Neoliberalism promised us prosperity, security and freedom through markets. Increasingly, it is delivering insecurity instead. So what does it have left to offer? Fear. And that is it.
We are told to fear government debt. We are told to fear the bond markets. We are told governments must maintain “fiscal credibility”, even when doing so means higher taxes, weaker public services, lower living standards and fewer jobs.
Martin Wolf's recent arguments in the Financial Times provide an example of this thinking. But the issue is much bigger than one commentator. It is about an economic ideology that treats satisfying financial markets as more important than meeting human need.
The argument rests in part on the household analogy: the claim that governments must finance themselves in much the same way as households do. But a currency-issuing government is not a household. That misunderstanding produces profoundly damaging economic policies.
In this video, I argue that neoliberalism increasingly relies upon fear because its promise of prosperity is failing. When insecurity is already widespread, however, threatening people with more insecurity eventually stops working.
We need another objective for politics: freedom from fear.
That means economic security, decent housing, worthwhile work, healthcare, security in old age and protection from climate change.
Can we build an economics that puts those things before appeasing financial markets? That is the question.
This is the audio version:
This is the transcript:
I think we've reached the point where neoliberalism has only fear left to sell to us. The fear that government debt will overwhelm us. The fear that markets will punish us if we disobey them. The fear that we will lose our jobs if we challenge the system. The fear that we will fail if we cannot consume enough. The fear that if we ask too many questions, we will be sacked, dismissed or branded as an ‘other person' to then be abused. Fear has become the means by which the economic system, which demands our attention, also demands our compliance.
We are seeing this everywhere. Martin Wolf has been turning up the fear in the Financial Times this week. He says that Labour must impose substantial fiscal tightening as a part of its economic strategy. What does he mean? He means that taxes must rise because spending supposedly cannot be sustained.
His demand is that public debt must fall to recreate what he calls fiscal headroom, but which actually means he wants the government to put aside a little pot of money, as he thinks about it, to cover the proverbial rainy day, which he thinks is coming, maybe. But what he calls fiscal credibility is the overriding objective. The underlying message is clear. It is that the bond markets must be satisfied.
And let's be clear: what Martin Wolf is saying is that ordinary people will be expected to pay the price that this fear is going to impose on us. Wolf implies there should be increases in income tax and VAT for everyone, but we will receive nothing more in return. That's precisely what he's saying will happen.
And at the same time, the fiscal tightening that he talks about would deliberately slow the economy. We would be worse off, and in fact jobs and living standards would be sacrificed as a consequence of the policy that he is promoting. And who will pay the price of that sacrifice? It is us.
We will be those who are sacrificed to the new god: the market.
We're told that governments must obey this god.
We must obey this god.
And if we don't, the failure to comply will bring fiscal retribution upon us.
The City has become the interest that government must appease, and we must be sacrificed in the process to that outcome.
Democratic choices are then constrained by supposed market necessity when no such necessity exists.
This is just the same as the fear used of old, when people were told they must comply with the demands of the priests and, of course, the emperors, and if they did not, the gods would bring down the reign of terror upon them that they deserved as a consequence of their disobedience. This is the same sort of analysis that is being used now in the pages of the Financial Times. We have got to be sacrificed on the altar of a balanced budget.
And the fact is, though, that fear now shapes everyday economic life. People already fear losing their jobs, and they don't enjoy those jobs, but they still fear losing them. And that's because debt creates fear about keeping homes and maintaining living standards. And consumption is presented as evidence of personal success. And advertising continually tells people what success should look like. And life has become a competition where people are frightened of losing.
But the promised rewards of this system have in fact disappeared. Real incomes are falling. We are not seeing greater prosperity. Many people cannot afford what they are encouraged to desire, and housing is beyond the reach of an increasing number of people, especially those who are younger. Parents are worrying about the prospects facing their children. They tell me they're now worried as well, because I know people of this age who are worried about the prospects for their grandchildren. Climate change just adds another profound source of insecurity.
But let's be clear, it is now neoliberalism that is creating the fear. It promised prosperity through markets and competition. It promised that consumption would deliver fulfilment. It promised that participation would produce economic security, and those promises are visibly failing on their own terms. We are not seeing the outcomes we were promised.
And that's because the economics on which all of neoliberalism is based depends on a myth. It is the myth of the household analogy. I've talked about it before on this channel. I will no doubt talk about it again. But people like Martin Wolf, one of the most senior economic commentators in the UK who has written for the Financial Times for longer than most of its readers have been alive, does believe in the household analogy. He treats government finances as though they resemble those of a household, but they don't.
Households need to get income or borrow before they can spend. A currency-issuing government does not need revenue before it can spend. Government creates the money it needs as it spends it and puts it into circulation. Tax then withdraws some of that money after spending has taken place. The household analogy therefore produces the wrong policy conclusions because it's based upon the wrong analysis of the role of the government inside the economy, and Martin Wolf very clearly has no comprehension of what that role is.
But let's come to the core point, and that is that the government exists to meet people's needs. Politics cannot be reduced to balancing government cash flow. People need housing, healthcare, training, and economic security. Government must protect people from economic and physical threats, and I stress it's both. The threat of inflation because of war in the Gulf is something our government should be protecting us from, but it isn't.
And the government also has another duty. It has the duty to protect us from those with power who would use it to exploit us. A neat government balance sheet cannot substitute for these responsibilities, but that is what those in power, people like Martin Wolf, and people who the Financial Times represents, are saying.
So why is this fear being turned up now? What is the reason for the comments that people like Martin Wolf are producing? What is it that makes them so frightened at this moment? My suggestion is that all these people know that the system of neoliberalism that they have been supporting is no longer working. Neoliberalism can no longer convincingly claim success on its own terms. Its positive promises of prosperity are exhausted. Its remaining argument is that abandoning it would make things worse. Ramping up fear then becomes essential when the promise of reward has failed, and that's what we are seeing.
There is nothing left to threaten us with, though. Threats of insecurity lose their force when insecurity is already widespread, and that is the case now. Market punishment looks different when the existing system already causes harm, and we know it does. We know it causes the problem of climate change. We can see that in our lives now. We know that the market has no solution to the problems of food supply or energy supply or anything else. How can we fear market punishment in that case? The market is already failing us.
And people can increasingly see that the neoliberal system is itself the problem they've got to stand up to. Turning up the fear now might then just reveal the weakness of those who propose this system rather than their strength. They think they've got the upper hand, but the question is really: does their promotion of fear now just reveal how weak they are and how strong we might become?
The alternative, and the one that we really need, is freedom from fear. Neoliberalism promotes fear. I want a politics that promotes freedom from fear.
Economic policy should not be organised around fear of financial markets. It should instead be organised around the need to supply people with housing, with good work, with healthcare and freedom in old age. We need protection from climate change, and we need protection from economic insecurity.
Politics must decide whose needs and interests it exists to serve. Freedom from fear creates the possibility of imagining something better, and that at this moment is what we need to do. It's why I am at this moment writing a new book. It's going to be called How to Govern: Creating the Courageous State. I hope it will be out early next year. I am in discussion with publishers, and the book is half written. And the point is this: we can have a different politics, we can have a different economics, and we can live free from fear, and that is my goal in producing this channel.
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It’s has become increasingly obvious over the years that politicians and their ignorance of how sovereign money is actually created see financial markets as the engine room of the economy.
The thing is, the markets do not ‘make’ money. This notion is complete claptrap. Markets simply move money around that has already been made. And when markets do issue new money as credit, they charge handsomely for it, so what net effect is that on the total of new money?
All they do, is moan about taxation taking money off them. But really, what is the difference between tax and debt, except of course who benefits? No scruples there then? It’s OK to pay interest but not tax? The hypocrisy is stunning.
The markets see money as a static stockpile when in fact money is more of a flow when it is employed in the real economy 24/7. And that means the markets do not understand tax either.
But as you say, the system we are in is one that real people doing real work having to suffer in order to keep confidence in a financial system that is no more than a subtle form of terrorism and daylight robbery.
Labour’s devolution plans really worry me. All that will happen is that the regions will have more power to raise local taxes, and spending from the centre in London will be cut even more. We will be a nation of city states. The City will have the Bank of England and sovereign money making power all to itself, and Westminster will be its hole in the wall. The rest of us will be paying a lot just to exist at all. I don’t think I over state this.
Much to agree with
Might it be that ruling power depends on three inputs plus the usual mixture of them?
1) Persuasion, direct and indirect
2) Force, not least by legislation to increase direct action by the police and a possibly less independent legal system
3) Gullibility of the ruled whom mass education teaches indirectly, but consistently, to unquestioningly accept what they are told and not to ask heterodox questions
You are so correct about the uses of fear as a form of persuasion.
The greater use of force is shown by the facilitating legislation to control/block governmentally unwanted protest eg. Palestine Action, the “softening ups” to reduce trial by jury and the acceptance of anti-democratic decisions of some judges.
It is increasingly evident that Neoliberalism benefits only a small part of society to the cost of the majority in that society.
Might it be that those governing directly, notably parliamentarians and senior civil servants, and those governing indirectly, notably big donors to parliamentarians and the main stream media, have a choice between increasing the undemocratic control of much the most of the citizenry or changing the dominant socio-economic policies?
P.S. Many thanks to you and your team for facilitating the second choice.
P.P.S. Might the current Fairford incident plus the puzzling American government “commentary” be a “scare incident”?
Re the PS: thank you
Re the PPS: Yes
Re the PPS and this is a general not a specific point.
There are clearly individuals who will ‘offend to order’ eg Starmers former car and attacks on Ukranian linked business’s
So its not difficult to go to ‘Rent a Robber’ and get whatever (minor) incident you want
Neoliberalism DID offer “Prosperity, security and Freedom” – “Prosperity” for those with the desire/ability/opportunity to seize it. Freedom to pursue Prosperity without regard to harm caused. Security to the prosperous to hang on to Prosperity “come what may” (to the rest of society).
Sounds marvellous (to many)…. until one realises that you are the one being trampled on by the prosperous in pursuit of more and more.
Fear is part the neo-libtard sales pitch, “we can’t change stuff cos bad things could happen” (& it needs to be seen as a sales pitch – no different to selling a 4×4). Neo-libtard supporters are in a club. Membership and mutual support gives status and nice freebies e.g. couple of days at Davos and the adulation of your peers, speeches at prestigious institutes, sons and daughters paths smoothed. Privately club members (as I noted wrt Wolfie) probably don’t believe the guff they spout publicly but that is irrelevant. The public stuff is important for maintaining membership of the club. Those that don’t conform are cast into the outer darkness – e.g. Varoufakis.
Thus Neo-libtards are liars, hypocrites and cowards, taking the easy path of conformity and non-think – whilst knowing it is all nonsense. In some respects they resemble MacDonld-Fraser’s Flashman but without the self-awareness that Flashman was given.
“Freedom from fear” – that set hares running in my head.
Imagine being admitted to hospital for terminal care. (Sorry, but hospices that specialise in compassionate palliative medicine are thin on the ground now, so hospital it is).
What things are you afraid of?
What might reduce your fear?
What might increase it?
(Think of both human, social and practical things – we’ll leave religion and philosophy till the end!).
Some time after July 2024, I realised that for the first time in my life, I was afraid of the UK State. Something that had been happening for over 40yrs had become blatantly, arrogantly, obvious – the state no longer even pretended to exist for the protection and welfare of me, and other people who live in it. It did not care about making the world a better place, and it didn’t care that I knew..
I could also see that I was not the only one who was afraid. Fear was what drove those in power- the PM, the Chancellor, the Home Secretary, and it made them callous, vicious, and mendacious. It is driving them now. And fear, unlike wealth, DOES trickle down very effectively to the citizenry.
My faith talks a lot about antidotes to fear – a lot of them relate to “God” – and I won’t go into them here. But it mentions one antidote I have relied on, and offered to others – “perfect love casts out fear”.
Where is the love?
So much political rhetoric depends on hatred, lies, and fear.
What drives me, us?
What drives a “politics of care”?
What is the engine that can power a “courageous state”?
Martin Luther King Jnr used to talk about “the extremism of love”, and not even the assassin’s bullet could quench it.
I like “the extremism of love”.
I also like “the extremism of care”.
Ninety three years ago an America president told people ‘the only thing we have to fear …is fear itself.’
Hoover had told people the market would right itself. it didn’t. FDR didn’t solve the problems of the Depression but he made a difference and his social security program is a lasting legacy. He had to fight the Supreme Court and Wall Street to get it done. FDR had courage.
In 1936 he tried to introduce a balanced budget. It didn’t work but in 1938 massive arms orders from Britain and France, plus America’s own program started to put more people back to work. The multiplier effect was demonstrated.
In many ways we have been here before and failed to learn the lessons.
https://www.youtube.com/watch?v=nHFTtz3uucY -rather crackly film 1 min 47 secs
Very interesting discussion on Ch4 News last night with Mariana Mazzucato and Michael Gove of all people, in which the following points were made and agreed:
– Neoliberalism is a failed experiment which has been damaging for most people.
– Austerity damages the economy and stimulates increased public spending
– Privatisation of public utilities was a bad idea and should be reformed
I’ve never heard any of these points debated so openly on the MSM before. I was shocked!
It was useful. But not solution focused.
A friend just told me he emailed Mazzucato to say he was impressed with her performance and suggested she do a stream with Richard. Are you game Mr Murphy?
We have met.
If she was.
Neoliberalism – apply the problem and then apply the solution.
The message across the right wing mainstream media is cling to neoliberal-nurse for fear of worse.
Echoes of William Jennings Bryan speech 1896
‘I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of government, and that the banks ought to go out of the governing business….You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.’ (On currency flexibility, in this case arguing for bimetallism, accepting silver as well as the gold standard)
Exactly so. I especially like the parallel with “the fear used of old”, which you describe. Very well said, Richard. Thank you for doing so.
Thank you
For more on the use of fear as a tool to achieve “free” markets, see:
The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein
https://amzn.eu/d/fAmspcx
The Racket: A Rogue Reporter vs The American Empire (2024) by Matt Kennard
https://amzn.eu/d/6KsBdEl
Watch:
The Shock Doctrine (ENGLISH) – FULL DOCUMENTARY : The Rise of Disaster Capitalism
https://www.youtube.com/watch?v=aL3XGZ5rreE
A Rogue Reporter vs. The American Empire (w/ Matt Kennard) | The Chris Hedges Report
https://www.youtube.com/watch?v=V1raT5Gxk_M
Thank you
Another person to have a discussion with would be Sharon Graham, she’s just come out to defend the Triple Lock and wants to see higher taxes on the super rich
https://www.youtube.com/watch?v=xBYE0quumls
There are many reasons why I think she would not meet me dating back to when I worked for her husband in Unite.
Oh
I’m not sure Unite is the solution to anything. It has too many of its own problems.
https://www.thecanary.co/skwawkbox/2026/08/24/unite-union-cover-up/
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