Neoliberalism: Not Dead Yet

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 The Fordist industrial regime of the postwar era had been replaced by a new economic order, one characterised by flexibility, mobility and greater “freedom” both for capital and, so the theory held, consumers and workers.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of weightlessness and mobility, when “change is the only permanence and uncertainty the only certainty” – has been replaced by calls for “securonomics” in which notions of national strength and state resilience are summoned in response to a crisis-ridden world.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.”

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.

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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.