[Marxism] New David Harvey book

Louis Proyect lnp3 at panix.com
Fri Oct 7 08:48:30 MDT 2005

(A new book by David Harvey points to post-Allende Chile as a model for 
economic restructuring everywhere in the world. I couldn't agree with this 

The Scandal of the Word “Class”:
A Review of David Harvey, A Brief History of Neoliberalism (Oxford UP, 2005)

David Harvey's new book has four faces on its cover: Reagan, Thatcher, 
Pinochet and Deng Xiaoping. It makes one self-evident, yet strangely 
scandalous assertion: the rise of neoliberal economics since the late 1970s 
— or more precisely, since the bankruptcy of New York City and the 
dictatorship in Chile — is the centerpiece of a deliberate project to 
restore upper-class power. True to its title, the book presents a concise 
but extremely well-documented economic history of the last three decades, 
encompassing not only the usual G-7 countries but the entire world, with a 
particular emphasis on the US and capitalist China.

It identifies structural trends of neoliberal governance that, as the book 
nears conclusion, serve equally to explicate the present crisis, both of 
the global economy and of interstate relations. And finally it asks the 
political question of how resurgent upper-class power can successfully be 
opposed. Here is where the most benefit could be gained by examining the 
aura of scandal that surrounds its central thesis.
But first let us consider in detail how this history unfolds. It is well 
known that Chicago-school economists, trained by Milton Friedman, applied 
the latter's free-market utopia to Chile after the consolidation of power 
by Pinochet in 1975. “Freedom” was therefore a key word in the economic 
management propounded by the dictator.

Harvey begins not with that story, but instead with four orders issued on 
September 19, 2003 by Paul Bremer, head of the Coalition Provisional 
Authority in “liberated” Iraq. The orders included “the full privatization 
of public enterprises, full ownership rights by foreign firms of Iraqi 
businesses, full repatriation of foreign profits... the opening of Iraq's 
banks to foreign control, national treatment for foreign companies and... 
the elimination of nearly all trade barriers” (p. 6).

Only oil was exempted from these orders, presumably because of its status 
as a strategic (i.e. military) resource. In addition, a flat tax, long 
promoted by Republicans in the US, was imposed. Harvey sees these economic 
parameters as exemplary of a neoliberal state, defined as “a state 
apparatus whose fundamental mission [is] to facilitate conditions for 
profitable capital accumulation on the part of both domestic and foreign 

The freedoms embodied by that particular kind of state “reflect the 
interests of private property owners, businesses, multinational 
corporations, and financial capital” (p. 8).

After drawing a striking parallel between the restructuring of the Iraqi 
and Chilean economies, he goes on to recount the sequence, relatively 
familiar from his previous books, whereby the postwar social compromise 
between capital and labor, instituted internationally by the 1944 Bretton 
Woods fixed exchange-rate system and by tariff barriers and capital 
controls negotiated within the General Agreement on Tariffs and Trade, 
gradually collapsed in the early 1970s after delivering two decades of 
sustained high growth. The central argument in this opening chapter is an 
account of the dramatic increase in the income of the upper 1% of the 
population of the most developed countries from the mid-1980s onward. By 
the end of the century, in the US case, that upper one-hundredth of 
American society commanded a full 15% of the national wealth — up from less 
than 8% at the close of WWII, and now very close to the level of 16% that 
had obtained before the war. On the same page Harvey offers another figure: 
“the ratio of the median compensation of workers to the salaries of CEOs 
increased from just over 30 to 1 in 1970 to nearly 500 to 1 by 2000” (p. 
16). And he points to similar concentrations of wealth in Britain, Russia, 
China and Mexico, as well as to the widening of the global income gap 
between the top fifth of the world's population in the richest countries 
and the bottom fifth in the poorest, which has gaped dramatically from 30 
to 1 in 1960 to 74 to 1 in 1997. Over the same period, aggregate global 
growth rates fell from 3.5% for the decade of the 1960s to just 1.1% for 
the 1990s.




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