Illiberalism or Hyperliberalism? Market Authoritarianism in Context

A dualistic view of the world has rapidly gained popularity in recent years. On one side stands the liberal order: advocating of free markets, the consent of the governed, human rights, and representative democracy. On the other: an aberrant authoritarian populism. This emergent axis flirts with ethno-nationalism, expands executive power beyond its bounds, expresses intense skepticism toward globalization, and demonstrates disregard, if not contempt, for civil liberties and the rule of law. This authoritarian creep threatens the tremendous gains that the dominant order has made since the Second World War and may even seek to revive its more abhorrent ideologies. And the alleged cure? More of the same – and fast. However, such an evaluation mistakes liberalism’s fulfillment for its death throes.

In other words, the expanding influences of nationalistic, authoritarian, pro-market figures such as Xi Xinping and Donald Trump do not represent a departure from liberalism but a civil war within it. Less have states performed their alleged role as checks on the excesses of civil and economic life as they have evolved into batons for market actors. But is this necessarily illiberal? Liberal-democratic ideology has always linked democratic institutions with laissez-faire market freedoms, but neoliberalism’s accelerated divorce of the two in favor of sweeping privatization and absolute market power places the nation-state mythos associated with liberal statecraft on a collision course with the traditional model’s latent market fundamentalism.  The underlying question is not one of hard versus soft liberalism but of liberalism’s cohesion and sustainability under the weight of its internal contradictions. Donald Trump and Xi Jinping do not depart from liberalism as much as they provide similar answers to the question of private v. public power and for and against whom the state maintains its monopoly of coercive force. Opportunistically weaponizing chauvinism to build political will, they vie for dominance of a cutthroat, globalized, hyperliberal order of their states’ own making. As hyperliberal structures installed across the global periphery come home to roost, liberal disavowal of market authoritarianism as a sudden departure from the norm represents a dangerous cognitive dissonance.

Reactionary populists lament the destruction of national sovereignty at length. The democratic nation-state as the chief decision-making engine for liberal capitalism emerged from a time that liberal capitalism and nation-states were both new. Representative democracy was often a luxury enjoyed by states in the Global North, while their colonies existed within the same economic sphere but without the claim to democratic self-determination: an arrangement that has changed clothes but ultimately persists. As capitalism has spread and semi-feudal empires have disintegrated into liberal nation-states, the dominant mode of production and distribution remains international in character. The Pin Factory’s conveyor belt now spans continents, demanding with its expansion a homogenization of norms sufficient to optimize production. Accordingly, new forms of international governance and decision-making have come into being to address, accelerate, and bring greater efficiency to this process. The nation-state is the dying superstructure of a transformed base. 

Broader economic integration, diffusion of supply chains, deregulation, and the slow death of antitrust norms have brought anational business and financial entities international power. Anational entities now enjoy power absolute within the limits of international market conditions to determine large-scale capital flows, employment opportunities for millions of people, and even political conditions through efforts such as lobbying and investor state dispute settlement. Though corporations are allegedly liable to demand, the ability to direct investment, the expansion of shadow banking, and the loss of agricultural autonomy to primitive accumulation allow financial entities to directly affect the ground-level conditions dictating demand for various goods. Meanwhile, suppression of wages and competition between labor markets limits the worker’s capacity to vote with their currency. “Social dumping” – the introduction of foreign workers willing to take a lower wage – is among globalized capitalism’s many growing pains and has become a focal point of reactionary politics.

The question of globalization’s undemocratic impulses is ultimately one of capitalism’s undemocratic impulses. The scale is merely broadened. This withering of democracy and concurrent explosion of private power should be traced to Ronald Reagan and Margaret Thatcher’s embrace of the Chicago School of Economics and neoliberalism. The oft leaned on buzzword “neoliberalism” refers to the market-fundamentalist policies advocated by the Chicago School of Economics, which have guided neoclassical economics and economic policy since the 1980’s. This economic philosophy, which prescribes the state’s sole role as guardian of the free market and property rights, uses such terminology to euphemistically refer to the actions of supply-side actors. This rhetorical sleight of hand solidifies economic gains secured through campaigns of forcible land privatization at the expense of indigenous people, rural peasants, and campesinos by the state with an ahistorical, economistic conceit.

General Augusto Pinochet, under the guidance of neoliberal pioneers Milton Friedman and the Chicago Boys, advanced austerity regimes, privatization campaigns, and other neoliberal policies while torturing, killing, and disappearing thousands of dissidents under the guise of fighting communism in Latin America. Fellow patron saint of Chicago School neoliberalism Friedrich von Hayek joined Friedman in heralding the market dictatorship in Chile as an ideal form of social organization and even suggested it to Thatcher as a workable model for the UK. To Milton Friedman’s enthusiastic praise, Deng Xiaoping’s famous market reforms transformed China from a communist planned economy to a highly liberalized economy open to international trade. Many individuals hoped that liberal markets would also bring the political rights typically associated with liberal democracy, but neoliberalism’s divorce of the two showed its teeth before the world at Tiananmen Square.

Though it would first appear to contradict their advocacy of small government, the Chicago Boys did not oppose powerful states but states that used their power to disrupt economic life. Economic planning did have a place, and this place was the free market. Neoliberalism posits that the market serves the common good more efficiently and effectively than the state or a public option. Therefore, the Chicago Boys favored a state mechanism that functioned to preserve the existing laissez-faire order and little else. The state under Chicago School neoliberalism is an electric fence around a battle royale. This is especially visible in nations like Ecuador and Haiti that have been prompted to cut public spending, privatize public institutions, and restructure land rights regimes by international creditors while expanding police and cracking down on dissent. The emerging order, characterized by more authoritarian states and freer markets, is not a departure from liberalism but the natural continuation of the Chicago School’s radical neoclassicism.

This is not to say that those mentioned are pure neoliberal states. Tariffs, persecution of ethnic minorities, welfare states, market regulations, capital controls, and other state policies unendorsed or discouraged by neoclassical orthodoxy exists in many neoliberal states – especially ones whose authoritarian executives derive legitimacy from a populist conceit. Many neoliberal political actors opt for policy favoring influential domestic firms and industries while demanding market absolutism from their competitors to position themselves for dominance in a liberalized global system (and get reelected – for now). Simultaneously, market absolutist state infrastructure may carry over into other forms of authoritarianism. There are winners and losers when establishing the land rights regimes, for example, necessary for existing modes of capitalism, and mining companies have a significantly better track record of winning such disputes than indigenous peoples. A mining company then enjoys the freedom to hire paramilitary forces or use the state to secure their property and forcibly expel those trespassing where they once lived. 

The state machinery that the Chinese Communist Party uses to imprison anti-capitalist Maoist students and maintain capitalism within China may simultaneously extend Han chauvinism by persecuting Uyghurs. In fact, privatization campaigns in rural areas often involve the criminalization of what indigenous populations view as self-defense as the state claims collective land for private procurement. This practice often takes on the character of outright ethnic cleansing and mass displacement as paramilitaries, aided or otherwise ignored by the state, carry out deadly violence, including assassinations, in the service of private interests. Many, such as the Autodefensas Unidas de Colombia, have framed their pogroms and assassinations in a light of anti-communist self-defense a la Pinochet. Trump ally and market authoritarian Jair Bolsonaro’s promised displacement of Amazonian tribes has many indigenous populations preparing for the worst as their state-protected and common lands are opened up to international markets.

Furthermore, Friedman argues that discrimination, however abhorrent, is a basic market freedom. The state must defend property rights, and the right to de facto use of coercive force through the state would belong to the property owner and not the individual facing discrimination. Private property owners, free to deprive others of biological necessities on account of belief or identity group, would determine access to goods and services. This, again, would come with the full backing of the state. So it did through Jim Crow-era discrimination and redlining in the US and so it continues through the expansion of discriminatory “religious freedom” laws in medicine and healthcare. 

This is the chief area of contradiction between liberal inclusivity and a laissez-faire conception of individual freedom. A labor union and a corporation would share equal freedom to hire strikebreakers. A rich and poor man could be equally prohibited from sleeping under a bridge by its owner. Liberal authoritarianism chooses market freedom over absolute inclusivity in the service of private absolutism without explicitly contradicting a naive, limited principle of equality under the law and negative liberty.

Market authoritarians like Donald Trump, Xi Xinping, Vladimir Putin, Mohammed Bin Salman, and Jair Bolsonaro do not structurally depart from liberalism. Though keen to embrace disdain for neoliberal conditions and foment nostalgia to legitimize their power, they do not offer an alternative but a higher concentration of the status quo actualized through institutional infrastructure inherited from ‘moderate reformers’ and shock-therapists with similar agendas but taller spoonfuls of sugar. Advocates of democracy will not determine its future by defeating an exception but by unraveling forty years of ‘sensible’ policy.