State under Neoliberalism

Chetna Andolan

Generally, market fundamentalism and reduction of the state are considered to be the chief characteristics of the totalitarian orthodoxy of neoliberalism, behind which the nation-states throughout the world today have lined themselves. However, we think this to be an exaggerated judgment. In fact targeting neoliberalism in this manner ultimately reduces the neoliberal regime of accumulation to a mere ideology, not recognising it as a concrete stage in the development of capitalism. In our opinion, neoliberalism should be taken more as a continuity, expansion and intensification of capitalist relations. “For bourgeois society, the commodity-form [market exchange] of the product of labour, or the value-form of the commodity, is the economic cell-form” or building block of capitalism.(1) The apologists of neoliberalism only assert this fact in the crudest manner.

Nevertheless, under the neoliberal regime this “cell-form” has realised its hitherto fullest potential. Capitalism under this regime is determined to cross all hurdles in its expansion that existed as pre-capitalist legacies or as non-capitalist spaces that were created during the course of class struggle and the successful labour’s resistance to ‘class’-ification. It is in this regard, David Harvey’s definition of neoliberalism as accumulation by dispossession through which class power of the capitalists is restored becomes relevant. He sees the “main substantive achievement of neoliberalization” in a redistribution rather than the generation of wealth and income. The primitive accumulation process which gave birth to capitalism is once again intensified in this postmodern stage of capitalism –

“the commodification and privatisation of land and the forceful expulsion of peasant populations…; conversion of various forms of property rights (common, collective, state, etc.) into exclusive private property rights…; suppression of rights to the commons; commodification of labour power and the suppression of alternative (indigenous) forms of production and consumption; colonial, neo-colonial, and imperial processes of appropriation of assets (including natural resources); monetization of exchange and taxation, particularly of land; the slave trade (which continues particularly in the sex industry); and usury, the national debt and, most devastating of all, the use of the credit system as a radical means of accumulation by dispossession.”(2)

And in this “the state, with its monopoly of violence and definitions of legality, plays a crucial role in both backing and promoting these processes.”(3) This brings us to the second aspect of the neoliberal orthodoxy – the reduction of the state. The neoliberal guru, Milton Friedman, himself said:

“The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the “rules of the game”” and “as an umpire to interpret and enforce the rules decided on”.”(4)


“These then are the basic roles of government in a free society: to provide a means whereby we can modify the rules, to mediate differences among us on the meaning of the rules, and to enforce compliance with the rules on the part of those few who would otherwise not play the game.”(5)

The role of government is definitely minimised under neoliberalism. However, it is minimised “to do something that the market cannot do for itself”.(6) This “something” is obviously determined by the needs of the market and capital. So the legal changes amenable to the neoliberal needs of capital are still needed, and we need the State to effect those changes. And most importantly, to regiment “those few who would otherwise not play the game”, the State with its coercive apparatus is evidently needed.

Economist Prabhat Patnaik rightly recognises that there is a mismatch in bargaining strength between the capitalists and the state organ engaged in negotiating with them, which intensifies “the competitive struggle among the aspirants for investment… This can have only one possible result, which is to raise the scale of social ‘bribes’ for capitalists’ investment. This increase in the scale of social “bribes” is an important feature of neo-liberalism.”(7) Even legal and institutional changes to attract investment need to be viewed as social bribery. Special Economic Zones are definitely so.


(1) Karl Marx, “Preface to the First German Edition”, Capital Vol 1, Penguin (1990), pp. 90.

(2) David Harvey, A Brief History of Neoliberalism, Oxford (2005), pp. 159.

(3) Ibid.

(4) Milton Friedman, Capitalism and Freedom, The University of Chicago Press, Chicago (1962), pp. 15.

(5) Ibid, pp. 25.

(6) Ibid, pp. 27.

(7) Prabhat Patnaik, “An Aspect of Neoliberalism”, People’s Democracy (December 24, 2006).

Chetna Andolan is an autonomous people’s organisation working in the Tehri region of Uttarakhand on the issue of social control over resources.

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