From the mid-1980s, many observers sensed that capitalism in the Global North had undergone a profound transformation. The Fordist industrial regime of the postwar era had been replaced by a new economic order, one characterised by flexibility, mobility and greater “freedom” both for capital and, so the theory held, consumers and workers.
There have been several moments when this “neoliberal” form of capitalism seemed imperilled, most notably during the 2008 financial crisis. Those who wrote about its demise at that time did so hesitantly, asking “is this the end of neoliberalism?” rather than asserting it as historical fact. Such caution was vindicated – far from ending, post-crash neoliberalism endured in a state the scholar Colin Crouch called “non-death”. For Wolfgang Streeck, we entered a lasting interregnum in which neoliberal capitalism will neither die nor provide for a good life outside “the shadow of uncertainty”.
Today, declarations about the end of neoliberalism are pitched in more strident registers. “Neoliberalism is dead,” the financial journalist Felix Salmon wrote in April. In similar no-nonsense fashion, the economic historian Adam Tooze declared that neoliberalism had been “buried”. Similar verdicts have come from scholarly luminaries of neoliberalism and other leading commentators.
Are they right?
The main reason the death of neoliberalism is routinely invoked is the increased role of the state in the economic life of nations. Across the world, state interventions were prominent during the coronavirus pandemic. In the neoliberal heartlands of the West, governments used the state to protect jobs, backstop businesses and prevent economic collapse. In the aftermath of the pandemic, the vogue for more active states was intensified following Russia’s invasion of Ukraine and the concerns over energy and food security. Zygmunt Bauman’s post-Cold War age of “liquid modernity” – of free-flowing capital, conditions of weightlessness and mobility, when “change is the only permanence and uncertainty the only certainty” – has been replaced by calls for “securonomics” in which notions of national strength and state resilience are summoned in response to a crisis-ridden world.
The principal manifestation of such dirigisme today is the “new industrial policy” led by Joe Biden’s administration in the US and increasingly pursued by its Western peers. Industrial policy is no longer denounced, as it was throughout the 1980s and 1990s. Encouraging the development of particular industry sectors and the competitiveness of particular types of firm – “picking winners”, no less! – is the method du jour.
Above all, it is this new economic consensus, and the proliferating denunciations of market fundamentalism accompanying it, that has inspired today’s commentators to call time on neoliberalism. The US national security adviser Jake Sullivan’s Brookings Institution speech in April – in which he rebuked the dogma “that markets always allocate capital productively and efficiently” and conceded there are economic challenges that “private markets are ill-suited to address on their own” – is a recent cause célèbre. “National industrial policy,” Tooze, emblematically, commented, “is all the rage.”
[See also: Out with the old: is neoliberalism really dying?]
These proclamations of a meaningful political-economic shift are baffling.
The privileging of markets over centralised decision-makers in the determination of economic outcomes – investment, trade, price and so forth – was only ever one part of neoliberalism. If the new industrial policy signals a shift from the economic reliance upon markets, it does not entail the end of neoliberalism’s other signature elements – welfare-state retrenchment, the dismantling of organised labour, deregulation and privatisation.
Biden’s industrial policy certainly involves the mobilisation of significant public funding for the construction and renewal of national infrastructure such as transportation, water and energy. But the public funding is intended principally to catalyse and subsidise private funding, while the infrastructure will predominantly be privately owned. So too, of course, will be the firms at the cutting edge of production in favoured industrial sectors such as clean-energy technology.
Striking at the heart of capitalism, questions of ownership are arguably more important than questions of allocation – the preserve of markets – to the economic and social lives of nations. Questions of allocation bear on where investment occurs; those of ownership bear on who principally benefits from it.
As Western governments are attempting to redirect corporate investment through industrial incentives, corporations are using inflation as an excuse to fatten profit margins through excessive price increases on goods and services – a trend known as “greedflation”. This is enabling capital to capture income share from workers.
[See also: The age of greedflation]
The nub? Try telling the households to whom corporations are shifting the burden of ongoing inflation that neoliberalism is dead and buried.
Pronouncements of the end of neoliberalism thus rest on a narrow conception of what neoliberalism is – a privileging of markets. That is reason enough to query them. But there is more.
Not only has the spread and implementation of markets been only one among several vectors of “neoliberalisation”, it has often been the most limited. This makes singling it out as a measure of neoliberalism’s life or death all the more flawed.
For one thing, governments across the neoliberal world have remained much more active and interventionist in matters such as price-setting and the channelling of investment than is commonly supposed.
Moreover, the neoliberal era has coincided with a dramatic rise in monopoly power that constrains the operation of “free” markets. Oligopolistic or monopolistic markets are still markets; strictly speaking, marketisation does not require competition. Yet those who argue that markets generate efficient and productive outcomes generally hold that markets without competition are fundamentally impoverished. If they are to “work”, markets require the existence of competition; it is the most powerful ingredient for producing innovation and consumer welfare.
Consider the electricity sector, for example. It is widely considered to have been restructured along quintessentially neoliberal lines, both in the Global North and – under the auspices of the Washington consensus – also across large parts of the Global South.
In its influential 1993 guide to power-sector reform in “developing” countries, the World Bank emphasised the need for fully-fledged markets. By the mid-2000s, however, market forces remained marginal to the electricity sectors of such countries. A decade on, still only around a fifth had any kind of power market. A far higher share had privatised some or even all of the industry – another of the World Bank’s original demands.
Even in the Global North, marketisation of the electricity sector has been limited, especially in retail. An initial burst of competition in the 1990s, when most liberalisation occurred, was typically succeeded by consolidation into oligopolistic (and highly profitable) supply structures, which remain the norm today. Nor has the state given markets free rein. Regarding the state interventions in energy markets that occurred in 2022, commentators gave the impression that, prior to such actions, electricity markets were a wild west. They weren’t – as of 2020, more than half of EU member states had some form of state control of retail prices.
A curious feature of the neoliberal debate is how actually-existing neoliberalism ever came to be understood as being principally about markets. The first major book-length treatment of neoliberalism explicitly did not describe it as such. David Harvey’s Brief History of Neoliberalism (2005) located its distinguishing feature in another register altogether. In the wake of postwar Fordism, and the awkward class compromise it entailed to maintain both social stability and effective demand, for Harvey neoliberalism was about the restoration of the power of the capitalist class. His was a deeply materialist reading of neoliberalism.
But scholarship increasingly treated it not as a set of political-economic policies, practices, relations and outcomes, but as a set of ideas as elaborated by its intellectual architects – Friedman, Hayek, et al – who did believe that neoliberalism was about markets. They professed the market’s superiority over centralised agents (such as government planners) in aggregating and processing dispersed information.
While scholars of neoliberalism focused on the ideas animating post-Fordist economies, as opposed to how those economies actually functioned, the interest in markets overshadowed everything else. The theory of neoliberalism became confused for its practical reality.
The resurgence of national industrial policy may presage a radical transformation in the political economies of the neoliberal core. But there is little sign of that happening.
The sociologist Vivek Chibber has pointed out that while corporations happily acquiesce to industrial policy if, as now, it leaves intact the “the private appropriation of profit”, they would forcefully resist any moves “which would give planners any real power over their investment decisions”. As the French economic theorist Cédric Durand has recently asked, will we see governments making such moves? Or substantially “increasing taxes on corporations and capital income, or taking industries into direct public ownership”? Durand’s scepticism is well-founded.
Short of such ambition, today’s industrial policy is liable, as Durand says, simply to maintain the flow of resources “from labour and the public sector to capital, exacerbating inequalities and resentments”. If this is not neoliberalism quite as we know it, then it is, pace David Wallace-Wells, “zombie neoliberalism” – namely the dispensation familiar from recent decades “only modified and recalibrated in certain ways”.
For as long as CEOs continue to earn up to 1,000 times as much as the average worker, talk of the death of neoliberalism is premature. Only when such ratios return to more seemly territory, and households have been able substantively to recapture income share from capital can this benighted n-word perhaps finally be consigned to the history books.
[See also: Friedrich Hayek: super-spreader]