‘Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown’ reviewed by Derek Wall

Reviewed by Derek Wall

About the reviewer

Derek Wall teaches political economy at Goldsmiths College, London. A former International …

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Mirowski has produced a profound and important book which deserves to be read, however his prose may be distracting for some readers. He also avoids discussion of my two favourite writers on political economy, Marx and Ostrom. I nearly gave up reading it on several occasions, mainly because of the frankly odd writing style. His book discusses why the financial crisis of 2008-9 has strengthened mainstream economics, rather than made it possible to challenge it.

Mirowski first outlines how a range of commentators proclaimed that the neo-classical economics that was so dominant in the early years of this century had been damaged, perhaps fatally, by the financial crisis. He explains carefully why it has instead survived, and is perhaps even stronger. In many parts of the world, the UK being a good example, initial caution about deregulation was soon replaced with an enthusiasm for extending neo-liberalism even further. In the UK, and to some extent in the European Union, greater austerity as a response to debt has seen the extension of market relations to new areas of society, rather than a challenge to deregulation. While it was widely agreed that global economic imbalances, growing inequality and financial deregulation contributed to the crisis, such agreement was forgotten swiftly and neo-liberal policies have been continued with greater enthusiasm.

Mirowski argues from popular culture to economic theory, advocates of neo-liberal economics have reacted swiftly and effectively against any challenge to their ideas. He notes the existence of a ‘full spectrum’ defence of neo-liberalism, which includes responses from mainstream academic economists, ideological neo-liberals and purveyors of popular culture.

Mainstream economics is so conservative that cognitive dissonance seems the order of the day. In the same way that fish are unaware of the water they swim, economists seem unaware of the discipline within which they move. Economics as an academic discipline is famously closed and despite demands for an economic alternative heterodox currents have virtually no space within academic departments. Mirowski argues that challenges from neuro and behaviourial economics are used to protect the discipline from fundamental change rather than to extend understanding.

One element of heterodox economics is the Austrian economics of von Mies and Hayek, yet this, has, and Mirowski produces much evidence to back up his thesis, been used to deepen rather than challenge market based assumptions. Austrian economists like Hayek, while criticising elements of mainstream economics, especially around knowledge, have used such criticism to enhance a market based logic, instead of challenging it. Mirowski suggests the existence of a neo-liberal thought collective that evolved from the Mount Pelerin Society and still shapes policy-making to an extraordinary degree.

Finally neo-liberal economics is defended ideologically as a common sense we can all buy in to. Popular culture, from TV shows to tabloids, demonises those who are poor and excluded and promotes a society based on `Dragons Den’, entrepreneurial self-striving. We are all in a competitive race with each other. A market logic extends ever further through society, if some are rich and others poor, this is because only a few of us can win the race. Economics shapes society so that society identifies with a market based logic.

 This is only the barest outline of what Mirowski discusses along with his suggestion that we need a full spectrum response to market based mainstream economics, stretching from popular culture to academic work. However there are gaps in his account and weaknesses in his presentation. Mirowski’s avoidance of any serious discussion of how Marx or other Marxist thinker’s such as Althusser, might help us understand the role of ideology in maintaining the influence of a particular social class was a failing for me. The potential contribution of Marx to understanding economic crisis, which I feel is as fresh and relevant today as in the nineteenth century, is another gap. Marx and Marxism are ignored other than passing remarks such as the supposed incompatibility of Foucault’s perspectives with Marx (99-100). There are a range of more recent challenges to the foundations of mainstream economics. I have long been fascinated by Elinor Ostrom’s attempt to think through economics beyond purely private property relations, the state, the commodity and notions of ‘rational economic man ‘ [sic]. Mirowski completely ignores the existence of her work.

Presentation seems, though, most problematic. The prose is so rich and odd, it almost made me dizzy. Ideas, including economic ideas, are transmitted and such transmission, the subject of Mirowski’s book, is a product of culture. Economists, of course, are not well known for the clarity, persuasiveness or beauty of their words. Mirowski combines obscure phrases with colloquialisms, colloquialisms which are variously clichéd or in themselves bizarrely obscure.

Open the book at random and you find statements such as:

Returning once more to our insistence on the importance of agnotology, it takes some diligence and not a little digging to come to understand why the populace was being lured up the garden path; those seeking enlightenment were lured to waste their time in dalliance with ideas that did little more than divert attention from deeper structural causes of the crisis. (256)

Few of us write well consistently, and yes ‘agnotology’ is explained earlier in the text, and yes ‘diligence’ sounds pleasant with ‘digging’ but ‘enlightenment’ and ‘garden path’ do not work well.

There is very much important detail here, for example, the use of doubt to prevent action on climate change is a fascinating aside. So ultimately Mirowski’s book is important, however Richard Seymour’s recent Against Austerity (2014), which is clearly influenced by Mirowski, is an easier read which picks up on many of the important points. Unlike Mirowski, Seymour examines the continuing success of neo-liberal ideology with reference to Marx, Gramsci, Althusser and a range of illuminating thinkers. Mirowski calls for a full spectrum approach to combating neo-liberalism, from high theory to cultural interventions, but largely fails to specify sources of inspiration for such interventions. Mirowski asks a vital question and provides some answers, but additional work is needed to provide a convincing alternative to neo-liberal economics and to develop strategies for advancing such alternatives.The test of a text, according to Spinoza, is its effects. In my opinion Mirowski diminishes the likely positive effects of his book with his prose.

19 August 2014

References

  • Seymour, Richard 2014 Against Austerity London: Pluto Press.

2 comments

  1. Thanks for this review. First of all as an aside, regarding Mirowski’s writing, compared to other economists I think his is pretty good (which is certainly no defense of Derek Wall’s complaints).
    Derek Wall is certainly correct that there is an absence of Marx. I don’t know Mirowski’s reasons for neglecting Marx. It is very common here in the US simply to ignore Marxian thought.

    Nonetheless, Mirowski’s strength is his understanding of orthodox political economy; both its historical development as a discipline of thought and contemporary mainstream currents. This is Mirowski’s invaluable contribution throughout many years.

    Thus, Derek’s review certainly gives the essence of Mirowski’s book, but I wanted to underscore that Mirowski’s critique is lodged at several mainstream currents. As Derek points out Mirowski’s aim is to understand how several mainstream currents of economic theory/ideology have been strengthened by the crisis of 2007-8.

    There is a thick protective belt in mainstream currents. I do agree with Mirowski that behavioral theories, along with developments in oligopoly theory, international relations, and asymmetric information and imperfect competition have not (yet) become heretical within the mainstream, but instead, as Derek points out, have tended to generate a protective scientific belt against change. Nonetheless, no one is in control of how these theoretical developments influence the discipline going forward. Properly understood much of mainstream economic theory is internally inconsistent (and quite radical inconsistent). Mirowski helps to point this out and to show just how much “truth” and “science” is lacking, and how much ideology, politics, and power relations have determined theory.

    The argument of Mirowski’s needs to be underscored and there are very important political lessons to be learned by those of us that believe capitalism is no alternative, i.e. CINA.
    Moreover, Mirowski’s book helps us further understand the theoretical return to orthodox market-oriented thinking is not merely ideological or political. I contend most economists, especially in the US, have never been trained to think any differently. And it is these economists that bring this narrow thinking to the popular press and political realm. We need to keep hammering away with our deeper and stronger explanations of international corporate capitalism and its contradictions.

    One very important problem is the lack of philosophical training economists receive in Ph.D. programs. The theory generated in this absence is narrow and reduced to small problems that are impressively detotalized from social being. Mirowski helps us understand such problems.
    Thus, I strongly appreciate Mirowski’s most recent effort in spite of his neglect of Marx.
    As an aside there is a new book to be published in 2015 by UC Berkeley’s Barry Eichengreen, Hall of Mirrors: The Great Depression, The Great Recession, and the Uses, and Misuses, of History (Oxford University Press) that has a similar argument to Mirowski’s. Eichengreen’s book is primarily a book of economic history to help explain policy mishaps today. However, it is penetrating epistemological explanation of why human beings fail to understand the ontology (or institutional physiology, or social reality) of social being. Whereas Mirowski is well within the heterodox camp, Eichengreen is far more rooted in the mainstream. In many ways these books will be received better than Marxian critiques of mainstream economics. In this sense they are important for initiating any hope toward emancipation.

    In the meantime we need to keep up explaining and providing theory with deeper philosophical understandings of, and are more totalizing for, our explanations of social being.

  2. Hi there… I like your perspective, however it is puzzling to bring back Marx in the face of the environmental challenge. Obviously the challenge today is to reduce ambition itself, reduce want and demand.

    P.S. Marx was materialist, same as the industrialists only with different organization. The fact that he was vaunted over cooler heads like Weber or traditionalists of the Romantic movement, in the competition for alternatives to capitalism, with his call for violent revolution and forcible equality, was probably a promotion of the industrialists themselves!

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