NEW POLITICAL SCIENCE https://doi.org/10.1080/07393148.2021.1960753 Neoliberalism’s Zeitgeist: The Untethered Disposition of Capitalism Robert Latham Department of Politics, York University, Toronto, Canada ABSTRACT Recent observers from the financial world have described the current status of the economy as “unhinged” and traversing “unchartered territory.” These expressions reflect the unprecedented freeing of capitalism from established conventions, norms, practices, and regulations underway since the 1970s and the ascendence of neoliberalism; a process that is not captured by the allied concepts “unfettered” and financialization. Capitalism has been untethering itself from not just the regulations that curtailed action (“fettered” it) across the twentieth century, but also the established conventions, customs, and practices initially described by Marx in Capital I that guided action into the mid-twentieth century, such as acceptable debt levels and forms of financial manipulation. This essay suggests that we have entered a new phase of capitalism with crucial implications for the status of the state and its intervention in the economy and likelihood or not that the current capitalist hegemonic order can be maintained far into the future. In volume two (The Wheels of Commerce) of his three-part study, Civilization & Capitalism, Braudel contrasts capitalists – adept at deploying, manipulating, accumulating capital, operating at the peak of economic life and impacting all geo-scales – with the lesser merchants and traders – limited to commerce and populating markets and trading networks.1 Along the way he specifies that emerging capitalist practices are marked by unique versatility, such that capitalism is “able to choose the sphere of its action.”2 Braudel goes on to point to “an essential feature of the general history of capitalism: its unlimited flexibility, its capacity for change and adaptation.”3 One cannot help but wonder how really free capitalists have been in different historical periods in the sense that Braudel implied with a phrase such as “unlimited flexibility.” Relative to commonplace merchants and traders certainly they had capacities that were unique. But Braudel throughout his work points to myriad limits emanating from powerful institutions, such as the princely states and the Church. He also discusses the emerging practices, customs, and conventions ranging from bills of exchange to double-entry CONTACT Robert Latham rlatham1@yorku.ca; https://profiles.laps.yorku.ca/profiles/rlatham1/ Department of Politics, York University, Toronto, Canada 1 Fernand Braudel, Civilization & Capitalism, 15th-18th Century, Vol. II: The Wheels of Commerce (Berkeley: University of California Press, 1992), 360–79. 2 Ibid., 400. 3 Ibid., 433. © 2021 Caucus for a New Political Science 2 R. LATHAM bookkeeping that made capitalism’s reproduction and expansion possible but which by institutionalizing action also constrained it. I believe Braudel, whatever his choice of words, did not mean to imply that such limits and constraints have been or can be disregarded; but rather that capitalists uniquely benefit from flexibility and, at a more fundamental level, freedom of action. This essay explores the connection between constraints and flexibilities in the context of contemporary capitalism. The focus here is on capitalists operating out of capitalism’s center (especially today the United States). I will argue the dynamic between constraints and flexibilities helps us gain further insight into the stakes of changes in capitalism since the 1970s, typically associated with the relevant processes of neoliberalization and financialization. This dynamic bears on a specific set of phenomena, processes, and tendencies that have shaped neoliberal capitalism. Attention to that set, I believe, reveals the possibility that capitalism has entered a specific phase, leaving behind its own anchors and constraints with potentially important implications for its future and therefore the planet. Rather than relying only on general categories, such as freedom of action and flexibility, I suggest a far more suitable label for the tendency in question here is the process of untethering. Tethers are the various conventions, regulations, and established practices – expressed often in agreements, laws, favored actions, and even the aims of capitalist organizations like the IMF – that in principle: a) limit ranges of action (understood in negative terms); and b) specify (in positive terms) what is considered appropriate within those ranges. To untether is to violate, ignore, or transcend these limiting forms. It refers to a broader range of processes and phenomena than what is meant by the well-known terms “unfettered” and its allied concept, liberalization. These refers typically to the deregulation process, which is only one of three dimensions of untethering. Of these three dimensions, the most straightforward but often overlooked is that of conventions, customs, and norms. These are what emerge in capitalist activity (say around measures of exchange value or accounting procedures). They may involve the state, as when a convention like the labor contract involves public law but they have a longer history (addressed below) as the general way “business is done.” These are not merely quaint practices but rather the codes, rules, and practices that help set the terms for daily economic action. A famous symbol of a release from such a code is the final casting aside in 1971 of gold (via dollar convertibility) as something money and circulation are linked to – the historic centrality of which Marx in Capital went to fairly great lengths to show4 – establishing a fiat currency regime on its own terms. Regulations are the second dimension. Unlike conventions and customs that emerge historically via practices, regulations are expressly political interventions to constrain and define what can be done in capitalism. It is likely that regulations (such as those that regulated interstate banking) are the first thing that might come to readers minds as to what constitute tethers (with deregulation as the most immediate sense of untethering). The third dimension is the fabrication of new financial forms, practices, and logics by capitalists and capitalist states. While financial innovations may be taken for granted as an 4 Karl Marx, Capital, Vol. I, trans. Ben Fowkes (London: Penguin Books, 1976). NEW POLITICAL SCIENCE 3 aspect of financialization, tethers intuitively relate to negative phenomena, such as regulatory constraints and their removal via deregulation. But I count fabrication – or really today, hyper-fabrication – as a dimension because it constitutes an especially powerful facet of untethering that is of concern in this article: the positive facilitation of capitalist agency. In the financial realm the incredible array of new financial forms created and engineered over the last decades has released capitalists from the relatively limited (and tethering) forms available previously.5 These dimensions are not separate but overlapping. A pointed example is the freeing up of fabrication in the financial sector once the regulatory tethers associated with the Glass–Steagall Act were removed in the 1990s. I situate the untethering process within capitalism through the concept of disposition. This refers to the way capitalism is actualized and reproduced, reflecting the inclinations of capitalists shaped not just by existing conditions but also by possibilities for creating new conditions. As a result of this agency capitalism is ordered and arranged in a certain way, disposed as such. This changing disposition, I argue, may well represent a fundamental change in the nature of capitalism that even may be tied to how we understand its current phase. I grapple below with the dynamics and implications of this development. Note that I use disposition to avoid alternatives such as governance, which typically are applied to the financial realm in concepts such as “international financial governance.”6 The term governance implies a managed steering of finance that does not apply overall to the disruptive modalities, unsettling activities of capitalism that can entail involvement in violent processes (such as imperialism or community destruction) not just the latest interest rate policy. These aspects are not captured by the recognition that governance may become crisis-ridden. Although capitalist institutions may be governed just as corporations are (think “corporate governance”) what could it possibly mean to say capitalism is governed – with governance being a concept, as argued elsewhere that is understood in apolitical ways7 and which is thereby antithetical to the way that power is realized and exercised in capitalism. The untethered disposition of capitalism speaks to phenomena such as the unprecedented recent credit expansion that I believe reflects a particular way to order and arrange not just the financial realm but patterns of accumulation and reproduction and corporate power. It even affects the logics of state and interstate intervention. In 2012 European central banker Mario Draghi famously stated that the ECB would do “whatever it takes” to maintain profits and stability in financial markets,8 while his American and Japanese counterparts made similar commitments. They henceforth went beyond Great Depression Era actions like quantitative easing by, for example, directly monetizing (that is, purchasing especially from financial institutions) non-governmental credit instruments like mortgage-backed-securities and even corporate debt. Such developments are just a piece of a new type of disposition that has come into being since the 1970s; which 5 The use of the label “fabrication” is explained in detail in Robert Latham, “Contemporary Capitalism, Uneven Development, and the Arc of Anti-Capitalism,” Global Discourse 8, no. 2 (2018): 169–86. 6 A recent example is Geoffrey Underhill, and Xiaoke Zhang, eds, International Financial Governance Under Stress (Cambridge: Cambridge University Press, 2003). 7 Robert Latham. “Politics in a Floating World: Toward a Critique of Global Governance,” in Approaches to Global Governance, Theory, eds. Martin Hewson and Timothy J. Sinclair (Albany: Suny Press, 1999). 8 Speech by Mario Draghi, July 26, 2012,” available online at https://www.ecb.europa.eu/press/key/date/2012/html/ sp120726.en.html. 4 R. LATHAM even some capitalists themselves reflexively view as an ascendant “unbridled” approach to capitalism. Untethering is not about reaching some end state, where one might say capitalism has become distinctly untethered. As just expressed, labeling capitalism as untethered is in the first instance about how capitalists perceive and pursue the organization of capitalism – where agency is central. It is a process the way globalization or neoliberalization are (we never ended up in some pure global or neoliberal condition) linking forms of agency and structure that are put in play. There are still limits and tensions which can be called tethers. There are always conditions and limits. Tethers can erode and then return. There are rules and institutions and ways of doing things even where algorithms are concerned. If anything, untethering requires institutions like the US Federal Reserve or the Bank of International Settlements (BIS) in that you need to create spaces and capacities to act in untethered ways (reflecting the enduring tension between constraint and freedom discussed below). An order marked by untethering is still a particular arrangement of rules and codes and not a chaos. Notwithstanding this caveat, I believe it is reasonable to suggest that we are after the crisis of 2008 facing a particularly intensified untethered disposition. The essay progresses by first considering freedom of action in (especially liberal) capitalism and the historical development of tethers, notably those observed by Marx. Special attention is given to the oldest form, customs, conventions, and norms since today they are typically overlooked or taken for granted. I subsequently try to show how far capitalism has come from a day when conventions constituted especially robust tethers, focusing on the other two dimensions, capitalist state (de)regulation and hyperfabrication of new financial practices. I draw connections between the rise of the interventionist Keynesian state and the development of economic (especially financial) hyperfabrication more generally. I argue that the inventive intervention of the former opened the way for the latter, with the appropriation by capitalism of a new form of social power associated with the unprecedented registers of inventive economic intervention. Regarding that appropriation, I consider how capitalists themselves reflexively understand untethering as unprecedented, as an opportunity, and a necessity. Finally, I conclude with a consideration of what the untethering process might mean for capitalist crises and the possibilities for an anti-capitalism that must develop within this context. Tethering in Historical Perspective The relationship between constraints or limits and freedom of action is applicable to any realm of human existence but has been a central theme, ideologically, of liberal capitalism across the centuries. Even so, for capitalists, operating at the peak of societal power, the relationship has a different import. Marx emphasized the revolutionary character of capitalism – and revolutionary action rests on freedom and flexibility that are consistent with Braudel’s assessment. But he was also always attentive to the play of human agency and its limits based on historical-material conditions famously expressed in The 18th Brumaire.9 It requires no sleight of hand to apply it to capitalists: they are free to make 9 Karl Marx, The 18th Brumaire of Louis Bonaparte, in Collected Works, Vol. 11, Karl Marx and Frederick Engels (London: Lawrence & Wishart, 1979), 99–197, 103.