Absorb, Coopt and Recast: Global Neoliberalism’s Resilience through Local Translation
Igor Guardiancich’s review of Cornel Ban’s book “Ruling Ideas: How Global Neoliberalism Goes Local”
Ideas are important. If such sentence rightly seems the apogee of banality, in reality the study of why and especially how ideas are being translated from textbook theory into practical policy has often escaped political scientists, who more often than not focus on two more tangible aspects of policymaking, that is, on institutions and interests.
Already in their 1985 classic study of Keynesianism, which basically launched the new institutionalism, Margaret Weir and Theda Skocpol stressed the importance of how “policy-relevant intellectual innovations” are both influenced by “state structures and policy legacies” and at the same time they steer the “activities of politicians and officials”. However, going from words to deeds is easier said than done, and the systematic research of ideas is a daunting endeavour. Cornel Ban picks up the gauntlet by studying what he calls the “local translators” of global neoliberal economic scripts, who fundamentally alter these textbook paradigms not only to fit them to the domestic reality, but also shape the policies according to their Weltanschauung. Ban’s book proceeds in classical, yet sophisticated neo-institutionalist manner, trying to bridge its historical, rational and sociological branches.
First, it stresses the importance of historical legacies, which shape the pace of the transition to neoliberalism. Domestication is inherent to the local ideational legacies, where policymakers had different familiarity with the ancestors of modern neoliberal theory. Here the permeability of the state to foreign ideas, which is intimately linked with the degree of academic and intellectual freedom granted to individuals, is crucial.
Second, the book contends that the timing, depth and path of integration of domestic translators with the neoliberal paradigm is key to understand their “independence of thought” vis-à-vis such paradigm. Ban convincingly applies the emerging political economy literature on professional ecologies, which shows that professionals’ capacity to act is heavily affected by material, status and institutional resources, where transnational organizations and networks are pivotal in the allocation of these resources. This is a key passage for the diffusion of ideas, as “the local distribution of professional and material resources provided by the global disseminators of neoliberalism shapes the local translation of imported neoliberal scripts” (22).
Third, the contemporary institutional context plays a major role. The cohesiveness of national institutions that host domestic policymakers as well as the panoply of coercive methods deployed by international organizations shape the capacity and vantage points of domestic translators.
Embedded and disembedded neoliberalism
The primary object of study of Ban’s book is the variety of neoliberalism that is being adopted by a certain country at different moments in time. For local hybrids to be considered neoliberal, the author contends, elements of competing theories can be edited into local translations of neoliberalism as long as they do not challenge its three fundamental and defining goals: 1) economic policies that have credibility with financial markets; 2) the primacy of trade and financial openness; 3) safeguarded internal and external competitiveness. Ban takes as departure point the notion, first developed in Karl Polanyi’s classic The Great Transformation, that markets must be always embedded to acquire a modicum of stability, that is, there must be a working equilibrium between market competition and social protection, as well as between macro-strategies of governments and micro-logics of firms. There are several ways in which these trade-offs are then resolved (that is, translated) in a specific national policy regime, thereby determining the kind of neoliberal variety.
At one end of the spectrum, the trade-offs may be resolved using ideas that maximize the policy space for downward distribution of income and opportunities to compensate society against market dislocations. Here, Ban posits that we are confronted with versions of “embedded neoliberalism”, in which the state enacts policies such as investment in public health and education, strengthens progressive taxation and employment protection legislation, or improves insurance against unemployment, old-age, maternity and so on.
At the other end of the spectrum, the upward redistribution of income and opportunities may be preferred, thereby favouring high-income individuals and corporations at the expense of their less wealthy or powerful peers. Such conduct requires as much state intervention as before; however, this is channeled towards policies such as regressive taxation, the weakening of labour union influence vis-à-vis organized capital, the creation of new markets through the privatization of social insurance and services as well as the setup of extensive guarantees for the financial industry. According to the author, these are all examples of “disembedded neoliberalism”.
What’s the Latin for neoliberalism?
In order to study the two regimes empirically, Ban compares Spain and Romania. The rather unconventional case selection is grounded in a number of striking differences regarding the depth, timing and pace of integration of policy elites into international neoliberal networks (deep, ascending and gradual in Spain; shallow, consolidating and fast in Romania), the exposure to international coercion (low conditionality in Spain; under IMF vs EU diktats in Romania) and the two countries’ institutional cohesiveness (unitary and continuous in Spain; factious and sporadic in Romania). These distinctions translated into dissimilar renditions of neoliberalism in the two countries: embedded and socially oriented in Spain, versus disembedded and, to put it like Orenstein and Appel, avant-garde neoliberalism in Romania.
The author provides a rich account of the inception of neoliberal thought in the two countries, starting at the beginning of the post-war period. While Francoism was open to academics’ international socialization, including in neoliberal economic doctrines; Ceausescu’s sultanism closed ranks against academic free thinking, especially after the debt crisis of 1981 (when Romania asked the IMF for a line of credit). If after the transition to democracy, professional neoliberal economists had access to policymaking through the revolving door between academia, the Banco de España and government; in Romania the economic profession was only superficially versed in the debates of Western academia, had lesser access to power and was often supplanted by expertise emanating form a host of domestic think tanks. If in the post-Franco period, under the premiership of Felipe González of the Spanish Socialist Workers’ Party, Spain created an extremely cohesive institutional environment; only three Romanian governments — namely those led by Nicolae Văcăroiu in 1992–1996, Adrian Năstase in 2000–2004, both of the Party of Social Democracy in Romania, and Emil Boc of the Democratic Liberal Party in 2009–2012 — permitted a smooth transformation of ideas into policies.
Hence, the early, gradual and deep integration of Spanish scholars into the global neoliberal consensus gave them the opportunity to interrogate and test its limits, thereby grafting onto its tenets local ideas combining strong social-democratic as well as ordo-liberal scripts (the tale of professor Heinrich Freiherr von Stackelberg on Spanish economic thought is one of the most entertaining parts of the book). The result was an embedded neoliberal regime, where macroeconomic rigour, deregulation, and privatization coexisted with unorthodox policies such as progressive taxation, robust public services and broad public investment strategies.
In contrast, the late, fast and shallow integration of Romanian policymakers did not provide such room for ideational manoeuvre. After flirting with neo-developmentalist policy in the first half of the 1990s, the great conflation between democratization and neoliberalism took hold. Romanian policymakers fully embraced a form of neoliberalism devoid of arguments defending the role of the state in buffering society against market dislocations. Similar to the Baltic countries and Bulgaria, Romania developed, in the words of Mark Blyth, “a unique growth model based on massive foreign investment, even more massive foreign borrowing, and economic institutions that could only be described as open to money coming in and people going out” (219). A model that exposed itself and especially the country’s weakest citizens to great external vulnerability.
The strange non-death of neoliberalism
One powerful message permeating the book, and which gives a forceful explanation to Colin Crouch’s punchy title is that: “rather than a mass-produced, slightly shrunk, and off-the-rack ideological suit, neoliberalism is a bespoke outfit made from a dynamic fabric that absorbs local color” (5). Even under a full-out attack against some of its basic assumptions, such as the one unleashed in the immediate wake of the global financial crisis, neoliberalism proved resilient beyond its many architects’ wildest dreams. Its capacity to absorb, coopt and recast selected ideas of oppositional social forces has been the most valuable asset guaranteeing its survival. Again, the comparison of the responses to the crisis in Spain and Romania show such adaptability in full.
The socialist government of José Luis Rodríguez Zapatero tried to salvage the social-democratic legacies of the Spanish economy by engineering a Keynesian rescue package. Only later, when the disaster of the cajas became apparent and the emergency intensified, did conservative PM Mariano Rajoy embrace more deregulation in the labour market (inspired by the Hartz IV reform) and extensive cuts in the public sector under the strong external pressure of the European Central Bank and of international financial markets.
In Romania, local policymakers further radicalized in the aftermath of the Lehman Brothers’ crisis, thereby outbidding the IMF on austerity and structural reforms. Instead of shielding lower-income groups, the opposite strategy of upward redistribution was chosen. By heroically withstanding the external attempts at moderation, the Romanian economy retained an unenviable mix of libertarian achievements (flat-tax rates), experimental neoliberalism (privatized pensions) and mainstream neoliberal orthodoxy (sound finance, labour market deregulation, social policy targeting, privatization of all public companies). Pure laissez-faire ideas such as the replacement of the welfare state by a voluntary, private, Christian charity system were not unheard of.
Hence, through an insightful analysis of the ideational underpinnings of its local interpretations, this book shows us that, despite the challenges, neoliberalism is alive and kicking. Ban guides us through half a century of policymaking in Spain and Romania, and embeds his analysis within the related nuances of contemporary liberal economic thought. The research is a valuable addition to a growing literature on the origin of current ideational frames and comfortably sits alongside contemporary classics, such as Mark Blyth’s Austerity: The History of a Dangerous Idea.
Photo Credits CC Hernán Piñera
Originally published at EuVisions.
