CONCLUSION: THE NEOLIBERAL NEUROSIS

Since the catastrophic failure of shock therapy in Russia, Jefrey Sachs

has taken on an extraordinary number of projects, which have grown
exponentially in their scope and ambition. A profle of Sachs in Vanity
Fair describes how day afer day, without pausing for air, it seems, Sachs
makes one speech afer another meets heads of state, holds press
conferences, attends symposiums, lobbies government ofcials
participates in panel discussions, gives interviews, writes opinion
pieces
1
According to his wife, Sachs only sleeps for four hours a
night, and works 90 per cent of the time during his waking hours.
2

Even while on a family holiday, his wife recalls that Sachs
ofen gave two or three speeches a day in addition to meetings starting
anytime from 7 a.m. till late at night. He then spent most nights writing
technical papers, articles, memos and proposals, while keeping in daily
contact with his colleagues, working with them via phone, fax and
email. All this, while consuming about a book a day on topics ranging
from ecology through tropical diseases.
3
People who have worked or travelled with Sachs are taken aback by
this relentless work-rate. Te journalist who wrote the Vanity Fair
piece found herself wondering what kept him going at this frenzied
pace. Another journalist reported, I took it all in, and later found
myself wondering, Why does he do it?, describing Sachs as engaged
in a desperate Sisyphean efort.
4
A development expert who has col-
laborated with Sachs observed, Te amount of work he puts in is
absolutely mind-blowing. Its complete madness. He is fascinating.
140 JEFFREY SACHS
You try to understand what drives him why suddenly this com-
plete shif from [shock therapy] to poverty reduction? What triggered
that?
5
In an article about the Millennium Villages Project, published
in 2008, a journalist suggested, he almost seems to be on a quest for
some kind of redemption, afer his failure in Russia.
6
Sachs, of course,
rejected this suggestion, insisting that there was no substantive difer-
ence between his shock therapy programmes and his later projects:
For me, that part of my career and this one its all part of the same
person, the same ideas: to help people in need, to help them from the
outside I am the same person I always was.
7
In a sense, Sachs is right. Te same ideas have continued to under-
pin his career from shock therapy to the present. But this continuity
has been defned less by a desire to help people in need than by an
enduring faith in the neoliberal fantasy the profound conviction
that market society is not a utopia to be constructed, but a natural
order already present in the structures of the social world, which will
spontaneously fourish if the right conditions are in place. Tis faith
was evident in Sachss earliest shock therapy experiments, when he
argued that the creation of a market society was not about construct-
ing a world that had never existed, but was based on the more down
to earth strategy of cutting away all other social forms, in order to
reveal what was already there.
8
Te same faith has continued to infuse
his clinical economics, which is predicated not on creating a new
reality, but on removing all pathological elements from a diseased cap-
italism, in order to restore the natural health of the market. Tis faith
also underpins the Millennium Villages Project, which attempts to
raise the capital levels of African villagers to the point at which their
supposedly innate entrepreneurial zeal will spontaneously generate
a functional market system. And the neoliberal fantasy even informs
Sachss populist attack on greedy bankers in the ongoing global crisis,
who he accuses of corrupting the austere benevolence of the natural
capitalist order.
So Sachs is right to say its all part of the same ideas. But hes not
quite right to say its all part of the same person. Over the course of his
career, Jefrey Sachs has morphed from Dr Shock into Mr Aid, even as
the shadow of his past identity has continued to cloud his progressive
and ethical visage. A qualitative change has therefore taken place,
which Sachs himself refuses to acknowledge. Yet this change has not
been defned by the abandonment of neoliberalism, as both disciples
and critics have claimed. Sachs was a neoliberal in the past, and he
continues to be a neoliberal in the present. Te nature of his trans-
formation is therefore located within the parameters of neoliberalism
itself. Ever since the catastrophe of shock therapy in Russia, Sachs has
no longer been just a neoliberal. He has become a neurotic neoliberal.
According to psychoanalytic theory, the frenzied activity of the obses-
sional neurotic is unwittingly devoted to preventing the repetition of
a forgotten past event.
9
In a similar way, Sachss manic schedule, his
determined optimism, and his preposterously ambitious schemes all
serve to modify and reinforce his neoliberal fantasy against the seeth-
ing morass of uncontrollable devaluation, violent dispossession, and
brutal class relations that confronted him in Russia. In contrast to
the swaggering market Bolshevism of the shock therapy era, Sachss
subsequent career has amounted to what Lenin would describe
as the reactionary attempt of a frightened philistine to hide from
stern reality.
10
Tis unfortunate predicament tells us something important about
the nature of neoliberalism. If we consider the history of neoliberal
ideology, we can see that it has always been driven by an anxious desire
to hide the ugly realities of capitalism beneath a fantasy of harmonious
order. Adam Smiths original theory of the invisible hand of the market
was born in the midst of the violent establishment of capitalism in
eighteenth-century Great Britain, providing Smith with a reassuring
vision that concealed the harshness of the world around him.
11
Te
frst great experiment with economic liberalism in the nineteenth and
early twentieth centuries ended in the Great Depression, the Second
World War and the rise of communism.
12
Tese traumatic events drove
the formulation of the neoliberal project by Sachss intellectual godfa-
thers Friedman, Hayek, and Ropke.
13
Once neoliberalism had risen
to hegemonic status driven in part by Sachs himself it became
plagued by a return of the repressed, in the form of fnancial volatility,
spiralling inequalities, and innumerable social conficts. Rather than
revealing the harmony of a market society, neoliberalism had gener-
ated a series of crises that tore through the fabric of the neoliberal
fantasy itself.
In response, neoliberalism has evolved in tandem with Sachss own
trajectory, from the stripped-down fundamentalism of Reaganomics
and the Washington Consensus to the more complex intervention-
ist policies of the Post-Washington Consensus and Tird Way social
CONCLUSION: THE NEOLIBERAL NEUROSIS 141
142 JEFFREY SACHS
democracy. But, as we have seen in Sachss case, these interventions
are aimed not at challenging market society, but at making reality
conform to the neoliberal fantasy. Te principles of free trade and
fscal responsibility remain sacrosanct, and the invisible hand of the
market remains the guiding force of economic activity. Tere is a role
for the state, but only in providing the economic infrastructure and
human capital required for markets to operate efciently. Health and
education should be valued, but only to the extent that they improve
labour productivity. Poverty should be addressed, but this should be
through the voluntary actions of philanthropists and corporations
rather than the mandatory redistribution of wealth. And development
must be ecologically sustainable, but only as a means of ensuring the
sustainability of economic growth and capital accumulation. Te neo-
liberal project has therefore created an ever more elaborate system,
in order to cope with the proliferating contradictions of capitalism in
such a way that the fantasy of a harmonious market society is pre-
served. Tis behaviour resembles that of the the obsessional neurotic,
who builds up a whole system enabling him to postpone the encoun-
ter with the Real ad infnitum.
14
In other words, although Sachss neurosis is unique in its personal
details, it is also symptomatic of a more generalized condition. Tis
condition is shared by other seemingly reformed neoliberals, such
as Joseph Stiglitz. Like Sachs, Stiglitz has made a name for himself
as a critic of the neoliberal project, but has remained wedded to its
fundamentals, serving as Chief Economist of the World Bank from
1997 to 2000, and masterminding its transition from the Washington
Consensus to the Post-Washington Consensus.
15
Other neurotic neo-
liberals include infuential economists such as Dani Rodrik, Nicholas
Stern, and Paul Krugman. Despite his current incarnation as a reborn
Keynesian, Krugman served as an economic advisor in the Reagan
administration, and appeared alongside Sachs and Stiglitz in the
World Bank conference discussed in Chapter 3, which was so central
to the transformation and legitimation of the neoliberal project.
16

Indeed, both Stiglitz and Krugman followed Sachss lead in rushing
to Zuccotti Park during Occupy Wall Street to deliver pseudo-radical
speeches that criticized the free market system they had helped to
create, while anxiously insisting upon the sanctity of a good and pure
capitalism against the supposedly anomalous deviance of the contem-
porary order.
17
Not all neoliberals are neurotic. In fact, we could contrast Sachs
and others like him to unreconstructed market fundamentalists such
as Niall Ferguson and William Easterly, by drawing a distinction
between neurotic and psychotic neoliberals, to the extent that the latter
remain utterly unaware of any dissonance between their fantasy and
the Real.
18
But despite the attacks that Sachs endures from orthodox
neoliberals like Ferguson and Easterly, and despite his own attacks on
them as free market ideologues, it is Sachs and his fellow neurotic neo-
liberals who are the true guardians of the neoliberal project. In their
willingness to engage in ever more invasive forms of planning and
intervention to sustain the coordinates of their fantasy, the neurotic
neoliberals exhibit the peculiar combination of transformability and
resilience that has made the neoliberal project so irrationally persis-
tent in the face of its repeated failures. Te evolution of the neoliberal
project towards increasingly intensive forms of social engineering
should therefore be understood not as the meticulous manipulation of
social reality by a conspiratorial technocratic elite, nor as the rational
unfolding of a comprehensive master-plan, but rather as a series of
increasingly desperate attempts to hold reality itself together, against
the relentless pressure of the Real of Capital.
Paradoxically, however, the obsessive-compulsive rituals of Sachs
and his fellow neurotic neoliberals have only served to intensify the
very contradictions they are struggling to contain. Te neoliberal
project is defned by the drive to liberate capital accumulation from
all external constraints, either by removing all impediments to the
efcient functioning of the price mechanism (as in the case of shock
therapy), or by designing interventions to compensate for market
failure (as in the case of the Post-Washington Consensus). But the Real
of Capital does not correspond to the neoliberal fantasy of a naturally
harmonious market order. No matter what the neurotic neoliberals
do, their actions do not result in the smooth tranquility of general
equilibrium, but only serve to further empower capital itself as an
increasingly volatile and destructive force, which is spiralling beyond
the bounds of social control and driving inexorably towards economic
and ecological collapse. Te predicament of the neurotic neoliberal
thus recalls that of the sorcerers apprentice, who, having summoned
the forces of the underworld, fnds that he is unable to control them,
and that his every attempt to do so only serves to strengthen their
diabolical powers.
19
CONCLUSION: THE NEOLIBERAL NEUROSIS 143
144 JEFFREY SACHS
Poor Jefrey Yet before we start to feel too sorry for him, we
should remember what Sachs is responsible for, and whose side he
is on. Shock therapy caused immense human sufering in Bolivia,
Poland, Mongolia, and elsewhere. In Russia, shock therapy resulted
not only in the longest and deepest recession in modern history, but
also in an unprecedented increase in mortality rates. In other words,
lots of people died. Sachs was utterly unsympathetic at the time, and
scorned calls for allegedly more humane policies,
20
complacently
insisting, If youre going to chop of a cats tail, do it in one stroke.
21

He has never accepted any responsibility for the appalling social con-
sequences of shock therapy, let alone apologized for them. Indeed, the
New York Times recently reported that Sachs now blames the Russian
diet for the increase in mortality rates that followed shock therapy.
22

Te anger that people in the former Soviet Union still feel towards
Sachs was refected in a series of responses on the New York Times
website, including the following:
I grew up cold and hungry in the former Soviet Republic of Armenia
during the shock therapy years of the 90s. My grandfather was one of
the 3 million who died prematurely during those days (incorrect medi-
cation and power outages did him in). I would very much like to tie Mr
Jefrey Sachs to a chair and slowly force-feed him every worthless page
of every idiotic policy paper hes ever written.
23
Not content with washing his hands of the social consequences of
shock therapy, Sachs now lists his actions in Bolivia and Poland as
evidence that [his] own track record has been consistently on the
side of the poor, and claims that he has a record of standing for the
poorest of the poor for decades.
24
Anyone still inclined to sympathize
with Sachs in this regard should consider his response to events in
Bolivia in October 2003, when eighty-one members of the poor
were massacred in cold blood by the government of his shock therapy
sidekick, Gonzalo Goni Sanchez de Lozada, Bolivias president. Te
massacre took place at a demonstration against the governments neo-
liberal policies, and resulted in Goni being forced out of ofce, with
the socialist Evo Morales elected two years later.
25
As a man whose
own track record is consistently on the side of the poor, we would
expect Sachs to condemn his old ally in the strongest terms, and to pay
tribute to the courage of the working class in the face of the murderous
apparatus of the capitalist state. Instead, Sachs celebrated Goni as
one of Latin Americas true heroes

for his role in shock therapy, and

lamented his resignation as a tragic milestone whose meaning extends
far beyond his impoverished country.
26
Sachs criticized Moraless
role in the leadership of the insurrection,
27
complaining that US
interests in Bolivia lie in shambles,
28
and warning that Bolivia would
become a centre of anti-Americanism, violence, and instability.
29
Te
killing of unarmed demonstrators went unmentioned. Instead, Sachs
condemned the deadly rioting in Bolivia,
30
as if the protesters had
massacred themselves.
Looking back across Sachss career, it is no exaggeration to say
that his version of history is a complete inversion of reality, and that
his track record has been consistently on the side of the rich. Goni,
afer all, was not only president of Bolivia at this time, but also one
of the countrys wealthiest capitalists. Sachss earliest contributions to
economics were fxated on returning capital to proftability through
tax cuts, productivity increases, and the reduction of real wages. His
privatization programmes in Eastern Europe and the former Soviet
Union were relentlessly focused on establishing real owners who
cared about the bottom line.
31
Sachs has been a staunch defender of
private property rights against the interests of the poor, both during
his shock therapy era and in his subsequent defence of pharmaceu-
tical companies in his work on health. He maintains close working
relationships with billionaire fnanciers such as George Soros and Ray
Chambers, and has gone to great lengths to collaborate with multina-
tional corporations in the Millennium Villages Project and the Earth
Institute Corporate Circle. In his popular writings, Sachs has consist-
ently emphasized that inequality is not a problem, and even his recent
criticisms of Wall Street are qualifed by his eager insistence that he
is not in the slightest against the accumulation of wealth, even vast
wealth, and his frm assertion that he is not recommending a class
war. Tere is no case for equalizing incomes.
32
To the extent that Sachs is concerned for the poor, it is only a patron-
izing concern for the extremely poor, understood as passive bundles
of human capital to be subjected to his social experiments. In fact,
my experience of the Millennium Villages Project in Uganda suggests
that Sachs is not even concerned with the poor to this limited extent,
as long as his experiments provide him with a stage upon which to
perform his imagined identity as Mr Aid, lost in a messianic fantasy
CONCLUSION: THE NEOLIBERAL NEUROSIS 145
146 JEFFREY SACHS
of salvation. And Sachs is most certainly not on the side of the poor
as the collectively organized and potentially revolutionary subjects of
the working class. Sachss early work is marked by a virulent hatred
of organized labour, and unions and workers are never mentioned as
potential political subjects in his later, more progressive works. In Te
End of Poverty, for example, Sachs provides an extensive list of the
great emancipatory struggles of the modern era, including anti-slav-
ery, anti-colonialism, and the civil rights movement, but excluding the
entire history of working-class struggle, which he replaces with his own
philanthro-capitalist agenda for ending extreme poverty.
33
Indeed, it
could be argued that Sachss concern for the poor is primarily motivated
by a fear of their revolutionary potential. Recall his promotion of his
development model (discussed in Chapter 3) in which he emphasized
what a deal the poor world is ofering the rich world, exclaiming: Te
poorest of the poor are saying We buy into your system. You can keep
your wealth. We dont call for revolution. We just want a little help
to stay alive.
34
Given his consistent defence of economic inequality and the power
of capital, we need to ask why Sachs has been so successful in trans-
forming his public persona from shock doctor to social democrat.
Sachs is now perceived by many on the lef as a champion of their
cause be it poverty alleviation, environmental sustainability, or cor-
porate governance despite the fact that he has continued to espouse
principles that would once have placed him frmly on the right. He
was allowed to pose as the voice of Occupy Wall Street even as he
continued to praise Friedman and Hayek, while endorsing the sanctity
of market mechanisms and the progressive credentials of corporate
philanthropy. Te attitude of many lefists towards Sachs is typifed by
the following extract from a 2011 blog-post by Doug Henwood, who
was once among Sachss most vocal lef-wing critics:
Over the last 10 years, Sachs has changed He has become more and
more critical of economic orthodoxy, both in the poorer parts of the
world and now increasingly in the US So what are we to make of
this? Some of my friends and colleagues think that Sachs should do
penance for his past before we applaud his current work; others think
that acting as a high-profle critic of orthodoxy is penance in itself.
35
Te parameters of this little debate exclude the fact that Sachs is not
really a critic of economic orthodoxy at all, but a committed member
of the economic and political elite, who has consistently defended
its interests against threats from the lef by adopting pseudo-radical
political discourses and advocating limited social programmes in
order to legitimize market economics and capitalist class relations.
Te ease with which this fact is overlooked suggests a wilful blindness.
Indeed, it could be argued that the neoliberal neurosis is a condition
not only of mainstream economists like Sachs, but also of much of
what used to be the radical lef. Te defeats inficted by Tatcherism
and Reaganomics have been far-reaching and profound, extending
to the loss of faith in an alternative future beyond the parameters of
global capitalism. Much of the lef is now trapped within the neolib-
eral fantasy, to the extent that it cannot imagine what social life would
be like if capital accumulation were no longer the dominant impera-
tive. From such a narrow perspective, Sachss messianic promises to
save Africa, and his populist attacks on greedy bankers, might start
to appear progressive. But the alternative they ofer is just another
version of the same fantasy, in which the capitalist system is fair and
inclusive, and everyone participates equally in a harmonious market
society. Ignoring Sachss shock therapy past, denying the continui-
ties between it and his current agenda, and celebrating this agenda
as radical and progressive must be comforting for those who would
like to forget the right-wing foundations of a system they feel unable
to change, and whose contours now appear to structure their reality.
In other words, the crisis of the lef can be measured by the extent to
which Sachs is allowed to pose as its legitimate representative.
A SPECTRE IS HAUNTING JEFFREY SACHS
Te defeat of communism was central to this closure of politi-
cal horizons. Sachs played a key role in this historic process, yet
he remains gripped by a seemingly irrational fear of a communist
resurgence. He reacted to the anti-globalization movement and
Occupy Wall Street by seeking to shif them away from anti-capital-
ism and towards more reformist agendas, and he justifes his recent
endorsement of social democracy in terms of its proven capacity
to defect the growing mass support for socialism.
36
Furthermore,
Sachss own policy proposals repeatedly take inspiration from anti-
communist strategies in the past, without acknowledging their
CONCLUSION: THE NEOLIBERAL NEUROSIS 147