As the fiscal fallout from the global financial crisis continues to reverberate around the world, politicians are once more falling back on market-based remedies.
In Britain, the government has ramped up the marketisation of higher education, cutting university budgets and allowing them to charge up to £9,000 for a degree. The NHS, a product of the post-war era of ‘cradle to grave’ social protections, is to be further opened up to private sector competition. Meanwhile, in the USA, state and municipal governments are privatising public assets – sometimes then leasing them back from the private sector – and attempting to limit the rights of public sector unions to organise, all in the name of economic efficiency.
This should sound very familiar. For it is the same set of neoliberal policies that came to dominate policy-making across the capitalist world from the 1970s onwards. Yet, after the global financial crisis hit in late 2007, many predicted neoliberalism was on its last legs. The crisis, it was thought, laid bare neoliberalism’s flaws – such as highly unstable deregulated markets, greed and inequality – and ushered in a new era of economic regulation.
So, what explains the durability of neoliberalism in the face of crisis? As I argued in my recent paper presented in the School of Politics and International Relations at Nottingham, perhaps the most convincing explanation is that neoliberalism is embedded in a range of social processes. This gives it enormous inertia. ‘Embeddedness’ means ‘fixed firmly in a surrounding mass’. In political economy, the concept is derived from the work of Karl Polanyi who argued that the economy was embedded within a broader social structure.
So, like the economy of which it is a part, neoliberalism can be thought of as socially embedded. For example, neoliberal rules and practices are embedded in state and supra-national institutions. We saw this quite clearly in the case of the bail-out of Greece, which the IMF only granted on the condition that Greece carry out a ‘structural adjustment program’ – privatisation, deregulation and cuts to state-funded services.
Neoliberalism is also embedded in the ideological norms of top civil servants and of most major western political parties. For political elites, neoliberalism is still the ‘common sense’ view, one the global financial crisis failed to dislodge. For example, in Britain it is not just the Conservatives who are committed to neoliberalism. When the 2007 crisis hit, the New Labour government showed little desire to wind back the market-based programs they had enacted after being elected in 1997.
Finally, neoliberalism is embedded in the pattern of class relations that have developed over the last thirty years. The power of organised labour has been weakened and the power of employers – both politically and in the workplace – has been strengthened. Employers are keen to maintain the managerial prerogatives they gained through neoliberalism so that the costs of restructuring can be forced into workers. And their political power gives them some ability to achieve this.
However, neoliberalism is also contested. Alternative ideas for organising the economy and society abound. In Britain, the USA and elsewhere, these ideas are given life by strong, diverse movements against the latest round of austerity and privatisation packages. At the micro level, Nottingham’s own Centre for the Study of Social and Global Justice exemplifies this trend, bringing together critical ideas about society and those involved in trying to change it.
Like all social systems, neoliberalism will eventually come to an end. But what comes after neoliberalism – and when – hinges upon the success or otherwise of its present-day opponents.
Damien Cahill is a Visiting Scholar at the Centre for the Study of Social and Global Justice, School of Politics and International Relations, University of Nottingham.