By PERRY ANDERSON*
Where does neoliberalism stand in the midst of the current turmoil? In emergency conditions, it has been forced to take measures – interventionist, statist and protectionist – that are anathema to its doctrine.
1.
A quarter of this century later, regime change has become a canonical expression. It means the overthrow, usually but not exclusively by the United States, of governments around the world that are not to the West's liking, using military force, economic blockade, ideological erosion, or a combination of all of these.
However, the term originally meant something quite different, a generalized change in the West itself—not the sudden transformation of a nation-state by external violence, but the gradual establishment of a new international order in peacetime. The pioneers of this conception were American theorists who developed the idea of international regimes as agreements securing cooperative economic relations between the major industrial states, which might or might not take the form of treaties.
These, it was claimed, developed from the US leadership after World War II, but which was replaced by the formation of a consensual framework of mutually satisfactory transactions between the major countries. The manifesto of this idea appeared in Power and interdependence, a work co-authored by two pillars of establishment of foreign policy of the time, Joseph Nye and Robert Keohane, whose first edition – which went through several – appeared in 1977.
Although presented as a system of norms and expectations that helped ensure continuity between administrations in Washington by introducing “greater discipline” into American foreign policy, Nye and Keohane’s study left no doubt about the benefits to Washington. “Regimes are usually in America’s interest because the United States is the world’s leading commercial and political power. If many regimes did not already exist, the United States would certainly seek to invent them, as it has done.”[I]. By the early 1980s, books along these lines were coming off the presses: a symposium entitled International regimes, and edited by Stephen Krasner (1983); Keohane's own treatise, After hegemony (1984); and a series of scholarly articles.
In the following decade, this comforting doctrine underwent a mutation, with the publication of a volume entitled Regime changes: macroeconomic policy and financial regulation in Europe from the 1930s to the 1990s, edited by Douglas Forsyth and Ton Notermans – one American, the other Dutch. The book retained, but emphasized, the idea of an international regime, specifying the variant that prevailed before the war, based on the gold standard; then the order forged in Bretton Woods, which succeeded it after the war; and, finally, explaining the disappearance of this successor in the 1970s[ii].
2.
What replaced the Bretton Woods world was a set of systemic constraints affecting all governments, regardless of their makeup, consisting of macro-policy packages of monetary and financial regulation that set the parameters for possible labor, industrial, and social policies. While the postwar order had been driven by the goal of ensuring full employment, the priority of its sequel was monetary stability. Classical economic liberalism came to an end with the Great Depression. Postwar Keynesianism ran out of steam with the stagflation of the 1970s. The new international regime marked the reign of neoliberalism.
Such was the original meaning of the phrase “regime change,” now largely forgotten, erased by the wave of military interventionism that seized the term at the turn of the century. A glance at its Ngram tells the story. Lacking currency since its arrival in the 1970s, the term suddenly soared in frequency in the late 1990s, multiplying sixtyfold and becoming, as John Gillingham, an economic historian attached to its earlier meaning, has observed, “the current euphemism for overthrowing foreign governments.”
Yet the relevance of its original meaning remains. Neoliberalism has not disappeared. Its features are now familiar: deregulation of financial and product markets; privatization of services and industries; reduction of corporate and wealth taxation; the erosion or emasculation of trade unions. The aim of the neoliberal transformation, which began in the United States and Britain under the Carter and Callaghan governments and reached its peak under the Thatcher and Reagan governments, was to restore capital’s profit rates—which had fallen virtually everywhere since the late 1960s—and to overcome the combination of stagnation and inflation that had set in after those rates had fallen.
For a quarter of a century, neoliberalism’s remedies seemed to work. Growth returned, though at a pace clearly lower than in the quarter of a century after World War II. Inflation was brought under control. Recessions were short and mild. Profit rates recovered. Economists and pundits hailed the triumph of what future Federal Reserve Chairman Ben Bernanke hailed as the Great Moderation.
The success of neoliberalism as an international system was not, however, based on the recovery of investment to post-war levels in the West: that would have required an increase in economic demand, which was made impossible by the wage repression central to the system. Instead, it was built on a massive expansion of credit – that is, on the creation of unprecedented levels of private, corporate and eventually public debt. In Buying time, his groundbreaking 2014 work, Wolfgang Streeck describes this as claims on future resources that have yet to be produced; Marx called it, more bluntly, “fictitious capital.” Eventually, as predicted by more than one critic of the system, the debt pyramid gave way, causing the crash of 2008.
The crisis that followed was, as Bernanke confessed, “life-threatening” for capitalism. In magnitude, it was fully comparable to the crash The following year, global output and world trade fell more rapidly than during the first twelve months of the Great Depression. However, what followed was not another Great Depression but a Great Recession – a big difference. A starting point for understanding the political position in which the West finds itself today is to look back at the sequence of events of the 1929s.
When Black Monday hit the American stock market in October 1929, conservative governments were in power in the United States, France and Sweden, while there were social democratic governments in Britain and Germany. All, however, were more or less unanimously faithful to the economic orthodoxies of the day: a commitment to sound money—that is, the gold standard—and balanced budgets, policies that simply deepened and prolonged the Depression.
It was not until the autumn of 1932 and the spring of 1933, that is, over a period of three years or more, that unconventional programmes to combat the situation began to be introduced, first in Sweden, then in Germany and finally in America. These countries corresponded to three very different political configurations: the rise to power of social democracy in Sweden, fascism in Germany and an updated liberalism in the United States.
Behind each of them were pre-existing heterodoxies, ready to be applied if rulers decided to adopt them, as did Per Albin Hansson in Sweden, Hitler in Germany and Roosevelt in America: the Stockholm school of economics, descended from Knut Wicksell to Ernst Wigforss in Sweden, the valorization of public works by Hjalmar Schacht in Germany and the neo-progressive regulatory leanings of Raymond Moley, Rexford Tugwell and Adolf Berle – the original “brain trust” of Franklin Delano Roosevelt – in the United States.
Neither of these was a fully worked out or coherent system. Schacht in Germany and Keynes in Britain had been in contact with each other since the 1920s, but Keynesianism proper – The general theory of employment, interest and money only appeared in 1936 – it was not a direct contribution to these experiences, although they all involved strengthening the role of the State. Such were the sets of dispersed technical instruments of the time.
Three years of mass unemployment had generated powerful ideological forces in each country: a social democratic reformism much bolder in the notion of People's home, the People's House, in Sweden; Nazism, self-described as the movement, the Movement, in Germany; and, in the United States, the dynamic role of American communism in the unions and among the intellectuals, forcing labor and social security reforms on a Democratic administration that, of its own volition, would hardly have enacted them.
Finally, against the backdrop of these three developments in the capitalist world, the unprecedented success of the Soviet Union in avoiding recession altogether, with full employment and accelerated growth rates, made the idea of economic planning attractive throughout the capitalist world. However, a much larger and more profound shock than that would be needed. crash of Wall Street to end the global depression to which it led, and to institutionalize the break with the orthodoxies of classical economic liberalism.
It was the abyss of the Second World War that did this. When peace was restored, no one could doubt the existence of a different international system – combining the gold standard, countercyclical monetary and fiscal policies, high and stable levels of employment and official systems of social protection – or the role that Keynes’s ideas played in its consolidation. After 25 years of success, it was the eventual degeneration of this regime into stagflation that triggered neoliberalism.
3.
The scenario was completely different following the crash In the United States, the political ambulances immediately sprang into action. Under Obama, the bankrupt banks, insurance companies, and failed auto companies were bailed out with huge infusions of public funds never available for decent health care, schools, pensions, railroads, highways, airports, let alone income support for the most disadvantaged. Massive fiscal stimulus was unleashed, with budgetary discipline ignored.
To support the stock market, under the polite euphemism of Quantitative Easing, the Federal Reserve released money on a massive scale. Stealthily, and in defiance of its mandate, the Federal Reserve bailed out not only troubled American banks but also European banks, in transactions hidden from Congress and public scrutiny, while the Treasury assured – in close behind-the-scenes liaison with the People’s Bank of China – that there would be no Chinese hesitation in buying Treasury bonds (T-bonds).
In short, once the central institutions of capital were at risk, all the precepts of neoliberal economics were thrown to the winds, with doses of mega-Keynesian medicine beyond Keynes’s imagination. In Britain, where the crisis quickly spread to the countries of Europe, they went so far as to temporarily nationalize what the American gift for bureaucratic euphemism called “troubled assets.”
Did all this mean a repudiation of neoliberalism and a shift towards a new international regime of accumulation? Not at all. The central tenet of neoliberal ideology, coined by Thatcher, has always resided in the attractive, feminine-sounding acronym TINA: There Is No Alternatives. As much as the measures to control the crisis seemed to break taboos, and to a large extent they did so, considered from the neoclassical canons, they essentially amounted to the square, or the cube, of the dynamics underlying the neoliberal era, namely the continuous expansion of credit above any increase in production, in what the French call a flight forward – an escape forward. Thus, once the measures required by the emergency risk to life stabilized the system, the logic of neoliberalism advanced again, country after country.
In Britain, which was the first to do so, the relentless imposition of austerity has reduced local authority spending to beggarly levels and cut university pensions. In Spain and Italy, labour laws have been overhauled to make it easier to dismiss workers and increase precarious employment. In the United States, drastic tax cuts on corporations and the wealthy have been maintained, while deregulation has accelerated in the energy and financial services sectors.
In France, historically a latecomer to neoliberalism but now a candidate for a place at the forefront, something like a full-fledged Thatcherite program has been put in place: privatization of public industries, legislation to weaken trade unions, tax breaks for companies, reductions in the number of public employees, cuts in pensions, reductions in access to universities – seemingly heading towards a social confrontation along the lines of Margaret Thatcher’s crushing of the miners, a turning point in class relations that British capital has never regretted.
4.
How was all this possible? How could such a traumatic shock to the system as the global financial crisis, and the discredit into which its major agencies and miraculous revenues inevitably fell, be followed by such a complete reversal of business as usual? Two conditions were fundamental to this paradoxical outcome. First, unlike in the 1930s, there were no alternative theoretical paradigms waiting in the wings to dislodge the dominance of neoliberal doctrine and replace it. Keynesianism, which after 1945 became the common denominator of what had been sifted by the threshing machine of war from the three contending tendencies of the 1930s, never recovered from its demise in the class conflicts of the 1970s.
Mathematization had long anesthetized much of the economic discipline against any kind of original thinking, leaving anomalies like the Regulation School in France or the Social Structure of Accumulation School in the United States completely marginalized. The neoliberal theorems of “rational expectations” or “market compensation” might now seem absurd, but there was little to replace them.
Behind this intellectual absence – and this was the second condition for neoliberalism’s apparent immunity from disaster – was the disappearance of any significant political movement that vigorously called for either the abolition or the radical transformation of capitalism. By the turn of the century, socialism, in its two historical variants, revolutionary and reformist, had been swept from the stage in the Atlantic zone. The revolutionary variant, it seems, with the collapse of communism in the USSR and the disintegration of the Soviet Union itself.
The reformist variant: apparently, with the extinction of any trace of resistance to the imperatives of capital in the social democratic parties of the West, which now limited themselves to competing with the conservative, Christian democratic or liberal parties in their implementation. The Communist International was closed down as early as 1943. Sixty years later, the so-called Socialist International counted in its ranks the ruling party of the brutal military dictatorship of Mubarak in Egypt.
None of this means, or could mean, that after reigning for a quarter of a century and then suddenly falling to its knees, the neoliberal system was left unchallenged. After 2008, its accumulated social and political consequences began to make themselves felt. Social consequences: a sharp and, in some cases (especially in the United States and the United Kingdom), staggering rise in inequality; long-term wage stagnation; an expanding precariat. Political consequences: widespread corruption, increasing party interchangeability, erosion of meaningful electoral choice, declining voter turnout – in short, the increasing eclipse of the popular will by a hardened oligarchy.
This system has now generated its own antibody, deplored in all reputable opinion bodies and in all respectable political circles as the disease of the times: populism. The revolts that fall under this label, although very different from each other, have in common their rejection of the international regime in force in the West since the 1980s. They are not opposed to capitalism as such, but to its current socioeconomic version: neoliberalism.
5.
Their common enemy is the establishment The political party that presides over the neoliberal order, constituted by the alternating duo of center-right and center-left parties that have monopolized government under their rule. These parties have often, though not always, offered two slightly different variants of neoliberalism: one is disciplinary, and typically more innovative in its initiatives, like Thatcher and Reagan; the other is compensatory, offering the poor secondary payments that the disciplinary variant retains, like Clinton or Blair. Both versions, however, have been unswervingly committed to promoting the common goal of strengthening capital against any inconvenient shocks.
Neoliberalism, as I have already argued, forms an international regime: that is, it is not just a system replicated within each nation-state, but a system that unites and transcends the different nation-states of the advanced and less advanced regions of the capitalist world in the process that has come to be called globalization. Unlike the various national agendas of neoliberalism, this process was not originally driven by the political intention of those in power, but followed the explosive deregulation of financial markets triggered by the so-called Big Bang by Margaret Thatcher, in 1986.
In due course, globalization became an ideological watchword of neoliberal regimes around the world, since it resulted in two enormous advantages for capital in general. From a political point of view, globalization ensured the expropriation of the democratic will that the oligarchic closure of neoliberalism was imposing internally. Now, TINA not only meant that political collusion between the center-right and the center-left at the national level largely eliminated any meaningful electoral choice, but also that global financial markets would not allow any deviation from the policies offered, under penalty of economic collapse.
This was the political bonus of globalization. No less important was the economic bonus: capital could now further weaken labor, not only through de-unionization, wage repression and precariousness, but also by relocating production to less developed countries with much lower labor costs, or simply by threatening to do so.
Another aspect of globalization, however, has had a more ambiguous effect. Neoliberal principles stipulate the deregulation of markets: the free movement of all factors of production, i.e. the cross-border mobility not only of goods, services and capital, but also of labor. Logically, then, this means immigration. Companies in most countries have long turned to migrant workers as a reserve army of cheap labor, whenever supply is needed and circumstances permit.
But for states, purely economic considerations had to be weighed against more social and political ones. On this point, Friedrich von Hayek – the greatest mind of neoliberalism – had introduced a significant reservation, a proviso, early on. Immigration, he warned, could not be treated as if it were a simple factor market issue, because if it were not strictly controlled, it could threaten the cultural cohesion of the host state and the political stability of society itself.
This is where Margaret Thatcher also drew the line. However, it is clear that pressures to import or accept cheap foreign labour persisted, even as production was increasingly outsourced abroad, since many of the manual or degrading services that locals avoided could not, unlike factories, be exported, since they had to be performed locally. Unlike virtually every other aspect of the neoliberal order, there was never a stable consensus on the establishment on this issue, which remained a weak link in the TINA chain.
6.
If we look at the populist uprisings against neoliberalism, they are roughly divided, as everyone knows, into right-wing and left-wing movements. In this sense, they repeat the pattern of the uprisings against classical liberalism after its failure in the Great Recession: fascists on the right, social democrats or communists on the left. What sets the current rebellions apart is that they do not have any comparable ideologies or articulated programs—nothing that matches the theoretical or practical consistency of neoliberalism itself. They are defined by what they are against, much more than by what they are for. What are they protesting?
Today’s neoliberal system, like yesterday’s, embodies three principles: escalation of wealth and income differentials; repeal of democratic control and representation; and deregulation of as many economic transactions as possible. In short: inequality, oligarchy, and factor mobility. These are the three central targets of populist insurgencies. Where these insurgencies divide is in the weight they give to each element—that is, against which segment of the neoliberal palette they direct the most hostility.
It is clear that right-wing movements cling to the last of these, the mobility factor, playing on xenophobic and racist reactions towards immigrants to gain widespread support among the most vulnerable sectors of the population. Left-wing movements resist this direction, pointing to inequality as the main evil. Hostility towards the established political oligarchy is common to both right-wing and left-wing populisms.
Historically, there is a clear chronological division between these different forms of the same phenomenon. Contemporary populism emerged in Europe, which remains the continent with the largest and most diverse variety of movements. Right-wing populist forces date back to the early 1970s. In Scandinavia, they took the form of libertarian revolts against taxes through the Progress Parties in Denmark and Norway, founded in 1972 and 1973 respectively.
In France, the Front National was founded in 1972, but it was only in the early 1980s that it achieved modest electoral strength as a right-wing nationalist and anti-immigration party with a certain working-class appeal and strong racist overtones. At the end of that decade, the leadership of the Freedom Party in Austria was won by Jörg Haider, who adopted a similar platform, while further north, the Sweden Democrats emerged as a small far-right group with a very similar xenophobic base. At the genesis of all three formations, there were literally neo-fascist elements, which – once they had achieved a significant electoral presence – gradually faded away.
The 1990s saw the rise of the Northern League in Italy, which by contrast had anti-fascist roots; the emergence of Ukip in Britain; and the conversion of the Danish and Norwegian parties, once libertarian, into anti-immigration forces. Early in the following decade, the Netherlands created its own Freedom Party, which combined libertarian and Islamophobic perspectives. Ten years later, the alternative for Germany repeated the Dutch model in Germany. All these right-wing parties rose up against political corruption and the closure of their national institutions and against the bureaucratic dictates of the European Union from Brussels. All, with the sole exception of the AfD (founded in 2013), predate the crash of 2008.
Left-wing populist forces are much more recent, having emerged only after the global financial crisis of 2008. In Italy, the Five Star Movement dates back to 2009. In Greece, Syriza, still a small group when Lehman Brothers collapsed in New York, emerged as a significant electoral force in 2012. In Spain, Podemos was created in 2014. Jean-Luc Mélenchon created Insubordinate France in 2016. The timing of this wave makes clear that it was neoliberalism’s socioeconomic inequalities, not its weakening of ethno-national boundaries, that spurred the rise of left-wing populism. This is a key distinction between the two types of revolt against the current order.
This is not, however, an unbridgeable chasm, since there is not only a general overlap in the common repulsion towards collusion and corruption of establishments politicians from each country, but also, in some cases, a contiguity in the common defense of threatened welfare systems and, in others, in the concern about immigration pressures. Under Marine Le Pen, the National Front has been consistently to the left of the French Socialist Party on most domestic and foreign policy issues, with the exception of immigration, offering criticisms of François Hollande's regime that are often indistinguishable from those of Mélenchon.
On the other hand, Italy’s Five Star Movement, whose voting record in parliament has generally been impeccably radical, has repeatedly expressed alarm at the growing influx of refugees into Italy. Another gesture common to virtually all shades of populism in Europe has been rebellion against the blatant confiscation of democracy by the EU structures in Brussels.
However, for seven years after the crash By 2008, the political impact of the populist uprisings in Europe had been quite modest – nothing remotely comparable to the storms that swept Europe and America in the 1930s. The Northern League and the AfD were both polling below 5% of the vote. Ukip, the Sweden Democrats, the Dutch Freedom Party, the Norwegian Progress Party and the National Front were all polling between 10 and 18% of the electorate.
They are all right-wing populisms. The Freedom Party in Austria and the Danish People’s Party, also on the right, and Podemos, on the left, each reached just over a fifth of active citizens. The two most successful populisms were recent creations of the left: in Italy, the Five Star Movement won a quarter of the vote, and in Greece, Syriza won more than a third.
7.
What changed all this were four other events. In Britain, the ruling Conservative Party, under internal pressure and threatened with losing voters to Ukip, authorized a referendum on European Union membership, which its leaders assumed would produce an easy victory for the status quo, given that three-quarters of the members of Parliament, the entirety of high finance and big business, the highest levels of the trade union bureaucracy and the massive ranks of the intelligentsia and establishment cultural aspects of the country were in favor of continued membership.
To everyone's surprise, a clear majority of the population voted to leave Europe, with a much higher turnout than in the general elections. Decisive to the result was the revolt of the country's most neglected regions and classes against the establishment The two-party neoliberal movement that had been continuously in power since the 1990s. It was the first time that a populist rebellion had become the expression of a political majority in a capitalist country and, in doing so, altered the course of its history. It was a revolt orchestrated by right-wing forces: Ukip, the traditionalist wing of the Conservative Party and much of the tabloid press. But its success was based on the mobilisation of large sections of the population who had previously been strongholds of the Labour left.
A few months later, Donald Trump triumphed in the United States presidential elections, in which he had hailed the Brexit as a dress rehearsal. His campaign, clearly distinct from his administration, was purely right-wing populist in tone and content—a chord last struck in his inaugural address, which combined scathing denunciations of political devolution, rising inequality, and loss of national sovereignty with hostility to immigration. His national victory was, in a sense, accidental: if the Democrats had chosen almost any other conventional candidate less unpopular than Hillary Clinton, he would probably have been defeated.
Falling far short of an absolute majority, with fewer aggregate votes than Hillary Clinton, Donald Trump's victory not only did not reach the same proportions as Brexit, but it also depended for its success on hijacking reflexive party loyalties among those who were willing to vote for any candidate as long as he was a Republican, no matter how unpalatable. However, Donald Trump's victory was not achieved on the basis of a single yes/no question, as in the Brexit, but on a broad political-ideological platform, and its support among working-class voters may have been greater than that obtained by Brexit: about 70% of those who voted for him did not have a college degree.
Nor was this the only populist surge in the United States that year, with Bernie Sanders proving to be a formidable challenger for the Democratic nomination on the left. If we consider the elements of the less privileged classes who voted for Donald Trump in the presidential election and those who voted for Sanders in the Democratic primaries as a proportion of those who voted for Clinton in November, about a third of voters in 2016 were susceptible to right-wing populism and a fifth to left-wing populism.
The next surprise was the performance of the British Labour Party in the 2017 general election under its new leader, Jeremy Corbyn, who had been almost universally dismissed as a hopeless and politically incompetent far-left loser. He ran a highly effective campaign under the populist slogan “For the Many, Not the Few” [“For the many, not the few”], he won a larger vote than his party had in any of the previous three elections, depriving the Conservatives of their majority in Parliament, on a platform more explicitly hostile to the neoliberal order than that of any comparable party in Europe.
The historical tradition and unchanged nature of British Labour, both deeply conservative, are far from populist. But a huge influx of young people into the party after Jeremy Corbyn became its leader, which made it for a time the largest political organisation in Europe, was like a sudden and massive injection of an alien strain, bringing it in what would otherwise have been a left-populist direction, not unlike the transformation of the Left Party of Mélenchon, traditionally socialist, which he launched in 2008, in the full populist France Insoumise of 2016.
In 2018, the highest hurdle was cleared in Italy, where two explicitly populist parties, the Five Star Movement on the left and the League on the right, jointly won 50 percent of the vote—an earthquake in Italy and by far the most alarming result yet for the establishment European, since both announced that they had no intention of subjecting the country to the dictates of further austerity from Berlin, Paris or Brussels. The Italian elections also marked the first time that, in a direct confrontation, left-wing populism surpassed right-wing populism by a large margin: 33% for the M5S, 17% for the League.
Elsewhere, the opposite was true. In France, in 2017, Le Pen’s votes surpassed those of Mélenchon. In the UK, Corbyn was soundly defeated in 2019 by the conservative demagogue Boris Johnson, an extravagant incarnation of a simulacrum of right-wing populism.
8.
The reason why right-wing populism has enjoyed an advantage over left-wing populism is not difficult to see. In the neoliberal order, inequality, oligarchy and factor mobility form an interconnected system. Right-wing and left-wing populisms can, in different ways, attack the first two with more or less uninhibited vigor. But only the right can attack the third with even greater vehemence, with xenophobia against immigrants functioning as its trump card. Here, left-wing populisms cannot continue without committing moral suicide.
Nor can they easily mitigate the immigration problem, for two reasons. It is no mere myth that companies import cheap labor from abroad—that is, workers typically unprotected by citizenship rights—to drive down wages and, in some cases, to take jobs from local workers, which any left should seek to defend. Nor is it true that, in a neoliberal society, voters have typically been consulted about the arrival or scale of the foreign labor force: this has almost always happened behind their backs, making it a political issue not former before more ex post facto.
There is a transatlantic difference here. The denial of democracy that has become the structure of the European Union has included, from the outset, the denial of any democratic say over the composition of its population. The US Constitution, woefully anachronistic in many other respects, is not so radically undemocratic. Historically too, of course, the US is a society of immigrants, as no European country has ever been.
This means that there is a tradition of selective reception and solidarity towards newcomers that is not found in Europe with the same emotional intensity. But on both sides of the Atlantic, left-wing populism faces the same difficulty. Right-wing populisms have a simple position on immigration: bar the door to foreigners and expel those who should not be here. The left cannot have anything to do with this.
But what exactly is their immigration policy: open borders, skills tests, regional quotas, or what? Nowhere has a politically coherent, empirically detailed and sincere answer been given so far. As long as this persists, right-wing populism is very likely to maintain its advantage over left-wing populism.
The problem is, in fact, more general. No populism, whether right or left, has yet produced a powerful remedy for the ills it denounces. From a programmatic point of view, most of the contemporary opponents of neoliberalism are still whistling in the dark. How can inequality be seriously combated – and not just patched up – without immediately triggering a strike by capital? What measures can be envisaged to confront the enemy, blow by blow, on this contested terrain, and emerge victorious? What kind of reconstruction, inevitably radical at this point, of the current liberal democracy would be necessary to put an end to the oligarchies it has generated? How can the deep state, organized in all Western countries for imperial war – whether clandestine or open – be dismantled? What reconversion of the economy to combat climate change, without impoverishing already poor societies on other continents, be imagined?
That there are so many arrows missing from the quiver of serious opposition to status quo is not, of course, the fault of current populisms alone. It reflects the intellectual contraction of the left, in its long years of retreat since the 1970s, and the sterility, in this period, of what were once original strands of thought on the margins of the mainstream. Palliative proposals can be cited, which vary from country to country: Medicare for everyone in the US, guaranteed income for citizens in Italy, public investment banks in Britain, Tobin taxes in France and the like.
But, in relation to a general and articulated alternative to status quo, the cupboard remains bare. If a populist party or movement comes to power today, to see the likely outcome, one need only look at the turncoat fate of Syriza in Greece, on the left – in opposition, a rebel against EU dictates, in office, a submissive instrument of the same – or, on the right, the overnight normalization of Trump’s first presidency, which spit fire at the complacency and inequality of the establishment on the day he took office, and did nothing about it once in the White House. In political terms, neoliberalism has not been in much danger in either situation.
Against this backdrop, the Covid virus struck the world like a thunderbolt in 2020, forcing lockdowns across the globe. Donald Trump and Boris Johnson, who were riding high a year earlier, were brought down by its impact. Donald Trump would almost certainly have been re-elected that year had his administration not been hit by the pandemic. Boris Johnson was impeached by his own party in 2022. Under the shockwave of Covid, international trade plummeted and, in a few months, half a billion jobs were lost worldwide.
In the United States, the stock market crashed and gross domestic product suffered its worst decline since 1946, contracting 3,5% in 2020. In the United Kingdom, GDP fell by 10% and in the European Union by 6%. As global supply chains frayed, inflation began to rise across the OECD, and with it unemployment. In this emergency situation, the last year of Donald Trump’s first administration was marked by massive fiscal stimulus to avoid a deeper recession.
9.
Starting in 2021, with Joe Biden in the White House, even greater government intervention to stabilize the American economy was set in motion with the so-called Inflation Reduction Act, injecting $750 billion into the economy, with a massive package of government subsidies to encourage new investment, sustain household incomes, and change energy use; followed by the Chips and Science Act of 2022, which poured another $280 billion of government spending into the country’s semiconductor and allied industries, along with a battery of protectionist measures designed to defeat high-tech competition from China.
This was a program proudly described by supporters of the Joe Biden administration as a 21st century version of New Deal Roosevelt’s prescriptions would modernize American industry, help the disadvantaged, and equip the country’s military to counter the threat posed by the rise of China. Many welcomed his sweeping statist interventions and his adoption of active industrial policies as a break with neoliberalism comparable to and as decisive as Roosevelt’s break with paleoliberal doctrines in the 1930s.
Others applauded Joe Biden’s revival of the Cold War policy of building alliances against deadly enemies abroad, whether around the Black Sea, in the Middle East or the Far East, in the best spirit of Truman in the 1940s and 1950s.
The prevailing opinion, not only in America, but also, and often even more ardently, in Europe, hailed the results of this change as little less than a miracle. The most influential and intelligent mass periodical in the capitalist world, functioning at times as a semi-official adviser to it, the magazine The Economist, from London, was able to celebrate the American economy in a special report last October as “the envy of the world”, whose post-pandemic dynamism “left other rich countries in the dust”.
Commentators in the US itself have hailed Joe Biden’s ability to suppress inflation, his administration’s healthcare measures for the underprivileged, his progressive interethnic policies of “diversity, equity and inclusion”. In both Europe and America, there has been applause for his steadfastness in standing with Israel in Gaza and with Ukraine. Unfortunately, American voters have been less impressed.
By the summer of last year, Joe Biden was so discredited that his own party forced him to drop his re-election bid, much as the Conservatives ousted Boris Johnson in Britain, leaving Kamala Harris, his hapless vice-president, to be defeated in November by Donald Trump, who won a larger majority than in 2016.
What Donald Trump’s second presidency will mean for America and the world remains to be seen, given the long-standing gap between his words and his actions. On the domestic front, he may not follow through on his election promises this time to impose 60 percent tariffs on all goods from China and deport all eleven million illegal immigrants in the United States, just as he failed to deliver on his promises last time to rebuild America’s crumbling infrastructure and build an impenetrable wall along the entire Mexican border.
But given Republican control of both houses of Congress for at least two years, he is more likely to make good on some of his promises than to scrap them all, and on trade, he will force allies and adversaries alike to pay more monetary tribute to the United States than they have in the past. Abroad, he could stop the war in Ukraine by cutting off all aid to Kiev, or he could escalate it if Russia refuses the terms on which he hopes to end the fighting. He believes in the advantage of being unpredictable, and certainly the European Union, Britain and Japan, even if they don’t like what he does, are too weak as subordinate partners to deter him from doing so.
The government of Germany – Europe’s strongest power – collapsed the day after Donald Trump was elected, when Olaf Scholz fired his finance minister and lost the third party on which his coalition depended. Never before had such an event occurred in the Federal Republic. The new elections doubled the AfD’s vote to a fifth of the electorate, giving rise to another coalition of the establishment who is rushing to approve an increase in defense spending in a Bundestag which voters have just rejected, in yet another demonstration of how little European elites care about the democracy they ardently proclaim.
In France, the government appointed by Emmanuel Macron after his defeat at the polls last summer collapsed within two months, overthrown by a combination of right-wing and left-wing opposition in the National Assembly in a revolt the likes of which the country has known only once before, more than 60 years ago. Few believe that his precarious successor, who is relying on a reluctant co-optation of the Socialist Party, will last long.
In short, Donald Trump’s version of right-wing populism, loathed by half the country as a mortal threat to democracy, has taken power in Washington at a time of institutional disarray in Berlin and Paris, and with a government in London that is now even less popular than the discredited opposition it recently defeated. Everywhere, the scene is one of instability, insecurity, unpredictability. “All is disorder under heaven,” and there is little sign of a return to order as those accustomed to governing the West understand it.
10
Where does neoliberalism stand in this maelstrom? In emergency conditions, it has been forced to take measures – interventionist, statist and protectionist – that are anathema to its doctrine, but without losing its grip on the minds of policymakers, or giving way to any coherent alternative vision of how an advanced capitalist economy should be managed.
Despite dramatic departures from the pure milk of Hayekian or Friedmanian recipes, little has changed in the underlying motivations and contradictions of the system it created. While U.S. GDP fell by about 4,3 percent during the Great Recession following the crash 2008, and two-thirds of the OECD workforce endured low or falling real incomes, global growth resumed, albeit at levels still much lower than those claimed in China, while inequality continued to rise.
In the United States, the spending gap between the richest and poorest segments of the population is the largest ever recorded. But above all, what triggered the 2008 crisis has been offset by more of the same. The obesity of finance in the American GDP has not diminished, but rather increased. The American government deficit has tripled in the last decade. In the same period, the United States public debt has increased by $17 trillion, an increase equivalent to that of the previous 240 years. In the OECD as a whole, total sovereign debt has more than doubled from $26 trillion in 2008 to $56 trillion in 2024. An international regime that a decade ago sank and nearly drowned in the sea of debt it had created is now drowning in an even greater flood of debt, with no end in sight.
So are we finally witnessing the arrival of a regime change in the West, already announced several times this century? This is the message of the recent bestseller from an eminent American historian sympathetic to Biden, The rise and fall of the neoliberal order: America and the world in the free market era, by Gary Gerstle, which suggests that, from different directions, Sanders and Trump dealt such effective blows to Hillary Clinton's incarnation of neoliberalism that the way was opened by Joe Biden for the balance between rich and poor in American society to begin to shift and the benefits of government-directed industrial policy to become visible to millions of people.[iii]
Acknowledging that “the vestiges of the neoliberal order will be with us for years and perhaps decades,” he nevertheless ends with the firm declaration that “the neoliberal order itself is in tatters.” In some ways, an even harsher indictment of the socioeconomic balance sheet since Reagan comes from a longtime admirer of the Gipper, the Indian-American banker Ruchir Sharma, a former chief global strategist at Morgan Stanley in What went wrong with capitalism[iv]. Your leitmotiv is that “the periodic financial crises – which erupted in 2001, 2008 and 2020 – are now unfolding against the backdrop of a permanent, daily crisis of colossal capital misallocation”, the result of huge infusions of easy money pumped into advanced economies by central banks to sustain steadily declining growth rates.
These torrents of money distributed by the state are the ultimate and primordial truth of this period. Sharma warns that sooner or later the system will be hit by a monumental shock. What remedy would this bring? Sharma’s answer: a return to a smaller state and tighter money, the classic recipe of Mises and Hayek – neoliberalism complete once again.
These contrasting verdicts are not in themselves new. Eric Hobsbawm proclaimed “The death of neoliberalism” in 1998. A few years later, Colin Crouch, no less opposed to this system and titling his book about its misadventures The strange non-death of neoliberalism, came to the opposite conclusion, a judgment that he reiterated a year ago in a text entitled “Neoliberalism: still to shrug off its mortal coil".
These were the conclusions of a declared enemy of the neoliberal order. A staunch exponent, Jason Furman – special assistant to Bill Clinton, chairman of Obama's Council of Economic Advisers, admirer of the Walmart management model – is of the same opinion. In a front-page article in Foreign Affairs, entitled "The post-neoliberal delusion”, Furman responds forcefully to thinkers like Gerstle, attributing the Democrats' defeat for the White House to the folly of abandoning orthodox economic discipline with vast and incontinent spending programs that failed to achieve their objectives.
Laying out the costs and benefits of Joe Biden’s presidency in damaging detail, Furman reports: “Inflation, unemployment, interest rates, and the national debt were all higher in 2024 than they were in 2019. From 2019 to 2023, inflation-adjusted household income fell and the poverty rate rose.” “Despite efforts to increase the child tax credit and the minimum wage,” he continues, “both were considerably lower in inflation-adjusted terms when Biden left office than when he entered.”
For all his emphasis on American workers, Biden was the first Democratic president in a century who did not permanently expand the social safety net.” The bottom line: “Policymakers should no longer ignore the essentials in pursuit of fanciful heterodox solutions.” What has been dismissed as neoliberal orthodoxy is alive and well, and offers the only way forward.
Is an international regime being buried, or is it being resurrected like Lazarus? The impasse between these experts’ verdicts has its counterpart in the political landscape, where the conflict between neoliberalism and populism, the adversaries that have clashed across the West since the beginning of the century, has become increasingly explosive, as the events of recent weeks demonstrate – even though, despite all its apparent concessions or retreats, neoliberalism maintains the upper hand. The former has survived only by continuing to reproduce what threatens to overthrow it, while the latter has grown in magnitude without advancing any relevant strategy. The political impasse between the two is not over: how long it will last is anyone’s guess.
Does this mean that until a coherent set of economic and political ideas, comparable to the Keynesian or Hayekian paradigms of the past, has taken shape as an alternative way of managing contemporary societies, no serious change in the existing mode of production can be expected? Not necessarily. Outside the core zones of capitalism, at least two major changes have occurred without any systematic doctrine having anticipated or proposed them in advance.
One was the transformation of Brazil with the revolution that brought Getúlio Vargas to power in 1930, when the coffee exports on which its economy depended collapsed in the crisis and recovery was pragmatically achieved through import substitution, without the benefit of any advance defense. The other, even more far-reaching, was the transformation, after Mao’s death, of the planned economy in China, in the Reform Era presided over by Deng Xiaoping, with the rise to power of the system of household responsibility in agriculture and the launch, by town and village enterprises, of the most spectacular sustained explosion of economic growth in recorded history – which was also improvised and experimental, without any kind of pre-existing theories.
Are these cases too exotic to have any influence on the heart of advanced capitalism? What made them possible was the magnitude of the shock and the depth of the crisis each society suffered: the recession in Brazil, the Cultural Revolution in China – tropical and Eastern equivalents of the blows to Western self-confidence during the Second World War. If disbelief that any alternative is possible were to occur at some point in the West, the likelihood is that something comparable would eventually be the occasion for it.
*Perry Anderson, historian, political philosopher and essayist, is a professor of history and sociology at the University of California at Los Angeles and founder of the New Left Review. Author, among other books, of Selective Affinities (boitempo).
Translation: Fernando Lima das Neves.
Originally published on London Review of Books [https://www.lrb.co.uk/the-paper/v47/n06/perry-anderson/regime-change-in-the-west]
Notes
[I] Nye became chairman of the National Intelligence Council and assistant secretary of defense in the Clinton administration.
[ii] Forsyth and Notermans were careful to end their account by emphasizing that they were not offering causal explanations for the successive systemic changes they were describing. Notermans, the more prolific of the two, became a notable critic of neoliberalism—a term that only became widespread in this century—from the standpoint of a coldly realist social democracy, producing, among other things, the best analysis of the economic model of the flat-rate income tax in the country he had moved to: “An unassailable fortress? Neoliberalism in Estonia", in Localities (2015)
[iii] Allen Lane, 384 pp., June 2024.
[iv] Oxford, 432 pp., September 2023.
the earth is round there is thanks to our readers and supporters.
Help us keep this idea going.
CONTRIBUTE
