Neoliberalism - Damien Cahill - ebook

Neoliberalism ebook

Damien Cahill

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For over three decades Neoliberalism has been the dominant economic ideology. While it may have emerged relatively unscathed from the global financial crisis of 2007-8, Neoliberalism is now - more than ever - under scrutiny from critics who argue that it has failed to live up to its promises, creating instead an increasingly unequal and insecure world. This book offers a nuanced and probing analysis of the meaning and practical application of Neoliberalism today, separating myth from reality. Drawing on examples such as the growth of finance, the role of corporate power and the rise of workfare, the book advances a balanced but distinctive perspective on Neoliberalism as involving the interaction of ideas, material economic change and political transformations. It interrogates claims about the impending death of Neoliberalism and considers the sources of its resilience in the current climate of political disenchantment and economic austerity.Clearly and accessibly written, this book will be a valuable resource for students and scholars across the social sciences.

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Table of Contents

Series page

Title page

Copyright page

Acknowledgements

Introduction

Neoliberalism: a useful concept?

Perspectives on neoliberalism

Neoliberalism: a critical synthesis

The structure of this book

1: Neoliberalism in Historical Perspective

Intellectual origins

The early postwar order and its decline

Advancing neoliberal policies

Spreading neoliberalism

Consolidating neoliberalism

Neoliberalism into the twenty-first century

2: Neoliberal Finance

Globalizing finance

States and financial markets

Inflation and the Volcker shock

Debt and austerity

Financial crises

Financialization

3: Work and Welfare

Changing patterns of work and employment

Neoliberalism and the welfare state

Transformations of welfare

4: Corporate Power

Corporate transformations

Corporations, markets and neoliberal ideology

The corporate funding of neoliberalism

Neoliberalism and corporate power

5: Power, Inequality and Democracy

Power in capitalist society

Inequality in historical perspective

Neoliberal inequality in the West

Neoliberalism, inequality and the developing world

The return of inequality into Western political discourse

6: Crisis and Resilience

Neoliberal resilience after the crisis

Neoliberal reason and resilience

The paradoxical politics of neoliberalism

References

Index

End User License Agreement

Guide

Cover

Table of Contents

Start Reading

CHAPTER 1

Index

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Series page

Key Concepts Series

Barbara Adam,

Time

Alan Aldridge,

Consumption

Alan Aldridge,

The Market

Jakob Arnoldi,

Risk

Will Atkinson,

Class

Colin Barnes and Geof Mercer,

Disability

Darin Barney,

The Network Society

Mildred Blaxter,

Health 2nd edition

Harriet Bradley,

Gender 2nd edition

Harry Brighouse,

Justice

Mónica Brito Vieira and David Runciman,

Representation

Steve Bruce,

Fundamentalism 2nd edition

Joan Busfield,

Mental Illness

Margaret Canovan,

The People

Andrew Jason Cohen,

Toleration

Alejandro Colás,

Empire

Patricia Hill Collins and Sirma Bilge,

Intersectionality

Mary Daly,

Welfare

Anthony Elliott,

Concepts of the Self 3rd edition

Steve Fenton,

Ethnicity 2nd edition

Katrin Flikschuh,

Freedom

Michael Freeman,

Human Rights 3rd edition

Russell Hardin,

Trust

Geoffrey Ingham,

Capitalism

Fred Inglis,

Culture

Robert H. Jackson,

Sovereignty

Jennifer Jackson Preece,

Minority Rights

Gill Jones,

Youth

Paul Kelly,

Liberalism

Anne Mette Kjær,

Governance

Ruth Lister,

Poverty

Jon Mandle,

Global Justice

Cillian McBride,

Recognition

Anthony Payne and Nicola Phillips,

Development

Judith Phillips,

Care

Chris Phillipson,

Ageing

Robert Reiner,

Crime

Michael Saward,

Democracy

John Scott,

Power

Timothy J. Sinclair,

Global Governance

Anthony D. Smith,

Nationalism 2nd edition

Deborah Stevenson,

The City

Leslie Paul Thiele,

Sustainability 2nd edition

Steven Peter Vallas,

Work

Stuart White,

Equality

Michael Wyness,

Childhood

Copyright page

Copyright © Damien Cahill, Martijn Konings 2017

The right of Damien Cahill, Martijn Konings to be identified as Authors of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2017 by Polity Press

Polity Press

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All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.

ISBN-13: 978-0-7456-9552-5

ISBN-13: 978-0-7456-9553-2(pb)

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Acknowledgements

In writing this book, we have benefited from the help and insights of Melinda Cooper and David Primrose, as well as our colleagues in the Department of Political Economy, a collective of critically minded scholars of which we are proud to be part. Although this study does not deal with neoliberalism in the university, the managerial animosity that the mere existence of the department has provoked since we both joined about a decade ago stands as a constant reminder of the relevance of neoliberalism. Many thanks to Colin Crouch and one other anonymous referee, who offered very helpful comments on the manuscript. Louise Knight and Nekane Tanaka Galdos expertly guided the book to publication, offering both patience and encouragement when needed. Tim Clark did a wonderful job copy-editing the manuscript. Martijn Konings gratefully acknowledges research support from the Australian Research Council under grant number DE120100213. We would each like to thank our families for their love, patience and support.

Introduction

The death of former British Prime Minister Margaret Thatcher on 8 April 2013 met with deeply divided reactions, in Britain and elsewhere. She was honoured by the government of the day with a ceremonial funeral. TheEconomist (2013) celebrated her achievements, calling her a ‘freedom fighter’ and writing that ‘what the world needs now is more Thatcherism, not less’. Many others, by contrast, had less fond memories of the period of Thatcher's prime-ministership: they recalled it above all as an organized assault upon their livelihoods and most cherished values, and they responded to the news of her death rather differently. For example, as Sky News reported, in the South Yorkshire town of Goldthorpe, ‘many people had travelled from what remains of surrounding coal-fields to demonstrate that Baroness Thatcher's passing does not erase what they see as the hurt she inflicted on their lives and communities’. Attending a mock funeral, they sang ‘Ding-dong! The witch is dead.’

The intense feelings and strong opinions provoked by Thatcher's death are testimony to the continued relevance of the political programme that she did so much to advance. As Prime Minister of Britain from 1979 to 1990, Margaret Thatcher was one of the most prominent advocates of what is now often called ‘neoliberalism’. Through widespread privatization of state-owned enterprises, industry deregulation and a direct confrontation with powerful trade unions, she presided over a radical transformation of the British state and economy. During the following decades similar policies were implemented across the world, by parties of both right and left. This neoliberal policy revolution dismantled the key pillars of the postwar economic order that had been built amid the capitalist boom of the 1950s and 1960s, offering itself as a solution to problems such as inflation and economic stagnation that had emerged during the 1970s. The goal of this book is to understand and decode the widely debated and contested concept of neoliberalism.

While the era of Thatcher's prime-ministership ended in 1990, the effects of her policies were still being felt at the time of her death in 2013. The former mining communities who marked Thatcher's death with celebrations were still living with the devastating social and economic repercussions of the 1984–5 miners’ strike, a bitter and violent year-long confrontation between the National Union of Miners and the Thatcher government that ended with the defeat of the union, led to the decimation of the mining industry and set the stage for the privatization of what remained. Moreover, while radical at the time, many of Thatcher's policies subsequently became political orthodoxy. Even the Labour Party, once fiercely opposed to ‘Thatcherism’, adopted many of its policies and implemented them while in office from 1997 to 2010. As TheEconomist (2013) argued, ‘[Labour Prime Minister] Tony Blair won several elections by offering Thatcherism without the rough edges.’ Even today many would argue that the austerity policies pursued by governments around the world essentially represent a continuation of the sorts of policies pioneered by Thatcher.

One common way of understanding the neoliberal era is as embodying the rise of ‘free markets’. Upon Thatcher's death, numerous media outlets reproduced this understanding, with statements such as ‘Thatcher was master of the free market’ (Hjelmgaard 2013) and references to her as ‘a global champion of the late 20th-century free market revival’ (White 2013). According to this view, politicians such as Thatcher in Britain, Ronald Reagan in the US, and many others subsequently, reduced the size of the state and the role of government within the economy, thus allowing for the flourishing of free markets unrestrained by public regulation.

Certainly the rhetoric of neoliberal politicians like Thatcher and Reagan consistently praised the virtues of free markets and railed against the stifling effects of big government and a bloated welfare state. Yet, the reality was often quite different. Under both Thatcher and Reagan state expenditure was not retrenched and, indeed, in Britain, the US and across much of the world, the neoliberal era gave birth to a whole host of new state regulations and regulatory institutions – widespread privatization and deregulation notwithstanding. As Vogel (1998) argues, it may well have resulted in a situation of ‘freer markets’, but it was simultaneously also one of ‘more rules’, as deregulation in practice involved significant economic and social re-regulation. Moreover, state activism did not by any means diminish. The Thatcher government, for example, deployed a militarized police force as well as the secret security services against the National Union of Miners. Meanwhile, the left-wing-dominated Greater London Council was abolished by the Thatcher government, and local councils more generally were denuded of many of their powers. These became increasingly centralized at the level of the national government. Such features led Andrew Gamble (1988) to describe Thatcherism as an ideology committed to both ‘the free economy and the strong state’.

Neoliberalism transformed states across the world in ways that made people more dependent upon market mechanisms for accessing a range of social services. But an emphasis upon ‘free’ markets has often led commentators to miss the constituent features of such markets – not just the pervasive regulatory framework underpinning them, but also the agents who comprise markets, especially large corporations. Similarly, the tendency to view the neoliberal transformation of states as ‘market-led’ can obscure not only how such restructuring has created new avenues for large corporations to reshape public policy, but also the ways in which states have been reshaped to more closely resemble and operate like corporations (see Crouch 2011; Birch 2015; Wilkes 2013). Understanding neoliberalism therefore requires that we identify the reconfigured institutional relationships brought about through processes such as privatization, deregulation and new approaches to macroeconomic policy, and that we untangle and assess the various claims made about such processes.

Neoliberalism: a useful concept?

Margaret Thatcher was an admirer of Friedrich Hayek, who has since become recognized as one of the leading neoliberal intellectuals. After she was elected Prime Minister in 1979, Hayek wrote to congratulate her; Thatcher replied: ‘I am very proud to have learnt so much from you over the past few years. I hope that some of those ideas will be put into practice by my Government in the next few months. As one of your keenest supporters I am determined that we should succeed. If we do, your contribution to our ultimate victory will have been immense’ (quoted in Ebenstein 2001: 295). But although Thatcher had never made a secret of her admiration for Hayek, it is only over the past decade-and-a-half or so that scholars have begun to explore in greater depth the intellectual sources and ideological roots of the neoliberal project and of the policies and models it has sought to implement. Such contributions have tended to focus on the emergence of a distinctly neoliberal critique of ‘collectivism’ (especially as expressed in the postwar welfare state and the state-planned economies that existed in countries like Russia until the end of the 1980s) during the interwar period, the way this was elaborated through various strands of thinking in the following decades, and the ways in which it came over time to have a crucial influence on political transformations. In describing the transition from the postwar order to the neoliberal era these analyses have also tended to place a great deal of emphasis on the intentions, ideas and interests of elite actors as well as their ability to purposefully coordinate their actions and implement their political strategies. Examples of such approaches include well-known books – written by authors who otherwise differ significantly in theoretical and political commitments – such as David Harvey's A Brief History of Neoliberalism (2005), Naomi Klein's The Shock Doctrine (2008) and Philip Mirowski's Never Let a Serious Crisis Go to Waste (2013).

To a significant extent, it has been this wave of scholarship that has propelled the concept of neoliberalism to its current status as a key concept for understanding the contours of modern life. Until the early years of the twenty-first century, neoliberalism was perhaps more a ‘word’ than a ‘concept’ – that is, just a term used to refer to the general shift from the social-democratic and progressive-liberal era to policies and institutions that were more concerned to promote market mechanisms and were more friendly to business and capital. As such, the word was used mostly as an adjective in major debates focusing on related but different questions (such as globalization, industrial restructuring, and deregulation). The word certainly had a somewhat critical connotation and was unlikely to be used by those (e.g., many orthodox economists) who would typically view economic processes as being primarily about neutral measures of efficiency and growth (Boas and Gans-Morse 2009). Otherwise, however, the term itself did not appear to be particularly contentious and was certainly not the focal point of scholarly competition to define the character of contemporary capitalism.

More recent arguments, in contrast, have claimed that neoliberalism is much more than just a useful descriptor – that it is in fact a discrete project whose origins can be traced back to the interwar period and which came into its own during the 1970s, when powerful organizations and political forces gravitated around the neoliberal intellectual tradition and gave it financial backing and institutional materiality. Subsequently, this forced perspectives that until then had used the word in a more casual way to make explicit how they view the neoliberal phenomenon. Although there is no shortage of rival definitions of neoliberalism, and many have been willing to associate themselves with one definition or another, a pronounced trend has been to insist that the concept should not or cannot be neatly defined. In the course of these debates, the growing interest in neoliberalism as a discrete political project, with distinctive ideational antecedents, has been matched by a growing scepticism regarding the use of the term. It is seen, in Mudge's words, as ‘an oft-invoked but ill-defined concept’ (2008: 703). One often hears that it is a somewhat lazy way for left-wing critics to group together any number of heterogeneous things to which they happen to be opposed. Imprecision would seem to characterize its use, sometimes even among those for whom the concept is central to their analysis, and its over-use is seen to have resulted in a loss of analytical value. This has led some to argue that scholars would be best served by jettisoning it as an unhelpful label, or, at the very least, by specifying the concept as being applicable only to a greatly narrowed range of phenomena. Venugopal, for example, argues that ‘much of what is explained – and hence left under-explained – as neoliberal can benefit, if it were simply to be disconnected from this universalizing framework and if neoliberalism were to be reconceptualised down in a sharper and unambiguous way to one of its constituent forms’ (2015: 181). Others point to what they view as a disconnect between neoliberal theory and the major transformations to states and economies effected through processes of deregulation and privatization (Braithwaite 2008).

But, of course, the notion of a strict correspondence of concept and reality rarely provides a good basis from which to evaluate the usefulness of concepts. By their nature, the labels we use represent abstractions, approximations and ideal types. Social-science scholarship tends to characterize political economic regimes, modes of regulation and forms of state with reference to the normative doctrines to which their supporters profess allegiance: Keynesianism, socialism, liberalism, etc. A label such as neoliberalism is of course not by itself capable of capturing the messy, complex dynamics and variegated details of social formations. The question is rather whether it provides a useful entry point, a way of looking at these processes that can subsequently be enriched with empirical detail. The phenomena of human life are inherently more complex than the social-scientific concepts we use to comprehend them, but this truism should not be used to fudge the issue of the relevance of neoliberalism. The labels we use are in many respects less important than our description of the political economic processes to which the label refers. In the next section we will survey some of the main approaches to neoliberalism in order to lay the groundwork for presenting our own perspective.

Perspectives on neoliberalism

It is useful to start here with what we might call the ‘classic’ perspective on neoliberalism, which saw it in terms of the growing power of markets vis-à-vis the institutions of national states. We find here a very literal interpretation of the ‘neo’ in ‘neoliberalism’: it is seen as a revival of or return to classic laissez-faire liberalism, marked domestically by a return to the minimal state and internationally by the resubordination of national policy priorities to the forces of economic and financial globalization (see, e.g., Przeworski 1992; Boyer and Drache 1996; Stiglitz 2002). For many purposes, this is a useful way of thinking about the changes neoliberalism has set in motion. But the tendency of thinkers in this vein to quickly qualify their basic assertions about the decline of the state suggests that the model has clear limitations. That is to say, it often has major difficulty accounting for those aspects of neoliberalism that do not fit with the idea of a return to a laissez-faire state.

This economic focus can be contrasted to the tendency to put neoliberal ideas and theories at the centre of analysis – a tendency that has been pronounced in recent contributions. Many ideational accounts emphasize how neoliberal ideas have developed historically and the organizational forms through which this has occurred. Typically this entails a close reading of the texts produced by key neoliberal intellectuals, the ways in which these have been translated by neoliberal think tanks, and the relationships forged between the latter and political and economic elites. For some scholars, such analysis is primarily an exercise in intellectual history that seeks to understand the diversity of currents that comprise the neoliberal intellectual movement and the sometimes nuanced differences between its leading figures (e.g., Nik-Khah 2011; Burgin 2012; Ebenstein 2015). But it is increasingly common for such scholars either to treat neoliberal ideas as the key to deciphering the logic of the neoliberal policy revolution or to see a fairly straight causal line from the formulation of neoliberal ideas to the implementation of neoliberal policy models, uncovering the hidden machinations of neoliberal think tanks and their attempts to shift the prevailing climate of opinion.

Emblematic of the latter tendency is Naomi Klein's widely read The Shock Doctrine (which, while written by a journalist for a popular audience, has also had a major scholarly impact). For Klein, political elites in the thrall of Milton Friedman and others from the Chicago School of economics, and in particular Friedman's statement that ‘Only a crisis – actual or perceived – produces real change’ (quoted in Klein 2008: 7), would be key to the advance of neoliberalism. According to Klein, neoliberalism was constructed through the ways these elites managed to seize opportunistically on natural disasters, war and economic crises to force the dystopian neoliberal free market ideal on disoriented populations. More recently, Mirowski (2013) has put forward a thesis of ideational causation to explain the rise of neoliberalism. His focus is on the ‘neoliberal thought collective’ represented by the network of think tanks centred on the Mont Pelerin Society, which mobilized from the 1940s onwards to shift elite opinion in a neoliberal direction. He recognizes that neoliberalism entails neither a weakened or smaller state nor free markets. Rather, he argues that the neoliberal thought collective, as well as intellectuals such as Hayek and Friedman, deliberately sought to cultivate an image of neoliberalism as concerned with the freeing of markets by limiting the state, all the while recognizing that any form of state action, including authoritarianism, was consistent with constructing a competitive economic order based on private property.

For Mirowski, then, neoliberalism is a ‘Schmittian’ project: a form of government that works by paralysing or bypassing the normal rules of democracy. Carl Schmitt was a German political and legal theorist associated with the Nazi regime. He criticized liberal democracy for the ways it covered up the antagonism that he considered foundational to politics. For Schmitt, it was naively idealistic to think that authority could ever be fully consensual or rationally grounded in coherent norms arrived at through collective decision making. Authority in the end was always ‘exceptional’: not derived from democratic norms but rooted in the force of decision. Many critical intellectuals have found in Schmitt's thought a useful model of how neoliberalism works in practice, namely by side-lining or even suspending democratic institutions. In public, Mirowski argues, the neoliberal thought collective advocated free markets and small states, but in their own private discussions and meetings with policy elites they advocated the enforcement of market rule by states. He describes this as ‘the double truth doctrine’ – a strategy whereby ‘an elite would be tutored to understand the deliciously Schmittian necessity of repressing democracy, while the masses would be regaled with ripping tales of “rolling back the nanny state” and being set “free to choose” – by convening a closed Leninist organization of counter-intellectuals’ (Mirowski 2013: 86).

If we take Mirowski's account as the limit point of the idealist take on neoliberalism, it readily bears out some of its shortcomings. Its tendency to reduce the neoliberal transformation of states to far-sighted manipulation on the part of a small group of intellectuals is unconvincing. Certainly conspiracies exist, and we may readily grant that the Mont Pelerin Society is as close to one as we may ever hope to find evidence of, but the mere discovery of a conspiracy should not lead us to assume that it must have succeeded in realizing its goals in the way it intended. In other words, we should not assume that neoliberalism can only rise to power through bypassing democratic institutions and the popular will. As a blanket statement this is untenable, even if neoliberalism has involved its fair share of vanguardist initiatives. Among the most telling examples here, what should we make of the many working-class British who voted for Thatcher, and the many working-class Americans who voted for Reagan? To say that these people were simply misled by the ‘double truth’ machinations of neoliberal elites is to revert to a crude notion of ideology that has been widely discredited, and for good reason.

Of course not all arguments made in this vein are as uncompromising as Mirowski's. But there is nonetheless a pronounced tendency to view the neoliberal project as characterized by a deep affinity with exceptionalism and authoritarianism (e.g., Bruff 2014; Streeck 2015; Bonefeld 2016). We should not, however, be too quick to brand neoliberalism an undemocratic doctrine that elites can only ever impose through bypassing democratic procedures. After all, avowedly neoliberal programmes have often enjoyed remarkable electoral support. Stuart Hall (1979) observed the popular traction of Thatcherism and proposed the idea of ‘authoritarian populism’ to capture the paradoxical dynamics at work. Seen from such an angle, the emphasis on neoliberalism's anti-democratic credentials appears rather one-sided, as it ignores the powerful ways in which neoliberal discourses have often been able to mobilize a great deal of popular support. This does not mean, however, that we should replace one blanket characterization with another. The point is precisely that we should be attuned to the differences in the ways neoliberalism has manifested itself in different regions and political systems. To say that neoliberalism often has an undemocratic streak – that it views the gains of democracy as having gone too far and as threatening the basic liberties of a market order – should not blind us to the obvious differences between its manifestations, such as those between the UK (where Thatcher came to power through an election) and Chile (where neoliberalism had to ally itself to military power in order to capture the state).

Still other scholars understand neoliberalism as the product of institutional variables. Such approaches tend to reject the idea that real-world transformations simply mirror the prescriptions of neoliberal theory, and they focus instead on empirically identifying the actual development of pro-market and pro-business policy shifts, investigating how nationally specific institutional architectures mediate the adoption and implementation of neoliberal ideas (Prasad 2006; Heyes, Lewis and Clark 2012). For example, Fourcade-Garinchas and Babb (2002) show how local institutional structures shaped the adoption of neoliberalism in four national contexts. They identify the emergence of an ‘ideological’ form of neoliberalism in Britain and Chile in contrast to a more ‘pragmatic’ version in France and Mexico, largely based on the degree to which each nation's domestic postwar institutional architecture promoted conflict or consensus. Such institutionalist approaches alert us to the unevenness, variegation and contextual specificity evident in the roll-out of neoliberalism globally. Moreover, by highlighting the fact that privatizations and deregulations often led in practice to a proliferation of new regulations, the rich empirical studies in this tradition of analysis also provide a useful corrective to the overly simplistic view of neoliberalism as a programme of rolling back the state.

But where this literature is less robust is in explaining what forces are at work, amid all the diversity of institutional dynamics and outcomes, such that the use of a generalizing concept like neoliberalism is required. Some authors working in this perspective have pursued this line of reasoning, arguing that there is no meaningful correspondence between the normative precepts of neoliberal theory on the one hand and the practices of contemporary restructuring on the other. Braithwaite, for example, thinks that we have little more than a ‘neoliberal fairytale’ (2008: 4). Along similar lines, aligning himself with perspectives that emphasize the importance of institutional varieties among different national systems, Block (2012) argues that we may as well dispense with the very concept of capitalism altogether (if we talk continuously about institutional variety, his reasoning goes, then at some point we need to stop assuming that these configurations are all different ‘varieties of capitalism’ and instead raise the question ‘varieties of what?’). In other words, the institutionalist literature tends to be insufficiently concerned with the systemic dynamics of the capitalist economy and the common pressures it imposes (Albo 1996; Coates 2000). Even though the global economic crisis of the 1970s is often seen as a catalyst for the changes being analysed, in many institutional accounts the global economy remains in the background, forming the crucial context for the story of institutional transformation, yet not amenable to explanation by the conceptual tools of institutional analysis itself. In reducing the question of neoliberalism to a purely empirical one, it seems that we may be missing out on some of its key aspects as well as its distinctive significance.

Neoliberalism: a critical synthesis

Here we follow the lead of other scholars, such as Brenner, Peck and Theodore (2010), who share a concern to avoid overly idealist explanations and to incorporate institutional factors into their analysis, but remain throughout concerned to formulate a critique of neoliberalism as a distinctive political project (for approaches in a similar vein, see Jessop 2002; Wacquant 2012; Cahill 2014). There is more at stake in specifying this content than the need to ‘combine’ material and ideational factors in our account of neoliberalism. That is certainly part of it, but such formulations do not by themselves solve the problem. As Dardot and Laval (2013: 8) point out, some Marxist accounts of neoliberalism (e.g., Duménil and Lévy 2004) adopt such an approach in ways that reproduce the problems of each perspective, combining a materialist focus on economic structures with a strong emphasis on the role of ideology and specific political projects in the rise of neoliberalism. In such a perspective, neoliberal elites appear as simply facilitating the rebirth of capitalism, as the midwives of a process that otherwise follows its own autonomous logic. While such Marxist perspectives usefully situate the rise of neoliberalism within the class dynamics and contradictions inherent to capitalism, they do little to bring into view the distinctive character of neoliberalism and they continue to rely on a separation of economics from politics and ideology. That is, they are unable to provide a compelling account of the connections between politics and economics in the rise of neoliberalism.

Dardot and Laval (2013: 9) note that even though Harvey's (2005) prominent work is characterized by similar problems, it makes an important innovation by insisting that the (re)production of neoliberal economic structures is always dependent on the kind of political interventions that Harvey associates with the idea of the permanence of ‘accumulation by dispossession’ – which represents a reworking of Marx's concept of ‘primitive accumulation’ to capture the ways in which neoliberalism dispossesses ordinary people through state-led processes such as privatization. This idea is not without connections to the Schmittian theme of exceptionalism, but rather than embracing that idea in its most dramatic form to outline an idealist theory of neoliberalism, it suggests a more plausible way to think about the constitutive connections between economic structures and politics.

We can draw here on Wood's (1995) work, which rejects the notion that we can talk about politics and economics as if they were inherently different spheres of human activity. Instead, Wood argues, the separation of politics from economics is itself an institutional construction of a specifically capitalist character, a historical process through which the social relations of capitalism are created. Under feudalism power and class relations were directly political, more or less immediately backed up by force. Capitalism, by contrast, is based on principles of private property and legal equality: exploitation and domination are now no longer overtly political but become ‘hidden’ in the economic domain, where they take on more indirect and mediated qualities. In other words, the separation of the political and the economic is not in the nature of things, but is ideological. And, as the dividing line is always contested, the history of capitalism is consequently characterized by the continuous resurgence of state power. To understand this as ‘exceptionalist’ is simply to set too much store by the official appearances and formal discourses of capitalist institutions: institutional interventions are the lifeblood of capitalism. Neoliberalism, then, is, as Panitch says of globalization, ‘both…authored by states and…primarily about reorganising, rather than bypassing states’ (1994: 63).

Neoliberalism is characterized by a certain degree of comfort with the constitutive character of institutional interventions: at its heart is an awareness that its success is not in fact predicated on the realization of some utopian state of non-intervention, whatever its official slogans might declare and however important promises to get the state out of people's business are for its political legitimacy. It is this focus on the institutional transformations effected by neoliberalism that can be usefully elaborated through an engagement with the history of neoliberal ideas. Peck (2010) draws on that history, but less in order to identify the origins of the neoliberal project than to reveal new sources of insight into the distinctive logic of neoliberalism. As the title of his book suggests, he is interested in figuring out the contours of ‘neoliberal reason’, as a distinctive way of approaching questions of human conduct and social organization. In recent years, theorists have relied on expressions such as ‘neoliberal reason’ or ‘neoliberal rationality’ to steer the analysis of neoliberalism away from an exaggerated concern with the actions of small circles of political and ideological elites (e.g., Dardot and Laval 2013; Brown 2015; Konings 2018). This is meant to express the idea that the power of neoliberalism involves not just the top-down imposition of a regime overtly biased in favour of corporate and financial interests but is also rooted in a broader field of beliefs, practices and institutions.

A great deal of current thinking about neoliberalism along such lines takes its cue from the lecture courses delivered by Michel Foucault during the 1970s. Foucault's extensive discussion came as something of a surprise when it appeared in English translation during the first decade of the twenty-first century, because until that time, in so far as Foucaultian scholarship was interested in contemporary transformations, it had focused primarily on evolving governmentalities and subjectivities and had sought to steer attention away from precisely the focus on epochal transformations or neoliberalism as a distinct political project (e.g., Rose 1993). But in the Birth of Biopolitics (2008 [1979]), Foucault engaged at length with the history of neoliberalism. Central to his argument was the notion that neoliberalism should not be reduced to a simple attempt to revive or return to classic liberalism, the set of doctrines that had enjoyed their heyday in nineteenth-century Britain and that instructed governments to desist from continuous interventions and instead adopt laissez-faire policies that would result in higher levels of economic welfare. Whereas classic liberalism had always made strong claims about the natural legitimacy or self-evident efficiency of the market, neoliberal concerns were driven by an awareness that such properties could not be assumed and that the continued viability of capitalism required more than a faith in the natural efficiency of markets. For Foucault, this ‘constructivist’ streak is at the core of neoliberalism's distinctive rationality. Whereas classic liberalism saw its task as removing institutional obstacles to the logic of the market, neoliberalism accepts that the kind of market order it envisages needs to be actively constructed, institutionally and politically.

This was not an abstract intellectual shift but one rooted in a recognition that liberalism by itself had failed and that it could only be rescued through a thorough rethinking. In other words, for Foucault, neoliberalism needs to be understood as an engagement with the limitations of classic liberalism that had become manifest during the social and economic instability of the early twentieth century. Neoliberal ideas were first formulated during the interwar period, when capitalism experienced a crisis whose intensity may be difficult to imagine for those who have come of age during the neoliberal era. Capitalism was going through an extraordinary contraction, and this was a major factor in precipitating the collapse of the international liberal world order and the turn to economic nationalism. Under these circumstances, capitalism had lost much of its legitimacy, and capitalist elites’ fear of the power of labour movements and the danger of communism can hardly be overestimated. Rather than a doctrinaire reassertion of classic liberalism, neoliberalism in its origins was marked by a serious engagement with socialist ideas and the aspirations of the labour movement.

As Plehwe (2009: 10) reports, the term neoliberalism was used first in the 1920s by authors who were specifically minded to defend liberal principles against advancing socialist forces. Plehwe (2009: 11) also observes that interwar Vienna served as something of an intellectual training ground for the neoliberal movement: there, Ludwig von Mises and Friedrich Hayek entered into debates with proponents of socialist policies that would eventually take the form of the ‘socialist calculation debate’, which questioned whether socialist central planning was capable of allocating economic resources efficiently (see Hayek 1949). Both realized acutely that, if orthodox economics was correct and markets were to be conceived as little more than neutral transactional devices (as in classic economic liberalism), then the case for capitalism being superior to socialism was on shaky ground. Their defence of capitalism was less concerned with the ideal efficiency of markets than with emphasizing the practical limitations of human knowledge and the way this undermines socialist ambitions for the transparent shaping of the future in line with collectivist principles (Gane 2014). Similarly, Walter Lippmann – whose book The Good Society (