TheSyllabus

That was almost two years ago, and the discussion around post-neoliberalism was already in the air. The question has popped up each time there has been a crisis, ever since there's been a thing you could call neoliberalism: is this finally the end? You heard it in 2008, and you heard it again with Covid, with all the excitement around large-scale state intervention. The essay was partly an attempt to get out of that cycle, which misinterpreted what was happening in the world and what might actually constitute the end of neoliberalism at this point in time.

The 2008 crisis, in fact, as many people pointed out, gave neoliberalism this extended lease of life under very peculiar circumstances. This is what my colleague Colin Crouch called the “strange non-death of neoliberalism.” My own view was that Covid would be a more dramatic and longer-term crisis – and would be far more likely to mark a turning point in how capitalism operates, and in producing the end of neoliberalism. But, in practice, it was an acceleration of a number of trends that were already present.

That first trend was geopolitical. China, the world's second largest economy, has – at least domestically – never entirely bought into the full-throttle neoliberal setting which is obvious in Britain and North America, but also present in various guises across the world. Although China had been fairly interventionist, and had integrated into the neoliberal world order through its external economic relations, the Chinese state has operated differently at home. It retains a large state-owned sector; it retains substantial power, particularly through the central bank, to intervene in parts of its economy. Now, China's economic power – which was partly a result of its unique continued growth after the 2008 crisis – had made it a “peer competitor,” to use State Department language. China was seen as exerting direct competitive pressure on other countries to respond – and to respond in a similar fashion.

The second trend had to do with the environmental and ecological crisis. The need to decarbonize was also leading to a set of state-centric responses. In place of saying that markets, or market-led action, could alone determine investments, you have governments deciding to actively pursue certain courses of action. Governments were running hard against the rhetoric of the EU, for example, which had insisted on a "level playing field" for its member states. But now governments were far more inclined to explicitly intervene in specific sectors.

The third trend was the distinctive part of the argument. The major institutions that had developed since the crash were not obviously neoliberal. They were not making use of a neoliberal global order, as the major financial institutions before them had. In fact, you now had extremely large corporations – Alphabet, Microsoft, Apple, Facebook; the Chinese companies of a comparable size – whose behavior did not easily slot into a neoliberal lawmaking perspective. A large bank would acknowledge that there are sets of rules, and would make their money by corresponding to those rules. With some of the tech companies, there were very deliberate attempts to break rules – to step outside of the bounds of the law, and what passes for international legal regulation – and instead create their own, new spaces. That has anti-neoliberal implications. 

There are many different definitions of the neoliberal project, but the minimum is that it is about markets, and about the laws that apply to markets. Now, you had institutions that were seeking to not have markets, to not sell their products to consumers; and, at the same time, to not just bend regulations, but to create entirely new forms of regulation for themselves.

These changes seemed like something of a stretch before Covid, but Covid dramatically accelerates the movement out of neoliberalism along all three dimensions. What's happened in the two years since is that the change is becoming self-evident. The Conservative government in Britain has just had to nationalize another railway company. It's now five that have been brought under public ownership, because trying to run an essential service in a privatized fashion just isn't working anymore. I think we'll see more and more of these overt movements against an obviously neoliberal setting, even by governments that themselves remain rhetorically committed to neoliberal claims: privatization is always good, the free market is always good, that kind of thing.

That’s not to say privatization doesn’t remain a danger for the left, broadly defined. It does. Look at the National Health Service in Britain, for example. The threat is still there; it's not like neoliberalism has just gone and something else has emerged. But there is now a different, and increasingly dominant, strategic question: what do you do now that capitalism is both very oppressive and in alliance with the state, in a way it was not under a classic form of neoliberalism? Now, the state overtly appears alongside major firms, and not only to enforce neoliberal norms. The fusion of the state and capital is there all the time.

Rather than the problem of privatization, which is that things are outside the state, the problem you start to face is that things sit inside and much closer to the state than has been the case in Western capitalism for a long period of time. It was challenging to think of the world as having changed, especially for those who put themselves on the left, broadly defined, and had come to just focus on privatization, expecting governments to always look to markets.

That's what I was worried about.

Neoliberalism is a governing logic of the system. If you arrive from the left – and this is how the thought collective view tends to think of it – there’s this story about neoliberalism: we used to have Keynesianism and social democracy until it went into crisis in the 1970s; then, the neoliberals turned up and told everyone what to do instead. That is a slight parody of the thought collective argument, but it is strongly rooted in the questions posed by neoliberals themselves: What is the crisis? And, what is the response to the crisis?

I instead put the stress on how you develop new forms of rule out of the crisis. This approach gets us away from thinking about neoliberalism as a sort of heroic struggle. The formation of the world you can now call neoliberal comes out of that heroic moment at the end of the ’70s into the ’80s. There is a lot of drama. It’s a class project in various ways, with people like Thatcher and Reagan at the forefront. But it also has to do with what happens in Eastern Europe. It's a clash, a conflict; enemies are defeated and something new is built.

The more useful part of thinking about neoliberalism comes in once you've done all of this – once you've built a world that starts to have stable institutions with stable rules, which are enforceable and everybody can then just correspond to. So, it's not the heroism of Thatcher, but the bureaucracy of Blair. It's the managerial view of neoliberalism that I think is more useful. It's about what happens in practice, rather than what people say about what they would like to do.

We've all been slightly led astray by this idea from Thomas Kuhn, that there is one set of ways of running the world, and things tick along until there is a crisis, and then we get a new set of ways. This might work in the natural sciences, but it underplays how society changes and how neoliberalism develops. There were many different routes to get there.

Each national history had to contend with its own setbacks and steps forward, so that a neoliberal international order could emerge at the other end of it. Many of those histories are quite distinctive. Some are quite dramatic – Thatcher defeats the miners in 1985 – and others are more a steady process of erosion, like it was under Blair. Neoliberalism is not just a prescriptive list of new things to use in thinking about the world, but something that emerges out of that process, out of that cluster of events coming out of the '70s.

Periodization is a useful way to summarize what has happened in history, to put everything in a box and use it to tell a certain kind of story. The classic one – especially if you are in Britain – says neoliberalism arrives in 1979. Bang, Margaret Thatcher is elected. That might work, but just as a story for Britain. Even the immediate transformation under Thatcher is not apparent. In 1979, she presented herself as something of a continuity. There was an accelerating process of radicalization in Britain connected to the fall of the Berlin Wall.

But again, even what happens in Eastern Europe is not a settled process. The end of the former state-capitalist regimes began a process of struggle; there were a number of options not taken. You can see this most clearly in somewhere like Poland, where a range of different voices are articulated in that process of change. It's only somewhere down the line you get to neoliberalism.

If you want a real periodization, the high point of neoliberalism is when China joined the World Trade Organization in 2001. This is the furthest point neoliberalism gets to before the entire process of trade integration starts to fall apart. It was already looking shaky coming out of the Seattle convention and the protests, and by the time you get to Doha that year it has really ground to a halt.

The underlying logic remains fairly similar throughout. Have we broken with the fundamentals of how capitalism operates? The logic of accumulation is still there, and that can take very different forms. Typically, in Western capitalism, it's in the form of profit – that remains continuous. Where you start to see a shift is in the logic of how you would govern that process of accumulation.

One part of it is the turn away from saying that a market will exist and define a price, and that this price will determine how everybody acts around that market. Not only are states more obviously intervening in markets and changing how prices operate – which we have seen in a wide scale just over the last couple of years – but institutions themselves are starting to approach market creation and market pricing, in a way that also breaches those fairly standardized rules: if there is a price, that is what is going to communicate information and define how everybody acts.   

The international regulations and laws constructed under this neoliberal period are now subject to challenge. This was not the case in the early 2000s. Back then, there was clearly an overwhelming power that could structure how the world looked. It was to the point where you can dig out Hardt and Negri and say, okay, this is Empire, a single global authority. It was always somewhat overstated, but there was clearly a dominant power, in a way there isn't any more. 

This leaves an open space for forms of activity that, again, are still in the service of the deep, underlying logic of capitalism that is the logic of accumulation, but that are not so tied to those earlier forms of governance, which said, "Here is the market price, and here are the laws that will enforce it."

I don't think it's particularly Hayekian to have algorithms internalize a market process. In a pure, Hayekian market, you have to declare your price and compete. Once you've internalized your price-producing mechanism in the form of an algorithm, you're doing something different. A market is, you declare, you compete; the information is out there, not internal to the firm.

But that's the almost ideological component to both neoliberalism and neoclassical economics. They're two separate things, but they agree that a price is the ultimate form of information that can exist in a capitalist society. Ideally, it will communicate something in a stable and guaranteed fashion, particularly to the people who don't write the price themselves. You get something different in terms of pricing with Big Tech firms.

The other part there is the process by which the money is being made. Zuboff somewhat overstates the case, but there's something about this extraction of value from users that is translated into those profits. Without that mobilization of value from users, it is not possible for Facebook and the rest of them to set up these flows of revenue from their real customers. 

That relationship tends to get forgotten, particularly by Marxists, for whom value comes from labor and from nature. But no part of this process of extraction and value conversion fits into the standard neoliberal model of how a consumer-facing firm will operate, either. In that model, you can advertize and do lots of things, but you have to declare a price. You need the price declaration function of a market.

That's my point. In this case, why would we even talk about neoliberalism? This is precisely the boundary between what neoliberalism helps to describe and what it doesn’t. When you have these people who identify as neoliberals, but their theories don't really fit, well, then perhaps you're not really talking about neoliberalism anymore. Their ideology is lagging behind capitalist practice.

Of course not! People became filthy rich. But just because somebody's going to sit there and say, well, "I believe in these things, and the world is moving on, so I'm going to just adapt what I think to it," doesn't mean we have to spend our time thinking, "Well, that must mean it's still neoliberal."

This is the problem with the neoliberal thought collective approach, and with identifying neoliberalism as what the people who call themselves neoliberal are doing. Instead, we should be asking how thinking about neoliberalism can help us understand how the form of capitalism that we live under has changed. This is what gets you to the politics of it.

The process of accumulation always takes place under the rubric of law. The law is what established the fundamental unit needed for capitalism to exist, which is the labor contract between a capitalist and a worker. This came to be regulated against the more lawless versions of that contract that existed before. In Europe, capitalism has been a process of modernizing legal forms of employment from the late 1500s onwards. So, there’s always been that element of the law being used in brutal and horrible ways. Most of the really awful bits of exploitation and expropriation that have taken place over the last 200 years have typically arrived with a kind of law attached to them.

What's distinctive about this movement out of neoliberalism – and I am a bit wary of saying it's post-neoliberal, which I’ll come back to – is that it gets beyond a form of law that defines what a company can do, and which that company, one way or the other, has to correspond to. If you're Bear Stearns or Lehman Brothers creating a collateralized debt obligation in 2007, you're very, very concerned with the legal status and legal standing of that thing that you're creating. Although you will try to push around what you can do with that legal status and legal standing – and you'll employ lobbyists whose job it is to do that – you do want that status and standing to exist. This is what allows your financialized product to actually achieve a value that everybody else will accept.

But what you find with the Big Tech companies, in particular, is that this relationship doesn't exist in the same way. You create the thing that you go and sell, and then you try to find a law to justify the sale. And then – perhaps somewhere down the line, when you're big enough – you get the regulation in place. Again, this is not an uncommon process in capitalism. You often find a really big capitalist saying, "Actually, at this point I want some regulation, please" – because you keep out all your competition. But that's a different thing than saying, "Here is the law, the law functions and we accept you as functioning" – because it provides a mechanism for exploitation and for the generation of profits.

Potentially, you could say that neoliberalism is better than what we're going to end up with as a result of these changes. I don't have a problem with saying that, once upon a time, capitalism could have been better than it is now. It's very plausible. This is why I think there's a problem with some discussions around post-neoliberalism, especially in how it gets framed in less academic settings or more activist settings. If neoliberalism is coming to an end, people think that the next version of the world is going to be automatically better. Why? You could easily get something far worse. It's not too hard to imagine versions of capitalism that are even worse than neoliberalism.

I don't think the techno-feudalism argument is helpful, either as a framing or – if you take it more seriously – as an attempt to understand what the processes of value creation or value extraction might be. There's a bracketing of history where, if you sit in the West, capitalism's moment of triumph was between the 1950s and 1970s, when it grew faster than ever before. And then if you go and stand in the East, the triumph doesn't look like this at all. The greatest triumph is actually just in the last 30 to 40 years or so. The periodization appears differently depending where you choose to look and what you choose to think about.

You put all that together, and what you've got is a very long process of growth, which continues all the way up through 2008 – maybe some time beyond that, but it now appears very, very shaky. If there's anything to the techno-feudalist position, it's not because this is a return to feudalism, but because this is a movement into a form of capitalism where the grounds for growth look rather shaky. Growth in the future may well be much harder to obtain than growth has been for most of the past 200 years.

Now, that starts to suggest that Keynesianism and neoliberalism as a globalized system are actually much closer to each other than we in the West had thought. Especially compared to what we've all entered into in the last ten years or so, with Covid as a major marker along the way. Before it was the period where capitalism was clearly at its best. The expansion of productive potential was clearly there, all while it made profits for the capitalists and brought real living standard improvements for everyone else.

What you move into now is something that is much closer to a zero-sum game. It doesn't mean it's feudalism. It means it's something closer to capitalism in, let's say, the 1810s or the 1820s. Before it established itself as a stable system that could produce expansive growth, there was a much more brutal, exploitative form of capitalism in which I-as-a-capitalist made profits by making you-as-a-worker poorer. That's the kind of logic I think we get to now. It's a capitalism that David Ricardo would recognize. But it's not the capitalism of John Maynard Keynes.

The peak of neoliberalism was the early 2000s because of this effective integration of the world economy, which is what produces quite incredible growth in various parts of the world for a long period of time. There is a flood of cheap consumer goods into the West, and a massive expansion of a traditional industrial working class across much of the rest of the world.

This all happens under the rubric of world trade. This was a form of governance that had a formal legalistic side – the World Trade Organization, in particular – but there was also a more informal integration through the monetary system and the financial system, which centered on the dollar. This is what the whole neoliberal construction hinges on. For neoliberalism to promote this kind of governance, it has to rely on something like the dollar for it to work at all, for local capitalist classes to feel it is worthwhile to integrate into world trade.

If that falls apart, the neoliberal forms of governance don't make so much sense. You would start to feel pressure from three different directions I discuss in the openDemocracy essay: competition from countries not acting in the neoliberal fashion; the chaos of environmental breakdown; and the underlying change in the way value extraction takes place. If you put all three together, you will be more prepared to break with the old neoliberal norms. And at that point, de-dollarization does run alongside the idea that we're moving out of the neoliberal world.

A few people have gotten very carried away with de-dollarization. The dollar still represents more than 80 percent of the currency that's used in world trade. But it is significant that you have what was, until quite recently, a major US ally in the Middle East saying it can start trading in renminbi when they sell oil. That's a change from ten years ago, or even five years ago.

BRICs was a convenient placeholder for a number of large middle-income or upper-middle-income countries back when it was coined, in a 2001 Goldman Sachs report. But it's actually quite a disparate group of countries, with different current account positions, different input–output setups, and different internal structures. So, I'm not sure I see a new monetary system emerging, although you can expect closer integration and more cooperation between those countries.

What this says more about is the potential for the renminbi. In South America, you can already see moves to create common currencies for trade. The most recent version of this is between Brazil and Argentina. The integration of South American trade through monetary areas has been proposed at many points in the past, but what makes it more reasonable now is that the region has a major trading partner that sits not in North America but in East Asia. They now have more space to relate to that trading partner, and to develop relationships with the people who work with that trading partner, rather than immediately thinking that everything in South America has to run through Washington.

You have to assemble all parts of the picture in order to explain the breakup of the existing form of hegemony in the world economy. We're in what feels like a transitional period. It isn't just that one minute it's the US, and the next it's China. There has been a reasonably steady but nonetheless real erosion of American power around the world, including here in Europe. There is a role for a somewhat independent Europe. But we'll have to see where these shifts and movements end up.

I thought it would take a while to comprehensively exit a dollar-denominated financial system. But with the Biden administration’s recent attempts to aggressively use that system against Russia and other countries it deems its enemies, the move out of that system is being accelerated. Countries now have an even greater desire to escape it, because they realize it's no longer the neutral space of neoliberalism, where you could just play by the rules that Washington gives you. Political power and sovereignty might now be enforced against you, in ways they didn't used to be.

Adam Tooze has written insightfully about this, picking up on the development of swap lines. Swap lines could potentially make it a smaller dollar system, but it would also be one that’s more tightly integrated. There's good research on how dollar swap lines have been used to politically discipline different central banks around the world. But of course, the effectiveness is limited when there are other currency and trading options available to major economies.

It’s both. This is the ideology and the rhetoric of capitalism is catching up with its reality. It was very striking to have Biden's national security adviser talking about a new Washington Consensus, going through the list of interventionist things they now expected to see and do. But a lot of that was already happening under Trump, who had started to change a large part of how the world trade system operates in response to China.

Biden has continued and deepened that part, and then worked backwards to the domestic economy. If you’re going to aggressively target semiconductor production in China, you’re going to have to build semiconductors in America, so you put more money into doing that. A similar thing is happening with green investment. They are trying to wrap this up not only as a way to secure or even expand US capitalist power in the rest of the world – which has clearly been threatened in the last 20 years or so – but also as a way to build up political consensus around this project at home. And to do so in a more systematic and thoroughgoing way than the Trump administration ever managed to achieve. This is why a large part of the Biden administration’s rhetoric is about creating good American jobs. Trump touched on this, but didn't actually deliver on them. I think Biden is reasonably serious about it.

The big driver for an exit from neoliberalism is the mechanism of capitalist competition and how it is enforced, which reflects how the underlying mechanism of accumulation appears and operates across the world. That's the really decisive bit for thinking about what's going to happen in individual countries. It depends not only on what capitalist firms do in their countries, but also on what the capitalist states do, and how they relate to their local capitalist firms.

What you get in the case of Britain, I think, is a deep dysfunction and a major institutional failure. We have sets of institutions that are deeply committed to versions of neoliberal rhetoric and neoliberal thinking. The Treasury is the worst example of this. They are deeply wedded to this way of thinking and functioning; they can't effectively grapple with a world that is changing around them. So, we have governments – just like our government now – which keep coming back to the same points, over and over again. They are always insisting that, at some point in the future, they are going to cut everybody's taxes, particularly big business; that they’re going to stop intervening in the economy; that all the high spending is just a temporary measure; that one day we'll get back to normality. And normality is neoliberal rules all over the place.

They keep saying this and then it keeps failing. They keep having to nationalize railway companies. They've nationalized a steel producer. They have government intervention in lots and lots of different forms, despite the fact that, rhetorically and institutionally, they're trying to do something different. What you get in Britain is a deep failure, and we don't have a leadership in any political party right now that sees this adequately. In Labour, some potentially see it slightly more clearly, but only in fits and starts.

Brexit’s more clear-sighted supporters actually did have some kind of an understanding of how the world was functioning. If you go and look at what Dominic Cummings, for instance, says about how capitalism should be structured in Britain, it is a response to a world of deep competition – but competition where the state may potentially be supporting its local capitalists. You'd have very big investment in research, you'd have lots of spending in infrastructure, you'd potentially have other deeper forms of intervention. You'd be a small, aggressive state in a world where the old rules aren't functioning properly. That was the design there.

It's the logic of competition driving the change, too. That has far more of an impact than what the EU itself and its collective institutions think they should be doing. You can clearly see that in the sudden move to tear up what was supposed to be the defining principle of EU economic policy: the level playing field inside the European single market, which prevented individual countries from intervening to support their local domestic industries. 

Once you get Biden and the Inflation Reduction Act, and once you get this clanging that China will be intruding in markets the EU would like for itself, the level playing field starts to disappear. That comes from a more effective understanding of what you need to do in order to compete, at least compared to the dysfunctional case of Britain.

I've not touched on the end-of-neoliberalism-from-below arguments, because, to a large extent, neoliberalism is constructed and functions as an elite project. This kind of governance has very weak roots in the societies it sits on top of. You can see that in Europe, as well as anywhere else in the older capitalist North where you end up with neoliberalism. The exceptions are places where neoliberalism has been more obviously successful, and where growth has been more rapid.

But, since 2008, there have been various attempts from below to pose more positive alternatives to neoliberalism, especially in South America. But these movements from below are not the decisive part in exiting neoliberalism. This has been a crisis within capitalism, and a change to how it is governed from the top – in response to changes in the structure of capitalism itself, but also to changes in how capitalism relates to the wider environment it has to sit in.

That brings us back to BlackRock's predictions. The world we had in the past could count on a stable climate across the globe. Over the last 200 years, you had a predictable range of variation in terms of temperature, rainfall, and extreme weather events. If that starts to go out the window, then everything is more chaotic. That poses problems to saying we can have stable growth into the future. It also reveals the insufficiency of the automatic adjustment mechanisms that neoliberalism would propose to manage capitalism. You start to expect that it will take continued interventions of one form or another against this instability, just to preserve how capitalism operates and how accumulation takes place.

The Green New Deal is a good first attempt to label a different way of running capitalism in the immediate sense, given that we're going to have to decarbonize rapidly. But we need to construct something more than just investing heavily to decarbonize the way our economies operate now. 

Many current versions of the Green New Deal involve keeping things the same. Take the 2019 Labour Party version. You would still have a car, only it will be electric. It doesn't say very much about changing how we consume, how we live, how we spend our time. It's just about switching everything over so it's less carbon-intensive than it used to be – without going into the huge resource demands that will still have, and without looking to the future problems of adapting to increasingly frequent and extreme weather events. Those are the most obvious problems we have to consider.

We need to, first of all, start building in a response to resource use. Now, there are bigger versions of the Green New Deal trying to do this. Rapid decarbonization will require huge amounts of lithium for all the batteries that we’re going to need, and that lithium has to come from somewhere. If somebody else has to mine it, we don't want that to be in terrible, exploitative conditions, where the country with the lithium resources loses out massively.

We also need to think about the circular economy, about recycling and reuse. Then we need to think about biodiversity loss, and how we manage farming, especially in terms of protecting essential biological systems. And we need to be thinking about how to decarbonize rapidly while adapting to the climate change-induced chaos that all of our best modeling is now producing. That's what it means to get beyond the Green New Deal.

All that also imposes the need to not just give money to capitalist firms so that they build more green stuff, but to make them operate less like a capitalist firm. We have to tell them that they perhaps will need different priorities, perhaps will need to restructure the fundamentals of how we produce, and therefore also how we consume. That's what it will take to actually deal with the world that 200 years of industrial capitalism created for us.