Never Let a Serious Crisis Go to Waste by Philip Mirowski

A powerful critique of neoclassical economics raises profound questions for all, says Christopher Phelps

July 4, 2013

While sitting before private glowing screens – seemingly private, that is – we use social media with ever greater enthusiasm. In the digital revolution that promises to set us free, we update our Facebook pages from our smartphones. But it only marks us, like Orwellian proles, enabling the Pentagon to trace us with ease. So we learned when The Guardian last month published secret documents about a US National Security Agency program, Prism, said to tap the customer data accumulated by corporations such as Google, Apple and Microsoft. Far from delivering a libertarian utopia, the internet realises Jeremy Bentham’s Panopticon, a vast surveillance plan invisible to those observed.

Prism as Panopticon, internet as Pentagon, a Hobbesian leviathan as corporate power: what of neo-liberalism’s promise of a minimal state? “The era of big government is over,” Democratic president Bill Clinton proclaimed in 1996, in centre-left capitulation to the logic of Ronald Reagan and Margaret Thatcher. The market will set us free, we are told, even as a penal-military-security state, itself trending toward privatisation, expands forever. At all levels, the market is saturated with collaborations of state and capital: revolving doors, no-bid contracts, quantitative easing, drone manufacturing.

Few people understood the neoliberal regime of capital accumulation when it emerged around 1973, if David Harvey is right about its birthdate. Most of us still strive to make sense of it. In the US, only in the 1990s did “neo-liberalism” become a common phrase. Well ahead of that curve, in France, was Michel Foucault who, not coincidentally, was responsible more than any other thinker for focusing contemporary attention on the Panopticon, in his 1975 work Discipline and Punish: The Birth of the Prison. He chose neoliberalism, perceptively, as the topic for his lectures at the Collège de France in 1978-79 prior to the Thatcher victory; only recently were those lectures published in English as The Birth of Biopolitics. Neoliberals, Foucault observed, celebrate the market but are not the same as classical liberals. “Neoliberalism,” he said, “should not be identified with laissez-faire, but rather with permanent vigilance, activity and intervention”.

In Never Let a Serious Crisis Go to Waste, Philip Mirowski is equally devoted to underscoring the “neo” in neoliberalism, including its deviation from the minimal state. Dedicating this book “to neoliberals of all parties” (a play on Friedrich Hayek’s dedication of The Road to Serfdom “to socialists of all parties”), Mirowski does not see our epoch of austerity and hostility to regulation, taxes and social provision as likely to produce a withering-away of the capitalist state, with Hayek playing substitute for Marx. Rather, neoliberalism augurs the state’s recalibration and redeployment. This book is not a blow-by-blow account of the financial crisis or of politics today. It is instead a fearless correction to much of existing social thought, a fusillade of provocation that alternates between witty, almost conversational, passages and erudite digressions on epistemology and political economy.

Mirowski is perhaps best known for “The Great Mortification”, an essay published in The Hedgehog Review in the early aftermath of the financial crisis of 2007-08. There, he posited that economics as a discipline failed to perceive the looming bubble that produced the greatest crisis since the Great Depression because it had expelled philosophy and history from its curriculum in favour of technical modelling and market rationality dogmas. Here, he extends that theme, arguing that neoclassical economics – the whole thing, not just its lesser claims, such as the “efficient market hypothesis” – must be scrapped. This signifies that Never Let a Serious Crisis Go to Waste is an uncommonly radical text, oppositional all the way down. Mirowski is positioned not just against the Chicago School established by Milton Friedman but also those, from Paul Krugman to Joseph Stiglitz, who serve as the putative left-wing economic alternative in the constricted world of mainstream press coverage.

In this delightful bramble of a text, Mirowski’s own precise vantage point is deliberately impossible to discern. While he is decidedly left-wing, he faults the recent Occupy movement, characterising it as ineffectual because it manifested neoliberal assumptions in its anarchism-inflected refusal to craft a serious political opposition. He dismisses Marxists, Harvey among them, as crudely deterministic. It would seem that Mirowski favours a form of social democracy, cloaked in invocations of heterodox economics, but his social democracy does not take the usual squeaky-clean Scandinavian form. Jaundiced, dyspeptic, bordering on the cynical, Mirowski dots his prose with a retro 1980s, high-theoretical gloss of citations from the likes of Foucault and political scientist Wendy Brown, although with little postmodernist obscurantism. He simultaneously faults as backward-looking most of the left, including those who argue that the New Deal should be revived. He even takes on (seemingly as a “frenemy”) left-leaning Australian economist John Quiggin, author of Zombie Economics: How Dead Ideals Still Walk among Us, whose metaphor of the undead guides Mirowski’s own opening question: why does neoliberalism, reduced to a corpse by the recent economic catastrophe, still haunt us?

How Mirowski answers that question forms the rub of the book. Economists’ refusal to relinquish their blatantly failed assumptions, he holds, is unsurprising, provided one is familiar with the psychological theory of cognitive dissonance, in which true believers, confronted by irrefutable evidence that disproves their core beliefs, merely redouble their efforts. Secondarily, he conjectures a “neoliberal thought collective” going back to Hayek, its precepts set within a Russian doll, in which neoliberalism’s insiders realise that the point is maximisation of profit, through state intervention to sustain markets if necessary. The outermost doll, created largely for simpleton fans of Ayn Rand, touts laissez-faire libertarianism, while only dupes are shocked by the enthusiasm for state action lurking within. (A case in point: Edward Snowden, who leaked information about Prism, is not only a former employee of the Central Intelligence Agency and the corporate defence contractor Booz Allen Hamilton but was also a small-scale donor to libertarian-conservative politician Ron Paul, who named his son Rand and whose neoliberal fundamentalism is seen as radical by his followers.)

Mirowski declaims against conspiracy theories in asides that are not quite persuasive, since his Russian doll metaphor is too close to the postulation of an inner cabal. Far more profound and disconcerting is his suggestion that we are all neoliberals now, and that neoliberalism was not dislodged by the financial crisis because it lies within ourselves. We now inhabit, he argues, “entrepreneurial” selves. Compelled to position ourselves in the market and rebrand ourselves daily, we manifest neoliberalism’s innate logic. That existential critique is all the more powerful since it can so easily be turned on Mirowski, whose pejorative use of “collective” in calling out neoliberals for groupthink risks equating the social with the totalitarian, thereby validating neoliberalism while rebuking it.

If Mirowski’s epistemological method tips too often toward the philosopher’s vanity of imagining bad thinking to be the cause of all bad practice (when it is so often the reverse), he also signals a much-needed realisation that neoliberalism’s persistence has much to do with the labour movement being too weak to pose a plausible, comprehensible alternative to neoliberalism. If often barren of hope, Never Let a Serious Crisis Go to Waste is extraordinarily clever, piercing and learned, establishing Mirowski as the Thorstein Veblen of our day, a creative critic with a highly perceptive, courageous pen dipped in idiosyncrasy and irony. Should neoliberalism ever be transcended, this work will be one of the resources that made it possible.

The author

Philip Mirowski, Carl Koch professor of economics and the history and philosophy of science at the University of Notre Dame, lives in South Bend, Indiana. “It keeps me in close proximity to the ongoing deindustrialisation and deskilling of the American economy. I have been much less susceptible there to stories about ‘recovery’ from the economic crisis than if I had been living in Washington or LA or New York or Boston.”

Had he the opportunity to live elsewhere, he says, he might well turn to the UK. “Having recently spent some time in South London, I have been much impressed how vibrant, diverse and serious the intellectual atmosphere has become, since the last time I had visited.”

Mirowski was born in Jackson, Michigan and took his undergraduate degree in economics at Michigan State; a master’s and a doctorate at the University of Michigan followed. But his initial inclinations lay elsewhere.

He recalls, “I had originally harboured ambitions to be a film-maker (those were the days of expensive celluloid film stock and painstaking editing by hand). I did make a few films as an undergraduate; but was soon brought to appreciate that a working-class boy in Michigan was never going to crack that industry. The only ‘film school’ I had acquaintance with there was subsidiary to training in advertising, which also did not hold much appeal. I also tried my hand at editing a literary magazine for a while in graduate school. Dealing with self-absorbed ‘artists’ proved well beyond my skill set.”

Correctly identifying the questions asked for this profile as an invitation to tell the tale of his intellectual development, Mirowski observes drily, “Many people trace their Bildung experience to their formal education. I suppose I am no different, and sometimes summarise it as three encounters I had during graduate school. The first was with a junior assistant professor at Michigan whose task was to teach us the first course in microeconomic theory. It must have been pretty apparent that I could not suppress my incredulity that a whole profession actually believed this stuff, and so at a party for us tyros he approached me, drink in hand, and offered the opinion I would never succeed as an economist. He was denied tenure the next year.

“The second case was an older tenured economics professor who prided himself an irascible sceptic and an iconoclast, and who, by contrast with the first, did buoy my quest to understand historically how economics had gotten the way that it was back then. He slept with my first wife; and taught me that there was no honour amongst iconoclasts. The third, a younger up-and-coming star, did serve as mentor and protector during my stint at Michigan, encouraging my rather scatter-brained enthusiasms for the history of physics, the effects of mentalité on trade, and the ways in which finance might destabilise an economy. Soon thereafter, he was called to Stanford University, and there frittered away much of his intellectual acuity on stolid orthodoxy and administration,” Mirowski notes.

“In retrospect, I wonder what might have happened if I had instead gone to some university where the demi-gods of the profession are cloaked in force-fields of fame, never actually getting close to their putative students. Perhaps it might have rendered me more accepting of the intellectual genealogies people often proffer concerning themselves.”

He joined the faculty of the University of Notre Dame in 1990. Since then, he has also held a number of visiting professorships at other US universities, at institutions in the Netherlands, Australia, Italy, Uruguay and France, and a visiting fellowship at All Souls College, University of Oxford.

“I am a great believer in the need to mix up your influences and intellectual inputs to keep from getting stale,” Mirowski says. “For instance, it was in Uruguay that I realised that the commercialisation of the university had spread far more globally and comprehensively in the past few decades than I had ever suspected. Stints at New York University and in Australia were very crucial in forcing me to turn my attentions to the neoliberals. France is one of the few places left where the history of economics is being seriously pursued by young people.”

His 1989 book More Light Than Heat: Economics as Social Physics, Physics as Nature’s Economics considered the debt of classical economics to 19th-century physics and was hailed as a major - and controversial - contribution to scholarship. Does he consider himself to be a heterodox economist?

“I hesitate at the term ‘heterodox’, because these days, it doesn’t index anything more than a pretension of being ‘not neoclassical’,” Mirowski says. “We live in an incredible era of doublethink in which neoclassical economists claim to have a ‘model’ somewhere which encompasses any possible divergence from orthodoxy, yet at the same time ruthlessly expels anyone who refuses to pledge allegiance to constrained maximization of utility, the notion of the market as super information processor, and the DSGE [dynamic stochistic general equilibrium] macro model. The permissible field of discussions of ‘politics’ remains restricted to the truncated pitch between Hayek and Keynes. Of course there are some bright people who see through this and explore more alternative sensible approaches, from Alan Kirman to Gerry Epstein to Perry Mehrling to Benoit Mandelbrot to Jamie Galbraith to Shyam Sunder and beyond, but this crew has never gelled into a coherent rival school, for a variety of reasons. And I worry that places that should be nurturing the next generation of ‘heterodoxy’, such as George Soros’ INET, in fact just co-opt them into more baroque versions of the reproduction of neoclassical dominance.”

Asked if he is surprised, despairing or angry that scholars of orthodox economics appear unconcerned by the discipline’s failure to predict, or later to explain, the recent economic crisis, Mirowski says, “I write about the issue of ‘prediction’ in the book, which I think has been turned into a bit of a red herring. Familiarity with the history of the Great Depression of the 1930s would suggest that economists don’t admit to error easily, but the sheer impudence with which the current economics profession, individually and collectively, has engaged in shameless denial after the fact and escaped all accountability for its complicity in direct causes (irrelevant macro entrenched in central banks devoid of political checks, inventing baroque derivatives, tactics undermining the very efficacy of regulation, privatising securitisation and ratings, preaching the ‘Great Moderation’) is unprecedented in the history of the profession. Even Paul Samuelson admitted something like this on record shortly before his death. Future historians will vie with one other to recount and analyse something that cries out for explanation.”

If economics is junk science or scientism (with Mirowski calling modern neoclassical microeconomics “hopelessly confused and corrupted”, and if research in the sciences has become “hobbled and corrupted”, as he has also said, do any scholarly disciplines give him grounds for hope that academic inquiry is working toward truth and/or improving the world?

Mirowski responds: “I do think the notion that academic disciplines work for the ‘general welfare’ has become rather threadbare. I say this not because I think academics suffer from some general moral degeneracy, but rather because the old Germanic ideas of the university - the responsibility of the self-governing professoriate to speak for the larger commonweal and the pursuit of truth isolated from politics - has been displaced by a rather American model: one which can be summarised as a marketplace of ideas, where both students and the public are customers, and the university is a business. Either you are supposed to pursue new technologies whose promise is tied up in intellectual property, or else you should serve as a gun for hire, spouting soundbites and increasingly provocative rodomontades for the entertainment of an easily distracted public. Above all, faculty must avoid offending powerful patrons, and provoking lawsuits from disgruntled customers. Indeed, the non-science side of American-style universities have come to increasingly resemble thinktanks, stocked with anti-intellectual intellectuals for hire and available for free media appearances. The science side looks more and more like a contract research organisation.

“Further, I must say I am continually surprised that journalists are shocked to hear this, since the same thing is happening to them as well.”

Asked about his non-scholarly pastimes, Mirowski says, “I used to play rock and jazz bass; but the musicians I played with did me the favour of impressing upon me the fact that I wasn’t very good at it. Now I do all I can to support live jazz, which skirts being a dying art form.”

Karen Shook

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown

By Philip Mirowski
Verso, 384pp, £20.00
ISBN 9781781680797 and 83033 (e-book)
Published 15 July 2013

Register to continue

Why register?

  • Registration is free and only takes a moment
  • Once registered, you can read 3 articles a month
  • Sign up for our newsletter
Please Login or Register to read this article.

Reader's comments (1)

I meant to rate this as a 5! No way to undo? Excellent review.