Capital Accumulation and the Historical Decline of Liberal Individualism

Introduction

Any study of liberalism is immediately complicated by its split into several rival families, among which it is sometimes difficult to find common points of policy or principle (Freeden, 1998: 141). A comparison of the writings of 19th-century liberals, such as Herbert Spencer (1969) and John Stewart Mill (1849) can leave the impression that there is little common to liberals beyond claims to stand for individual liberty. Against this diversity, C. B. MacPherson’s (1962) book, The Political Theory of Possessive Individualism, suggests that there is a common thread running through all liberal thought. MacPherson traces the rise of modern individualist ideas as they were initially developed by people trying to live their individuality as free and equal producers in a sea of feudal relations. His work focuses on the form of individualism that emerged hand in hand with the political aspirations of independent producers, who required the freedom to make binding agreements with one another under the rule of law, and to have their possessions and contracts recognized and protected by a central authority. MacPherson (1962: 3) demonstrates how liberty came to be understood in terms of individual ownership and control over the individual’s own body, labour-power, intellect and all of the wealth that these possessions create. This ‘possessive individualism’, which was relatively undiluted in the early modern period, is presented as the most central and enduring feature of liberal thought over its entire history (MacPherson, 1962: 3).

This article, which takes MacPherson’s analysis as its starting point, is less concerned with the origins of liberal individualism as it is with its long-term viability. This requires an acknowledgement that the assumptions, principles and theories comprising political ideologies are always used and reproduced by real people, with real interests, interpreted and reinterpreted in light of changing social relations and conditions. As Robert Cox (1986: 31) suggests, theories and doctrines are always for someone and some purpose. For their part, political ideologies are invariably consistent with the purposes or perceived social interests of those espousing them. It follows that the development of any ideological form depends on the development and advancement of the social groups and individuals that are likely to find reasons to be disposed towards it. The relentless reorganization of relations and conditions under capitalism, which constantly generates new social antagonisms and conflicting perspectives, has a great deal of bearing on this. Given the progressive dominance of finance capital, the continued viability of ‘possessive individualism’ (hereafter referred to as ‘liberal individualism’) looks increasingly uncertain.

Liberal individualism has been criticized in Marxist terms before. However, little attention has been given to its long-term prospects. After a brief historical sketch to highlight its political function, this article accounts for the declining role of individualist principles and doctrines in the facilitation of capitalist accumulation. It argues that the continued existence of liberal individualism is dependent on something that is increasingly lacking: a powerful and influential social group with good reasons to be disposed towards it. The article further argues that the rise of neo-liberalism from the 1970s onwards, which appears to represent a revival of liberal individualist principles, is actually a manifestation of its historical decline. Individualist assumptions and principles will almost certainly continue to be sloughed off, since they cannot be adapted to the ongoing transformations of the capitalist system.

Early modern individualism was certainly shaped by bourgeois struggles against restrictive feudal relations. Its possessive character is abundantly clear in Thomas Hobbes’s Leviathan and in John Locke’s Second Treatise on Government (Hobbes, 1968; Locke, 1980). ‘The individual’ or ‘the person’ is conceived of in abstract form, allowing claims of political advocacy to be made without clarifying whether the reference is to the interests of an individual man, woman or child, or an individual representative of capital or an individual representative of labour power. The capacity for vagueness on these points is precisely what has underpinned the centrality of ‘the individual’ to the liberal ideological forms developed under the competitive market system. The abstract individual offered a means of avoiding the question: freedom for whom, and to do what to whom? At the same time ‘the individual’ was underpinned by something specific. In much of classical liberal thought it was clearly concerned with the individual freedom of men as opposed women. And for many classical liberals it referred to white men, not black men. But for the possessive, specifically bourgeois strand of individualism, from Hobbes to present day libertarians, it refers to those in control of capital, not those who depend on the sale of their own labour power for income (O’Flynn, 2009a: 33–34).

Though MacPherson (1962) was correct to emphasize this possessive aspect of liberal thought, it is important to stress the point that liberalism has never existed as a monolith. The claims of liberal individualists were always contested within the broad liberal movement, even in 19th-century Britain where related principles were used most effectively as justification for laissez faire capitalism. It was precisely in that environment that ‘new liberals’ such as John Stuart Mill emerged. Mill (1849) did not accept that laissez faire was always necessarily consistent with liberty. Those that followed in Mill’s footsteps, such as J. A. Hobson (1909: xii), who advocated a form of liberalism that involved ‘increased public ownership and control of industry’, or L. T. Hobhouse (1964: 87), who argued that it should be possible to have a ‘liberal socialism’. The rise of this new liberalism was of course indirectly related to the growth of the labour movement, or an expression of the fact that old liberals had no answer to the arrival of class politics (Bentley, 1987: xiv).

New liberals challenged old liberals at the level of policy, doctrine and principle. The measures advocated by new liberals were not always compatible with the rights of private property, and therefore inconsistent with individual freedom, as understood by old liberals. Herbert Spencer (1969: 183) derided new liberal reformers for advocating ‘socialistic’ legislation, which was considered a threat to property and individuality.

By the 19th century, liberal individualism also had to contend with increasingly sophisticated challenges from socialist thinkers. Marx, for example, addressed the fears of old liberals as follows: ‘from the moment when individual property can no longer be transformed into bourgeois property, from that moment, you say, individuality vanishes. You must, therefore, confess that by “individual” you mean no other person than the bourgeois’ (Marx and Engels, 1992: 20). Marx saw that while there was and is freedom in commodity-producing societies, it is capital that is free and it is capital that has individuality. Only those persons that manage to attach themselves to capital can maximize their individual freedom, which for Marx, ultimately depends on the material means to make choices. Formal rights, though essential, are never sufficient if they cannot be exercised on an equal basis. For Marx,

man is free not through the negative power to avoid this or that, but through the positive power to assert his true individuality … each man must be given social scope for the vital manifestation of his being. If man is shaped by environment, his environment must be made human. If man is social by nature, he will develop his true nature only in society, and the power of his nature must be measured not by the power of the separate individual but by the power of society. (Marx and Engels, 1975)

Marx recognized that the working population, being completely dependent on capital, are consequently subject to the collective power of the capitalist class. Capitalists live out their individuality through their capital, and their capital is realized through the domination and exploitation of the working population. The workers cannot live out their individuality since they do not have the material means to do so. As such, the range of freedoms enjoyed by the personification of capital rests on the continued conditions of dependence experienced by the personification of labour. With respect to wage workers Marx wrote

the condition of their existence [is] something over which they, as separate individuals, have no control … The contradiction between the individuality of each separate proletarian and labourer, the condition of life forced upon him, becomes evident to him himself, for he is sacrificed from youth upwards and, within his own class, has no chance of arriving at the conditions which would place him in the other class. (Marx and Engels, 1932)

The point is that the ‘individual freedom’ advocated by 19th-century liberal individualists had little title to universality. The championing of the individual was really a championing of the freedom of a select social group to act, which required corresponding acts of constraint, limiting the actions of all (Freeden, 1991: 20–21).

There is no reason to presume that the advocacy of liberal individualist principles involves any conscious deception. Individualists did seek an arrangement of rules, regulations and constraints that would maximize the freedom of individuals to act. And in many parts of the world, most particularly in the USA, individualism has become a salient feature of the cultural identity.

T. William Greene (2008) has pointed out that related ideals of ‘self-willed wealth’ and ‘full self-reliance’ find expression in the very metaphors and symbols that citizens rely on to identify with their society. The bald eagle, distinguishable as a solitary hunter, ‘is depicted as the official national symbol of a country of free, autonomous individuals’.

However, even where individualism is deeply rooted in culture, its ideals must nonetheless be filtered through the social interests of the antagonists that supply them with meaning (O’Flynn, 2009b). The arrangement that best facilitates individual freedom depends on what kind of social relations and conditions are presumed to hinder ‘the individual’, and what kind of activity is presumed essential. These questions are conditioned by the position and interests of the advocate within the structure of social economy. The question then is: to what particular social group does ‘the individual’ of liberal individualism refer?

Up to the 19th century this was clear enough. Individualist doctrines and principles were developed and expressed with competitive owner-producers in mind. The latter required the freedom to accumulate and to distribute surplus value as necessary, and to do so without interference on the part of the state or collectives (O’Flynn, 2009a: 184). The prosperity and happiness of the individual and that of the owner-entrepreneur became synonymous. So-called freedom required the state to ensure that investors remained free to buy labour power and labourers be permitted to sell it in the same way as any other commodity. The latter freedom was advocated, as Brass (2009) points out, on the basis that unfree labour is economically inefficient. This view was expounded by Adam Smith in the 18th century and taken as given by economic liberals in the 19th and 20th centuries. As Brass explains, ‘productivity was equated with the capacity of the individual worker to exercise “choice” in the context of the labour process, to “choose” to work hard because he/she individually benefited from this’.

Though workers were formally free to ‘choose’ if or where to work, formal freedoms did nothing to release them from private economic coercion. On the contrary, liberal individualism was actually built around the justification of conditions that weakened the power of labour vis-à-vis capital (i.e. conditions under which labourers could have no say in how their labour power was used in production or any say in the distribution of the surplus that it produced). The weakness of individual labourers was increased to the extent that they were dependent on capital and compelled to sell their labour power at market determined rates. Invariably, liberal individualists considered policies that reproduced this condition of weakness to be consistent with individual freedom. All attempts on the part of labourers to compensate for their individual weakness (i.e. through increasing trade union militancy) were considered to be detrimental to individual freedom. Key liberal thinkers of the period, such as Spencer, were genuinely appalled to find politicians, such as Gladstone, introducing ‘socialistic’ legislation, and other new liberals advocating public health provision, publicly funded schools, progressive taxation and the like. He thought it necessary to restrict the title of liberal to those defending laissez faire policies and opposing all such ‘socialistic’ reformism (Spencer, 1969: 183).

The possessive tenets of old liberalism served to justify private control over resources vital for wealth creation. In adherence to classical political economy they presumed that prosperity is most likely where investors can go about their business unimpeded; where they are free to invest as they please, to take risks, to profit when the market rewards them and to take a loss when it doesn’t. The market had to be permitted to iron out any problems that arose. The market was expected – if left alone – to reward skill and effort, to punish inefficiency, in a dispassionate way. Herbert Spencer explained this in terms of the ‘law of conduct and consequence’, which consisted of the idea that each individual must only receive ‘the benefits and the evils produced in consequence of his own consequent conduct: neither being prevented from what his good actions normally bring to him, nor allowed to shoulder off on to other persons whatever ill is brought to him by his actions’ (Taylor, 1992: 234). This ‘law’ rested on the assumption that the riches accumulated were due to the individual’s own unaided efforts. Taken to this level, individualism permitted the capitalist, or the liberal representative, to proceed, as R. H. Tawney put it, ‘in blind unconsciousness of a social order without whose continuous support and vigilant protection he would be as a lamb bleating in the desert’ (Tawney, 1948: 267).

The precise relationship between individuals and society has always been contested among individualists. Stephen Lukes’s (1973: 73) caricature of individualism – a view of individuals as self-contained units, with independent drives and desires – does contain a grain of truth, but is not a uniform view. Not all individualists conform to it. Hayek opposed this conception, while also denying that individuals were shaped according to any independent social forces, such as classes and nations. Social forces do not exist independently of, and act on, the individuals comprising a society. Individuals always command the capacity to act according to subjective perceptions of opportunity (Burczac, 2006: 20).

Over its history liberal individualism has played a twofold function. Firstly, as an extension of commodity fetishism, it provided a conception of the relationships among human beings under capitalism as voluntary exchange relationships (as in a barter system). Secondly, it helped to depict the human conditions generated in consequence of the profit motive as a consequence of ‘collectivist’ interference in voluntary and private exchange relations. It justified capital accumulation, while using the human consequences to justify the removal of obstacles to accumulation wherever they emerged. The notion that relationships under capitalism are voluntary follows the assumptions that the state plays little role, that markets do not need to be imposed (they simply emerge) and that free markets permit all individuals to enjoy the same degree of freedom to choose the contracts that they enter into (Hayek, 1991: 27). It was assumptions that permitted the rise of the mythical night watchman state of liberal political economy and also, at a more fundamental level, that universal bourgeois construct, ‘the individual’.

Capitalist accumulation does not only require an ideology that justifies private property and private control over surplus value; it also requires an ideology that rationalizes a measure of control over the working class. Any ideology consistent with capitalist relations has to view labour power as a commodity, wholly alienable from the individual labourer. As early individualists saw it, labour power began as alienable property held by the individual labourer, which if sold became the individual property of whoever purchased it (Locke, 1980: 19–20). Control of labour power and its entire product was considered the exclusive domain of the individual owner-entrepreneur. This remained the case with 19th-century individualists that had to contend with the emergence of union militancy. In response to their individual weakness, labourers formed trade unions, with the view to regaining some control over their collective labour power and its product. For liberal individualists this ‘collectivism’ – proceeding from elected bodies or trade unions – represented a threat to the rights and properties of free individuals. In the mid-20th century this view was expressed most forcefully by F.A. Hayek (1978: 68), who insisted that interference with the competitive market system, which was otherwise impersonal, was an affront to individual liberty. The ability of the individual to succeed or fail was considered a measure of his/her freedom. Since the free market system was impersonal, it could not be described as unjust; in a free and equal game of skill and chance there had to be winners and losers.

The word ‘freedom’, as employed by liberal individualists, assumes individual private control over the resources societies need and, by extension, control over those individual people that require access to those resources. With this conception of freedom Hayek could only consider government participation in economic life (such as in Britain after WWII) was a form of ‘collectivist’ coercion, limiting individual choice and freedom (Hayek, 1991). This ‘collectivism’ was thought to be rooted in the socialist ideas popularized around the time of the French revolution. For Hayek (1978: 55), and contemporary individualists, such as John Gray (1986: 30), liberalism stands opposed to new liberalism and social democracy. For Gray, the former is characterized by a principled commitment to individualism, as expressed by John Locke. The latter are thought to stem from the doctrines of John Stuart Mill, who is credited with having ‘created a system of thought which legitimated the interventionist and statist tendencies’.

Though Hayek (1991) continuously protested the advance of ‘collectivism’ (most famously in his book The Road to Serfdom) the conditions after WWII were such that his attacks on social democracy received little attention. Few agreed with the implication that the reforms underpinning the welfare state represented a step toward totalitarianism. The revival of free market doctrines and principles would have to wait. The economic crises, wars and class struggles of the preceding years mobilized bias in the direction of social democracy, and the investing classes had learned how to grant concessions when necessary (Ticktin, 2009). In the post-war period the welfare state was presumed superior to both free market capitalism and ‘state socialism’. It was broadly held that, with the help of government, the existing system could be organized so as to gradually eliminate crises (Mandel, 1978: 501).

Since society is ever changing there will always be aspects of the ruling ideology that are no longer useful and are likely to be sloughed off over time. The decline of free-market ideas and the rise of social democratic ideas in the post-war period is one example of this process. The subsequent decline of social democratic and rise of neo-liberal ideas, from the 1970s onwards, is another. When Keynesian policies started to fail – when they could no longer effectively mediate the contradictions of capitalism – they fell out of favour with the investing classes and their political representatives. Shrinking opportunities for profitable investments, coupled with a loss of control over the working class, eventually made the existing arrangements intolerable. As Hassan (2011) has pointed out, the crisis of the 1970s was as much a political as it was an economic crisis, with much of the political and economic debate boiling down to the question of: ‘by whom, and how is the economy to be run?’

By the late 1960s Keynesian policies were becoming problematic and social democratic principles were coming to the end of their usefulness. Near full employment had led to a growth of working class militancy. The working class was becoming harder to control and had to be disciplined (Ticktin, 2009). After the upheavals of 1968 the investing classes had to react. Their representatives worked on undermining social democratic principles, which was difficult since these had become a material force in their own right. However, from the 1970s the free market policies advocated so strongly by Hayek eventually grew legs. That which had fallen on deaf ears in the post-war decades was embraced in one country after another. With different practices to rationalize, Keynesian ideas were sloughed off and Hayekian and Friedmanite ideas began to hold sway, particularly in the emerging finance capitalist Anglo Saxon world.

Since the advance of neo-liberal policies coincided with the rise of free market doctrines a particular line of causation is sometimes assumed. A number of authors have explained the demise of social democracy almost as a result of the propagation of Hayekian and Friedmanite ideas. In Susan George’s (1999) account, for instance, the changes are thought to have started from a tiny embryo at the University of Chicago:

[W]ith the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly … If you can occupy peoples’ heads, their hearts and their hands will follow.

While it is necessary and important to highlight the dissemination of ideas, there is no reason to presume that this was the primary agent of change. Ideology usually functions to facilitate rather than initiate change. As David McLellan (1986: 58) explains, the role played by ideology in mobilization is not that it ‘causes one to do’ but that it ‘gives one cause for doing’; it ‘provides grounds or warrants for the political activity engaged in’. Threadbare doctrines and principles can be abandoned and others embraced or transformed as circumstances give rise to changes in political activity and new policy agendas, or as new strategies are necessitated according to evolving class antagonisms.

The relationship between socio-economic change, policy change and ideological change appears a little clearer with respect to the sudden rise of neo-liberal ideology in Ireland in the late 1990s. This change was quite sudden and unexpected. Ireland had resisted free market policy prescriptions and attendant doctrines since political independence was achieved in 1922; this was partly because its capitalist class was unusually weak – producers of goods and services served a very poor home market, and would-be export-orientated producers could not get a foothold in a world capitalist system that was already characterized by a relentless elimination of free competition through the formation of cartels and trusts (Hilferding, 1981: 21). The economic development that did take place after independence – in the peat industry, the airline industry, the sugar industry, rail and road transport, gas and electricity – was all necessarily state-led (Bristow, 1965).

It was not the case that successive post-independence governments were left-leaning. On the contrary, the state-led industrialization was aimed at providing the basis for an investor-led industrialization; it was in the long-term interests of the investing classes that the state developed a level of infrastructure that could, in theory at least, serve as a basis for indigenous capitalist development. State-led industrialization only proceeded where private investors could not be incentivized, or had already failed in spectacular fashion. As such, Ireland remained a largely rural country right up to the 1970s.

The absence of a sufficient incentive to invest, and subsequent reliance on the state, meant that liberal individualism never took hold in Ireland as it had done in other countries. Free market policies and principles were inconsistent with the basic infrastructural development necessary for future accumulation. In any case, the weakness of Irish capital meant that groups other than those with the capacity to invest (not least the religious orders) maintained considerable political influence (McDowell, 1991). This partly explains why Ireland’s political culture was characterized by emotional attachments to land, to community, to nationalism and to religion up to the final decades of the 20th century.

All of this changed with the emergence of the ‘Celtic Tiger’ (a period of prosperity lasting from the mid-1990s until 2007). There was a sudden and complete embrace of ‘market fundamentalism’ or ‘neo-liberalism’. The background to this change lay in the prolonged boom in the USA and the simultaneous growth of European markets. Irish elites found a path to accumulation via alliances with international capital. There was an over-accumulation of capital in the USA that had to find an outlet for investment somewhere. By this time Irish elites had accepted that there would be no significant development of indigenous industries in Ireland, but had realized that they could prosper if Ireland was set up as a facilitator of American capital that wished to expand into European markets (Murphy and Devlin, 2009: 22). Once the potentialities were revealed, long-standing policies and doctrines were abandoned with lightning speed. As Paul Krugman (2009) noted, ‘Ireland jumped with both feet into the brave new world of unsupervised global markets’, embracing policies and ideas that had already taken hold in Britain, the USA and elsewhere in the 1970s and 1980s.

According to Denis O’Hearn, the early years of growth in Ireland (up to 2001) were underpinned by the arrival of a handful of mostly American computer and pharmaceutical companies (1998: 70). Their arrival drastically reduced unemployment and emigration, which led to considerable growth in the domestic market and paved the way for an unprecedented property boom. Thereafter a great deal of the accumulation that took place rested on asset-price inflation and privatization – facilitated by deregulation and the process of financialization. House prices in Ireland rose at a rate approximately equivalent to the average industrial wage (€30,000) every year, for 10 years (Global Property Guide, 2008). This left home-buyers with 35–40-year mortgages, but owning far less of their homes than previous generations had done. Many great fortunes were amassed in very short periods of time, but after the inevitable property collapse, people were left in negative equity, saddled with mortgages far exceeding the value of their homes. As elsewhere, the end result of neo-liberalism in Ireland has been a return to large-scale unemployment, coupled with unmanageable public and private debt.

The acceptance of neo-liberal policies and ideas in Ireland and elsewhere should not be viewed as the return of liberal individualism. Though the ‘free market’ was relentlessly advocated across the world, it was nothing like that which was advocated in the 18th or 19th centuries. In classical political economy the free market refers to free relations of exchange between free and equal producers. It usually meant freeing the economy of unnecessary restrictions and burdens over and above the costs of producing goods and services. To this end the classical economists made a distinction between those who live by rent or interest, those who live by profit, and to those who live by their own labour. According to Smith (1910: 230), the revenue of the first group ‘costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own’. Smith saw that producers were not only saddled with state encumbrances, but were unnecessarily burdened with rent, debt and monopoly profits realized by means of capitalist combination (Smith, 1910: 225–235). The idealized free market was one comprised of equal producers, free of all unnecessary burdens, free to make contracts, and free to prosper.

Though John Stuart Mill broke ranks with liberal individualism in many respects, his distinction between earned and unearned income – between that derived from the production of necessary goods and services, and that derived from rent, monopoly price, or legal privilege – was consistent with classical political economy (Mill, 1849: 382). Mill saw that when a country prospers, the ‘rentier’ class invariably receive a greater proportion of the wealth of the community. As with Smith, he stressed the point that their revenue is unearned; it is realized ‘independently of any trouble or outlay incurred by themselves. They grow richer, as it were in their sleep, without working, risking, or economizing’. Therefore, according to Mill (1849: 492),

it would be no violation of the principles on which private property is grounded, if the state should appropriate this increase of wealth, or part of it, as it arises. This would not properly be taking anything from anybody; it would merely be applying an accession of wealth, created by circumstances, to the benefit of society, instead of allowing it to become an unearned appendage to the riches of a particular class.

In classical political economy, income was regarded as earned where it was derived directly from the production of goods and services; it was earned in the sense that it was payment for value produced. Rent was considered unearned because it was extractive of value. The latter was considered an unnecessary burden on individuals, on the economy, and therefore an impediment to the free market. To free the markets it was necessary to shift the tax burden away from labour, from producers of goods and services generally, and onto unearned wealth (Mill, 1849: 492). The ‘free market’ means something very different in the neo-liberal era, almost the exact opposite in fact. Neo-liberal policies have been largely about facilitating unproductive accumulation, and about sacrificing productive sectors in order to facilitate accumulation in unproductive sectors.

Neo-liberal policies replaced social democratic policies as large sections of the investing class abandoned industrial production and diverted their attentions and investments to finance. Since privatization and deregulation was a major part of this process, the principles and doctrines espoused by Hayek and Friedman were thereafter embraced and promoted. However, where their ideas were consistent with liberal individualism they were inconsistent with a world dominated by finance capital. Their ideas were not taken very seriously, at least not in the long term. In order to provide ideological justification for the purely extractive practices of finance capital, neo-liberals had to supply their own meanings to the principles they appeared to take seriously. Hayek’s views on the continued expansion of intellectual property rights had to be ignored completely. Hayek explained that such rights could only exacerbate the problem of monopoly, which he opposed in principle. He claimed that the preservation of competition is made all the more difficult due to

the extension of the concept of property to such rights and privileges as patents for inventions, copyright, trade-marks, and the like. It seems to me beyond doubt that in these fields a slavish application of the concept of property as it has been developed for material things has done a great deal to foster the growth of monopoly and that here drastic reforms may be required if competition is to be made to work. In the field of industrial patents in particular we shall have seriously to examine whether the award of a monopoly privilege is really the most appropriate and effective form of reward for the kind of risk-bearing which investment in scientific research involves. (Hayek, 1948: 113–114)

The expansion of intellectual property rights has been central to neo-liberalization. Hayek’s views were necessarily disregarded; there was never going to be a return to the competitive system that both he and Friedman appeared to favour (Gamble, 1996: 82–83).

As with Hayek, wherever Friedman adhered to individualist principles he was of no use to neo-liberals. Friedman’s (2007) opposition (in principle) to the IMF meant that its advocates had to look elsewhere for ideological support. Though the institution was to become a central mechanism for the imposition of neo-liberal policies in different parts of the world, Friedman could not view it favourably – to him it was another example of ‘big government’ interfering with markets and distorting price signals. Friedman’s inconvenient views are not so well known as his useful ideas. The former were never popularized by neo-liberal ideologues and policy makers. The latter were; they helped provide a rational for dismantling state industries, state provision of services and the selling of public assets. His throw-away ideas, such as his infamous ‘shock doctrine’, were far more useful in the creation of profitable opportunities for investment than were his principled individualist positions (Klein, 2007). Liberal individualism, insofar as it informed his work, had little bearing on the development of neo-liberal policy or ideology.

The relentless decline of competition, and the increasingly insignificant role of the individual owner-entrepreneur in almost every sphere of economic life, means that liberal individualism is increasingly detached from ruling class interests. The progressive dominance of finance over industrial capital, the expanding regime of intellectual property rights alongside conventional property rights, the relentless decline in the law of value, the increasing necessity for the state to mediate crises and intervene in the class struggle, all mitigate against its return. Such conditions cannot find rationalization through expression of the principles of liberal individualism. Though neo-liberalism derives its name from old liberalism, the policy agendas that are attributed to it bear little relation to laissez faire. Neo-liberalism involves nationalizations along with privatizations, regulation along with deregulation, intervention along with non-intervention, as conditions require. It is in fact difficult to associate neo-liberalism with any particular set of policies, principles and doctrines (O’Connor, 2010). Its lack of consistency has been obvious from its apparent beginnings in the 1970s, but it has become too obvious to ignore since the financial collapse of 2007–8. Unprecedented government intervention was advocated as soon as faithfulness to the principle of market discipline posed a threat to accumulated wealth. The policy agenda of the ruling class appears to change almost effortlessly in accordance with its needs. As such, David Harvey (2005: 161) is quite correct to view neo-liberalism as a class project aimed at facilitating the redistribution of power and resources upwards, rather than as an ideology, or set of policy prescriptions.

The representatives of finance capital are not wedded to policy agendas and principles in the same way as capitalists were in the heyday of competitive capitalism. Old liberalism grew out of the interests of the owner-entrepreneur, which required a more or less consistent set of policy demands, upon which rose a set of principles that most of the bourgeois class could internalize and actually take seriously. With the continued concentration and centralization of capital, the owner-entrepreneur was forced off centre stage, and individualist doctrines and principles became much less useful as a guide or rationalization of policy. Security of wealth under finance capitalism demands that given policies be quickly replaced with their opposites; the ruling classes must be ready (and are ready) to reverse their actions and abandon everything they profess as quickly as conditions and interests require them to do so (O’Flynn, 2009a). As such, neo-liberalism shares none of the conceptual clarity and precision that characterized liberal individualism – even if use of the term creates an impression of policy and ideological coherence.

Hillel Ticktin (2009) has expressed the viewpoint that neo-liberalism is really just the ideology of finance capital. Though it may comprise more than this, it does appear that neo-liberalism prioritizes unearned income. It sacrifices the interests of the ‘free and equal producers’ that were prioritized by liberal individualists in the era of competitive capitalism. Neo-liberal ideology supplies a new meaning to the concept of ‘free market’, and distorts all related principles in order to justify the practices associated with a form of capital that is ‘unproductive of value and so must extract it from the productive sector’, capital that is ‘predatory and parasitic in that it transfers capital from where it is originally accumulated to itself’ (Ticktin, 2009). The body of doctrine that took hold from the 1970s was developed to validate the pursuit of the above interests, not those of independent producers in a competitive system. In this connection O’Connor (2010) has drawn attention to the growing economic power and influence of ‘rentier’ capitalists in recent decades. ‘With rentiers and sophisticated financial markets springing up throughout the world, capital appropriation increasingly became finance driven under the early neoliberal phase’. Thereafter finance capital came to dominate the system as a whole, shaping the development of neo-liberal ideological forms.

The term neo-liberal serves as a means of identifying policy strategies and uses of ideology that facilitate the upward redistribution of power and resources. It is a useful concept in that respect. Unfortunately, it creates the impression of a return to the policies and principles of 19th-century liberal individualism, which is likely to decline further given the relentless decline in the role of price signals and competition. Contemporary capitalism still requires principles and doctrines that serve to rationalize exclusive private control over a society’s productive resources and the wealth produced, but individualism features less and less as a guide to principle.

Naomi Klein (2008) has pointed out that when ‘free market’ ideology was broadly consistent with the activities and interests of elites it was unquestioned in the mainstream. When it began to fail in this regard after 2007–8 its former advocates immediately began to sing a different tune. However, Klein insists that this change is temporary. The about-turn necessitated by the current downturn does not signal the end of ‘free market’ ideology. According to Klein (2008),

Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests … During boom times, it’s profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done.

Klein shows that the doctrines associated with the ‘free market’ come and go as necessary, that they have just temporarily lost their usefulness. However the policies required to facilitate capital accumulation are altered after each cycle, as are the doctrines and principles attendant to those policies. The policies rationalized by ‘market fundamentalism’ are likely to be pursued once more when conditions permit. However the policy agendas will be altered to suit changed conditions, and the ideological forms necessarily accompanying them will have to deviate further from liberal individualism.

Though liberal individualism, as a coherent body of theories, principles and doctrines, has served an essential political function under competitive capitalism, it finds fewer and fewer powerful and influential advocates under finance capitalism. It is not really controversial to claim that ideologies must eventually decline. Absolutely everything in our world goes through a similar process of coming into being and fading away. Or to use a biological analogy, everything goes through the process of birth, growth, maturity, decline and death. It does not matter what we speak of: the universe, our sun, our world, particular species, the human race and all of its creations – civilizations, nations, languages, traditions, religions, institutions, modes of production, theories, ideologies and so on. Everything we know of is either in the process of, or heading for, decline (Novack 1942: 76–99). It is difficult to trace the actual process, or to show the extent of decline in a particular case. However, an argument can be made to this effect with respect to liberal individualism.

Over the longer term we can see that the historical glorification of ‘the individual’ arose because it was expedient during the period of competitive capitalism – and for some time under monopoly conditions, at least until after the end of the Cold War and the demise of Stalinism. The system that gave rise to liberal individualism has been subject to continuous change from its initial development under feudalism right up to the 21st century. In its competitive stage capitalism required a relatively free transmission of price signals between individual producers, and between producers and consumers. In order to realize returns on investments, individualistic producers all had to take part in the general struggle for competitive advantage.

The scope for the free transmission of price signals has been continuously narrowed with the development of the system as a whole. Late capitalism is characterized by the increasing importance of unproductive sectors of the economy, such as in education, health, advertising, insurance, finance and real-estate. Across the system as a whole an ever greater portion of accumulation is facilitated by the privileges resulting from monopoly power, price fixing and new exclusive legal privileges coupled with state coercion. In this connection, Adair (2010) has considered some of the fortunes amassed in recent decades (such as those of Bill Gates and others at Microsoft). Adair points out that although a portion of this wealth may derive from the extraction of a surplus in the process of production, ‘the bulk rests on the collection of monopoly rents for a commodity that could be digitally reproduced for a large market’.

The examples highlighted by Adair illustrate changes in the form of accumulation. Overall the capitalist system experiences an absolute decline in the operation of the price mechanism. The most powerful capitals facilitate this decline. They do not require, or want, any return to competition, to the free transfer of price signals, to the law of value.

The continued progress of monopoly conditions has had enormous effects on the organization of production, on the development of class struggle and on the development of policy. For the sake of profits it is increasingly necessary to use the force of the state to extend corporate control. There has been a relentless extension of knowledge ownership and a corresponding circumscribing of information and knowledge freely available to the public (May, 2003). Capital accumulation in the first decade of the 21st century is characterized by a dependence on the development of intellectual property rights. It requires the continuous development of new legal forms, along with the extension and strengthening of those already in existence. The open-ended monopolization of ideas and technique certainly undermines competition, which is continuously sacrificed in order to create opportunities to realize returns on investments.

Intellectual property rights allow returns to be realized apart from the extraction of surplus value in the process of production. In general, the proportion of investments in unproductive sectors continues to increase. This necessitates the growth of the intellectual property regime, which recognizes claims on the part of corporations and private money capital on the profits of enterprises that create value. The largest corporations have the greatest interest in and greatest capability to accumulate patents, which represent a most effective means of blocking potential competitors from ever getting off the ground. The bulk of patents are held by a handful of corporations and wealthy groups. This is the case even though virtually all of the great advances in modern technology are the result of research carried out by public institutions or on the back of public funds (Perelman, 2007: 11).

It is quite clear that the night-watchman state of liberal political economy cannot sufficiently serve corporate interests under late capitalism. To facilitate accumulation the state must move ‘from holding to withholding’ (May, 2003). It must actively prevent individual persons from using their own individual intellectual capabilities to their own benefit. In defending intellectual property rights it must coercively restrict the use of resources that would otherwise be available to all (May, 2003). It cannot limit itself to the defence of life, liberty and property. It must advocate measures that cannot be rationalized in terms of classical liberal individualist principles.

Under competitive capitalism, workers were controlled and disciplined through private economic coercion. Ownership of productive resources brought social power to the property holder, which allowed for the extraction of surplus value in the process of production. It was possible to harness and exploit this social power to the extent that the resource was scarce (or made scarce) and needed by others. Insofar as the investing classes and their representatives did not recognize the coercive nature of private power they could claim that all were free under the market system. They could thereafter oppose state interference in economic life in terms of individual rights and freedoms (MacPherson, 1962).

In the era of the individual entrepreneur, private economic coercion (i.e. through a managed scarcity of necessary resources) was sufficient to control labour. However, under late capitalism, it is increasingly necessary for capital to control what individuals can and cannot do. This necessitates more, not less, government intrusion into public life. Populations often resist change when it is perceived as harmful to their collective interests and freedoms. A non-compliant population can lead to curtailments of civil liberties and/or the development of a more authoritarian state. Neo-liberalism cannot but exacerbate inequality, which means it cannot but create resentment and social unrest. The latter provokes governments to restrict rights of assembly, to protest, to information and to free speech. To an increasing extent, the state is required to supplement the existing social power of capital with measures that are directly coercive. It could be argued that many of these tendencies are currently exemplified by the international campaign to criminalize, prosecute and silence Julian Assange, founder of whistle-blowing website Wikileaks (MacAskill and Jones, 2010).

The overall tendency to limit the freedom of individuals is connected to the growing importance of technique and knowledge generally in the process of accumulation. Economic coercion is not sufficient. Investors are faced with the reality that knowledge does not become scarce no matter the demand for it, how widely it is shared (May, 2003), or how often it is used. It can only be converted into social power if scarcity is introduced by excluding others, through coercively controlling individual living beings in their daily activities. It is to this end that new legal rights to knowledge are being introduced and enforced. Where it can function to facilitate accumulation we find that even widely known technology can and is being appropriated, to the exclusion of all who do not or cannot pay for the privilege. A portion of the value created in production must be given over to those holding new legally created privileges (Perelman, 2007: 24). This only accelerates the centralization and concentration of capital. The rich industrialized countries now hold 97 percent of all patents world wide (Perelman, 2007: 6).

These changes in the form of capital require the capitalist class to adopt new strategies. The manner in which capital accumulation is facilitated in the 21st century has been recently highlighted by David Harvey, who focuses on the increasingly parasitic nature of capital accumulation. Broadly speaking the policy innovations referred to as neo-liberal facilitate accumulation on the part of investors with little intention of producing valuable commodities. They signal a growing dependence of capital on privileges provided by the state, coupled with a reliance on state coercion. According to Harvey (2003: 181), neo-liberal policies emerged in the service of a growing mass of capital that could not find opportunities for profitable investment in production and therefore sought ‘accumulation through dispossession’.

Across the world economy, accumulation associated with the extraction of surplus value in the process of production has decreased relative to accumulation associated with predatory practices. Liberal individualism, which was rooted in the class interests characterizing competitive capitalism and industrial production, is slowly eliminated by this tendency. As a body of doctrine it grew out of the need and desire to unshackle owner-entrepreneurs with control over capital from inconvenient regulatory and collectivist obstacles. The level of concentration and centralization under late capitalism, along with the interests generated, prevents price-signals being transmitted in more and more areas of economic life. It is clear that the scale of investment required has become too large for a new generation of individual owner-entrepreneurs to assemble. As such, it is amassed and organized on a collective basis. Giant capitalist collectives have come to dominate policy. Their needs are prioritized over those of the declining owner-entrepreneur, not to mention the interests of the societies concerned.

The point that needs to be made is that a great deal of 21st-century accumulation takes place apart from the law of value. The demise of competitive capitalism and the shift away from industrial to finance capitalism gives rise to policy agendas that cannot be justified in individualist terms. It is difficult to retrieve, promote and thereafter employ the principles of liberal individualism in an environment that necessitates the yielding of more and more control to monopolies and the granting of more and more legal privileges to money capital. As the state and collectives of various kinds become more central to the processes of capital accumulation, the social roots of older ideological forms decay. The processes of accumulation justified by liberal individualism have created the very conditions that have rendered the political function of this ideological form all but obsolete. As with everything else we know of, liberal individualism has been shown to contain within it the seeds of its own destruction.

The organic composition of capital has continued to progress at the expense of the owner-entrepreneur, which was accompanied by an overall decline in competition, an increase in monopoly power everywhere, a managed capitalism and managed crises. In consequence, the relationship between pro-corporate policy agendas and individualist principles is increasingly contrived. The inadequacy of those principles has become far more obvious with the downturn of the world economy. Ideologues and policy makers that had claimed to favour free markets from the 1970s onwards had to do a complete about-turn in 2007 and thereafter provide justification for unprecedented levels of government intervention. All across the world governments were forced to intervene, to organize bailouts and to nationalize banks. The conditions and the necessary measures accepted by all policy makers laid to rest individualist principles of risk-bearing and desert. The world witnessed the ease with which free market policies and attendant ideological forms were abandoned. The scale of the downturn left no option. The concentration of capital meant that the best run businesses could face ruin along with the worst. It meant that unprofitable businesses would bring down the profitable. All stakeholders in the system recognized that the largest banks, industries, mortgage and insurance companies had to be propped up. There had to be large-scale government intervention, for which the central tenets of liberal individualism could provide no justification.

There are some liberal individualists (the ‘libertarian’ right) that still exist (usually on the fringes) in political life. They sometimes surface to condemn this or that intervention. These individuals help to maintain utopian visions of a free market paradise. However they are forced one by one, insofar as they are representatives of capital, to grant concessions to bourgeois collectivism and all of the coercion of individual living beings that this entails. Many consistently oppose government regulation of markets, but many more appear incapable of doing so in a consistent manner. Regulations that benefit those with the capacity to invest are generally welcomed while regulations that obstruct accumulation, such as those protecting worker’s rights, pay and conditions in productive enterprises, are opposed. So-called risk-takers are glorified as such until it becomes necessary to organize bailouts. Wherever it has been necessary for the maintenance of capital, libertarians abandon their principles and support bailouts. This was the case with the bailout of hedge fund Long Term Capital Management in 1998. This intervention was organized and thereafter strongly defended by avowed libertarians, including the then head of the Federal Reserve, Alan Greenspan (Dowd, 1999).

It was no accident that the abandonment of free market principles was as complete and remorseless as it was after 2007. The contradiction between principle and practice was obvious long before the current downturn. Neo-liberals that still take individualist principles seriously can only do so to the extent that they ignore pro-corporate government interference, or depict it as something other than it is. The processes of capital accumulation have developed in such a way that such principles can no longer be held with any degree of conviction. The strategies and doctrines referred to as neo-liberal are really the outcome of the above contradiction. The term neo-liberal refers to something that is not liberal (Hudson, 2009). It comprises a set of practices and justifications for practices that are largely attendant to the interests of finance capital, and as such does not rest on any stable policy agenda and has no coherent ideological form. The ideologues of contemporary finance capital have never been able to settle on a clear theoretical framework or definite set of political principles. They can, at best, temporarily draw on liberal concepts and doctrines where they are useful, but their expression can never amount to much more than a fig leaf. Only a very loose commitment to principle is possible among those most sensitive to the changing imperatives of capital accumulation in the 21st century.

Conclusion

The political concept of ‘the individual’ served to legitimate the processes of capital accumulation at a particular stage in the development of the market system. The focus on individual freedom was a historical means to a particular end. The economic downturn, which has necessitated unprecedented intervention in economic life on the part of national governments across the globe, appears to have highlighted its redundancy. ‘The individual’ was constructed in order to mobilize bias in a direction favourable to those primarily concerned with the freedom of mostly independent investors to accumulate, to have a powerful state apparatus to protect the assets accumulated, and to use privately held productive resources to maximize control over the working population. Today accumulation is increasingly dependent on positive legal forms and coercion, which makes it increasingly difficult to maintain ‘the individual’ as a useful ideological construct, particularly when it comes to rationalizing government subsidies to corporations, or in the case of the USA, rising government deficits alongside apparently counter-productive military adventurism (Perelman, 2007: 14). As it stands, claims to represent the individual are less frequently expressed. That this aspect of the ruling ideology is in decline results from the fact that the representatives of capital can no longer credibly claim to represent ‘the individual’ or even the owner-entrepreneur – the disguise of whose interests initially gave rise to the political concept. The representatives of capital have less and less interest in defending the rights, liberties and properties of potentially industrious ‘individuals’. In order to create opportunities for profitable investments, capital must now force individual persons to obey the collective will of those who invest in a more obvious state-aided manner.

The image of capitalism conjured up by liberal individualism is less credible as time goes by. The gaps between principles, theories and practice continue to widen. Capital benefits from the overall increase, rather than decrease, in control over what people are allowed to do with their own individual physical capabilities, their own skills and their own intellects. Claims to represent ‘the individual’ cannot obscure the increasing amounts of state involvement, the new laws to facilitate corporate and financial privilege and the increasingly coercive means necessary to create the conditions to facilitate capital accumulation. Accumulation is increasingly taking place without competition and without the associated free transfer of price signals. The process is operating apart from the law of supply and demand, and in some respects it is operating apart from the power relations that result from private economic control. Increasingly it is legal power and state coercion that serves this function.

Accumulation continues as the owner-entrepreneur, free competition and free transfer of price signals all decline in the face of continued centralization and concentration. Only those that have abandoned liberal individualism altogether can develop any kind of consistency between theory, principle and practice. New principles are required to provide ideological justification for the processes of capital accumulation in the present time.