What is Neoliberalism and What Comes After It?

Neoliberalism is a word that can be used a little sloppily, and sometimes as a general cuss-word for policies or practices that are disliked, especially by those on the Left. But just because it is not always used rigorously does not mean it doesn’t exist.

Milton Friedman himself used the word neoliberalism, in a 1951 essay called ‘Neoliberalism and Its Prospects’. In that essay, Friedman argued that it takes twenty years for there to be “a change in the underlying current of opinion and the resultant alteration in public policy.” Friedman claimed that while elections could create a “difference of degree” and an “opportunity to begin a drift in a new direction”, “the direction this drift takes will be determined not by the day-to-day shifts in political power or the slogans of the parties or even their platforms but by the underlying current of opinion which may be already … determining a new direction for the future.” Friedman noted that he sensed the start of a move away from collectivism in 1951. “The stage is set for the growth of a new current of opinion to replace the old,” wrote Friedman, “to provide the philosophy that will guide the legislators of the next generation even though it can hardly affect those of this one.” Friedman said the problem with collectivism was its means, not its ends; in particular, its belief “in the ability of direct action by the state to remedy all evils”. He talked of the need for “a new faith”, which would put “a severe limitation on the power of the state to interfere” with individuals (while recognizing that the State can do some things well).

He said that this faith could be what is “sometimes called neo-liberalism”, associated particularly with Henry Simons. The faith would be “ideally suited to fill the vacuum that seems to me to be developing in the beliefs of intellectual classes the world over.” It would accept the liberal emphasis on the importance of the individual, but would add to this the goal of a “competitive order”. Monetary stability would be an important feature of the system. Governments, Friedman claimed, would still have a role in “relieving misery and distress”, but this would have to involve minimal interference with the market: minimum incomes and minimum wages could not be justified. He concluded that “neo-liberalism offers a real hope of a better future.” Of course, neoliberalism was never just about ideas, as I’ll explain further in a moment. It was, in David Harvey’s words, a political project. But what is interesting about this essay — apart from Friedman’s own use of neoliberalism — is that we find ourselves in a similar interregnum, or in-between moment, today: a moment where there is a vacuum. Part of the purpose of today’s conversation is to stir up thinking that might fill that vacuum.

The other preliminary point to make is that neoliberalism has not had the same character the world over. I will speak in particular based on what I have seen and heard in the places I’ve lived: New Zealand, Australia, Indonesia, the United States, and the United Kingdom. Neoliberalism has had different emphases in different places, based on different cultural backgrounds and different understandings of the State.

Nevertheless I do think there is something unified called neoliberalism that has had some common features across multiple continents. What I want to talk about are six overlapping and interlocking elements of the neoliberal project. I want to sketch these out so that we can talk clearly about what neoliberalism is, and so that we can be open-eyed about what we have to move beyond. The six elements I’ll talk about are neoliberalism as philosophy, neoliberalism as policy package, neoliberalism as class project, neoliberalism as new language, neoliberalism as closure of the Overton window, and neoliberalism as a social force. I want to try to be both precise and speculative in what I say, and I apologise if this ends up satisfying no one. I’m going to quote a fair few people, partly to help fill gaps in my knowledge, and I do this not to sound like a name-dropper, but to show how much work has gone into constructing and deconstructing neoliberalism — and to highlight how much more work needs to be done to move beyond it.

1. Neoliberalism as philosophy of government

The first way of conceiving of neoliberalism is as a programme for what the government should and shouldn’t do. This approach is best illustrated by Michel Foucault’s book of lectures, The Birth of Biopolitics, which is not at all about biopolitics (by which Foucault means the politics of scientific measurement of human health, including birthrate and life expectancy), and more a history of liberalism and neoliberalism. Foucault sees neoliberalism as continuous with liberalism, and traces the history of liberalism back to the seventeenth and eighteenth centuries. He sees neoliberalism as a “framework of political rationality”, which emerged in Germany in the 1930s and 1940s, and was transported to France and the US. (This is, it should be said, quite a Eurocentric account.) For Foucault, liberalism has always been about the organization and management of freedom (and not necessarily the guarantee of freedom). He understands neoliberalism as a refashioning of old liberal forms to serve particular purposes. So he writes: “we should not be under any illusion that today’s neo-liberalism is, as is too often said, the resurgence or recurrence of old forms of liberal economics which were formulated in the eighteenth and nineteenth centuries and are now being reactivated by capitalism for a variety of reasons to do with its impotence and crises as well as with some more or less local and determinate political objectives.” According to Foucault, the key change in the shift from liberalism to neoliberalism is a focus on competition: the competitive individual, and the engineering of government so that forces of competition play out within and between governments. There is overlap here with the work of British writers Jeremy Gilbert and Eliane Glaser. Neoliberals, in Foucault’s view, take competition as something that is not a given, but as something that has to be created. This is “the neoliberal art of government”: a form of government that focuses on economic growth, that opposes monopolies, that aims to guarantee price stability, and that regards social policy as being concerned with equal access to market goods. French neoliberalism placed particular emphasis on the separation of economic and social policy, whereas US neoliberalism developed the notion of human capital and the entrepreneur. In this discussion, Foucault also emphasizes the importance of the rule of law to the neoliberal project, and it is notable that Hayek engages closely with law in his writing, and that Friedman begins his essay on neoliberalism by quoting Dicey, the nineteenth century Oxford-based constitutional theorist. The focus on the rule of law creates a bridge to other philosophical work applying market models to the domain of crime, with Foucault citing Gary Becker’s work (and gesturing at the world of law and economics) as an example of this. There are different ways of constructing what the neoliberal philosophy of government is, but Foucault’s is perhaps the most prominent, seeing neoliberalism as an active initiative to create competition and to extend the market into non-market domains. Will Davies has talked analogously about neoliberalism as a philosophy that replaces politics with economics.

2. Neoliberalism as policy package

The second way of conceiving neoliberalism is as a policy package, perhaps to implement this philosophy of government. A number of theorists have done the hard, fine-grained work of charting neoliberal legal and policy changes, including the New Zealand writer Jane Kelsey (who in my view does some of the best work in closely and thoroughly mapping policy shifts). Policy changes discussed by Kelsey and others include the deregulation (the removal or loosening of rules) of various markets, especially financial markets and banking practices (in a way that has increased private debt considerably as well as the complexity and size of financial markets); the privatization of key State functions, including the provision of water, power, and railways; the weakening of trade unions through restrictions on recruitment and closed-shop unions; the denting of progressive income taxation, the abolition of some taxes (including inheritance tax), and the introduction of more regressive taxes such as VAT (goods and services taxes); the corporatization of public services (through introducing chief executives, private sector-style incentives and strategic planning, and increasing use of government by contract); and the focus on inflation targeting by independent central banks; the lifting of subsidies and tariffs, and the removal of explicit industrial policies. Away from the sphere of economic policy, the 1990s and 2000s saw a punitive push in criminal justice policies (exemplified in the US and the UK); Louis Wacquaint writes that this push, which disproportionately affected black and indigenous peoples, immigrants, and women (notable that the world female prison population has increased by 50% since 2000), was used to shut down dissent against the neoliberal order, and to create a false sense of security amidst the insecurity of significant economic change. This was neoliberalism’s racial dimension, and it is relevant to here to note that in New Zealand, some indigenous activists that I know well have spoken of neoliberalism as simply another iteration of colonisation. International institutions were key actors in these policy shifts, in addition to domestic governments: with the World Bank and IMF pairing development assistance with neoliberal changes, and the World Trade Organisation enforcing a particular model of trade and State action.

I also think there has been insufficient focus on the role of lawyers in all of this. The role of economists, thinktanks, finance, politicians, and international institutions has been well-mapped. But (and maybe it’s just because I’m trying to find work for myself in law that will interest me) more work remains to be done on how lawyers advised policy-makers and devised key phrases and statutes for neoliberal change; and how judges themselves drew on neoliberal reasoning in the common law (which is often under-scrutinised by non-lawyers). What is clear is that this was a society-wide agenda of policy and legal change; an agenda that shifted the way people in government (including judges in the courts) themselves thought about the task of government.

3. Neoliberalism as class project

Third, neoliberalism was and is a class project: a point that David Harvey has brought out with great clarity. Harvey has pointed out that the charting of policy change, and the tracing of the philosophy of neoliberalism, can give the impression that this was a completely coherent intellectual endeavour. But neoliberalism’s intellectual commitments were selectively applied: for all that neoliberalism involved and involves an attack on the State, the size of many States increased during the 1980s, as Harvey explains (partly because of increases in defence and criminal justice spending to scaffold other neoliberal projects). This was not just about ideas, either. Neoliberalism was built up through the funding of thinktanks such as the Mont Pelerin Society and the Business Roundtable in New Zealand, and the development of strategic networks of neoliberally minded thinkers in government and the public service and business. But it resulted in an unmistakeable transfer of wealth to a small group of people, such that in 2016 (according to Oxfam’s research) 8 men owned the same amount of wealth as half the rest of the world, 3.6 billion people. In Harvey’s words, from a 2016 interview in Jacobin magazine, neoliberalism was a “political project carried out by the corporate capitalist class as they felt intensely threatened both politically and economically towards the end of the 1960s into the 1970s”, a project “that would curb the power of labour”, a “counter revolutionary project” that “would nip in the bud what, at that time, were revolutionary movements in much of the developing world — Mozambique, Angola, China — but also a rising tide of communist influences in countries like Italy and France.” It required, Harvey says, significant solidarity across a corporate capitalist class. So, when Shadow Chancellor John McDonnell talks — as he has done recently, paraphrasing Tony Benn — about the need for an irreversible shift in the balance of power towards labour, away from capital, he is referring to a response to the class project of neoliberalism.

4. Neoliberalism as new language

Fourth, neoliberalism involved new language: it involved a shift in how we talk about the economy and ourselves. Some of the best writers on this include Maurizio Lazzarato, who speaks in his book Governing by Debt about the “axiomatics of neoliberalism” (the maxims that gave neoliberalism a simple soundbite logic), and Wendy Brown. Brown, in her book Undoing the Demos, traces the rise of how individuals came to be figured as “human capital”; the focus on “governance” as opposed to government; the rhetoric of flexibility; the discussion of benchmarking and best practice; the view of speech as capital, which Brown analyses with reference to the US Supreme Court decision in Citizens United. We could also think of our own examples: the way citizens have become regarded as consumers or clients, for examples. What Brown’s examples — especially, I think, the reference to “best practice” and “benchmarking” — bring out is that neoliberalism also involved an attempt to depoliticize certain political debates: an effort to suggest that neoliberal change was technocratic and value-neutral. This new language had real-world impacts too, changing the way government officials thought about their work and the way that we as citizens viewed our responsibilities. Kate, of course, has shown in her work how visual framing in economics can have considerable impact, alongside verbal framing.

5. Neoliberalism as a project to define the limits of the political world

This point about neoliberalism as new language is closely linked to the fifth way of viewing neoliberalism: as a way of closing down what is seen as politically possible. Mark Fisher’s book Capitalist Realism is perhaps the best account of this, explaining how Margaret Thatcher’s claim that “there is no alternative” cast a shadow over political and cultural debates. Other writers have spoken about how the Overton window — the window of what is seen as politically possible at any one moment — was closed through the neoliberal era. The causes of this include the rise of technocratic language and thinking, and the diversion of policy-making to less accountable institutions such as central banks. The result is that for some time certain issues have seemed to be untouchable by politics — say, for example, rising food prices or nationalization — though it may be that in recent times that Overton window has begun to be prized open again. A further consequence, I think, has been greater disengagement from mainstream politics — especially amongst young people — borne of a view that the power of politics to transform everyday lives has been dented. In all of this, I think we are better off talking not just of the closure of the Overton window, but of the movement of the Overton window to the right, since it certainly cannot be said (at least in places that I’m familiar with) that ideas from the far-right of politics have not been given space for debate. The upshot of this is that when we talk about the widening of the Overton window, we are talking about the widening of the Overton window in one particular direction.

6. Neoliberalism as social engineering

Finally, sixthly, neoliberalism has been a social force: a project that was always designed not just to change government or politicians, but also the everyday values, views, and visions in society — the “current of opinion” mentioned by Milton Friedman. We are reminded of this by Thatcher’s references to there being “no such thing as society”, and her claim that “economics is the method; the object is to change the soul.” Writers such as George Monbiot and Lynne Segal have traced the shift to more individualistic values, including with reference to empirical evidence, in the last 20–30 years. Guy Debord, writing The Society of the Spectacle in 1971, wrote of “the vicious circle of isolation” ushered in by the economic system, and the lack of an available vocabulary for discussing our damaged social lives. The anthropologist Arjun Appadurai has traced shifts in the “social imaginary”. My friend Andrew Dean has written about young people growing up in the wake of neoliberalism, and has analysed the structure of feeling that has created: including a lingering sense of disconnection and anxiety (under the cloud of debt). I have written about persistent loneliness — it’s striking that in both NZ and the UK, 15–24 year olds are the loneliest group in statistics just constructed about loneliness — and how neoliberalism has infected friendship, through its creation of social distance (to borrow a term from Adorno). Hito Steyerl has written about neoliberalism in the art world, and cultural studies theorists and others have explored how neoliberalism has affected popular culture, especially music. My view is that neoliberalism has not destroyed our capacity for prosocial values, but has maligned and marginalised those values. Jon Cruddas drew my attention to this passage from Vaclav Havel’s essay, ‘Politics and Conscience’, which lays out the point well. Havel writes: “We must not be ashamed that we are capable of love, friendship, solidarity, sympathy, and tolerance but just the opposite: we must set these fundamental dimensions of our humanity free from their ‘private’ exile and accept them as the only genuine starting point of meaningful human community.” The imperative is not to reintroduce values that have entirely disappeared, but bring these values back from exile within our peresonalities.

There is much more that could be said about neoliberalism’s precise starting point — it can, as I have noted, be traced back to the 1930s, or the 1970s, or 1980s, depending on your view of it and the geographical scope of the analysis. We could also talk about different rounds of neoliberalism. My sense is that neoliberalism has had three incarnations: a first surge of ruthless reform, often in the 1970s and 1980s; a second wave under the Third Way of Blair and Clinton, which bedded in neoliberalism through some forms of technocracy (recall Blair’s refrain that he was concerned only with “what works”), something Nancy Fraser has described as progressive neoliberalism; and a third phase after the global financial crisis, which has involved new forms of financialisation (including a brief period of enthusiasm around crypto-currencies such as bitcoin) and the rise of what Nick Srnicek describes as platform capitalism, new digital monopolies such as Amazon and Google that challenge neoliberalism’s commitment to competition. On the theme of using capitalism and neoliberalism somewhat interchangeably, there is a further debate to be had about whether criticisms of neoliberalism are a diversion from the need to criticize capitalism more broadly (David Harvey prefers to talk about anti-capitalism over anti-neoliberalism). But I would maintain that it is helpful to at least understand the specific ideological and political form that has predominated in the last 20–30 years, the problems with which might be shared with the broader capitalist order.

So what comes next?

Neoliberalism has failed on its own terms in many places — not succeeding in boosting productivitiy or living standards or growth — while also ripping at the social fabric of various societies. I’ve not spent so much time on the harms of neoliberalism because I think that ground is well-trodden by Joseph Stiglitz and many of the authors I’ve mentioned above. Needless to say, dissatisfaction is felt both on the Right and the Left, with Trumpian aggressive, authoritarian Statist action representing one attempt to build an alternative. Our challenge, I think, is to build a different kind of alternative from the Trumpian vision — and to talk with some specificity about a new form of government, politics, and economic rationality, however transitional that may be. One of the exciting things about Kate and Martin’s work is it provides that level of constructive specificity.

A challenge that we face is that the image and reputation of government has been dented by neoliberalism, as Mariana Mazzucato and Max Rashbrooke and others have pointed out. Government is regarded as inefficient, bloated, and corrupt, and there is the added fact in many societies that the government has been responsible for colonization, which leaves indigenous peoples and others with a justified sense of suspicion and distrust towards it. Another challenge is that the Left has been notably patchy in its provision of a theory of the State (despite work done by Ralph Miliband, Leo Panitch, and others). And Foucault notes the problem goes beyond the lack of a theory of the State. “What socialism lacks,” he writes, “is not so much a theory of the state as a governmental reason, the definition of what a governmental rationality would be in socialism, that is to say, a reasonable and calculable measure of the extent, modes, and objectives of government action.” And a final challenge, perhaps the greatest of them all, is that not all objections to the State are based on myth. Government can be a destructive as well as a deeply emancipatory force.

The best account of this tension between the destructive and deeply emancipatory capacities of government is given, I think, by Stuart Hall, in a short essay called ‘The State — Socialism’s Old Caretaker’, published in Marxism Today in 1984. Hall says, “I do not … believe that what ‘we have always thought about the State’ on the Left will necessarily do for the next ten decades; or that posing ourselves difficult questions is necessarily a sign of the weakening of the faith.” In a key statement of the problem, Hall says: “On the one hand, we not only defend the welfare side of the state, we believe it should be massively expanded. And yet, on the other hand, we feel there is something deeply anti-socialist about how this welfare state functions. We know, indeed, that it is experienced by masses of ordinary people, in the very moment that they are benefiting from it, as an intrusive managerial, bureaucratic force in their lives. However, if we go too far down that particular road, whom do we discover keeping us company along the road but — of course — the Thatcherites, the new Right, the free market ‘hot gospellers’, who seem (whisper it not too loud) to be saying rather similar things about the state.” Hall notes that Marx and Engels’ view on the future role of the State is sketchy and does not offer much guidance. And he argues that the State does not have a “monolithic class character”. The Left, on Hall’s view, “has its part of the state, too”: including the the welfare state, the NHS, and other nationalized services. But there is “the parallel expansion of the warfare state”: the repressive, policing state, active in surveillance (and we might add, mass incarceration). Hall acknowledges that this state seeps into the welfare state. And the large bureaucracy of the State also “makes people into passive, greedy, dependent clients much of the time, rather than people claiming rights from a state which is supposed to be their state.” Hall mentions the challenge of being “in and against the State”, a phrase often used by John McDonnell. Hall says we cannot “afford to be naïve about the state”. It is a “contradictory force”, and “the state has to be dismantled, and another conception of the state put in its place.” But, Hall notes, “we have as yet a wholly inadequate conception of how a socialist state would operate in ways which are radically different from that of the present version.” He does not set out an alternative vision, but does observe that there is something to hold into in the concept of “the public”, and that a “partnership” should be envisaged between state and society”, where “the state itself is rooted in, constantly draws energy from, and is pushed actively by popular forces.” He ends by underscoring the importance of “democracy” to socialist thinking, across “a multiplicity of sites in social life”, and not simply by smashing the state. It’s worth noting that what Hall discusses is a little similar to what I understand of the writing of academic and now Bolivian Vice President, Alvaro Garcia Linera, who talks about the State needing to become a “State of social movements”: a government driven by and creating space for advocacy and activism.

Salvaging the State

I think we can still salvage the State. It is difficult to prescribe how in an overly abstract way, since the conditions of each society are different. But I think a starting point is to commit to disciplining, democratizing, and (in this society and some others) decolonizing the State. What I mean by disciplining is that the State should be guided by certain progressive values: I’ve suggested that in the New Zealand context those might be values of care, community, and creativity. What I mean by democratizing is something I hope Martin will speak more about: thinking hard, in Keaanga Yamahtta-Taylor’s words, about not just what the State owns, but who owns the State; and working hard — through the use of cooperatives and community forces — to ensure that State action is participatory and responsive to the many publics that exist in any one society. What I mean by decolonizing (and I have in mind here especially the British and NZ states, though it applies to many other) is undoing and understanding the negative effects of colonization; and recentring the views and values of colonized peoples, since this is crucial to the legitimacy of the State. I might add — and this is perhaps something Kate might touch on — that we need to speak of decarbonizing the State, especially given the IPCC’s recent report (and I’m very pleased to say that one of the authors of that report, Bronwyn Hayward, is in the room today) tells us we have 12 years to reorient our societies to avoid complete climate breakdown. This, for me, is how we resolve the paradox of the double-edged State: by disciplining, democratizing, and decolonizing it.

There are still many questions of detail, of course. Is it enough for the State to be disciplined by values-based politicians, such as Jeremy Corbyn, or can a single written constitution do more to buttress the direction of a salvaged State? The Left has also been ambivalent historically on matters of constitutional law, something that I’m interested in. What is the role of central banks, seemingly anti-democratic institutions, in all of this? What should the salvaged State do about finance, that sector that has grown considerably under neoliberalism? My sense is that on the contemporary British left, there are some subtle but important differences on this question, with some — like Mariana Mazzucato and, I would say, Graham Turner (primary author of a report called Financing Investment that I contributed to) — who think the challenge is to transform finance and harness it towards more progressive ends; and others who would seek to decentre finance more radically as part of a diversified economy. This raises the question: what, of the economy, needs to be democratized — and what needs to be dismantled? I think we should not be scared to have these arguments out. The Left should pride itself as being a place of contestation, and Stuart Hall is right, I think, that “posing ourselves difficult questions” is not “necessarily a sign of the weakening of the faith”. And the questions, of course, should not be confined to the State — there are many other aspects of a new economic model to be worked out, as I think Kate and Martin will speak about.

How do we get from where we are now to a salvaged State, a different vision of government beyond neoliberalism? I think we should be wary of copying the methods of the Right, and it is concerning to me to see some writers simply suggesting that what is needed is a Mont Pelerin-style thinktank and a similar circulation of ideas. The Left has different values and commitments, and these should apply to our methods as well as our ends. That means we should maintain a commitment to mass movement politics as the principal and best way to achieve bottom-up, society wide change — through the Labour Party and Momentum, in my view, and outside of it. We need to maintain a commitment to networks of advocacy groups, joining together with common cause. And there is also a desperate need for hard and rigorous thinking about these questions, from people in the university — through dissertations and theses, and also through other forms (including conversations and writing for a popular audience). All of us have a part to play in this project, and — in the face of climate breakdown, in the face of shameful homelessness, in the face of mass incarceration — in the face of all of these things, and even though we and others find ways to mask or not to face up to them, we have not a moment to lose.

[speaking notes from event on ‘Government After Neoliberalism’, with Kate Raworth and Martin O’Neill]