Abstract
As the focus of study has shifted from the causes of the 2007-8 global crisis to its consequences, the future of neoliberalism has become one of the main preoccupations of left scholarship. The crisis has revealed fundamental weaknesses in the new policy architecture of globalisation, privatisation and deregulation, and many critics looked forward to a reassertion of alternatives that would reverse these processes, or at least rein them in.
Colin Crouch’s book is deliberately aimed at a non-specialist audience, and seeks to explain the yawning gap in neoliberalism between the simplistic ideology of freedom and enterprise, and the reality of giant corporations that dominate markets and states alike. The opening chapter provides a concise history of neoliberalism, focusing on how it came to the fore with the crisis of Keynesianism and social democracy in the 1970s. The following five chapters analyse what the author sees as the major elements of neoliberalism. Chapter 2 provides the liberal auto-critique of ‘market failures’, the most significant of which is monopoly, or more precisely the excessive power of large corporations. This is then explored directly in Chapter 3, in which Crouch shows how the Chicago School argued that the greater overall efficiency of the large firm more than outweighed the welfare loss attributed to market power, thereby undermining traditional US and UK antitrust policy. This demonstrates that corporate power is political as well as economic, contradicting the liberal insistence that they can and must be separated.
Chapter 4 then examines the related claim that the public sector is innately inefficient as a service provider, requiring reforms that either transfer provision directly to the private sector, or subject public provision to simulated market discipline. However, monopoly and other classic forms of market failure ensure that any gains in ‘productive efficiency’ accrue very largely to private providers, not to service users; they also create a web of mutual promotion between private interests and state managers. Chapter 5 traces the origins of the 2008-9 financial crisis directly to the neoliberal transformation of global finance, corporate governance and the day-to-day finances of businesses and households. Crouch defines this as a ‘privatized Keynesianism’, in which big finance dictates to governments not only the rules of macroeconomic policy, but also their regulatory practices, and in Chapter 6 he goes on to challenge the pretensions of ‘corporate social responsibility’ as a basis of effective self-regulation. In the final two chapters, Crouch looks for alternatives that might restore a public realm oriented to the common good. Here the emphasis remains on corporate power as the real problem, while the solution is to be found in civil society, including political parties, religions, campaigning groups, volunteer organisations and the professions. Confronting the realities of corporate power reveals the weakness of this approach, but the alternative of a return to state power offers only a repeat of the state-market cycle.
In effect, Crouch is calling for a pragmatic long march in which civil society must constantly reassert moral values and the collective good against corporate power. This is all well and good, but the problem is that the concept of civil society, at least as set out here, is deeply imbued with the political philosophy of liberalism. Behind ‘the corporation’ lies not simply a power élite of owners and managers, but a system of class rule; but because he does not recognise this, Crouch can offer nothing that would potentially transcend the contradictions of liberal capitalism and the false antinomies of its dominant ideology.
The contributors to Neoliberalism in Crisis work on the face of it within a very different framework of ideas, rooted in the Amsterdam School’s approach to global political economy. Here, neoliberalism is viewed as being a project combining free-market liberalism with monetarism, through which the perspective of money comes to dominate the real economy, recruiting support from transnational business, and key segments of the ‘new middle classes’ and organised labour. The current crisis threatens to bring the neoliberal project to a close, and potentially lead to a new hegemonic project. Older readers will recall a host of similar responses to the stagflation crisis of the 1970s, the Third World debt crisis of the 1980s, and the various financial market crises from Sweden and UK 1992 to Argentina 2002, all of which proved to be mere temporary interruptions to the rise of neoliberalism. So can Overbeek et al. offer a more encouraging prospect today?
The conceptual framework for the book’s wide-ranging studies is broadly neo-Gramscian, based on tracking accumulation regimes, fractional alliances, financial regimes, legitimacy and consent, and challenges to US hegemony. The studies provide a wealth of up-to-date information on the current contradictions of neoliberal policy-making. After a wide-ranging introductory chapter, Part I focuses on aspects of neoliberal regulation, examining in turn, largely at national (or EU) level, the fields of competition policy, corporate governance, investment banking and financial markets. Chapters 2-4 all suggest that the crisis has not led to any fundamental questioning of the neoliberal approach to regulation, largely because of the political power of transnational firms under the current hegemony of financial capital. The focus in Chapter 5 is rather different: Perry and Lewis examine the theoretical underpinnings of the idea of financialisation. Rejecting the common-sense view that finance has become divorced from production, they argue rather that they are inextricably linked in capitalism. However, the financial approach to the pricing of capital, based on discounted future cash flows, conflicts with the ‘production’ theory in which the price of capital depends on its marginal productivity, and thereby on its quantity. The result is a tension between the production and the distribution of profits, which cannot simply be managed through credit regulation.
The five essays in Part II turn to aspects of global rivalry and interdependence, with chapters on the rise of the BRICs, sovereign wealth funds, energy markets, Latin America and US imperialism. Chapters 6-9 examine the more active role played by states outside the advanced West in capital accumulation. Nölke suggests that a BRIC variety of ‘organised’ or ‘state-permeated’ capitalism can be discerned, which might form a more general post-neoliberal model, though he seems over-optimistic about the potential for social reform in such countries. Overbeek argues that China’s sovereign wealth funds spearhead an accumulation strategy within which there are powerful tensions between a more inward-looking mercantilism on the one hand, and deeper integration into global capitalism on the other. De Graaff charts the resurgence of state-owned national oil companies, starting well before the crisis and fuelled by growth in emerging economies, which has not prevented deeper interdependences in global markets. She suggests that an erosion of Western dominance may take place, without any resolution of challenges such as high oil prices and climate change. Tsolakis looks at the spread of ‘pink’ governments in Latin America, but is sceptical about whether they open up a ‘post-neoliberal’ path of transformation. Finally, Apeldoorn and de Graaff examine the difficulties faced by US administrations since the end of the Cold War in maintaining their global hegemony. Their study of the networks linking business and politics suggest that despite the tensions between neoconservatism and the neoliberalism of the transnational business élite, the latter still dominates.
The books under review attest to the range of issues progressive scholars are examining as we try to make sense of the 2008 crisis and its aftermath. Neither of these volumes can offer much encouragement to those seeking radical social change; but it is worth remembering that nearly 200 years after the French Revolution, Chou En-lai reportedly said that it was too early to judge its outcome.