‘Green Capitalism’: A Critical Review, Part 2

Part 2 of Stephen Graham’s critical review of the ‘Green capitalism’ literature examines the relationship between capitalism and fossil fuels. Discussion focuses on the particular advantages that ‘energy dense’ fossil fuels afford capitalist production, and examines some of the major barriers that impede the transition to a future based on renewable energy sources.

Part 2

2.1. Capitalism and fossil fuels

It is now widely accepted that the dangerously high levels of accumulated carbon dioxide in the atmosphere are in large part the historical result of the activities of (certain groups of) humans. It is also commonly accepted that fossil fuel combustion constitutes a key driver of CO₂ emissions.[1]

Fossil fuels have been central to capitalist production for over two centuries.[2] Although capitalist social relations did exist prior to Watt’s invention of the double-acting steam engine[3], the development of steam power as the prime mover in capitalist industry enabled the expansion of capitalist social relations on a scale hitherto unimaginable. As Altvater notes:

Although something like capitalist social forms occasionally could be found in ancient societies (in Latin America and Asia as well as in Europe), they could not grow and flourish without fossil energy… growth was limited, and in fact the average annual growth rate was close to zero before the industrial revolution of late eighteenth century. But in the course of the industrial revolution economic growth rates jumped from 0.2% to more than 2% a year until the end of the twentieth century.[4]

Perhaps the most influential historical narrative regarding the marrying of fossil energy to capitalist production suggests that, through their combination, manufacturers were at last able to transcend the historic limits imposed on production by a lack of available land for growing wood fuel (the ‘land constraint’).[5]

Wrigley set out to demonstrate the importance of this limitation by converting amounts of coal consumed into the acreage of woodland required to produce an equivalent amount of energy.[6] For example, Wrigley states that in 1750, the coal produced in England would have required 4.3m acres of woodland – 13% of national territory; by 1800, this figure had risen to 11.2m acres (35%). By 1850, the amount of woodland required to match energy from coal was 48.1m acres – or 150% of national territory. Considering the geographical confines of the state boundary, the economic limitations imposed by wood-fuelled production are clear. On Wrigley’s view, as coal-fired production entailed expanding down into the earth, instead of across its surface, its utilization unleashed the power of industrialist capitalist production held in fetters until then.[7]

However, as Huber notes, although forms of energy are central to the ways that people reproduce themselves, it is necessary to steer clear of any kind of ‘energetic determinism’ that ‘divorces historical development from its true social and political basis’. While energy matters, ‘it is important to retain a perspective of dialectical complexity that emphasizes the mutually constitutive relations between energy and society’.[8] This consideration will inform the analysis that follows.

The rise of fossil production

Prior to the industrial revolution, around 80-85% of all mechanical energy came from human and animal sources; the rest came from wind and water.[9]

During the 19^th century, the shift to fossil fuels displaced human muscles as the core productive force and placed machinofacture centre stage. By freeing workers from certain types of manual labour, fossil fuel-powered machines allowed for an ever more complex division of labour and opened increasing possibilities of ownership of the means of production by an emerging capitalist class over propertyless workers shorn from the means of subsistence.[10] This, Huber suggests:

…provides the social basis for the development of the productive forces based on capital… The whole notion of workers divorced from the means of production began to make social sense only in the context where the worker is no longer a prime physical force of production.[11]

He adds that:

…the emergence of large-scale fossilized production hastened the generalization and extension of the wage labor relationship on a scale heretofore unseen.[12]

Malm, too, examines the changes in social relations that fossil fuel-based capitalist production enabled. His analysis of the transition from water to steam power in the British cotton industry from the 1820s onwards is useful for our analysis of the relationship between fossil fuels and capitalist production today.[13] In his study, he challenges the popular view that 1) coal replaced water power as the former was more cost-effective; and 2) that manufacturers seeking to utilise the latter were critically hampered by a shortage of suitable sites.

Malm instead demonstrates how steam power displaced water power even though water-powered mills were cheaper to run than steam plants, and although plenty of suitable sites for water mills remained. Contrary to the commonly-held view, he argues that steam power came to dominate in the cotton industry as fossil energy enabled capitalist enterprises to move from often isolated riverside sites – where mill output depended on natural fluctuations in water levels – to the emerging industrial towns where a concentrated oversupply of labour power had settled.^[14] Here, capitalist manufacturers could expand production by drawing on reliable reserves of cheap, expendable labour; and no longer at the mercy of seasonal river flows, capitalist production could potentially take place 24 hours a day, seven days a week.

These advantages offered by fossil (‘stock’) energy over renewable (‘flow’) sources proved central to the development of early industrial capitalism. They remain no less important to capitalist production today.

This point is emphasised by Altvater, who suggests that, compared to other energy sources, fossil fuels hold so many advantages for capitalist production that they fulfil ‘almost perfectly the requirements of the capitalist process of accumulation’.[15] Unimpeded by low windspeeds, unpredictable water levels, or the amount of sunlight available at particular times of day, fossil energy allows surplus value extraction to continue around the clock. As the early cotton capitalists discovered, once production is based on fossil fuels, energy availability need no longer be a primary factor in the location of an enterprise; today, as energy resources (particularly oil and liquid natural gas (LNG)) can easily be transported around the globe, manufacturing can take place wherever labour costs are cheap and environmental regulations lax. By contrast, any dependence on place-bound energy would restrict such freedoms ‘as it cannot be assumed that cheap labour and political stability coincide geographically with abundant flows of WWS [wind, water, solar] and low energy prices’.[16]

Another advantage of fossil energies over renewable sources relates to their high Energy Return on Energy Input (EROEI). While it must be noted that not all fossil fuels are equal in this respect – consider the energy required to obtain a barrel of oil from a Saudi field compared to that needed for the same amount from the Canadian tar sands – compared to renewable sources, fossil fuels can be considered a ‘thick’ energy source. Its entropy is low, its energy concentration very high, and therefore it yields a high energy surplus.[17]

So central have fossil fuels been to capitalist development to date that some deny the very possibility of a non-fossil fuel-based capitalist social formation. Eco-socialist thinker Ian Angus, for example, believes that fossil fuels ‘are not an overlay that can be peeled away from capitalism, leaving the system intact’. Instead, they are ‘embedded in every part of the system’.[18] Arguing along similar lines, Altvater suggests that the advantages of fossil energy for the capitalist system make this fuel source ‘unique and indispensable’.[19] In contrast to many green growth advocates, he argues that ‘[t]oday, and possibly for ever, it is impossible to power the machine of capitalist accumulation and growth with ‘thin’ solar radiation-energy’ as this lacks the ‘potential of time and space compression, which “thick” fossil energy offers’.[20] Kallis, too, argues against the possibility of a capitalist accumulation regime powered by non-fossil energies. He suggests that if a technology existed that provided abundant, cheap and clean supplies of energy, capitalism would have taken it up by now. The problem, therefore, is more fundamental:

The coal lobby did not prevent the development of oil, and neither did oil interests block the development of natural gas. If renewable energies could sustain growth, they would have been adopted as quickly as fracking was. My hypothesis is that renewable energies are not adopted because they cannot sustain an economy of the scale and pace of the contemporary global economy.[21]

Such views run counter to the general green capitalist outlook, which (at least ostensibly) considers renewable, non-fossil energies as the de-carbonized power source for the ecologically sustainable capitalist production regimes of the future.[22]

To enable us to move on to the next part of the discussion, I will here draw a preliminary conclusion from Part II’s findings so far. Fossil fuels have been central to the development of industrial capitalism to date. Compared to energies derived from wind, water and sun, ‘thick’ fossil fuels offer certain advantages that match almost perfectly the needs of capital accumulation. Primarily, these are: the means to extract surplus value 24 hours a day, seven days a week, regardless of weather fluctuations; the capacity to shift production to wherever labour is cheap and ‘flexible’; and the ability to manufacture commodities where environmental protections are weak.[23]

Even with due consideration for these advantages, in theory there may be no reason to doubt the potential future existence of a capitalist social formation powered entirely by wind-, water- and sun-based energies. In practical terms, however, such an outcome is extremely unlikely. More likely is the continuation for the foreseeable future of dangerously high levels of fossil fuel combustion, despite the well-known ecological consequences of such a course of action. I will now set out a basis for this suggestion.

2.2 Barriers to a renewable energy transition

• Fossil fuel corporations

One significant barrier impeding a shift away from fossil energies is the political and economic power of fossil fuel corporations. These businesses rank among the largest in the world.[24] While we must be careful not to overstate their influence, it is now well known that these institutions have for decades sought to obfuscate the negative environmental consequences of their operations, and have spent huge sums in efforts to thwart action on climate change.[25]

Given that fossil fuel combustion is a key driver of rising CO₂ emissions, preventing runaway climate change will require that most known fossil energy reserves remain in the ground; exploration for new reserves must also cease. However, as Mahnkopf suggests, ‘financial investors who currently spend large sums on finding new reserves are not prepared to be directed away from high-carbon options’.[26]

The existing investments in fossil fuel infrastructures are huge. According to Smil, the global network of oil and gas-fields, along with all the coal carrying vessels, oil and Liquid Natural Gas (LNG) tankers, treatment plants and refineries ‘constitute the world’s most extensive, and most costly, web of infrastructures’.[27]

The following extract from the UN’s 2011 World Economic and Social Survey highlights the scale of the problem:

There are thousands of large coal mines and coal power plants, about 50,000 oilfields, a worldwide network of at least 300,000 km of oil and 500,000 km of natural gas pipelines, and 300,000 km of transmission lines. Globally, the replacement cost of the existing fossil fuel and nuclear power infrastructure is at least $15 trillion-$20 trillion. China alone added more than 300 GW of coal power capacity from 2000 to 2008, an investment of more than $300 billion, which will pay for itself only by 2030-2040 and will run maybe until 2050-2060. In fact, most energy infrastructures have recently been deployed in emerging economies and are completely new, with typical lifetimes of at least 40-60 years. Clearly, it is unlikely that the world will decide overnight to write off $15 trillion-$20 trillion in infrastructure and replace it with a renewable energy system having an even higher price tag.[28]

An unwillingness to write off such investments leads to inertia. As David Harvey shows in Limits to Capital: ‘When capitalists purchase fixed capital, they are obliged to use it until its value (however calculated) is fully retrieved’.[29] And as Malm notes, this is not simply about recuperating expenses:

…once a power plant has paid back, the owning firm will be wise not to knock it down, but rather keep it in operation for as long as possible. Already paid for, it can now be treated as costless fixed capital and used a base for capturing larger market shares; decommissioning the complex and constructing another would be to start all over again.[30]

While fossil fuel corporations are hugely powerful, they are, however, not invulnerable. As Warlenius notes:

Capitalism has always developed through phases of destruction and phases of creation, and the substitution of one technology or energy regime for another might be a threat to jobs, firms, even to people, towns and landscapes, but not necessarily a threat to capital as such, since it will relocate to expansive, profitable sectors.[31]

Indeed, Holgersen and Warlenius suggest that the ‘creative destruction’ of fossil fuel infrastructure could pave the way for the resolution of both the economic and climate crises. For the former, capital must be destroyed; for the latter, fossil fuel infrastructure must be demolished. However, the difficulty comes – particularly when one considers the dense web of links between fossil fuel corporations and capitalist states – in ensuring that the ‘right’ type of capital is destroyed. [32]

Their argument, however, assumes that renewable energy sources will be sufficient to drive the capitalist economies that emerge – a claim questioned above; they also prioritise climate change over other ecological considerations. This stance constitutes what I call a ‘weak’ conception of green development.

• Power and decentralisation

Renewable energy lends itself to local, decentralised production and distribution. This is considered a virtue by many.[33] However, as Warlenius notes, such thinkers would be naïve to assume that this decentralised vision is shared by capital or social elites.[34]

In terms of geopolitical leverage, as no single country can dominate the source of solar energy, it cannot be weaponized as an imperial tool.[35] And although locally-based production would eliminate the need for much of the centralised grid system, minimise transmission losses, and help manage supply and demand, the market domination of a few energy companies ‘leads to a preference being given to central, grid-based approaches that retain their market power (offshore wind parks, nuclear energy and project proposals for huge solar power generation facilities)’.[36]

For Warlenius, such considerations make it:

…hard to imagine industrial capitalism, based on competition, commodification and monopolization, willingly adopting an energy system based on a decentralized network of rather cheap and low-tech devices generating electricity from wind, water and sun… Probably the concentrated ownership of capital will fetter the development of such a decentralized energy system, whose full potential could only be developed under different circumstances.[37]

• The neoliberal conjuncture: bad timing

As Malm points out, the hyper-globalised economy of the current conjuncture can only be understood as a ‘most unpropitious moment… for embedding the world’s energy system in the spatial and temporal matrix of wind, water and sun’.[38]

Given neoliberalism’s (ostensible) aversion to state intervention, as well as to any forms of potentially profit-inhibiting regulation,[39] politicians operating within the limits of its normative frame are far from ideally placed to deal with the climate crisis (let alone ecological crises more broadly).[40] For Warlenius, this is a classic case of ‘bad timing’:

…a deal on climate change agreed under the Fordist era would probably have adopted measures and policies that would have mitigated climate change more effectively… [Such a course of action, however, would be] regarded as economically ‘inefficient’ by today’s neoclassical economists.[41]

Carbon emissions have exploded under neoliberalism – and taking account of current trends, as an accumulation regime neoliberalism appears incapable of dealing in any meaningful way with the climate crisis.[42]

This inability need not necessarily create a problem for neoliberal accumulation, however. Indeed, the multiple environmental crises we face present potential opportunities for a new wave of innovation and neoliberal expansion.[43] Examples include carbon markets, payments for ecosystem services (PES) and the commodification of nature, insurance and climate finance mechanisms (for example ‘catastrophe’ bonds), renewable technologies, geoengineering, electric vehicles, green chemistry, and green nanotechnology, to name just a few.[44]

Advocates of market-based solutions to ecological crises are quick to point to the recent expansion of renewable energy capacity as evidence of the unparalleled mobilising force of neoliberal regimes.[45] Indeed, on current trends, such renewable capacity is set to increase markedly in coming decades. Yet due to the inner logic of capitalist production, rather than displacing production based on fossil fuels, new renewable energy capacity is augmenting existing energy supply. Richard York analysed data from across most nations of the world during the period 1960-2009 and found that each unit of total national non-fossil energy displaced less than one-quarter of a unit of fossil energy; regarding electricity in particular, each unit of non-fossil fuel-generated electricity displaced less than one-tenth of a unit of electricity generated from fossil fuel sources. These results, he suggests, ‘challenge conventional thinking in that they indicate that suppressing the use of fossil fuel will require changes other than simply technical ones such as expanding non-fossil-fuel energy production’.[46]

We are brought once again to the environmental problematics rooted in capitalism’s inner logic. Production takes place with the primary aim of capital accumulation. Consequently, new renewable energy capacity is put in service of this goal. And as there exist no real boundaries between ‘green’, ‘grey’ or ‘black’ capitalist sectors, money invested in ‘green’ sectors might produce profits that are later invested in ‘black’ sectors.[47] Profit is the ‘bottom line’; environmental concerns are cast aside.

• Material resources

Renewable energy systems require large amounts of earth materials. The development of a global renewable energy system and the electrification of transport would require 50%of current copper reserves; regarding platinum, nickel and lithium, the need would be larger than (or a large proportion of) respective existing reserves.[48]

According to Mahnkopf, due to decreasing discovery rates, major minerals – silver, lead, copper, nickel, uranium – at acceptable prices are set to become exhausted between 2030 and 2050. Lower grade ores require relatively more energy for extraction. Also, due to the ecological impacts of mining, mining corporations in many places around the world are facing increasing levels of resistance.[49] Such issues pose problems for the development of a global renewable energy system.

And whether capitalist or not, any future social formation that increases renewable energy capacity to deal with atmospheric carbon emissions will likely amplify other ecological stresses. While the impacts of solar energy production, for example, might be milder than those of fossil energy, in an expanding economy the total amount of energy produced, and the materials extracted, will sooner or later overshadow such differences. Kallis warns that if world energy consumption was to triple by expanding renewable energy capacity, the impact of materials extracted and land used would ‘become a major force of environmental degradation and pollution’.[50] Could a major shift to renewables signal the return of ‘the land constraint’ in 21^st century form?

These issues constitute significant obstacles to those who propose to power the ‘green’ capitalist economies of the future entirely by renewable energy sources. For Kallis, this problematic brings forth the issue of ‘de-growth’: although powering the global economy of today entirely by renewable energy is unlikely, it is possible, he suggests, ‘to thus power a much smaller one’.[51]

Notes to Part 2

[1] Intergovernmental Panel on Climate Change (IPCC), Climate Change 2014 Synthesis Report (2014); Ian Angus, Facing the Anthropocene: Fossil Capital and the Crisis of the Earth System (New York: Monthly Review Press, 2016); Malm, Fossil Capital.

[2] Elmar Altvater, ‘The Social and Natural Environment of Fossil Capitalism’, Socialist Register, 43 (2007), 37-59; Matthew T. Huber, ‘Energizing historical materialism: fossil fuels, space and the capitalist mode of production’, Geoforum, 40:1 (2008), 105-15; Malm, Fossil Capital.

[3] Ellen Meiskins Wood, The Origin of Capitalism: A Longer View, 2^nd edn. (London: Verso, 2017); Huber, ‘Energizing historical materialism’.

[4] Altvater, ‘Social and Natural’, p. 42.

[5] Edward Anthony Wrigley, Energy and the English Industrial Revolution (Cambridge: CUP, 2010).

[6] Wrigley, Energy; Malm, Fossil Capital, pp. 21-2.

[7] Wrigley, Energy.

[8] Huber, ‘Energizing historical materialism’.

[9] Carlo Cipolla, The Economic History of World Population, 7th edn (New York: Harvester Press, 1978), p. 45.

[10] Huber, ‘Energizing historical materialism’; cf. Marx, Capital, vol. 1, ch. 27.

[11] Huber, ‘Energizing historical materialism’, 108-9.

[12] Huber, ‘Energizing historical materialism’, 110. Fossil fuel-powered machine production allowed more and more commodities to be produced, for which new markets – often in other parts of the world – had to be found (Huber, ‘Energizing historical materialism’, 111). Increasingly, demand was also driven by requirement of domestic wage workers whose only way to obtain the necessities of life – now that access to means of substance was denied – was through the sale of their labour power and the exchange of wages for these commodities; see: Wood, Origin of Capitalism.

[13] Malm, Fossil Capital.

[14] This shift had other advantages for capitalist manufacturing, for example, better access to transport links and supplies of raw materials.

[15] Altvater, ‘Social and natural’, 41.

[16] Rikard Warlenius, ‘A renewable Energy Transition: capitalist barriers, socialist entitlements’, in: Eskelinen et al. (eds.) Politics of Eco-socialism, p. 90.

[17] Altvater, ‘Social and natural’, 39; cf. Vaclav Smil, Power Density: A Key to Understanding Energy Sources and Uses (Cambridge: MIT Press, 2015).

[18] Ian Angus, Facing the Anthropocene: Fossil Capital and the Crisis of the Earth System (New York: Monthly Review Press, 2016), p. 56.

[19] Altvater, ‘Social and natural’, 42.

[20] Altvater, ‘Socical and natural’, 45.

[21] Giorgos Kallis, ‘Socialism without growth’, Capitalism Nature Socialism, (2017), 7.

[22] Sachs, Age of Sustainable Development; Arthur P. J. Mol, David A. Sonnenfeld, Gert Spaargaren, (eds.) The Ecological Modernisation Reader: Environmental Reform in Theory and Practice (London and New York: Routledge, 2009).

[23] Not only do fossil energies allow production to take place at sites away from ‘place-bound’ energy sources; thanks to the cheap transport possibilities they afford, commodities produced in such locations can easily be transferred to distant markets. ‘Containerisation’, for example, has played a key role in global commodity flows in recent decades. This is an example of what Marx described as ‘the annihilation of space by time’: Karl Marx, Grundrisse: Foundations of the Critique of Political Economy (Harmonsdworth: Penguin, 1973), p. 524.

[24] Fortune 500: Full List (2017).

[25] Klein, This Changes Everything; Damian Carrington, ‘“Shell knew’” oil giant’s 1991 film warned of climate change danger’, The Guardian (28 February 2017).

[26] Birgit Mahnkopf, ‘Lessons from the EU: why capitalism cannot be rescued from its own contradictions’, in: Dale et al., Green Growth, pp. 145-6.

[27] Vaclav Smil, Energy Transitions: History, Requirements, Prospects (Oxford: Praeger, 2010), pp. 125-6.

[28] United Nations, World Economic and Social Survey (2011), p. 53.

[29] David Harvey, Limits to Capital (London: Verso, 1999), p. 220.

[30] Andreas Malm, ‘Socialism or barbeque, war communism or geoengineering: some thoughts on choices in a time of emergency’, in: Eskelinen et al. (eds.) Politics of Eco-socialism, p. 181.

[31] Warlenius, ‘A renewable energy transition’, p. 87.

[32] Ståle Holgersen, Rikard Warlenius, ‘Destroy what destroys the planet: Steering creative destruction in the dual crisis’, Capital & Class, 40:3 (2016), 512; cf. Klein, Shock Doctrine, p. 316.

[33] e.g. Jeremy Rifkin, The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy, and the World (New York: Palgrave Macmillan, 2011).

[34] Warlenius, ‘A renewable energy transition’, p. 91.

[35] George A. Gonzalez, Energy and Empire: The Politics of Nuclear and Solar Power in the United States (Albany: SUNY Press, 2012), p. 8.

[36] Hoffman, ‘Can green growth really work’, p. 35.

[37] Warlenius, ‘A renewable energy transition’, p. 97.

[38] Andreas Malm, ‘The origins of fossil capital: from water to steam in the British cotton industry’, Historical Materialism, 21:1 (2013), 61.

[39] Philip Mirowski, Never Let a Serious Crisis go to Waste: How Neoliberalism Survived the Financial Meltdown (London: Verso, 2013); David Harvey, A Brief History of Neoliberalism (Oxford: OUP, 2005).

[40] Klein, This Changes Everything.

[41] Warlenius, ‘A renewable energy transition’, p. 95.

[42] Malm, Fossil Capital, p. 359.

[43] The Natural Edge Project, Waves of Innovation (2004).

[44] Harvey, Seventeen Contradictions, p. 248; Razmig Keucheyan, Nature is a Battlefield (Cambridge: Polity, 2016).

[45] Howard Johns, Howard Johns: Energy Revolutionary and Solar Entrepreneur (2015).

[46] Richard York, ‘Do alternative energy sources displace fossil fuels?’, Nature Climate Change, 2 (2012), 441-3.

[47] Holgersen, Warlenius, ‘Destroy what destroys the planet’.

[48] Antonio García-Olivares, Jordi Solé, ‘End of growth and the structural instability of capitalism – from capitalism to a symbiotic economy’, Futures, 68 (2015), 31-43.

[49] Birgit Mahnkopf, ‘Lessons from the EU: why capitalism cannot be rescued from its own contradictions’, in: Dale et al., Green Growth, p. 145.

[50] Kallis, ‘Socialism without growth’, 4.

[51] Kallis, ‘Socialism without growth’, 6.

Absolute Capitalism

This article is based on a keynote address, entitled “Absolute Capitalism: The Neoliberal Project and the Marxian-Polanyian-Foucaultian Critique—Where Do We Go from Here?,” presented to the 2nd Biennial Conference of the Caucus for a New Political Science, February 25, 2019, South Padre Island, Texas.

The French poet Charles Baudelaire wrote in 1864 that “the cleverest ruse of the Devil is to persuade you he does not exist!”¹ I will argue here that this is directly applicable to today’s neoliberals, whose devil’s ruse is to pretend they do not exist. Although neoliberalism is widely recognized as the central political-ideological project of twenty-first-century capitalism, it is a term that is seldom uttered by those in power. In 2005, the New York Times went so far as to make neoliberalism’s nonexistence official by running an article entitled “Neoliberalism? It Doesn’t Exist.”²

Behind this particular devil’s ruse lies a deeply disturbing, even hellish, reality. Neoliberalism can be defined as an integrated ruling-class political-ideological project, associated with the rise of monopoly-finance capital, the principal strategic aim of which is to embed the state in capitalist market relations. Hence, the state’s traditional role in safeguarding social reproduction—if largely on capitalist-class terms—is now reduced solely to one of promoting capitalist reproduction. The goal is nothing less than the creation of an absolute capitalism. All of this serves to heighten the extreme human and ecological destructiveness that characterizes our time.

The Origins of Neoliberalism

The notion of neoliberalism is nearly a century old, although its main political influence is much more recent. It first arose as an ideology in the early 1920s in the face of the collapse of liberalism nearly everywhere in Europe, and in response to the rise of German and Austrian social democracy, particularly developments in Red Vienna.³ It had its first notable appearance in Austrian economist and sociologist Ludwig von Mises’s three works: Nation, State, and Economy (1919), Socialism (1922), and Liberalism (1927).⁴ Mises’s ideas were immediately recognized as representing a sharp departure from classical liberalism, leading the prominent Austro-Marxist Max Adler to coin the term neoliberalism in 1921. Mises’s Socialism was subjected to a sharp critique by another gifted Austro-Marxist, Helene Bauer, in 1923 and to a more extended critique entitled “Neoliberalism” by the German Marxist Alfred Meusel, writing for Rudolf Hilferding’s Die Gesellschaft in 1924.⁵

For Meusel and Bauer, the neoliberal doctrine presented by Mises was far removed from classical liberalism and constituted a new doctrine devised for the era of “mobile capital” or finance capital, of which Mises was a “faithful servant.”⁶ It was expressly aimed at justifying the concentration of capital, the subordination of the state to the market, and an openly capitalist system of social control. Mises’s neoliberalism, Meusel wrote, was characterized by the “merciless radicalism with which he attempts to derive the totality of social manifestations from a single principle” of competition. Everything opposed to the complete ascendance of the competitive principle was characterized by Mises as “destructionism,” which he equated with socialism. For Mises, Charles Dickens, William Morris, George Bernard Shaw, H. G. Wells, Émile Zola, Anatole France, and Leo Tolstoy were all “without perhaps being aware of it…recruiting agents for Socialism…paving the way for destructionism,” while actual Marxists were nothing more than destructionists, pure and simple.⁷

In Liberalism, Mises explicitly distinguished between “the older liberalism and neoliberalism” on the basis of the former’s commitment, at some level, to equality, as opposed to the complete rejection of equality (other than equality of opportunity) by the latter.⁸ The question of democracy was resolved by Mises in favor of “a consumers’ democracy.” Where democracy is concerned, he wrote, “free competition does all that is needed.… The lord of production is the consumer.”⁹

Mises was to exert an enormous influence on his younger follower Friedrich von Hayek, who was originally drawn to Mises’s Socialism and who attended Mises’s private seminars in Vienna. They shared a hatred of the Austro-Marxists’ Red Vienna of the 1920s. In the early 1930s, Hayek left Vienna for the London School of Economics at the invitation of Lionel Robbins, an early British neoliberal economist. Mises took on the role of economic consultant to the Austrofascist Chancellor/dictator Engelbert Dollfuss prior to the Nazi takeover. In his work Liberalism, Mises declared: “It cannot be denied that Fascism and similar movements [on the right] aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.”¹⁰ He later emigrated to Switzerland and then to the United States with the support of the Rockefeller Foundation, taking up a teaching post at New York University.

The Great Transformation Reversed

The most important critique of neoliberalism in the early post-Second World War years was to be Karl Polanyi’s attack on the myth of the self-regulating market in The Great Transformation, published in 1944, at a time when the allied victory was already certain and the nature of the postwar order in the West was becoming clear. Polanyi’s critique grew out of his earlier defense of Red Vienna in the 1920s, where he had identified to a considerable extent with Austro-Marxists like Adler and Otto Bauer, strongly opposing the views of Mises, Hayek, and others on the right. The neoliberal project, Polanyi explained in The Great Transformation, was to embed social relations in the economy, whereas prior to capitalism the economy had been “embedded in social relations.”¹¹ Polanyi’s book, however, appeared in a context in which it was assumed that the neoliberal perspective was all but doomed, with the “great transformation” standing for the triumph of state regulation of the economy, at a time when John Maynard Keynes was recognized as the dominant figure in state-economic policy, in what came to be known as the Age of Keynes.

Nevertheless, Polanyi’s deeper concerns regarding attempts to rejuvenate market liberalism were, in part, justified. The Walter Lippmann Colloquium held in France in 1938, just prior to the outbreak of the Second World War, with Mises and Hayek both present, had constituted the first step at creating a capitalist international among major intellectual figures. At the time, the term neoliberalism was explicitly adopted by some participants, but was to be later abandoned, no doubt with the memory of the strong critiques that arose in the 1920s.¹² Still, the neoliberal project was taken up again after the war. In 1947, a mere three years after the publication of Polanyi’s The Great Transformation, the Mont Pèlerin Society was established. It was to become the institutional basis, along with the University of Chicago Department of Economics, for the reemergence of neoliberal views. A key participant in the inaugural conference, in addition to Mises, Hayek, Robbins, Milton Friedman, and George Stigler, was Karl Polanyi’s younger brother, Michael Polanyi, the noted chemist, philosopher of science, and virulent Cold Warrior.¹³

Keynesianism dominated the entire period of what is now sometimes called the Golden Age of capitalism in the first quarter-century after the Second World War. But in the mid–1970s, with the appearance of a major economic crisis and the beginnings of economic stagnation first manifested as stagflation, Keynesianism disappeared within the economic orthodoxy. It was to be replaced by neoliberalism, first in the guise of monetarism and supply-side economics, and then in the form of a generalized restructuring of capitalism worldwide and the creation of a market-determined state and society.¹⁴

The critical figure who best captured the essence of neoliberalism almost the moment that it rose to dominance, analyzing it extensively in his 1979 lectures at the Collège de France on The Birth of Biopolitics, was Michel Foucault.¹⁵ As Foucault brilliantly explained, the role of the state is no longer to protect property, as in Adam Smith, or even to be an executive for the common interests of the capitalist class, as in Karl Marx. Rather, its role under neoliberalism became one of the active expansion of the market principle, or the logic of capitalist competition, to all aspects of life, engulfing the state itself. As Foucault wrote,

Instead of accepting a free market defined by the state and kept as it were under state supervision—which was, in a way, the initial formula of liberalism, [neoliberals]…turn the formula around and adopt the free market as [the] organizing and regulating principle of the state.… In other words: a state under the supervision of the market rather than a market supervised by the state.…

And what is important and decisive in current neo-liberalism can, I think, be situated here. For we should not be under any illusion that today’s neo-liberalism is, as is too often said, the resurgence or recurrence of old forms of liberal economics which were formulated in the eighteenth and nineteenth centuries and are now being reactivated by capitalism for a variety of reasons to do with its impotence and crises as well as with some more or less local and determinate political objectives. In actual fact, something much more important is at stake in modern neo-liberalism.… What is at issue is whether a market economy can in fact serve as the principle, form, and model for a state which, because of its defects, is mistrusted by everyone on both the right and the left, for one reason or another.¹⁶

In a nutshell, Foucault declared: “The problem of neo-liberalism is…how the overall exercise of political power can be modeled on the principles of the market economy.” Its single-minded goal is “privatized social policy.”¹⁷

In the neoliberal era, the state was not to intervene to counter the effects of the system, but was simply to promote through its interventions the spread of the rule-based system of the market into all recesses of society. It was thus the guarantor of a self-regulating and expansive market, from which neither the society nor the state itself were immune.¹⁸ Monopoly and oligopoly were no longer considered violations of the principle of competition, but mere manifestations of competition itself.¹⁹ Perhaps most important in distinguishing classical liberalism and neoliberalism, according to Foucault, was the emphasis of the former on a fictional equal exchange or quid pro quo. For neoliberalism, in contrast, free competition, reinterpreted to embrace monopoly power and vast inequalities, was the governing principle, not exchange.²⁰

The overriding of the state’s social-reproductive role in favor of neoliberal financialization was most apparent, Foucault argued, in the demise of social insurance, along with all forms of social welfare. In the neoliberal system, “it is up to the individual [to protect himself against risks] through all the reserves he has at his disposal,” making the individual prey to big business without any protection from the state. The result of this shift was the further growth of privatized financial assets monopolized by a very few.²¹

Neoliberalism, conceived in this way, is the systematic attempt to resolve the base-superstructure problem, perceived as an obstacle to capital, through the introduction of “a general regulation of society by the market” to be carried out by a state—itself subordinated to the market principle. This new capitalist “singularity” is to be extended to all aspects of society, as an all-inclusive principle from which no exit is possible.²² Even economic crises are to be taken as mere indicators of the need to extend the logic of the market further.

As Craig Allan Medlen, building on Paul A. Baran and Paul M. Sweezy’s Monopoly Capital, explains in Free Cash, Capital Accumulation and Inequality, today’s neoliberal order involves a systematic shift in the “boundary line” between state economic activities and the private sector. This boundary line has now shifted decisively against the state, leaving little room for the state’s own consumption and investment, outside of the military sector, and with the state increasingly subsidizing the market and capital through its fiscal and monetary operations.²³

When neoliberalism reemerged in the late 1970s, it was thus as an opportunistic virus in a period of economic sickness.²⁴ The crisis of Keynesianism was related to deepening problems of surplus capital absorption or overaccumulation in the developing monopoly-capitalist economy. Neoliberal restructuring arose in these circumstances first in the forms of monetarism and supply-side economics, and then evolved into its current form with the financialization of the system, itself a response to economic stagnation. With the growth of excess capacity and stagnant investment, money capital increasingly flowed into the financial sector, which invented new financial instruments with which to absorb it.²⁵ Financial bubbles propelled the economy forward. None of this, however, removed the underlying stagnation tendency. In the decade since the Great Recession, as distinguished from all previous post-Second World War decades, the capacity-utilization rate in manufacturing in the United States has never surpassed 80 percent—a level chronically insufficient to ignite net investment.²⁶

All of this reflects the transition from twentieth-century monopoly capital to twenty-first-century monopoly-finance capital.²⁷ This is evident in an explosion of credit and debt, institutionalized within the system despite periodic financial crises, leading to a whole new financial architecture for amassing wealth. The seizure of excess profits on a world scale through the new imperialism of the global labor arbitrage was made possible by digital systems of financial and technological control, and the opening of the world market after 1989. All of this has culminated in a globalized process of financialization and value capture, directed by the financial headquarters of multinational corporations at the apex of the capitalist world economy.²⁸

The diminishing role of the state both as an instrument of popular sovereignty and of social protection has led to a crisis of liberal democracy. The greatest inequality in history plus the undermining of the economic and social conditions of the vast majority of the population has given rise to massive, but still largely inarticulate, discontent.²⁹ Capital’s response to this destabilizing situation has been to try to mobilize the largely reactionary lower-middle class against both the upper-middle class and the working class (especially through racist attacks on immigrants), while making the state outside the market the enemy—a strategy that David Harvey has recently referred to as a developing “alliance” between neoliberalism and neofascism.³⁰

Absolute Capitalism and Social-System Failure

In Foucault’s interpretation, neoliberalism is as remote from laissez-faire as it is from Keynesianism. As Hayek argued in The Constitution of Liberty, the neoliberal state is an interventionist, not laissez-faire, state precisely because it becomes the embodiment of a rule-governed, market-dictated economic order and is concerned with perpetuating and extending that order to the whole of society. If the neoliberal state is noninterventionist in relation to the economic sphere, it is all the more interventionist in its application of commodity principles to all other aspects of life, such as education, insurance, communications, health care, and the environment.³¹

In this ideal, restructured neoliberal order, the state is the embodiment of the market and is supreme only insofar as it represents the law of value, which in Hayek’s terms is virtually synonymous with the “rule of law.”³² The hegemonic class-property relations are encoded in the juridical structure and the state itself is reduced to these formal economic codes embodied in the legal system.³³ What Hayek means by “the rule of law,” according to Foucault, is the imposition of “formal economic legislation” that “is quite simply the opposite of a plan. It is the opposite of planning.” The object is to establish “rules of the game” that prevent any deviation from the logic of commodity exchange or capitalist competition, while extending these relations further into society, with the state as the ultimate guarantor of market supremacy.³⁴ Foucault contends that this principle was most explicitly enunciated by Michael Polanyi, who wrote in The Logic of Liberty: “The main function of the existing spontaneous order of jurisdiction is to govern the spontaneous order of economic life.… [The] system of law develops and enforces the rules under which the competitive system of production and distribution operates.”³⁵

Hence, the supremacy of the dominant social relations of production or hegemonic class-property forms is encoded in the rule of a commodified legal structure. The new Leviathan, which has discarded any precapitalist trappings, is no longer a force above or external to the realm of commodity exchange—that is, a superstructure—but is subordinated to the logic of the market, which it is its role to enforce.³⁶ This, Foucault suggests, is Max Weber’s rational-legal order, which turns out to be simply the imposition of formal economic relations circumscribing the state. At the same time, the state is given the role of enforcing this new privatized order through its monopoly of the legitimate use of force.³⁷

Hence, Abraham Bosse’s famous frontispiece for Thomas Hobbes’s Leviathan, depicting the giant sovereign composed of individuals who have transferred their sovereignty to the monarch, would today take the form of a giant rational-legal individual in a two-piece suit composed internally of corporations, replacing the multitude.³⁸ The crownless sovereign power would now be portrayed as holding not a scepter in one hand and a sword in the other, but the fourteenth amendment of the U.S. Constitution (originally meant to ensure the rights of former slaves but transformed into the basis of corporate personhood) in one hand and a cruise missile in the other. The neoliberal Leviathan is a state that increasingly has a single function and follows a single market logic—and in those terms alone it is absolute and represents an absolutist capitalism.

Naturally, absolute capitalism is not without contradictions, of which five stand out: economic, imperial, political, social-reproductive, and environmental. Together, they point to a general system failure. The economic-crisis tendencies are best viewed from the standpoint of Marx’s wider critique of the laws of motion of capital. Economically, neoliberalism is a historical-structural product of an age of mobile monopoly-finance capital that now operates globally through commodity chains, controlled by the financial headquarters of the multinational corporations in the core of the world economy, which dominate international capital flows.³⁹ The inherent instability of the new absolute capitalism was marked by the Great Financial Crisis of 2007–9.⁴⁰ Overaccumulation and stagnation remain the central economic contradictions of the system, leading to corporate mergers and financialization (the shift toward the amassing of financial assets by speculative means) as the main countervailing factors. All of this, however, simply exacerbates the top-heavy character of twenty-first-century capitalism intensifying its already-existing long-term tendencies toward disequilibrium and crisis.⁴¹

Neoliberal globalization refers specifically to the system of global labor arbitrage and commodity chains, coupled with the growth of worldwide monopolies. The fulcrum of this form of imperialism is the systematic exploitation of the fact that the difference in wages between the global North and South is greater than the difference in their productivities. This creates a situation whereby the low unit labor costs in emerging economies in the global South become the basis of today’s supply chains and the new system of value capture.⁴² These international economic conditions mark the advent of a new imperialism that is generating increasing global inequality, instability, and world struggle, made worse in our age by declining U.S. hegemony, which points to the prospect of widening and unlimited war.

As indicated above, the neoliberal regime represents a new synergy of state and market, with the increasing subordination of the social-reproduction activities of the state to capitalist reproduction. Whole sections of the state, such as central banking, and the main mechanisms of monetary policy, are outside effective governmental control and under the sway of financial capital. Under these circumstances, the state is increasingly viewed by the population today as an alien entity. This raises contradictions with respect to the three key social classes below the super-rich and the rich: the upper-middle class, the lower-middle class, and the working class.

In a broad sketch focusing on advanced capitalist society, the upper-middle class can be seen as consisting predominantly of a professional-technical stratum deeply suspicious of any attacks on government, since its position is dependent not simply on its economic class but also on the general system of political rights. It is therefore wedded to the liberal-democratic state. In contrast, when taken by itself, the lower-middle class, made up mainly of small business owners, middle management, and corporate-based white-collar salaried and sales workers (particularly the white, less-educated, rural, and fundamentalist-religious sectors), is generally antistate, procapital, and nationalist. It sees the state as chiefly benefitting its two main enemies: the upper-middle class and the working class—the former perceived as benefitting directly from the state, the latter increasingly designated in racial terms.⁴³ The lower-middle class includes what C. Wright Mills called “the rearguarders” of the capitalist system, mobilized by the wealthy in times of crisis when a defense of capitalist interests is considered essential, but represents in itself an extremely volatile element of society.⁴⁴ The working class, essentially the bottom 60 percent of income earners in the United States, is the most oppressed and most diverse population (and thus the most divided), but nonetheless the enemy of capital.⁴⁵

The biggest threat to capital today, as in the past, is the working class. This is true both in the advanced capitalist countries themselves and even more so in the periphery, where the working class overlaps with the dispossessed peasantry. The working class is most powerful when able to combine with other subaltern classes as part of a hegemonic bloc led by workers (this is the real meaning of the Occupy Wall Street movement’s “we are the 99%”).

The 1 percent thus find themselves potentially without a political base, which remains necessary to continue the neoliberal, absolute-capitalist project. Thus, from Donald Trump to Jair Bolsonaro, we see the emergence of a tenuous working relationship between neoliberalism and neofascism, meant to bring the rear guard of the system into play. Here, the goal is to enlist the white, rural, religious, nationalistic lower-middle class as a political-ideological army on behalf of capital. But this is fraught with dangers associated with right-wing populism and ultimately threatens the demise of the liberal-democratic state.⁴⁶

The major gender, race, community, and class contradictions of capitalist society today reflect crises that extend beyond the narrow confines of workplace exploitation to the wider structures in which the lives of working people are embedded, including the major sites of social reproduction: family, community, education, health systems, communications, transportation, and the environment. The destruction of these sites of social reproduction, along with deteriorating working conditions, has brought back what Frederick Engels called “social murder,” manifested in the declining life expectancy in recent years in the mature capitalist economies.⁴⁷ It is in these wider social domains that such issues as the feminization of poverty, racial capitalism, homelessness, urban-community decay, gentrification, financial expropriation, and ecological decline manifest themselves, creating the wider terrains of class, race, social-reproductive, and environmental struggle, which today are merging to a remarkable degree in response to neoliberal absolute capitalism.⁴⁸

The conflict between absolute capitalism and the environment is the most serious contradiction characterizing the system in this (or any)phase, raising the question of a “death spiral” in the human relation to the earth in the course of the present century.⁴⁹ The age of ecological reform, in the 1970s, was soon displaced by a new age of environmental excess. In absolute capitalism, absolute, abstract value dominates. In a system that focuses above all on financial wealth, exchange value is removed from any direct connection to use value. The inevitable result is a fundamental and rapidly growing rift between capitalist commodity society and the planet.

Exterminism or Revolution

As we have seen, Mises employed the notion of destructionism to characterize the role of socialism. So important was this in his perspective that he devoted the entire fifty-page-long Part 5 of his book Socialism to this topic. “Socialism,” he wrote, “does not build; it destroys. For destruction is the essence of it.” It simply carries out the “consumption of capital” with no replacement or increase. Destructionism was best characterized, in his view, as a society that in the present consumed to the utmost extent, with no concern for the future of humanity—a future which he saw as residing in the accumulation of capital.⁵⁰

Ironically, today’s monopoly-finance capital is typified by the very kinds of absolute destructionism that Mises so deplored. Although technological change (particularly via the military) continues to advance, capital accumulation (investment) is stagnant at the center of the system, except where spurred on temporarily by tax cuts on corporations and privatization of state activities. Meanwhile, income and wealth inequality is rising to stratospheric levels; workers worldwide are experiencing a decline in material conditions (economic, social, and ecological); and the entire planet as a place of human habitation is in jeopardy. All this is the result of a system geared toward the most egregious forms of exploitation, expropriation, waste, and predation on a world scale. Science now tells us that the capitalist juggernaut, if present trends continue, will soon undermine industrial civilization and threaten human survival itself—with many of the worst effects occurring during the lifetime of today’s younger generations.

A useful reference point, with which to gain a historical and theoretical perspective on the present planetary emergency, is Marx and Engels’s analysis of conditions in colonial Ireland from the 1850s to the 1870s.⁵¹ Here, the operative term was extermination. As Marx wrote in 1859, English (and Anglo-Irish) capitalists after 1846—marking the Great Irish Famine and the Repeal of the Corn Laws—were involved in “a fiendish war of extermination against the cotters,” or the mass of Irish peasant subsistence farmers “ground to the dust” and dependent on the cultivation of potatoes as a subsistence crop. Irish soil nutrients were being exported with Irish grain, without return, to feed English industry.⁵² The decades immediately following the Great Famine were thus referred to by Engels as the Period of Extermination.⁵³ The term extermination as used here by Marx and Engels, along with many of their contemporaries, had two related meanings at the time: expulsion and annihilation.⁵⁴ Extermination thus summed up the terrible conditions then facing the Irish.

At the root of the Irish problem in the mid–nineteenth century was a “more severe form of the metabolic rift” associated with the colonial system.⁵⁵ With the gradual expulsion and annihilation after 1846 of the poor peasant farmers, who had been responsible for fertilizing the soil, the entire fragile ecological balance underlying the production of crops and the replacement of nutrients in Ireland was destabilized. This encouraged further rounds of clearances, expulsion of the peasantry, consolidation of farms, and the replacement of tillage with pasture geared to English meat consumption. The Irish peasants were thus faced, as Marx put it in 1867, with a choice between “ruin or revolution.”⁵⁶

Today, analogous conditions are arising on a planetary scale, with subsistence farmers everywhere finding their conditions undermined by the force of global imperialism. Moreover, ecological destruction is no longer mainly confined to the soil, but has been extended to the entire Earth System, including the climate, endangering the population of the earth in general and further devastating those already existing in the most fragile conditions. In the 1980s, Marxist historian E. P. Thompson famously penned “Notes on Exterminism, the Last Stage of Civilisation” examining planetary nuclear and environmental threats.⁵⁷ It is no secret that human lives in the hundreds of millions, perhaps billions, are threatened this century by material destruction—ecological, economic, and military/imperial. Innumerable numbers of species are now on the brink of extinction. Industrial civilization itself faces collapse with a 4°C increase in global average temperature, which even the World Bank says is imminent with the continuation of today’s business as usual.⁵⁸ Hence, the old socialist slogan famously associated with Rosa Luxemburg, Socialism or Barbarism!, is no longer adequate and must be replaced either by Socialism or Exterminism!, or with Marx’s Ruin or Revolution!

The neoliberal drive to absolute capitalism is accelerating the world toward exterminism or destructionism on a planetary scale. In perpetrating this demolition, capital and the state are united as never before in the post-Second World War world. But humanity still has a choice: a long ecological revolution from below aimed at safeguarding the earth and creating a world of substantive equality, ecological sustainability, and satisfaction of communal needs—an ecosocialism for the twenty-first century.

Notes

1. Charles Baudelaire, “The Generous Player,” in Baudelaire: His Prose and Poetry, ed. Thomas R. Smith (New York: Modern Library, 1919), 82.
2. Daniel Altman, “Neoliberalism? It Doesn’t Exist,” New York Times, July 16, 2005. Altman’s article begins by mocking frequent Monthly Review author Patrick Bond (they apparently sat next to each other on a plane) for believing that neoliberalism exists, and for seeing it as connected to contemporary imperialism and issues such as the commodification of water. “The problem is,” Altman, himself clearly a neoliberal, writes, “the real neoliberals don’t seem to exist.”
3. On the collapse of liberalism in the 1920s, see Eric Hobsbawm, The Age of Extremes (New York: Pantheon, 1994), 109–41.
4. Ludwig von Mises, Nation, State, and Economy (Indianapolis: Liberty Fund, 1983), Socialism (Indianapolis: Liberty Fund, 1981), Liberalism (Indianapolis: Liberty Fund, 2005).
5. Phillip W. Magness, “The Pejorative Origins of the Term ‘Neoliberalism,’” American Institute for Economic Research, December 10, 2018; Peter Goller, “Helene Bauer Gegen die Neoliberal Bürgliche Ideologie von Ludwig Mises (1923),” Mitteilungen der Alfred Klahr Gesellschaft 4 (2005), http:// klahrgesellschaft.at; Alfred Meusel, “Zur Bürgerlichen Sozialkritik der Gegenwart: Der Neu-Liberalismus (Ludwig von Mises),” Die Gesellschaft: Internationale Revue für Sozialismus und Politik 1, no. 4 (1924): 372–83. For a more detailed discussion of the early origins of neoliberalism and a more complete set of citations, see John Bellamy Foster, “Capitalism Has Failed—What Next?,” Monthly Review 70, no. 9 (February 2019): 1–24.
6. Meusel, “Der Neu-Liberalismus,” 383. The term mobile capital gained currency in Marxian theory through Rudolf Hilferding’s Finance Capital. See Rudolf Hilferding, Finance Capital (London: Routledge, 1981), 325–30, 342.
7. Meusel, “Der Neu-Liberalismus,” 372–73, Mises, Socialism, 413, 422. I would like to thank Joseph Fracchia for translations from the German.
8. Mises, Liberalism, 9.
9. Mises, Socialism, 400–401.
10. Mises, Liberalism, 30; Herbert Marcuse, Negations (Boston: Beacon, 1968), 10.
11. Karl Polanyi, The Great Transformation (Boston: Beacon, 1944), 57. Polanyi’s analysis of embeddedness, which is at the center of his critique of neoliberalism, was originally based on Marx’s discussion of Aristotle’s inability to fully explore the distinction that he had made between use value and exchange value, given that the separation of economy from its embeddedness in the polis had not yet taken place. Polanyi’s treatment is thus most fully developed in “Aristotle Discovers the Economy,” in Trade and Market in the Early Empires, Karl Polanyi, Conrad M. Arensberg, and Harry W. Pearson (Glencoe, Illinois: The Free Press, 1957), 64–94.
12. Philip Mirowski, Never Let a Serious Crisis Go to Waste (London: Verso, 2013), 24, 37–50.
13. Eamonn Butler, “A Short History of the Mont Pèlerin Society,” The Great Offshore, “Mont Pelerin Society” (encyclopedia entry) http://rybn.org/thegreatoffshore.
14. For an important work that described this transition as it was occurring, concentrating on the role of international economic elites, see Joyce Kolko, Restructuring the World Economy (New York: Pantheon, 1988).
15. Michel Foucault, The Birth of Biopolitics (New York: Palgrave Macmillan, 2008).
16. Foucault, The Birth of Biopolitics, 116–17.
17. Foucault, The Birth of Biopolitics, 131, 145.
18. Foucault, The Birth of Biopolitics, 145.
19. Foucault, The Birth of Biopolitics, 133–38, 176–78; Joseph Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper and Row, 1942), 81–86; Mirowski, Never Let a Serious Crisis Go to Waste, 64; Mises, Socialism, 344–51; George Stigler, Memoirs of an Unregulated Economist (New York: Basic, 1988), 92, 162–63.
20. Foucault, The Birth of Biopolitics, 118. Foucault’s remarks are related to the comments of Baran and Sweezy on how capitalism with growing monopoly has abandoned its classical principle of quid pro quo. Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), 336–41.
21. Foucault, The Birth of Biopolitics, 145. The square brackets in the quotation were inserted by the editor of Foucault’s lectures.
22. Foucault, The Birth of Biopolitics, 145, 165.
23. Craig Allan Medlen, Free Cash, Capital Accumulation and Inequality (London: Routledge, 2019), 149–69; Baran and Sweezy, Monopoly Capital, 142–77.
24. Samir Amin, The Liberal Virus (New York: Monthly Review Press, 2004).
25. See Harry Magdoff and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987); John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009); John Bellamy Foster and Robert W. McChesney, The Endless Crisis (New York: Monthly Review Press, 2012); Costas Lapavitsas, Profiting Without Producing (London: Verso, 2014); and Medlen, Fresh Cash, Capital Accumulation and Inequality.
26. Federal Reserve Board of Saint Louis Economic Research, FRED, “Capacity Utilization: Manufacturing,” February 2019 (updated March 27, 2019), http://fred.stlouisfed.org.
27. Foster and Magdoff, The Great Financial Crisis, 63–76.
28. On the imperialist aspects of this, see John Smith, Imperialism in the Twenty-First Century (New York: Monthly Review Press, 2016); Intan Suwandi, R. Jamil Jonna, and John Bellamy Foster, “Global Commodity Chains and the New Imperialism,” Monthly Review 70, no. 10 (March 2019): 1–24. On the connection between financialization and expropriation, see Lapavitsas, Profiting Without Producing, 141–47, 166–68.
29. On the deepening global inequality, see Jason Hickel, The Divide (New York: W. W. Norton, 2017).
30. David Harvey, “The Neoliberal Project Is Alive but Has Lost Its Legitimacy,” Wire, February 9, 2019. See also John Bellamy Foster, Trump in the White House (New York: Monthly Review Press, 2017).
31. F. A. Hayek, The Constitution of Liberty (Chicago: Henry Regnery, 1960), 221.
32. Hayek, The Constitution of Liberty, 232–33.
33. Michael Tigar, Mythologies of State and Monopoly Power (New York: Monthly Review Press, 2018).
34. Foucault, The Birth of Biopolitics, 171–73; Hayek, The Constitution of Liberty, 220–33.
35. Michael Polanyi, The Logic of Liberty (Chicago: University of Chicago Press, 1951), 185; Foucault, The Birth of Biopolitics, 174; Hayek, The Constitution of Liberty, 220–33. See also Tigar, Mythologies of State and Monopoly Power.
36. “Why Leviathan?… The answer is both very simple and painfully difficult. Very simple in the sense that the state—despite the great variety of its forms, as constituted in history, from the time of the so-called oriental despotism and the early empires to the Modern Liberal State—cannot be other than Leviathan in imposing its structurally entrenched power on overall societal decision-making” (István Mészáros, “Preface to Beyond Leviathan,” Monthly Review 69, no. 9 [February 2018]: 47). While this remains true, in neoliberalism the state is selectively withered away in its relation to capital, confined by its own self-imposed rational-legal character that must conform to the formal economic laws of the capitalist system, of which it is, paradoxically, the main legitimating force and official guarantor. The extent of these limitations is apparent whenever a social democratic government is brought to power, thinking it can institute reforms, only to discover that it is compelled to enforce neoliberal policies.
37. Foucault, The Birth of Biopolitics, 105, 172.
38. “Leviathan Frontispiece,” Willamette.edu.
39. See Samir Amin, Modern Imperialism, Monopoly Finance Capital, and Marx’s Law of Value (New York: Monthly Review Press, 2018). On the role of neoliberalism to finance, see also Gérard Duménil and Dominique Lévy, Capital Resurgent (Cambridge, Massachusetts: Harvard University Press, 2004), 110–18; David Harvey, The Enigma of Capital (Oxford: Oxford University Press, 2010), 11.
40. The extreme monetization of information in our era induced by the Internet has led to an era of surveillance capitalism. See John Bellamy Foster and Robert W. McChesney, “Surveillance Capitalism,” Monthly Review 66, no. 3 (July–August 2014); Shoshana Zuboff, The Age of Surveillance Capitalism (New York: Public Affairs, 2019).
41. John Bellamy Foster and Michael D. Yates, “Piketty and the Crisis of Neoclassical Economics,” Monthly Review 66, no. 6 (November 2014): 1–24.
42. Suwandi, Jonna, and Foster, “Global Commodity Chains and the New Imperialism”: 15.
43. On the class analysis provided here and its relation to neoliberalism and neofascism, see Foster, Trump in the White House.
44. C. Wright Mills, White Collar (Oxford: Oxford University Press, 1951), 353–54.
45. R. Jamil Jonna and John Bellamy Foster, “Beyond the Degradation of Labor,” Monthly Review 66, no. 5 (October 2014): 7. For a rough demarcation of the major class divisions in the United States, see Dennis Gilbert, The American Class Structure in an Age of Growing Inequality (Los Angeles: Sage, 2011), 14, 243–47. The divisions between the working class and the lower-middle class obviously cannot be determined with precision. As Karl Marx wrote, “Middle and transitional levels always conceal the boundaries.” Karl Marx, Capital, vol. 3 (London: Penguin, 1981), 1025.
46. See Henry A. Giroux, “The Nightmare of Neoliberal Fascism,” Truthout, June 10, 2018.
47. Karl Marx and Frederick Engels, Collected Works, vol. 4 (New York: International, 1975), 330.
48. There has recently been a convergence of Marxian analyses of ecological crisis, social reproduction, and racial capitalism, all of which increasingly emphasize the dialectic of exploitation and expropriation. See Nancy Fraser, “Behind the Hidden Abode,” New Left Review 86 (2014): 60–61; Michael D. Yates, Can the Working Class Change the World? (New York: Monthly Review Press, 2018), 52–56; Michael C. Dawson, “Hidden in Plain Sight,” Critical Historical Studies 3, no. 1 (2016): 143–61; John Bellamy Foster and Brett Clark, “The Expropriation of Nature,” Monthly Review 69, no. 10 (March 2018): 1–27.
49. George Monbiot, “The Earth Is in a Death Spiral. It Will Take Radical Action to Save Us,” Guardian, November 14, 2018.
50. Mises, Socialism, 413–14, 452.
51. The brief comments on Marx and Engels’s Irish writings here are inspired by research I have carried out with Brett Clark to be included in our forthcoming book, The Robbery of Nature (New York: Monthly Review Press, 2020).
52. Karl Marx and Frederick Engels, Ireland and the Irish Question (Moscow: Progress, 1971), 90, 124; Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 860.
53. Marx and Engels, Ireland and the Irish Question, 210.
54. “Extermination,” The Compact Edition of the Oxford English Dictionary (Oxford: Oxford University Press, 1971), 938.
55. Eamonn Slater, “Marx on the Colonization of Irish Soil” (Maynooth University Social Science Institute Working Paper Series no. 3, January 2018), 40.
56. Marx and Engels, Ireland and the Irish Question, 142.
57. E. P. Thompson, Beyond the Cold War (New York: Pantheon, 1982), 41–79. Thompson made it clear at times that he thought of exterminism as generally applicable to the environment. Others were to develop this notion explicitly in terms of ecological crisis. See especially Rudolf Bahro, Avoiding Social and Ecological Disaster (Bath: Gateway, 1994), 19–25; John Bellamy Foster, The Ecological Revolution (New York: Monthly Review Press, 2009), 22–28; and Ian Angus, Facing the Anthropocene (New York: Monthly Review Press, 2016), 179–80.
58. David Roberts, “The Brutal Logic of Climate Change,” Grist, December 6, 2011; World Bank, Turn Down the Heat: Why a 4°C Warmer World Must Be Avoided (Washington, D.C.: World Bank, 2012), http://documents.worldbank.org.

Virtuous Discourse in the Specialty Coffee Sector: How Social Responsibility Practices Fragment Pursuits for a Supply Chain

The global coffee industry touches millions of lives around the world. In Latin America, Africa, and Asia, small farmers grow coffee to be sold to international markets. At the opposite end of the supply chain, coffee roasters purchase green coffee beans, roast them, and sell those beans to consumers in major markets like the United States, Jahpan, and Europe. In between, mills, exporters, importers, non-governmental organizations (NGOs), and other public and private institutions influence how coffee is grown, processed, shipped, sold, and regulated.

The coffee industry supports people’s livelihoods around the world, but like other agricultural industries, it is fraught with social, economic, environmental, and political challenges. Most of these challenges manifest in coffee-producing countries. For example, traditional coffee forests in Latin America, Africa, and Southeast Asia are losing their biodiversity due to pressures to expand coffee production and establish more sun coffee plantations—farming systems characterized by intensive agricultural practices, like heavy pesticide and fertilizer use, mechanization, and the destruction of rainforest canopies. Climate change is threatening the ability of growers to experience consistent harvests due to changing precipitation and temperature patterns. Moreover, many coffee growers and pickers continue to receive low wages due to volatile commodity market prices, inconsistent demand, and limited regulation of market dynamics.

Over the past twenty years, a variety of public and private initiatives have tried to address the challenges confronting the global coffee sector. These include Voluntary Sustainability Standards (VSS) like Fairtrade, Rainforest Alliance, and Smithsonian Bird Friendly direct trade sourcing models that claim to provide higher price premiums to growers and more social, economically, and environmentally responsible sourcing practices and recently, efforts led by international non-governmental organizations (INGOs) like Conservation International (CI) and the Global Coffee Platform (GCP) to build multi-stakeholder initiatives that leverage resources and help facilitate supply chain sustainability for the entire coffee sector.

Generally speaking, these initiatives are market-based approaches to sustainability that emerged alongside neoliberal economic policies in the early 1990s. In the coffee sector specifically, neoliberalism forced market deregulation and the dissolution of state oversight in coffee-producing countries around the world, opening the door for private stakeholders to take a leading role in governing supply chain dynamics through marketbased approaches to supply chain sustainability. Today, the majority of VSS and other private sustainability initiatives in the coffee sector—as well as other global commodity chains like bananas and chocolate represent market-based approaches to supply chain governance, a common affect of neoliberalism’s hollowing out of state regulation.

As these market-based initiatives have taken hold in the industry, “sustainability” has become a mobilizing buzzword in the global coffee industry. A 2016 report commissioned by the Specialty Coffee Association (SCA), the GCP, and the Sustainable Coffee Challenge (SCC) revealed that in 2015, for example, the global coffee industry spent an estimated $350 million U.S. dollars (USD) on sustainability initiatives in coffee-producing regions. These programs provided trainings related to climate smart agriculture and coffee lands regeneration, infrastructure development, financial management, and access to social programs like education and healthcare. In 2017, the SCA hosted its first sustainability conference, AVANCE, in Guatemala. This event brought together actors from across the industry to evaluate existing sustainability initiatives across the supply chain and discuss how these efforts could be scaled up to further address the human-environment challenges confronting the industry.

These efforts exemplify the sustainability efforts undertaken by major industry associations and companies; yet, a quick perusal of small specialty coffee business’ websites reveals that sustainability has also become a key a concern among smaller players in the industry. BeanFruit Coffee Company in Pearl, Mississippi states on their website, for example, “we understand that there are farms that don’t meet the criteria of other [sustainability] certifications but provide their workers with many benefits including fair wages. Our focus is sustainability not certifications.” Similarly, Corvus Coffee Roasters in Denver, Colorado writes, “the search for excellent coffee is the search for farmers who consistently produce quality coffee because of a strength in their character. We build relationships with these men and women, visit their farms, and invest in their success […]”

Countless small and medium-sized specialty coffee businesses promote similar messages and initiatives on their websites and packaging materials. They market business practices that improve grower livelihoods, protect areas of biodiversity in coffee producing regions, and produce higher quality, artisanal coffees. They advertise donations to non-profits, infrastructure investments in coffee-producing countries, seasonal purchasing of coffee beans, and long-standing relationships with growers in countries around the world. In the case of direct trade business models and firm-led development projects, many companies also subvert the accountability structures of certifications like Fairtrade and take the responsibility of finding solutions to social, economic, and environmental concerns into their own hands.

While corporations like Starbucks have highly visible sustainability commitments and have been researched and critiqued extensively, significantly less is known about the sustainability discourses and practices of smaller specialty coffee businesses. Because there is no centralized governance entity in the specialty coffee sector that regulates businesses practices, businesses are often able to develop, advertise, and pursue any number of social responsibility causes. While some of these efforts result in positive outcomes for some coffee producers, the paucity of regulations and guidelines means that small companies’ private initiatives may result in unintended consequences across the supply chain and derail coordinated industry-wide efforts to address lingering human-environment challenges. As efforts grow in the industry to integrate private firm-led initiatives and leverage resources like the estimated $350 million invested in sustainability in 2015, it is critically important to understand the role small businesses may play in moving the industry towards greater supply chain sustainability. This is especially true in the United States’ coffee market where small specialty coffee businesses with less than 3 locations dominate the specialty sector—accounting for 55% of all specialty coffee businesses.

In this qualitative research study, I build on existing scholarship about sustainability in the coffee sector and corporate social responsibility, examining how small specialty coffee roasting and importing companies in the United States represent themselves as bearers of morality and social good through discourses of partnership, responsibility, and sustainability. I consider how small companies’ social responsibility practices may contribute to industry wide calls to make coffee the first sustainable agricultural commodity in the world. Based on open-ended interviews with specialty coffee professionals and experts, and analyses of secondary materials, I illustrate how sustainability discourses create symbolic capital for coffee companies, yet fail to systematically address the human-environment challenges that persist in the industry. Through this critique, I “demystify such virtuous language” and elucidate the potential limitations of market-based solutions to social, economic, and environmental injustices. Building on this critique and institutional analyses of supply chain management, I also consider alternative avenues to achieve supply-chain sustainability, including greater institutional oversight, shared governance, and the emergence of multi-stakeholder initiatives that integrate public and private interests towards common sustainability goals.

While this research is fundamentally grounded in the specialty coffee sector, lessons from this research apply to other global commodities like bananas, cocoa and tequila. In these industries, too, private, market-based standard setting continues to regulate social, economic, and environmental market outcomes. These initiatives strive to fill in the regulatory shortfalls of state governance, yet as this research reveals, they often fail to systematically address social, economic, and environmental injustices. Thus, this research reiterates the limitations of private standard setting initiatives in global commodity chains, with an emphasis on small and medium sized enterprises. Moreover, I consider the evolution of institutions and governance in global commodity chains and the emerging movement towards multi-stakeholder initiatives and collective action. I argue that the specialty coffee sector may be approaching a turning point where networked governance structures may help mitigate the unintended consequences of private sustainability initiatives and bring centralized governance back into the process of regulating supply chain dynamics for social, economic, and environmental sustainability. I argue that by moving away from market-based standard-setting processes and towards networked governance, institutional regulation, and collective action; evolving institutional ecosystems to include regulatory trade associations and multi-stakeholder initiatives may help facilitate new trade environments and values that are better equipped to address the diverse human-environment challenges routinely confronted within global commodity chains.

Jane H. Motsinger (2018) Virtuous Discourse in the Specialty Coffee Sector: How social Responsibility Practices Fragment Pursuits for a Supply Chain