Emerging from year zero of the pandemic, the us and eu have adopted recovery programmes widely acclaimed as historic turning points. The Next Generation eu programme (ngeu) offers €750 billion to help member states towards a greener, more digitized recovery. The sum is relatively modest but, critically, the project endows the European Commission with the power to leverage its budget by borrowing on the markets. For its admirers, this initial offering is the thin end of a transformational wedge. ‘If the eu borrows €500 billion this year for a European recovery fund, then it could easily borrow another €1 trillion next year for a digital-inclusion fund, and then maybe €2 trillion for vehicle electrification or €3 trillion for a comprehensive climate-change fund’, argued Anatole Kaletsky, former economics editor of The Times. The ngeu represented ‘a Hamiltonian moment’ for the fractious bloc. As in the 1790 compact between America’s founding fathers, debt could be the catalyst for a stronger federal centre and deeper continental union.footnote1
The ngeu package was formally adopted on 11 February 2021, pending ratification by the member states. A month later, on 11 March, Biden signed the $1.9 trillion American Rescue Plan into law, giving $1,400 to all Americans earning under $75,000 a year, as well as a monthly child allowance, emergency health insurance and a weekly $300 unemployment benefit. An additional $750 billion went towards vaccinations and state/city support. In late March, Biden unveiled a $2 trillion American Jobs Plan, a ‘paradigm shift’ in infrastructural investment—transport, power grid, rural broadband, clean energy, electric vehicles, r&d ‘to win the competition with China’—and promised a Climate Plan and an American Families Plan to follow.footnote2 Comparisons with fdr and Eisenhower proliferated. Biden’s rescue programme was ‘almost as historic as the pandemic it seeks to mitigate’, according to the Financial Times. Not simply ‘the biggest anti-poverty effort in a generation’ (New York Times) and a ‘seismic shift in us politics’ (Washington Post), but the dawn of a new economic era—a structural break with the neoliberal consensus.footnote3
After so many false dawns, claims about the end of the neoliberal era will be taken with a pinch of salt. A first step in assessing them is to distinguish analytically between first, the implementation of neoliberal policies, second, the prevalence of broader neoliberal ideologies and third, the operations of the capitalist economies themselves. Harmless enough in everyday political speech, the substitution of an ill-defined ‘neoliberalism’ for capitalism as such risks not only sweeping away the insights gained from over a century of inquiry into the latter’s dynamics as a mode of production and reproduction, but also blurs the fact that practices may be ‘post-neoliberal’ but still decidedly capitalist.
Restricting the term ‘neoliberal’ to the school of thought descending from Mont Pèlerin, we can ask which of its policies have been abandoned and which are still in use. As a rule of thumb: a central principle of neoliberal thinking posits that the regulation of the market should be insulated as far as possible from any popular-democratic pressures, which will only distort its operations. A corollary is the drive to liberate spheres of economic activity from such interference, through strategies of deregulation, privatization or marketization, to ensure the freest possible movement of capital and the largest pool of cheap and biddable labour.
State regimes have always had wider—and narrower—concerns than the market alone. To take the American example: the us imperial infrastructure, the defence of Israel, the ‘war on drugs’ and the ‘war on terror’, as well as market-distorting affirmative-action policies or immigration restrictions and do-gooding esg goals, all exceed or flatly contradict Mont Pèlerin prescriptions. As a broader free-market ideology, neoliberalism has typically been supplemented by non-market aspirations: nationalism, under Reagan and Thatcher, or multicultural equity and diversity. Meanwhile capitalist dynamics have continued to unfold according to their own, intensely competitive, creative-destructive laws of motion. We can briefly track the trajectories of the three—policies, ideologies, economies.
The first acts of the drama are familiar enough. Neoliberal prescriptions gained influence in the 1970s as a solution to the problems caused by the astonishing success of Cold War Fordist capitalism. Dynamic production centres in Germany and Japan were undercutting American multinationals, which wanted a freer hand, at home and abroad. Responsibility for the Bretton Woods system was becoming a shackle, offering geopolitical leverage to competitor capitalist states. Henceforth, the fiat-dollar system would put the levers of the world-monetary order in the hands of the technocrat-financiers at the Federal Reserve. Operating across an uneven world landscape, the practical application of neoliberal policies was shaped by prevailing political-economic and cultural-ideological conditions—in Chile, under Pinochet; in the uk, under Callaghan and Thatcher; in the us, under Carter and Reagan; in the eu, under the convergence criteria of the Maastricht Treaty; in the indebted developing countries of the Third World, more destructively, under the auspices of the World Bank and imf; in Japan, more discreetly, under the miti and mof; in China, more cautiously, under Deng and the ccp. After the collapse of Soviet communism, social democracy largely rewrote itself as a ‘progressive’, cosmopolitan neoliberal project.footnote4 By this stage one could speak of a broader neoliberal ideology, or constellation of ideologies, as distinct from the Washington consensus on policy prescription.
The 1990s saw an unprecedented form of us-centric multinational capitalism, with world interest rates controlled from the Eccles Building in Washington dc. Massive new concentrations of manufacturing crowded the Asian-Pacific Rim, drawing on relays of sub-contractors and putting-out systems, with the Chinese village the ultimate safety net. Within a globalized labour market, American wages and consumer prices were diluted by endless slack. Weak demand was permanently stimulated by loans from a gigantic financial superstructure, fed by the dollars China was earning. The eu’s insertion into world markets, powered by the frg, was also fuelled by low-cost ex-Comecon labour and a miraculously cheap-for-Germany single currency. This was a form of capitalism based on globalized manufacturing, financialized profits and debt-driven demand. In the East, sustained investment saw an unprecedented rise in living standards, while the West was characterized by inflated asset prices, falling real wages and rising debt, which in 2008 duly undermined the hyper-leveraged Atlantic banking sector.