Beyond Neoliberalism? Crisis and the Prospects for Progressive Alternatives

Abstract

The onset of the current global economic crisis was hailed by many as signalling the demise of neoliberal hegemony. Two years on however, neoliberalism appears to be quite durable. Indeed, after a brief period of Keynesian-type responses, states, on the whole, have embraced neoliberal solutions to the fiscal problems generated by the crisis. Greece, for example, is now following an IMF programme of privatisation and cuts to social expenditure, while other European nations are pursuing austerity policies. In the USA, state and municipal governments are selling off public assets in response to mounting deficits. This paper explains the durability of neoliberalism and the opportunities and challenges it creates for non-neoliberal progressive policy agendas. Drawing upon Karl Polanyi's conceptual framework, this paper argues that neoliberalism is best understood as a historically specific process of state and economic restructuring that is socially embedded through three mechanisms: ideological norms, class relations, and institutional rules. This paper examines responses by states to the crises and concludes that, although the ideological legitimacy of neoliberalism has been somewhat weakened, there is little evidence to suggest that the three mechanisms, through which neoliberalism is socially embedded, have been significantly eroded. The implication for progressive politics is that, just as neoliberalism is socially embedded, so would a successful progressive non-neoliberal political programme need to be socially embedded: through the articulation of a coherent alternative ideology; through the mobilisation of social forces; and through the institutionalisation of non-neoliberal rules and norms within the apparatuses of the state.

Notes

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⁴ “Statement by the Eurogroup and ECOFIN Ministers on Portugal,” April 8, 2011, < http://ec.europa.eu/ireland/press_office/news_of_the_day/ecofin-statement-portugal_ en.htm>.

⁵ Eric Hobsbawm, “Socialism Has Failed. Now Capitalism is Bankrupt. So What Comes Next?,” The Guardian, April 10, 2009.

⁶ Kevin Rudd, “The Global Financial Crisis,” The Monthly, February 2009, p. 20.

⁷ Kevin Rudd, “The Global Financial Crisis,” The Monthly, February 2009, 22.

⁸ Kevin Rudd, “The Global Financial Crisis,” The Monthly, February 2009, 29.

⁹ Kevin Rudd, “The Global Financial Crisis,” The Monthly, February 2009, 25.

¹⁰ Will Hutton, “A Short History of Capitalism's Rise and Fall,” The Observer, October 5, 2008, < http://www.guardian.co.uk/business/2008/oct/05/creditcrunch.marketturmoil1/print>.

¹² Milton Friedman, Capitalism and Freedom (Chicago, IL: University of Chicago Press, 1982), p. 34.

¹¹ Milton Friedman and Rose Friedman, Free to Choose (Harmondsworth: Penguin, 1980), p. 58.

¹³ Leo Panitch and Martijn Konings, “Myths of Neoliberal Deregulation,” New Left Review 57 (2009), p. 68.

¹⁴ See Hugo Radice, “Confronting the Crisis: A Class Analysis,” in Leo Panitch, Greg Albo, and Vivek Chibber (eds), Socialist Register 2011: The Crisis This Time (London: The Merlin Press, 2010), pp. 34–35.

¹⁵ Joseph Stiglitz, Freefall: America, Free Markets, and the Sinking of the World Economy (New York: W.W. Norton and Co., 2010), p. xii.

¹⁶ For an example see J. Best, “From the Top-down: The New Financial Architecture and the Re-embedding of Global Finance,” New Political Economy 8:3 (2003), pp. 363–384.

¹⁷ David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2005), p. 11.

¹⁸ V. Tanzi and L. Schuknecht, Public Spending in the 20th Century (Cambridge: Cambridge University Press, 2000), pp. 6–7.

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²¹ David Levi-Faur, “The Global Diffusion of Regulatory Capitalism,” The ANNALS of the American Academy of Political and Social Science 598:21 (2005), 19.

²² John Braithwaite, Regulatory Capitalism. How it Works, Ideas for Making it Better (Cheltenham: Edward Elgar, 2008), p. 24.

²³ Neil Brenner and Nik Theodore, “Cities and the Geographies of ‘Actually Existing Neoliberalism,’” Antipode 34:3 (2002), pp. 349–379; Jamie Peck and Adam Tickell, “Neoliberalizing Space,” Antipode 34:3 (2002), pp. 380–404.

²⁴ Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston, MA: Beacon Press, 2001).

²⁵ Kurtulus Gemici, “Karl Polanyi and the Antinomies of Embeddedness,” Socio-Economic Review 6 (2008), p. 25.

²⁶ Gemici, “Karl Polanyi and the Antinomies of Embeddedness.”

²⁷ Polanyi, The Great Transformation, p. 71.

²⁸ Polanyi, The Great Transformation, 74.

²⁹ Fred Block, “Karl Polanyi and the Writing of ‘The Great Transformation,’” Theory and Society 32:3 (2003), p. 276.

³⁰ Fred Block, “Karl Polanyi and the Writing of ‘The Great Transformation,’” Theory and Society 32:3 (2003), 276.

³¹ Karl Polanyi, “The Economy as Instituted Process,” in Karl Polanyi, Conrad Arensberg, and Harry Pearson (eds), Trade and Market in Early Empires: Economics in History and Theory (Glencoe: Free Press, 1957).

³² Karl Polanyi, “The Economy as Instituted Process,” in Karl Polanyi, Conrad Arensberg, and Harry Pearson (eds), Trade and Market in Early Empires: Economics in History and Theory (Glencoe: Free Press, 1957), 250.

³³ Block, “Karl Polanyi and the Writing of ‘The Great Transformation,’” p. 276.

³⁴ Gemici, “Karl Polanyi and the Antinomies of Embeddedness,” p. 25.

³⁵ Gemici, “Karl Polanyi and the Antinomies of Embeddedness,”, 26–27.

³⁶ Ha-Joon Chang, “Breaking the Mould: An Institutionalist Political Economy Alternative to the Neo-liberal Theory of the Market and the State,” Cambridge Journal of Economics 26:5 (2002), p. 547.

³⁷ Geoffrey Hodgson, “Introduction,” in G. Hodgson (ed.), The Evolution of Economic Institutions: A Critical Reader (Cheltenham: Edward Elgar, 2007), p. 2.

³⁸ Levi-Faur, “The Global Diffusion of Regulatory Capitalism,” p. 19.

³⁹ Radice, “Confronting the Crisis: A Class Analysis,” p. 35.

⁴⁰ Neil Brenner and Nik Theodore, “Cities and the Geographies of ‘Actually Existing Neoliberalism,’” p. 353.

⁴¹ For alternative understandings of embedded neoliberalism, see Phil Cerny, “‘Embedding Neoliberalism’: The Evolution of a Hegemonic Paradigm,” The Journal of International Trade and Diplomacy 2:1 (2008), pp. 1–46; and Bastiaan van Apeldoorn, “The Contradictions of “Embedded Neoliberalism” and Europe's Multi-level Legitimacy Crisis: The European Project and its Limits,” in B. van Apeldoorn, J. Drahokoupil, and L. Horn (eds), Contradictions and Limits of Neoliberal European Governance: From Lisbon to Lisbon (New York: Palgrave Macmillan, 2009), pp. 21–43.

⁴² Cerny, “Embedding Neoliberalism: The Evolution of a Hegemonic Paradigm,” p. 39; Huw Macartney, Variegated Neoliberalism: EU Varieties of Capitalism and International Political Economy (New York: Routledge, 2011), p. 25.

⁴³ Cerny, “Embedding Neoliberalism: The Evolution of a Hegemonic Paradigm,” p. 39; Huw Macartney, Variegated Neoliberalism: EU Varieties of Capitalism and International Political Economy (New York: Routledge, 2011), 3.

⁴⁴ Peck and Tickell, “Neoliberalizing Space,” p. 384.

⁴⁵ Tim Anderson, “The Meaning of Deregulation,” Journal of Australian Political Economy 44 (1999), pp. 5–21.

⁴⁶ Greg Albo, “Neoliberalism, the State and the Left: A Canadian Perspective,” Monthly Review 54:1 (2002), p. 48.

⁴⁷ Charles Lindblom, Politics and Markets: The World's Political Economic Systems (New York: Basic Books, 1977), pp. 170–188.

⁴⁸ Neil Davidson, “What was Neoliberalism?,” in N. Davidson, P. McCafferty, and D. Miller (eds), Neoliberal Scotland: Class and Society in a Stateless Nation (Newcastle upon Tyne: Cambridge Scholars Publishing, 2010), p. 2.

⁴⁹ Greg Albo, Sam Gindin, and Leo Panitch, In and Out of Crisis: The Global Financial Meltdown and Left Alternatives (Oakland, CA: PM Press, 2010), p. 78.

⁵⁰ William Carroll, “Crisis, Movements, Counter-hegemony: In Search of the New,” Interface: A Journal For and About Social Movements 2:2 (2010), p. 169.

⁵¹ Gosta Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge: Polity Press, 1990), pp. 21–22.

⁵² Dick Bryan and Mike Rafferty, “Deriving Capital's (and Labour's) Future,” in Leo Panitch, Greg Albo, and Vivek Chibber (eds), Socialist Register 2011: The Crisis This Time (London: The Merlin Press, 2010), pp. 218–219.

⁵³ Alfredo Saad-Filho, “Crisis in Neoliberalism or Crisis of Neoliberalism?,” in Leo Panitch, Greg Albo, and Vivek Chibber (eds), Socialist Register 2011: The Crisis This Time (London: The Merlin Press, 2010), pp. 242–259.

⁵⁴ Michal Kalecki, “Political Aspects of Full Employment,” in Jerzy Osiatynski (ed.), Collected Works of Michal Kalecki: Volume 1, Business Cycles and Full Employment (Oxford: Clarendon Press, 1990), pp. 347–356.

⁵⁵ Michal Kalecki, “Political Aspects of Full Employment,” in Jerzy Osiatynski (ed.), Collected Works of Michal Kalecki: Volume 1, Business Cycles and Full Employment (Oxford: Clarendon Press, 1990), 350.

⁵⁶ Greg Albo and Bryan Evans, “From Rescue Strategies to Exit Strategies: The Struggle Over Public Sector Austerity,” in Leo Panitch, Greg Albo, and Vivek Chibber (eds), Socialist Register 2011: The Crisis This Time (London: The Merlin Press, 2010), p. 303.

⁵⁷ Peter Baldwin, The Politics of Social Solidarity, Class Bases of the European Welfare State 1875–1975 (Cambridge: Cambridge University Press, 1990).

⁵⁸ See, for example, Steven Kull, Clay Ramsay, Evan Lewis, and Stefan Subias, How the American Public Would Deal with the Budget Deficit (College Park, MD: The Program for Public Consultation, University of Maryland, 2011).

⁵⁹ Noam Chomsky, Powers and Prospects: Reflections on Human Nature and Social Order (London: Pluto Press, 1996), p. 70.

⁶⁰ Erik Olin Wright, Envisioning Real Utopias (London: Verso, 2010 [pre-publication version]), p. 156, < http://www.ssc.wisc.edu/∼wright/ERU.htm>.

⁶¹ Erik Olin Wright, Envisioning Real Utopias (London: Verso, 2010 [pre-publication version]), 116–117.

⁶² Jamie Peck, Nik Theodore, and Neil Brenner, “Postneoliberalism and its Malcontents,” Antipode 41:6 (2009), p. 105.