Neoliberalism’s Death Drive
Uncovering the regime’s “unconscious rationality”
Nicolás Medina Mora
Friedrich Hayek
Harold Bloom, prone as he was to stating the obvious, liked to say that, since Freud read Shakespeare while Shakespeare never read Freud, one should strive for a Shakespearean reading of Freud, rather than a Freudian reading of Shakespeare. That argument might have been contrarian at a time when psychoanalysis still informed the mainstream of literary studies, but in the aftermath of a time when Freud’s star fell to such a degree that today one can speak of a “revival” of the tradition he founded, the quip rings a bit quaint. In any case, Bloom’s dictum offers an invitation to interpret other readers of Shakespeare in a Freudian key, as a paleontologist might reconstruct the anatomy of a fossil by referring to the bone structure of a different species with which the specimen shares a common ancestor.
Consider, for instance, the source of one of the central metaphors of classical economics:
“Lady Macbeth:
What’s to be done?
Macbeth:
Be innocent of the knowledge, dearest chuck,
Till thou applaud the deed.—Come, seeling night,
Scarf up the tender eye of pitiful day
And with thy bloody and invisible hand
Cancel and tear to pieces that great bond
Which keeps me pale.”
When it came to finding an image to personify the Market—so much like God or like Fate in its unpredictable power—Adam Smith reached for the text of a tragedy that is concerned above all with the unconscious.
The merchant, writes Smith in The Wealth of Nations,
"intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention . . . By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.”
But what are we to make of the fact that the force that leads this merchant to unintentionally—which is to say, unconsciously—pursue the interest of society as a whole is the same one that drove Macbeth to murder? More than a sunlit square, alive with the din of exchange, the Market turns out to be nocturnal and uncanny: a matter of fantasy and pulsion rather than reason or calculation. Like an unsettling dream, or a vision that might or might not be the product of psychosis, the Invisible Hand tempts us to surrender to desires that lay beyond the pleasure principle—even or especially if doing so would bring about our destruction.
At the manifest level, the Market is for Smith a mechanism that guarantees the social order; at the latent level, his metaphors suggest an engine of aggression and chaos. The Invisible Hand, in brief, is a figuration of the death drive.
We could, of course, go further. If Smith and Freud share a common ancestor in Shakespeare, what Freudian traits might we discover in the twentieth-century descendants of the founding father of liberal economics? On first glance, not many. The commonplace understanding of neoliberal thought would have us believe that Smith’s late-modern disciples were downright hostile to the very notion of the unconscious. Neoliberalism, so the story goes, figures human beings as subjects transparent to themselves. Or isn’t it true that its economic theory, and the reactionary politics that its exponents derive from it, rests on the assumption that individuals tend to pursue their own best interest, which necessarily implies that they know where their interests lie— that they know their own desire?
Then again, it seems unlikely that the story is quite so simple. Consider, for instance, a telling moment from a lecture that Milton Friedman delivered at Cornell in 1977 under the title “Is Capitalism Humane?” At the start of the video of the talk, the economist appears a bit rattled, thrown off balance. It’s not hard to see why: though he makes no mention of the incident, Friedman has just been confronted by student protesters who object to his work for the fascist dictatorship of Augusto Pinochet—a regime whose veneration of the Market, incidentally or not, was only exceeded by its enthusiasm for acting out sadistic fantasies.
In an apparent attempt to come off as bemused rather than angry, Friedman launches on an amusing story—except that the joke’s on him:
“One of the most interesting analyses of these problems I know of is by a Russian dissident mathematician named [Igor] Shafarevich . . . he comes out with the conclusion that, just as Freud pointed to the death-wish in individuals as a fundamental psychological propensity, the appeal of capitalism—I’m sorry, the appeal of socialism, the opposition to capitalism, is really a fundamental sign of a death-wish for society on the part of intellectuals. It is a very intriguing, strange and, at first sight, highly improbable kind of an interpretation. Yet I urge you all to read that essay, because you will find that it’s very disturbing by having a great deal more sense to it than you would suppose.”
For once in his career, Friedman is correct: the words that come out of our mouths often have a great deal more sense to them than we ourselves would suppose. Perhaps neoliberals are closer to the truth than we give them credit for, even if they go to great lengths to deny—or rather, to repress—that truth.
Perhaps we do know what we desire, even if we don’t know that we know it. Perhaps we reveal what we don’t know that we know in our more cartoonish moments, when the mask we wear before the mirror slips, and we begin to resemble the caricatures that others paint of us. Friedman spends the rest of the psychoanalytic hour making a courageous case for the ways in which the Free Market spontaneously results in an improvement of “the moral climate,” but he has also given us good reasons to suspect that he took a great deal of pleasure from his collaboration with a government that disposed of anti-capitalist dissidents by torturing them, burning their faces to render them unrecognizable, loading them into helicopters, and throwing them into the sea.
*
It would be foolish to dismiss the neoliberal tradition on the basis of a moment of motivated error. Let’s leave poor Friedman alone and turn our attention to the slightly older fossil of a far more serious thinker: Friedrich von Hayek. A cursory glance at one of his most influential essays, “The Use of Knowledge in Society”—published in the American Economic Review in 1945—is enough to see that the first generation of neoliberals was acutely aware of the importance of the unconscious for social life. So much so, I would suggest, that their political theory amounts to an argument for leaving alone the organic order of the Market by respecting people’s innate tendency to fulfill wants that they themselves don’t understand.
The commonplace story about the rational and transparent “neoliberal subject” is simply wrong, at least when it comes to the movement’s founders. Hayek believed that our conscious minds can know very little about the economy and the social world with which it is coeval, and not only because the myriad of interrelated factors that determine its functioning are too numerous and complex for any individual to comprehend, but also because our own minds are themselves impossible to grasp. His opposition to economic planning, and hence to redistribution, is not predicated on the assumption that individuals know best and that therefore society flourishes when they’re left to their own devices. Rather, Hayek’s anti-statism rests on the notion that reason, and consciousness more broadly, is just the most superficial layer of the mind’s infinite depth. The corollary of this psychic topography—so similar to Freud’s—is that reason is powerless before the mind of which it forms a part, and even more so before the vast network of exchange that arises when many such minds engage in commercial intercourse in hopes of satisfying one another’s desires. Hostile to the mathematical approach that many of his disciples would later embrace, Hayek subscribed to the radical epistemological modesty of that other ancestor of Freud, Friedrich Nietzsche: “We are unknown to ourselves, we men of knowledge . . . We are necessarily strangers to ourselves.”
“The commonplace story about the rational and transparent ‘neoliberal subject’ is simply wrong, at least when it comes to the movement’s founders.”
The claim that the most influential of the neoliberal thinkers had more in common with Nietzsche—and therefore with Freud—than with the quantitative social sciences may seem far-fetched, but only if we ignore Hayek’s context. The intellectual historian Quinn Slobodian points out that the fathers of neoliberalism were quite different in temperament from the provincial Chicago Boys who much later, around the time when Friedman delivered his lecture, adopted the theory of “rational expectations” that inspired many of the received ideas about neoliberalism that circulate in leftist circles. Hayek and company were not American technocrats or Randian libertarians, but Austro-Hungarian cosmopolite-modernists, closer in temperament to Stefan Zweig than to Ronald Reagan. It’s not insignificant that Hayek was fond of reminding people that he was a distant cousin of Ludwig Wittgenstein.
As Corey Robin put it in a recent essay in The New Yorker:
“‘Fin-de-siècle Vienna’ invokes a century-straddling city whose violent metamorphosis, from the crown jewel of the Austro-Hungarian Empire to the capital of the Austrian Republic, released into the world a distinctive swirl of psychoanalysis and logical positivism, fascism and atonal music. Though often omitted from the city’s syllabus, Hayek’s writings are among its lasting texts.”
If nothing else, the intellectual temperament of the late Austro-Hungarian Empire, where a cultured person was expected to take an interest in a wide range of subjects, helps explain the thematic diversity of Hayek’s writings. During his university days, the author of The Road to Serfdom read a great deal of psychology, not just economics. His interest in the former subject lasted throughout his life, to the point that, alongside his better-known works, he also produced a treatise on the philosophy of mind, The Sensory Order, as well as a number of essays on the nature of thinking and knowing that have drawn the attention of cognitive scientists and theorists of artificial intelligence who reject so-called functionalism—the notion that mental states are defined by what they do, rather than by their constitutive parts—and instead subscribe to a school of thought known as connectionism.
In his psychological writings, Hayek posits that we come to understand the world by forming “connections” between the disparate sensory perceptions that analytic philosophers call qualia. These connections do not reside in the things themselves but are instead imposed on them by the perceiving mind, which arranges them into a “sensory order” that transforms vast troves of undifferentiated sense-data into a coherent scheme that inevitably simplifies the world, but which in return makes it possible for us to tell a hawk from a handsaw.
This process of arranging, moreover, is cumulative, iterative, and most importantly historical. The mind forms connections between new data by comparing and contrasting them with previous perceptions and then placing them within the order that it constantly revises and expands. A consequence of this philosophical position, surprising to those of us who were under the impression that neoliberals believed in “objective facts” that are true regardless of who we are, is that Hayek maintains that we can only know the world through the lens of our subjective experiences. The sensory order of each person, their map of reality, is unique and irreproducible: you and I might be looking at the same video of Friedman giving a talk, but we will be seeing two very different Friedmans.
For Hayek, unlike for his friend Karl Popper, knowledge is not a matter of verification or falsifiability, but a question of memory—and hence of biography. It’s not hard to see how these ideas relate to his positions on economics and politics. In Hayek’s scheme, any attempt to alter the course of society through economic central planning is catastrophically arrogant: how could a committee of bureaucrats pretend that it knows how to best allocate a society’s resources, when its members can’t even know what their colleagues experience when they drink the same office coffee as they do?
The aspect of Hayek’s psychology that proves most important for the rest of his thought, however, is that in his scheme the vast majority of our thought-processes are unconscious. Gary Dempsey sums this up in a white paper for the Cato Institute—an institution that, for reasons unknown, prefers to be associated with don’t-tread-on-me orcs rather than with Austro-Hungarian elves, and insists on calling itself libertarian rather than neoliberal:
'“According to Hayek, the process that orders the contents of our consciousness is beyond our self-awareness. We are, he argues, subject to the workings of an evolving cognitive network that organizes our sensory experiences into our conscious mind and that is implicit in everything to which our mind refers, but that is nonetheless inexplicable to our conscious mind. It is important to recognize the precise sense in which Hayek maintains that a portion of the self is entirely withheld from us. A claim that we can know the cognitive processes that result in our conscious mind would mean that we could arrive at a substantive explanation of why we think as we do and how we know what we know.”
But if we can’t ever know the minds of others, and not even our own mind, how is any kind of social life possible—let alone one as complex and interdependent as we see in modern societies?
Consider a passage from “The Use of Knowledge in Society”:
“I am convinced that if [the price system of the free market] were the result of deliberate human design . . . this mechanism would have been acclaimed as one of the greatest triumphs of the human mind . . . the people guided by it usually do not know why they are made to do what they do. But those who clamor for ‘conscious direction’ . . . should remember this: The problem is precisely how to extend the span of our utilization of resources beyond the span of the control of any one mind; and, therefore, how to dispense with the need of conscious control . . . [This problem] is by no means peculiar to economics but . . . constitutes really the central theoretical problem of all social science. As Alfred Whitehead has said in another connection, ‘It is a profoundly erroneous truism, repeated by all copy-books and by eminent people when they are making speeches, that we should cultivate the habit of thinking what we are doing [sic]. The precise opposite is the case.’”
The “marvel” of the Market, Hayek writes, is that it constitutes the world’s greatest information-processing system. In the interplay between supply and demand, the partial, limited, subjective knowledge of millions of people—as well as the unconscious cognition that gives form to that knowledge—results in the emergence of the collective equivalent of the individual’s sensory order: an economic order that arranges the chaos of the social world in a coherent scheme that is most clearly expressed in the fluctuation of prices.
Here each person has a role to play: because of his unique experiences and memories, the manager of a shipping company knows more about supply chains than the manager of a car factory, but the latter knows more about which car parts are in short supply than the former. Even if the two never speak to one another, the Market allows them, and society as a whole, to integrate their very different bodies of knowledge. This spontaneous order arises without conscious direction: the Market mirrors, on a social scale, the way in which our individual minds come to know the world by (unconsciously) integrating new perceptions into a map of reality composed of (for the most part unconscious) memories.
It’s on this point that Hayek’s family resemblance with Freud, inherited from a distant common ancestor, comes into play. If the Market is a mechanism to reconcile people’s unconscious experiences and memories, it follows that it must also be a mechanism to adjudicate their desires. After all, the reason why the managers of the shipping company and the factory manager must find a way to integrate their bodies of knowledge is that people want cars. Why they want to buy them is unknown to both managers, and perhaps even to the carbuyers themselves. This ignorance, however, is irrelevant, for the simple reason that we could never hope to understand the causes that drive people to desire cars as opposed to, say, motorcycles. What matters is that the Market, by tracing connections between people who desire and people in a position to fulfill those desires, imposes a functional order on what would otherwise be chaos. One begins to suspect that, for Hayek, the Invisible Hand is a name for the collective unconscious.
*
These resonances between Hayek and Freud shouldn’t surprise us. Again, we should remember that Hayek was born in Vienna in 1899—the time and place in which the publishing house of Franz Deuticke released the first edition of The Interpretation of Dreams. And while it is true that Hayek’s views on psychology were informed by his critical engagement with the positivist circle that formed around Ernst Mach, rather than by Freud’s writings, it’s just as true that this positivism, like the one espoused and later abandoned by Hayek’s illustrious cousin, was an attempt to make sense of the same world-weary society that produced the talking cure. Consider a passing remark that Hayek made in a 1979 interview with the Colombian economist Diego Pizano:
“DP: After having done research in the area of psychology, what’s your opinion on the Freudian approach and its influence?
Professor Hayek: I consider that Freud is the greatest destroyer of civilization and culture, with his basic aim of replacing culturally acquired habits with innate drives.”
Such a vociferous rejection, of course, betrays that most embarrassing of all neuroses: the anxiety of influence. Hayek’s notion of the Market as a spontaneous order that arises from the unconscious interaction between human beings with different wants is remarkably similar to Freud’s concept of civilization, which is also an order without design that emerges organically, without the direction of a central planner, to mediate people’s often-violent desires.
Armchair diagnosis aside, the fact is that Hayek is letting himself get carried away by the commonplace understanding of psychoanalysis, which is just as impoverished as the commonplace story about neoliberalism. Freud’s thinking on the relationship between civilization and the social repression of innate drives is far more ambivalent than Hayek suggests. The founder of psychoanalysis certainly thought that repression was harmful, but he also understood that without repression human society as we know it would be impossible, that the paradox of civilization is that it is at once the cause of our ordinary unhappiness and the only thing standing between us and the nasty, brutish, and short life that would be our lot if all of us pursued our desires without restraint.
Against Hayek’s charge that Freud sought to destroy culture by ending the repression of the drives, I submit the closing passage of Civilization and its Discontents, which Freud appended to the original text in 1931, when fascism was already on the horizon:
“The fateful question for the human species seems to me to be whether and to what extent their cultural development will succeed in mastering the disturbance of their communal life by the human instinct of aggression and self-destruction. It may be that in this respect precisely the present time deserves a special interest. Men have gained control over the forces of nature to such an extent that with their help they would have no difficulty in exterminating one another to the last man. They know this, and hence comes a large part of their current unrest, their unhappiness and their mood of anxiety.”
Here we can see what is missing from the neoliberal conception of the unconscious: it makes no space for the death drive. Hayek and his acolytes understood that people don’t know what they want or why they want it, but they fail or refuse to acknowledge that people often want to destroy one another; that inflicting pain on others is often a source of greater pleasure than helping them escape misery; that the price system is not just an index that helps the collective supply individuals with the object of their demands, but also a record of people’s demand for power over others.
“Here we can see what is missing from the neoliberal conception of the unconscious: it makes no space for the death drive.”
The moment one understands that, if left to our own devices, many of us would become cruel, the need for a peculiar sort of “unconscious central planning” becomes clear: at worst, a truly free market would allow for the sale of human beings; at best, for their brutal exploitation. To put it another way: the enjoyment that capitalists derive from the accumulation of wealth, like the pleasure Friedman took from his work for Pinochet, exceeds the sphere of economics. It derives, as well, from sadism, from the desire to hurt and harm—the pulsion to dominate that drove Macbeth to murder the king of Scotland, his friend Banquo, and countless others.
But what are the political implications of this weakness in the conceptual apparatus of neoliberalism? To put it in practical terms: how might understanding that the Invisible Hand is a figuration of the death drive help critics, activists, and clinicians in their struggle against the insidious neoliberalism that haunts our collective and private lives? A passage from Hayek’s essay, which contains in miniature his teleological theory of history, offers some clues:
“The price system is just one of those formations which man has learned to use . . . after he had stumbled upon it without understanding it . . . The people who like to deride any suggestion that this may be so usually distort the argument by insinuating that [the proponent of the free market] asserts that by some miracle just that sort of system has spontaneously grown up which is best suited to modern civilization. It is the other way round: man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible.”
The notion that capitalism is not the product of a specific arrangement of historical forces (a remarkably conflictive stage in the course of the class struggle) but rather the natural culmination of the development of the human mind (a remarkably peaceful solution to the class struggle) rests on the premise that, while people don’t know what they do, or even why they want what they want, the sum of their individual actions organically results in a social order that, however imperfect, is preferable to all known alternatives: the kingdom of the Market, where the Invisible Hand reigns supreme.
In this line of thinking, socialist or communist thought can be dismissed precisely because it begins from a hubristic negation of the role of the unconscious as a fundamentally positive force. Any attempt to impose artificial limits on the designs of the Invisible Hand amounts to paving the road to serfdom. Capitalism, in short, is superior to socialism not because it’s less barbaric but because it is less civilized.
But as Freud, Nietzsche, and Shakespeare knew, and as Friedman and Hayek pretended not to know, the Invisible Hand is nocturnal and uncanny, irrational and sadistic. So much so, in fact, that civilization itself is the product of our discovery that the discontent of repressing the death drive is preferable to the psychotic cruelty of a society organized around the unbridled desires of the powerful. Those who wish to dismantle the ideological apparatus of contemporary capitalism, then, ought to remember that neoliberalism is not so much an argument against centralized economic planning as one against the social repression of the violent pulsions that lead Macbeth to commit unspeakable acts in hopes of usurping the place of the primal father. The key to defeating the neoliberal enemies of the people, in short, is to remember that every political economy is also a libidinal economy.