This article titled “Our economic ruin means freedom for the super-rich” was written by George Monbiot, for The Guardian on Monday 30th July 2012 20.45 Europe/London

The model is dead; long live the model. Austerity programmes are extending the crises they were meant to solve, yet governments refuse to abandon them. The United Kingdom provides a powerful example. The cuts, the coalition promised, would hurt but work.

They hurt all right – and have pushed us into a double-dip recession.

This result was widely predicted.

If you cut government spending and the income of the poor during an economic crisis, you are likely to make it worse. But last week David Cameron insisted that “we will go on and finish the job”, while the chancellor maintained that the government has a “credible plan, and we’re sticking to it”.

Two questions arise. The first is familiar: why has the public response to this assault on public life and public welfare been so muted? Where are the massive and sustained protests we might have expected? But the other is just as puzzling: where is the economic elite?

Surely the corporate class and the super-rich – the only people the government will listen to – can see that these policies are destroying the markets on which their wealth relies? Surely they can see that this scorched-earth capitalism is failing even on its own terms?

To understand this conundrum we should first understand that what is presented as an economic programme is in fact a political programme. It is the implementation of a doctrine: a doctrine called neoliberalism. Like all such creeds, it exists in its pure form only in the heavens; when brought down to earth it turns into something different.

Neoliberals claim that we are best served by maximising market freedom and minimising the role of the state. The free market, left to its own devices, will deliver efficiency, choice and prosperity. The role of government should be confined to defence, protecting property, preventing monopolies and removing barriers to business. All other tasks would be better discharged by private enterprise. The quest for year zero market purity was dangerous enough in theory: distorted by the grubby realities of life on earth it is devastating to the welfare of both people and planet.

As Colin Crouch shows in The Strange Non-Death of Neoliberalism, the state and the market are not, as neoliberals insist, in perpetual conflict. Instead they have united around the demands of giant corporations.

When the state cuts regulation and social provision, business is enriched. It uses this wealth to trample on the doctrine that enriched it. Through campaign finance, networking and lobbying, big business recruits the state to champion its interests. In Britain corporations lobbied for privatisation programmes that replaced public monopolies with private ones. They also persuaded the government to create hybrid schemes (like the private finance initiative) that guarantee state funding for business. In the US, giant corporations persuaded Congress to remove the key regulations governing auditors and the banks. This led first to the Enron and WorldCom scandals, then the financial crisis.

Big business has used its power to persuade the state to let it keep dumping its environmental costs on the rest of us. It has vitiated anti-trust laws. It has excluded new entrants to the market (through its advertising budgets and distribution networks); and become big enough to prevent its own exit even when it fails (note the bailout of the banks). These are results of neoliberal policies of the kind that Cameron is applying, but they are sharply at odds with the predictions neoliberals made of how free markets would behave.

Above all, the neoliberal programme has closed down political choice. If the market, as the doctrine insists, is the only valid determinant of how societies evolve, and the market is dominated by giant corporations, then what big business wants is what society gets. You can see this squalid reality at work in Cameron’s speech last week. “We have listened to what business wants and we are delivering on it. Business said, ‘We want competitive tax rates,’ so we are creating the most competitive corporate tax regime in the G20 and the lowest rates of corporation tax in the G7 …”. What about the rest of us? Don’t we get a say?

The neoliberal hypothesis has been disproved spectacularly. Far from regulating themselves, untrammelled markets were saved from collapse only by government intervention and massive injections of public money. Far from delivering universal prosperity, government cuts have pushed us further into crisis. Yet this very crisis is now being used as an excuse to apply the doctrine more fiercely than before.

So where is the economic elite? Counting the money it has stashed in unregulated tax havens. Thirty years of neoliberalism have allowed the super-rich to detach themselves from the lives of others to such an extent that economic crises scarcely touch them. You could see this as yet another market failure. Even if they are affected, the rich are doubtless prepared to pay an economic price for the political benefits – freedom from democratic restraint – that the doctrine offers.

A programme that promised freedom and choice has instead produced something resembling a totalitarian capitalism, in which no one may dissent from the will of the market and in which the market has become a euphemism for big business. It offers freedom all right, but only to those at the top.

Twitter: @GeorgeMonbiot

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