Kean Birch reflects on a classroom exercise introducing students to the reach of market-driven actions in everyday life. He finds the exercise is also helpful for his own engagement with an intellectual tradition with which he disagrees. According to Hayek, Friedman and Becker, every decision and choice can be conceived as a market decision. But in the process of negotiating and renegotiating every action in life, we end up entangled in an impossibly complex arrangement

Birch, Kean

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blogs.lse.ac.uk http://blogs.lse.ac.uk/impactofsocialsciences/2016/01/29/how-to-think-like-a-neoliberal/How to think like a neoliberal: Can every decision and choicereally be conceived as a market decision?Kean Birch reflects on a classroom exercise introducing students to the reach of market-drivenactions in everyday life. He finds the exercise is also helpful for his own engagement with anintellectual tradition with which he disagrees. According to Hayek, Friedman and Becker, everydecision and choice can be conceived as a market decision. But in the process of negotiating andrenegotiating every action in life, we end up entangled in an impossibly complex arrangement.Most years I teach a course on neoliberalism. I end the first class with a game in which I auction offthe course grades to the students. First, I offer A-grades to the top 20% of bidders, B-grades to thenext 20%, C-grades to the next 40%, and fails to the bottom 20%. Then I split the auction into two rounds to providestudents with some chance to spread their bets. For each round I ask them to write down, secretly, their bids. Finally,I reveal the winners and losers. There is one proviso to all this, however, students can only use the cold, hard cashthey have in their pockets to make their bids. Of course, I don’t actually sell students their grades, but rather use thismock auction as a way to show how markets can – and often do – work, even in unusual circumstances.My aim, in getting students to bid for their grades, is to show how we can create markets for everything and anythingin life; for education, for work, for relationships, for crime, etc., etc., etc. We can, literally, find ways to sell anything, ifonly we think hard enough about it – and we have to remember many people are thinking hard about just these sortsof things. Street lighting, often presented as the quintessential public good, could be marketized, if we so desired,through some newfangled socio-technical system combining night-vision goggles and crime prevention payments, forexample. All that is required, to be simplistic about it, is working out what to monetize (e.g. personal safety re streetlighting) and then finding some way to construct a market around it. Market construction, obviously, entails a socialand technical arrangement, highlighting the need to appreciate the materiality of markets.While I might enjoy the mental exercise of forcing students to think about how their lives are already, and could beincreasingly, determined by markets, I find it useful for myself because it forces me to think like a neoliberal. I amrarely forced out of my comfort zone, as it were, when it comes to my own work. Generally, for example, I write for anaudience that adheres to the same set of normative assumptions as I do (e.g. ‘neoliberalism is bad’). Consequently, Idon’t have to think about neoliberalism – or anything else I disagree with – in anything less than negative terms.However, it is, from time to time, helpful to subsume ourselves in the things we contest.For me, there are at least three ways we might think like a neoliberal: (a) like Friedrich Hayek, (b) like MiltonFriedman, and (c) like Gary Becker. While neoliberalism has a more convoluted intellectual history and epistemologythan my reference to these three leading figures would suggest, what I might call ‘modern neoliberalism’ – or theversion most dominated by the ‘Chicago School’ – is largely driven by these thinkers. Each of them, in turn, had adistinct vision of the good society, which was underpinned by their own particular – or maybe peculiar – market-basedepistemology.First Hayek: from books like Road to Serfdom and Constitution of Liberty, it’s evident he saw markets and collectiveplanning as largely irreconcilable ways to order society. Hayek conceived of markets as a process of discovery,where the market not only reveals prices but also (re)forms the subjectivity of its participants – see Dardot and Laval’s(2014) The New Way of the World for more on this. We are constantly learning, adapting and spontaneously creatingsocial order – but only in a certain way. In this epistemology and normative framework – as Philip Mirowskiemphasizes in his book Never Let a Serious Crisis Go to Waste (2013) – there is no reason for us ever to developknowledge beyond ourselves, as that is all we need to know. Interestingly, this led Hayek to emphasize theimportance of the law to markets, especially common law, which he argued had evolved towards a private form of law.Image Credit: United States Library of CongressIn this sense, Hayek’s evolutionary epistemology reflects his conservative position (i.e. we’re building on the past onour way to a future market society) despite his denials otherwise.Second Friedman: in his popular work, like Capitalism and Freedom, Friedman stressed the origins of freedom inmarket choice. In his view, markets are the only mechanism that enables us to act freely because they enable us tochoose what we really want without some external constraint (e.g. government). We can, therefore, choose freelywhatever is in our own interests. Here Friedman’s vision and epistemology are based on the view that society is notcurrently ordered via markets because markets are distorted by an external force (i.e. government). Friedman madea major normative assumption that there is such a thing as a perfectly working market and, more importantly, thatwe’re currently not in it; normatively, the attainability of a perfect market was, moreover, necessary to hisepistemology.Third Becker: perhaps the most interesting of the three, Becker’s position was that we can understand all social lifethrough the lens of the market (e.g. education, crime, marriage, etc.). This comes out clearly in his Bank of SwedenAward (aka ‘Nobel’ Price in Economics) lecture from 1992. It is also evident in the more recent work of people likeSteven Levitt, of freakonomics fame. In his ‘Nobel’ lecture,Becker argued that “individuals maximize welfare as theyconceive it, whether they be selfish, altruistic, loyal, spiteful, ormasochistic”. Becker’s perspective is interesting because itcomes closest to assuming that everything is already a marketand, therefore, there is no need to work towards a society inwhich perfect markets determine our decisions. We’re alreadythere, according to Becker.I think it is useful to focus on Becker’s perspective as it hasprofound epistemological and normative implications forunderstanding neoliberalism. Most importantly, it means wedon’t have to assume that there is something like a perfectmarket – with the attendant contradictions this entails – and thatwe don’t need to construct or pursue the institution of saidperfect market. It is already with us, to all intents and purposes.Every decision and choice can be conceived as a marketdecision, a finely honed calculation of the benefits and costs ofevery action we take.On the one hand, Becker’s epistemic position is necessary ifneoliberals don’t want to have to rely on the assumption thatthere is such a thing as a perfect market somewhere down theroad if only we struggle onwards in our journey to finding it – butthen find that it’s always over the next hill, or around the nextcorner. There is no reliance on the normative linchpin of aperfect market or evolution towards market society, as with Friedman and Hayek. Consequently, we can consider allsocial decisions to already be market decisions, from when to marry and divorce through decisions to commit crimeor not to whether to smoke – the last of these is merely a weighing up of your preference for smoking against goodhealth. As Colin Crouch outlines in Strange Non-death of Neoliberalism (2011) everything can have and/or has to begiven a price from this market perspective or it would fail as an epistemology – all things have to be comparable inorder for us to be able to make our market decisions, so everything has to be conceived as having a price that can becompared with other prices. While Becker’s perspective might avoid some of Hayek and Friedman’s normativeassumptions, it entails other serious implications.On the other hand then, Becker’s position is deeply problematic, practically and normatively. As Paul Treanor pointsout in his discussion of neoliberalism, if we accept that everything has a market price – that is, the market isexpanded to include all social activities – then the benefits of markets are only ensured with the intensification ofthese market transactions (i.e. frequency, speed and shortened duration) since the market is only efficient if it’s ableto re-price everything constantly under conditions of market competition. As should be evident, if we constantly haveto negotiate and renegotiate every transaction – by which neoliberals like Becker mean every action in life – then weend up entangled in an impossibly complex arrangement and number of constantly changing contracts (i.e. eachtransaction is a contract we need to negotiate, monitor and enforce). The increasing costs of these contracts – or‘transaction costs’ in the parlance of economists like Ronald Coase – militate against ever doing anything in life; weare simply left arguing about contracts with each other.The only solution to this conundrum is to institute standard or boilerplate contracts – think of the end user licenseagreements (EULA) we sign all the time when we download software, sign up to new bank accounts, and so on –which raises a series of other problems I discuss in a forthcoming article in the journal ephemera: theory & politics inorganization. Simply put, these include anti-competitive practices engendered by overly complex standard contracts(e.g. cellphone contracts we can’t easily, if at all, compare with one another); the replacement of negotiated marketinteractions with non-negotiated contractual arrangements (e.g. we don’t get to choose not to sign a EULA and stillget the product or service we need or want); and the construction of privately made law by businesses (e.g. throughthe dominance of business perspectives in contract law).I want to finish by returning to the auction I hold for students in my course on neoliberalism. While I highlighted howthinking like a neoliberal leads to certain contradictions and problematic assumptions in the discussion above, it ismuch easier to do so using the auction game. I mention two here, but there are, undoubtedly, more. First, the rulethat the students can only use the money in their pockets illustrates the differential capacities of people to benefit frommarket systems, in that our starting positions determine, largely speaking, where we end up. Second, in buying theirgrades the students come to realize that turning everything into a market transaction ends up destroying the verything they want; that is, the intrinsic value of their grade and, ultimately, their degree. If we all know that grades anddegrees are for sale then we all know they are worthless and we will treat them as such. Some things simply cannotbe priced, no matter how hard we think of ways to do just that.This piece was originally published on Discover Society and is reposted with the author’s permission.Note: This article gives the views of the author(s), and not the position of the LSE Impact blog, nor of the LondonSchool of Economics. Please review our Comments Policy if you have any concerns on posting a comment below.About the Author:Kean Birch is an associate professor in the Business and Society Programme at York University, Canada. His newbook, We Have Never Been Neoliberal: A Manifesto for a Doomed Youth , was recently published by Zero Books.Copyright 2015 LSE Impact of Social Sciences - Unless otherwise stated, this work is licensed under aCreative Commons Attribution Unported 3.0 License.

How to think like a neoliberal: can every decision and choice really be conceived as a market decision?

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