Neoliberalism's Balancing Act: Shifting the Societal Burden and Tempting Fate

Colin Jenkins I Social Economics I Theory I May 22nd, 2014

The following is Part two of a multi-part series, "Applying Poulantzas ," which analyzes the work of Greek Marxist political sociologist, Nicos Poulantzas, and applies it to the unique political and economic structures found under neoliberalism and post-industrial capitalism. To read Part one, click here .

As discussed in Part One of this project, regarding the layered appearance of the economic foundation and political sphere, Poulantzas stays within the confines of base-superstructure theory while also extending this notion to emphasize a strict demarcation. This emphasis is seen in the following statement, which is predicated upon a firm economic base: "In this state, political power is thus apparently founded on an unstable equilibrium of compromise." Thus, the political apparatus is viewed as an outgrowth of the inherently fragile economic base formed by capitalist relations (i.e. capital v. labor, private property as a social relation). With this understanding, the task of governing said "unstable equilibrium" becomes not only a priority, but arguably the sole purpose of the state. And when considering this purpose, which is manifested through calculated sacrifices, one can view the so-called social contract - which advocates for a reciprocal relationship between government and citizen - as the capitalist state's most natural element. Poulantzas explains, "It is in this context that we should locate, for example, the whole problem of the so-called 'Welfare State,' a term which in fact merely disguises the form of the 'social policy' of a capitalist state in the stage of state monopoly capitalism."[1] "The notion of the general interest of the 'people', an ideological notion covering an institutional operation of the capitalist state," continues Poulantzas, "expresses a real fact: namely that this state, by its very structure, gives to the economic interests of certain dominated classes guarantees which may even be contrary to the short-term economic interests of the dominant classes, but which are compatible with their political interests and their hegemonic domination."[2]

Through their deployment of the 'Welfare State,' the economic power players, via this autonomous political structure of limited compromise which Poulantzas details in length, have been able to accomplish a strategic shifting of societal responsibility from the official governing body to the upper tiers of the working classes; and most notably to that of the "new petty bourgeoisie" (or, as Kautsky and Lenin once referred to as the aristocracy of labor), who are the most immediate economic beneficiaries of this process that gives "certain dominated classes guarantees which may even be contrary to the short-term economic interests of the dominant classes." This monumental rearrangement of the "societal burden" which had previously fallen on the dominant classes (through liberalism's "social contract") at one time or another in the form of effective taxation, a willingness/need to pay livable wages, a general reliance and facilitation on and of worker-consumers (a component of Fordism), and a cultural acceptance of relative humility and communal responsibility, has accomplished two things for the modern power elite.

First, it has relieved the dominant classes of this aforementioned "responsibility" to the collective - whether in the form of a community, region, nation, country or society - by allowing them perpetual "free rider" status through the virtual elimination of corporate and wealth taxation and redistribution. The relative eradication of distributive justice has been maintained through various means, such as tax loopholes, tax "breaks," a common practice of hoarding and hiding money in "off-the-grid" banks, and most recently through the virtual revolving door that is the corporate-political structure, which successfully launders and concentrates public funds into private hands through either direct government disbursement (i.e. corporate subsidies and the Federal Reserve's constant use of quantitative easing (QE)), back door subsidization (i.e. the Student Loan system and "foreign aid" that's used to finance the weapons industry), or "emergency relief" (i.e. the Emergency Economic Stabilization Act of 2008, the Troubled Asset Relief Program (TARP), and other forms of so-called "government bailouts").

In the latter instance, the finance sector, much of which also includes significant components of the corporate-political structure, has benefitted two-fold: Initially through the immense profits generated by the mortgage-backed securities and collateralized debt obligations schemes, and later through the "bailout" of the systemic losses created by these historic profits, despite their being (and because they were) purely fiat-based (lacking liquidity), speculative, and highly concentrated. These considerations are important because they represent a reverse safety net of sorts - not necessarily one that "privatizes gain and socializes loss" (though this has proven to be true), but one that allows for constant, cyclical distribution - flowing from private to public and back to private - even in the rare cases where corporate revenue or gain is effectively taxed (in other words, this tax revenue isn't applied towards a "common good," but rather is funneled back to the corporate sector through these various means). This is accomplished behind the facade of the 'Welfare State,' effectively replacing distributive justice with a constant recycling and reproduction of wealth that is laundered through the corporate state and returned to the wealthy.

Second, it has placed the bulk of this societal responsibility on the backs of the upper crust of the dominated classes (the "new petty bourgeoisie" and so-called industrialized middle class) by subjecting them to heavy burdens in the form of increased taxation, rising costs, and diminishing wages - all designed to supplement (not necessarily fill - see starving the beast) the void left by the absentee owners of wealth who want nothing more than to accumulate as much as possible while contributing as least as possible. In other words, the "compromises" made to set the "equilibrium" for which Poulantzas refers to have historically benefited only the sector of the working class possessing higher degrees of privilege (the white middle class, for example) by allowing them improved standards of living through offerings of education, social mobility, homeownership and consumer credit, under the condition that these "compromises" do not spill into the political sphere. However, this equilibrium has been thrown off tilt by the measures taken under the banner of neoliberalism, which unleashed corporate power (Reaganism in the 1980s) with the assumption that the political sphere had been secured. This now appears to be a miscalculation or, at the very least, a careless move on the part of the dominant classes, since many of the compromises of old have been reversed in the process, leading to a betrayal of sorts against the "new petty bourgeoisie" and "industrialized middle classes" whom have always served as loyal watchdogs for the dominant classes, providing a buffer between them and the majority of the working class - the working poor, unemployed, and generally disenfranchised.

"In the course of capitalist development, the traditional petty bourgeoisie - independent artisans, small shopkeepers, etc. - has steadily dwindled," explained Erik Olin Wright in a late-1970s analysis. "In its place there has arisen what Poulantzas calls the "new petty bourgeoisie," consisting of white-collar employees, technicians, supervisors, civil servants, etc. Under conditions of advanced capitalism, the crucial question for understanding the structural determination of the working class, Poulantzas argues, centers on analyzing the boundary between the working class and this new segment of the petty bourgeoisie."[3] The fundamental differences between what Poulantzas referred to as the "traditional petty bourgeoisie," which "did not belong to the capitalist mode of production, but to the simple commodity form which was historically the form of transition from the feudal to the capitalist mode,"[4] and the "new petty bourgeoisie" are immaterial with regards to their relation with the working class as a whole. Historically, their beneficial position within the societal structure maintained by the 'social contract' has molded a largely apolitical existence. "As a result of the situation that finds the petty bourgeoisie as an intermediate class," Poulantzas tells us, "[they] have a strong tendency to see the state as an inherently neutral force whose role is that of arbitrating between various social classes."[5] This betrayal is testing this middle class not only economically, but also temperamentally.

A corollary development to this shift has been a designed looting of public coffers (the manifestation of Starving the Beast) which has produced insurmountable public "debt" (a loaded term). This has coincided with historic levels of corporate profit and wealth accumulation on one side (the ruling/power elite), and rising levels of unemployment, underemployment and "austerity measures" on and for the other (everyone else, the working class). However, despite these tangible economic consequences, the peculiar dynamics explained by Poulantzas still remain, most notably regarding the post-World War II splintering of the dominated classes and the subsequent "bourgeoization" of the former industrialized middle classes - or the development of what pareconists refer to as the "coordinator class," which isn't much different than Kautsky and Lenin's "labor aristocracy," or even the idea of a comprador bourgeoisie in some ways. Ironically, the historically "neutral stance" maintained by the petty bourgeoisie towards the state has been systematically broken down throughout the 30-plus year reign of the neoliberal agenda, mainly through its destruction of this very class (the middle class). The pluralistic nature of the multi-class society which formed after World War II, and effectively served as a buffer between the power elite and the working class, has been decimated by an extreme concentration of wealth that has accumulated at the top over this period. Specifically, this massive accumulation of wealth which has been siphoned from the middle class has served as the main catalyst in displacing the societal burden. The increasingly strained "petty bourgeoisie," despite their diminishing wages, remain the standard bearers of not only the remnants of the social contract's welfare state, but also of the newly prominent corporate welfare state.

While the political consequences of this 'social contract' betrayal have yet to form in their entirety, a transition appears to be on the horizon with the prospects of a new generation facing long odds of maintaining the degrees of privilege enjoyed by their parents. Two concrete examples of this angst can be seen in the Occupy Wall Street movement and the Ron Paul-inspired "Libertarian" movement (though misled in many ways). Hence, the highly propagandized and still popular notion of rugged individualism and a stubborn Randian refusal to accept the mere existence of "society" - both manufactured ideologies used to justify the illegitimate accumulation of personal wealth and property. While the working class as a whole continues to suffer at ever-increasing levels due to the neoliberal agenda, the displaced "aristocracy of labor" - which consists mainly of the children (mostly white) of the eroding middle class - continues to ignore some obvious root causes of their demise, instead choosing to blame their fellow victims who have historically resided a few steps below on the socioeconomic ladder. Even in the rare instance of a somewhat nuanced analysis (i.e. libertarians), shallow conclusions of "End the Fed," eliminate government interference in the free market, and "Don't Tread on Me" serve as blinders to the intricate development of a corporate-political system that has intentionally and successfully taken back compromises in order to allow for increased rates of wealth accumulation for a minuscule percentage of the population. This temperamental conservativism that clings to the eroding middle class and much of the white working class is seemingly all that stands between the status quo and widespread unrest rooted in a miscalculated shift of the societal burden.


[1] Nicos Poulantzas. Classes in Contemporary Capitalism. Verso, 1978, p. 93.

[2] Ibid, pp. 190-191.

[3] Erik Olin Wright, Class, Crisis and the State, Verso, 1978. P 34
[4] Classes in Contemporary Capitalism, p. 285.

[5] Ibid, p. 292.