Is neoliberalism over? This is what many of its defenders are beginning to fear. Chris Giles, the economics editor of the Financial Times, recently lamented, “The left is winning the economic battle of ideas.”
The fundamental reason for this is provided by the three giant spending programmes introduced by Joe Biden since he became president of the US in January.
The latest unveiled last week, the American Families Plan, proposes to spend £1.29 trillion on measures, for example, to subsidise childcare and boost health insurance. Many on the left are also hailing the Biden presidency as a turning point.
In a very interesting article in the latest issue of New Left Review, the journal’s editor Susan Watkins offers a more sceptical view. Neoliberalism, since it was pioneered by Ronald Reagan and Margaret Thatcher in the 1980s, may have celebrated free markets ideologically.
But it aimed, as Quinn Slobodian puts it in his important book Globalists, “not to liberate markets but to encase them, to inoculate capitalism against the threat of democracy”.
Watkins has no difficulty in showing that neoliberalism in this sense still reigns in the European Union (EU). The £652 billion Next Generation programme was laboriously negotiated in response to the pandemic.
It is being doled out to national governments in carefully controlled doses by the European Commission. “As far as popular-democratic influence on economic policy is concerned, the end of the neoliberal era is farther away than ever in Europe,” Watkins writes.
But US spending is on an altogether bigger scale—250 percent larger than the EU’s. Personal incomes jumped a record 21.1 percent in March, thanks mainly to the £1,010 government stimulus cheques to individual citizens.
As Watkins notes, “In terms of social provision, the American Rescue Plan is playing catch-up.”
Biden’s economic programme is compensating for a much weaker welfare state than still exists in western Europe.
Watkins also highlights what she calls the “national-imperialist” dimension of Biden’s strategy. Addressing a joint session of Congress last week, Biden said, “We’re in competition with China and other countries to win the 21st century. We’re at a great inflection point in history. We have to do more than … just build back, we have to build back better. We have to compete more strenuously than we have.”
Biden aims to use government spending to reinvigorate US imperialism. Reagan and Thatcher in their day pursued much the same objective for their respective states.
But, as Watkins points out “practices may be ‘post-neoliberal’ but still decidedly capitalist”, and indeed imperialist.
David Harvey famously argued that “the neoliberal turn” was about “the restoration … of power to economic elites”. In other words, shifting the balance of class forces in favour of capital. During the “heroic” era of neoliberalism in the 1980s this involved using the power of competition to discipline bosses and workers alike. Bankruptcies and mass unemployment undermined organised labour and boosted the profits of the more competitive firms.
Today capitalism is too weak to be able to use this kind of market discipline.
Ever since the Global Financial Crisis of 2007-8 the system has relied on huge infusions of cheap credit money provided by the central banks.
This has gone even further especially in the US and Britain, with the central banks buying up the debt that governments issue to finance their extra spending.
Classical neoliberalism tried to depoliticise the economy, subjecting it to the apparently “natural” rhythms of the market. Today the market is being repoliticised.
This is a real change. But it doesn’t extend to workers. Their organisations remain severely weakened, and they are still at the mercy of the market and of unscrupulous employers.
During the pandemic, in the imperialist core of the system in Europe and the US, workers have been cushioned a bit by stimulus cheques, furlough schemes, and the like. But these will start to end as economies eventually reopen.
The contradictions of an economy repoliticised to support capital but not labour will become visible.