Neoliberalism is Dead – and Something Even Worse is Taking Its Place

Buckle up for a new era of authoritarian capitalism.

by James Meadway

29 June 2021

Tony Blair and Margaret Thatcher shake hands
(REUTERS/Christopher Furlong/POOL)

The coronavirus pandemic has forced governments across the world to take extraordinary political action: from implementing massive increases in state expenditure to making direct interventions in industry, to even nationalising parts of their economies. Most recently, the G7, an organisation of the world’s seven largest so-called advanced economies, has declared its support for a global minimum corporation tax. This minimum tax rate would threaten the existence of tax havens across the world, thus knocking out a key institution in upholding low-tax neoliberalism on a global scale. Such changes have prompted economic historian Adam Tooze to declare that neoliberalism, an “ebullient, aggressive ideology… is clearly dead”. 

Historian Quinn Slobodian and economist Grace Blakely challenge Tooze’s claim, with Slobodian suggesting that neoliberalism hasn’t died, but has instead mutated into forms of populist racism, drawing a link between neoliberal economist Friedrich von Hayek’s support of racist measures and former Trump advisor Steve Bannon’s so-called nativism. But while this intellectual history helps us to understand neoliberalism’s ideological development (and so how different governments might frame and justify their decisions), it doesn’t necessarily tell us about how those decisions were made, and the circumstances that they were made in.

Blakeley takes a different approach, arguing that neoliberalism is still very much alive and well since governments across the world continue to ‘prop up’ markets. She argues that neoliberalism “has reshaped statecraft away from the governance of the market and towards governance by markets”. In other words, because governments across the world are still looking to adapt their economies around the demands of markets – meaning, in reality, big business – neoliberalism still exists.

It is easy to understand why people are wary about declaring neoliberalism to be dead or dying. The 2008 financial crash was something of a false dawn for many of us. The global crisis initially provoked – and all but demanded – government intervention on a huge scale, with Britain’s New Labour government forced to part-nationalise failed banks and commit to significant increases in government spending. Initial efforts were even made to coordinate rescue packages across the globe, culminating in April 2009’s G9 meeting. 

Despite these interventions, by the following year, the lurch into austerity was near-universal. Britain’s new Conservative-Liberal Democrat coalition government was among the first to break the international consensus against enacting austerity measures (although Labour’s own spending plans also implied significant cuts); whilst the European Central Bank and the European Commission enforced disastrous spending cuts across already hard-hit southern Europe. In this way, austerity was being used as the cutting edge of a renewed neoliberal offensive across the Global North in order to reassert the rights of the financial sector against the wider population. 

In the UK, this meant that the newly publicly owned banks were run by “UK Financial Investments”, an assortment of senior bankers and civil servants who insisted that the nationalised banks continue to act as if they were purely commercial operations in expectation of future privatisation. RBS was extraordinarily aggressive, using its “Global Restructuring Group” to force hundreds of small businesses into liquidation. 

That said, the effort to preserve the neoliberal status quo still caused huge strains on society. Even in Britain, where ‘the cupboard is bare’ argument became widely accepted (helped, of course, by the Labour party’s failure to oppose it), the extent and severity of the cuts began to undermine public support, eventually setting into motion a wave of anti-austerity protests across the globe. New movements erupted, like Occupy Wall Street and the Indignados; new political parties were formed, like Podemos in Spain; and some older parties were revitalized, as with Syriza in Greece or the Labour party with the election of Jeremy Corbyn as leader. 

But while these oppositions to austerity were organised by its victims, at the top of society, an anti-neoliberal turn was also starting to take place. While the US and its allies had taken a considerable hit in the financial crisis, China’s growth had continued almost unabated. The US was happy to support a global free market and limited government intervention when it could reliably dominate the economy, however China’s ascension, and the threat it posed to US dominance, prompted a shift in opinion by the country’s political elite. By the mid-2010s, the warnings of China as a ‘peer competitor’ were gaining ground in Washington policy circles. Donald Trump dealt some crucial blows through his opening of a trade war with China, via the hiking tariffs on Chinese imports and aggressive moves against Chinese tech companies. Similarly, his wrecking of the World Trade Organisation’s ‘Appellate Body’, an international trade court that had provided judgement on trade disputes between governments since 1995, played a key part in the erosion of the ideology’s dominance.

Slobodian argues that neoliberalism has operated most powerfully at a global level, with major international organisations like the WTO or the IMF instrumental in upholding its rules. Thus, by breaking neoliberal trade agreements and shutting down neoliberal international trade courts, the world’s most powerful country delivered a decisive blow to the dominant ideological order.  

Consider that this was happening before the coronavirus pandemic hit. Indeed, Covid-19 has only served to exacerbate all of the trends contributing to the breakdown of the neoliberal order: from increased government intervention to the weakening of international trade and cooperation (as seen with ‘vaccine nationalism‘). 

During this time, the Tories have announced an end to austerity – having made promises to increase to increase spending on schools even before the pandemic. It is worth noting, however, that ending austerity does not mean ending neoliberalism, since spending cuts are not an essential part of the ideology. Tony Blair’s New Labour government is a prime example of this, pushing privatisation even as it increased public spending.

As well as putting an end to over a decade of cuts, the Conservatives are now using the power of the state to support key industries, promoting some at the expense of others. This is a decisively anti-neoliberal style of politics in that it means using the government rather than the market to steer economic outcomes. Consider the speed at which the UK government threatened fan ownership of English premier league teams as an example of this.

The political terrain is changing fast. For the last decade, austerity was a vital component in the elite programme to stabilise capitalism after the 2008 crash. Today, in Britain as in much of Europe, the new offensive by political and economic elites is two-pronged: first, centred on the rolling back of basic civil liberties and the expansion of state powers; second, on the attack on anti-racism and the insidious promotion of other forms of oppression, including transphobia.

These two strands are directly related. The expansion of state powers also means an expansion of its power to exclude and discipline. This is another reason why Slobodian’s neoliberal-to-racist populist link is insufficient. We need to see this anti-neoliberal offensive as being tied to the ongoing ‘anti-woke’ offensive. Despite Boris Johnson’s dramatically anti-neoliberal claim that he was “’wrapping the arms’ of government around the country”, his government is still pursuing deeply exclusionary policies around migration, stoking up culture war issues and pushing for expanded police powers. The government may no longer be neoliberal, but it is still pursuing a brutal agenda – one that Laurie Macfarlance describes as authoritarian capitalism”.

Opposing and resisting this new world order will likely mean the left having to devise new ways of organising and a new language to express it. Of course, we will always need to defend public services, but this new terrain will also likely mean a much closer focus on defending ‘liberal rights’, like civil liberties and democratic values.  Yes, neoliberalism is ending, but if we don’t fight for a better alternative we’ll find something even worse in its place.

James Meadway is an economist and Novara Media columnist.


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