The whole neoliberal, or free market, order that has dominated the world for over 30 years was called into question when the system plunged into economic crisis in the autumn of last year.
The recent financial collapse in Dubai reminds us that the crisis is still shaking capitalism’s foundations. Yet talk about “the twilight of neoliberalism” has unfortunately proved premature.
It is true that a modified form of neoliberalism is emerging. This retains its core aspects while making pragmatic adjustments out of economic necessity.
But these measures, such as the part-nationalisation of British and US banks, are seen as temporary. They are certainly not undertaken as a means of achieving social reform.
If anything is blamed for the present debacle it is the excesses of financial institutions rather than the capitalist system itself. “What we are experiencing is not a crisis of capitalism,” proclaimed a recent article in the Newsweek magazine. “It is a crisis of finance, of democracy, of globalisation and ultimately of ethics.”
Neoliberalism did not promote economic growth or reduce inflation, let alone restore companies’ profit rates, except on a temporary and very uneven basis. Why then is it still dominant?
Like the 19th century neoclassical economic school from which it takes much of its theory, neoliberalism is an ideology representing particular class interests.
Neoclassicism represented mainly the interests of a subset of the capitalist class. This was characterised by extreme individualism and focused on the consumption of goods rather than their production.
In some respects, neoliberalism reflects the way in which these attitudes have been generalised across the capitalist class. The Italian journalist Loretta Napoleoni even argues that we have entered a new “Gilded Age” where the ruling class has once again become a “leisure class”.
This goes too far. But it is true that neoliberalism has benefited individual capitalists by increasing their wealth at the expense of the poor and the working class. It is unsurprising, therefore, that no significant section of the international ruling class has abandoned its belief in neoliberal capitalism.
It appears that we have returned to the start of the crisis of the late 1970s. Almost 35 years later, the same solutions are being offered to the same problems, with the same intended victims.
At this point it is customary to quote Karl Marx on how “the great events and characters of world history” are repeated “the first time as tragedy, the second as farce”. But, if the ruling class does achieve its aim, the repetition is unlikely to be funny.
It will extend and deepen the original tragedy. But there are two differences from the late 1970s.
One is that the original practitioners of neoliberalism, particularly those associated with the vanguard regimes of Margaret Thatcher and Ronald Reagan, shared key objectives and strategies.
Their successors no longer do so. Instead, they display a sense of panic and consequent incoherence. Yet they are agreed about one thing – that the cost will be borne by the people they rule over, rather than by themselves.
The other is that, for most people, economic life has become more uncertain, political life more meaningless, social life more fragmented and cultural life more degraded. Since human beings are not just greedy little bundles of appetite, they are rebelling against these assaults on their humanity.
Those who might have been persuaded to accept a supposedly temporary deterioration of their living conditions in order to restructure capitalism for the greater good are less likely to be fooled again.
They have seen how their years of sacrifice have only benefited those at the top of society, and failed to prevent a recession.
Also, the idea that Labour represents an alternative to the capitalist parties has suffered with its 12 years of “social neoliberal” government.
The experiences behind these developments have been terrible. But they represent potentially positive changes in consciousness, if the left can offer people an alternative.