Rethinking Neoliberalism and the Subprime Crisis: Beyond the Re-Regulation Agenda

Many critical commentators view the current crisis and the attendant legitimacy problems for free-market capitalism as an opportunity to make the case for financial re-regulation, i.e. a reassertion of public values against globalising markets. This paper suggests that such assessments of the political possibilities offered by the subprime crisis rest on a misappraisal of its nature and, more broadly, the nature of the neoliberal era. It argues that the financial expansion of the past decades cannot be adequately understood in terms of the state's failure to regulate financial markets. Financial growth has not involved the retreat of public institutions, the dissolution of social bonds or an emptying out of subjectivity, but has rather been a process whereby new organisational linkages were forged, particular norms and relations of institutional control were constructed and complex identities with thoroughly interlinked emotional households were created. Through a historical interpretation of the development of American finance since the New Deal, the paper outlines how the reconfigurations of neoliberalism have not reduced but enhanced the institutional capacities of the American state, as well as the leverage and power resources available to those who enjoy privileged access to the state's organisational mechanisms. It then returns to the question of the political significance of the current crisis, suggesting that to seize on the change in ideological climate to advocate increased state control over financial life is likely to come down to supporting the restoration and fortification of an infrastructure of financial power that we criticised when it still went under the ideological banner of neoliberalism.