimes. Preserving the marketplace was more important than preserving democracy, right?

NOYes. It’s pretty clear that the democracy of consumers they identified with the market economy often represented an analogy pertaining only to economic processes and not to a political order characterized by traditional democratic institutions and virtues. It’s also pretty clear that the political measures they approved for sustaining a “democratic” economic order often entailed strongly anti-democratic measures and anti-parliamentary approaches to claims to societal and political participation.

German neoliberalism in the 1930s is an obvious case in point. Accommodating to National Socialism, German neoliberals outlined an ideal of consumer sovereignty that was conditioned by the evasion of basic democratic and social rights. In fact, it was primarily concerned with making the population consumers, who were to fulfill government policies through specific modes of behavior in the market, bolstered by state-enforced education and compulsory measures.

Generally, I think it’s fair to say that prioritizing the marketplace over democracy is a recurring pattern in neoliberal ideology and practice.

DZYou mention that Mises once wrote that nobody is “spontaneously liberal” unless he’s “forced to.” But how could an order be liberal if people are “forced” to be liberal? What does it mean for Mises? Was it a conception widely shared among neoliberals?

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