Social rights in the post industrial society

The birth of neoliberalism

The Lipmann Conference held in 1938 gave impulse to the liberal ideas. In particular

the event brought together, for five days, many prominent economists and liberal

intellectuals. The conference ended with the creation of an international study centre

for the Renovation of Liberalism. It was the first attempt to create an ‘international’

neoliberal movement, encompassing thinkers and intellectuals around the world, with

the aim to recast the liberal doctrine and contain the introduction of several social

reforms. Thus neoliberalism stems from the crisis of liberal governments culminated

in the rise of totalitarianisms. The crisis of liberalism led to two different response:

new-liberalism and neoliberalism. Both had the aim to overcome social conflicts

generated by the capitalist mode of production and to face international

confrontations. Dardot and Laval distinguish two different features of new-liberalism:

first, States must go beyond the boundaries imposed on them by laissez-faire

dogmatism if they want to preserve the essential benefits of a liberal society; second,

States must challenge the confidence reposed in the self-regulating mechanism of the

market. Although neo-liberalism shared with some reserves new-liberalism’s first

assumption, it rejected completely the second one. Indeed, it combines a

“rehabilitation of public intervention with a conception of the market centred on

competition, whose source in the Spencerism of the second half of the nineteenth

century” .

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After the financial slow-down in 1960, doubts over Keynesian economic policies

emerged in United States, and many authors started to question the role of the Welfare

State. In that sense, it is paradigmatic the document The Crisis of Democracy: Report on the

Governability of Democracies to the Trilateral Commission published in 1975 and written by

Samuel Huntington, Michel Crozier, and Joji Watanuki. They contested the rise of

egalitarian demands and the desire for active political participation by the poorest and

most marginalized classes. Indeed according to them: “the effective operation of a

P. Dardot, C. Laval, The new way of the world on neo-liberal society, cit., p. 47.

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democratic political system usually requires some measure of apathy and non-

involvement on the part of some individuals and groups”. Moreover, the general idea

behind their economic approach, is that private enterprises manage business in a better

way since their aim is not to provide a service, but to make profits. Hence, neoliberal

policy run-up powerfully by proceeding with privatizations and deregulations. They

are convinced that the main European problem is that in Europe there is a long record

of traditional social control imposed upon the individual by collective authorities,

especially the state. Furthermore European countries, have more difficult problems to

overcome since there are differences in each country, each one having maintained a

very distinctive collective system of social control which appears to be insufficient to

solve the problems of that time .

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This ideological framework had strong support given by authors such as Von

Mises, Hayek, and Milton Friedmann. Their studies gained success leading to the

establishment of think tanks and to the publication of many academic researches.

Thus, a neoliberal ideology conquered academic institutes. For instance, the Koch

Foundation is well known for its donations to particular universities in order to

promote pro-capitalist knowledge and counter social science research considered as

left-wing. The Foundation attempts to influence and control faculty hiring, and its

sponsorship of endowed Chairs in Law and Economics. For instance, the George

Mason University in North Virginia received $16.5 million in 2014 for advance pro-

capitalism academic researches .

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Neoliberal implications for the labour market

According to Thomas I. Palley neoliberalism can be understood in a two-fold manners:

income distribution and aggregate employment determination. With regard to income

distribution, neoliberalism asserts that factors of production (labour and capital) get

paid what they are worth. With regard to aggregate employment determination,

neoliberalism asserts that free markets will not let valuable factors of production,

especially labour, go to waste. According to distribution income theory, there is no

M. Crozier, S. P. Huntington, J. Watanuki, The Crisis of Democracy : Report on the Governability of

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Democracies to the Trilateral Commission, New York University Press, New York 1975, pp. 21, 114.

L. Snider, “Enabling exploitation: Law in the Gig Economy”, Critical Criminology, 26 (2018): pp. 563-

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577, 571. 25

need for social protection institutions and trade unions (therefore it promotes labour

market deregulation), while for the aggregate employment determination theory price

adjustment will lead toward full employment. These concepts are influenced by new

economic labour theories that adopted as a unit of measurement of the natural

employment rate (NAIRU). According to Milton Friedman any attempt to bring

unemployment below its natural rate will lead to a high level of inflation. “Within this

framework, policy interventions to increase employment either cause inflation or raise

unemployment, by destabilising the market process”.

According to Palley, the adoption of natural rate rhetoric had two goals:

“first, it has provided political cover for higher average rates of unemployment, which

have undermined the bargaining position of workers. Second, it has provided cover

for keeping real interest rates at a higher level, thereby benefiting the wealthy and the

financial sector. Thus, even though interest rates have been adjusted counter-cyclically

to mitigate the business cycle, their average level has been higher” .

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As we wrote in this chapter, the ‘flexibilization’ of the labour market, is a key concept

for neoliberals economists. It implies the simplification of hiring and firing regulations,

the reduction of trade union rights, the elimination of collective agreements and

protective regulation, and the reduction of social security benefits. These policies and

regulations are designed to diminish the economic role of the state.

Markets are represented as self-regulating social structures by neoliberalism, if they are

allowed to function without restraints, they will generate full employment for those

who really wish to work. This goal is easier to be achieved through globalisation and

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free trade.

The tendency to labour-market polarisation has been most marked in the United

Kingdom, where we see the reappearance of low-paid, low-quality casual work. Indeed,

T. I. Palley, From Keynesianism to Neoliberalism: Shifting Paradigms in Economics, in A. Saad-Filho, D.

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Johnston, Neoliberalism cit., pp. 20, 23, 24.

According to Oxford dictionary the term ‘globalisation’ indicate: “The process by which businesses

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or other organizations develop international influence or start operating on an international scale”.

https://www.lexico.com/en/definition/globalization

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inequality has increased most sharply in liberal countries (such as the United States and

the United Kingdom) and least in the continental European and Nordic groups .

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As confirmed by Dardot and Laval, industrial legislation veered toward a direction

more favourable to the employer. “The general orientation of these policies –

according to the authors – consisted in dismantling the systems that protected wage-

earners from cyclical variations in economic activity, and replacing them by a new

norms of flexibility, which enabled employers optimally to adjust their requirements

for manual labour to the level of activity, while reducing labour costs as much as

possible”

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Some authors have argued that market liberalization has contributed to

women’s empowerment and emancipation because of the higher participation rates.

However, it’s not always like that, indeed, Louise Dalingwater presented evidence

which suggests that neo-liberal policies have also been accompanied by a deterioration

of working conditions – casualization, flexibilization and low wages.

A research carried out by Gash showed that workers in France and Denmark were

able to move between full and part-time work quite easily because of the adequate

provision of childcare. This was more difficult in Britain, where workers have less

favourable childcare conditions and less job mobility. Therefore, it seems that part-

time work may be more of a constraint than a choice.

But the most interesting data is that according to the authors there has been a sort of

acceptance of neoliberal ideas by the workers themselves and suggests that there has

been an internalization of neoliberal principles in Britain’s labour market. Thus, even

those who are clearly losing out in the neo- liberal economy see inequalities as “natural”

or “justified” . That’s kind of ‘justification’ goes back to what we have called

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‘rationalization’. Indeed, the most dramatic result according to Snider is that

neoliberalism set up an unhealthy working relation, according to which workers tend

to consider as a natural outcome of technological changes : 24/7 availability, intrusive

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surveillance, and a constant stress status in working places.

S. MacGregor, The Welfare State and Neoliberalism, in A. Saad-Filho, D. Johnston, Neoliberalism cit., p.

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144.

P. Dardot, C. Laval, The new way of the world on neo-liberal society, cit., p. 174.

43 L. Dalingwater, Neo-liberalism and Gender Inequality in the Workplace in Britain, French Journal of

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British Studies, XXIII/1 (2018): p. 5, 9, 10.

L. Snider, “Enabling exploitation: Law in the Gig Economy”, cit., p. 566.

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As highlighted by Alain Supiot neoliberal institutions such as the World Bank tried to

influence foreign investments by giving opinions and recommendations over relative

national labour legislation. Emblematic is the paragraph “Hiring and Firing Workers”

written in the Report “Doing Business” published by the World Bank in 2005. The

aim of the Report is to discourage or encourage investment in a given country.

Countries that grant many social rights to their workers have a high ‘employment

rigidity’ index , therefore they are considered badly for investors. According to the

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World Bank “[…] governments struggle to reach the right balance between labour

market flexibility and job stability. Most developing countries err on the side of

excessive rigidity, to the detriment of businesses and workers alike”.

In order to move toward a flexible labour market, the World Bank proposed some

type of reforms: increase the length and scope of term contracts; introduce apprentice

wages; allow flexible