It sounds like the set-up of a joke: what do the chair of the Japanese Communist Party (JCP), the Pope, and the founder of the Davos World Economic Forum have in common? The mirthless punchline: they all hate (or are exhausted by) “neoliberalism”.
But what do they mean by this? And is it a helpful way of describing the world?
In July this year, Kazuo Shii commemorated the 98th anniversary of the JCP by denouncing the philosophy that “entrusted all to the market principle, ridded it of any regulation, for the only goal of maximising short-term profits”. Countries with the flimsiest social safety nets such as the US, he argued, have experienced the highest casualties from Covid-19.
In October, Pope Francis wrote in his third encyclical that “the marketplace, by itself, cannot resolve every problem, however much we are asked to believe this dogma of neoliberal faith.” “Neoliberalism simply reproduces itself by resorting to the magic theories of ‘spillover’ or ‘trickle’,” he wrote, and it produces ever more violence and inequality.
Conservative MEP Daniel Hannan was outraged: “I hesitate to correct His Holiness but… no free marketeer has ever proposed such rank nonsense.”
In September Klaus Schwab, the founder of the European Management Forum in 1971 (now known as the World Economic Forum), whose annual meetings in the Swiss Alps are such icons of the age that “Davos Man” has become part of the political lexicon, declared that neoliberalism in the form of “unregulated, unrestrained capitalism” has “had its day”.
Deploying the same desktop metaphor as the Financial Times on its front page in 2019, Schwab called for a “Great Reset”, meaning new attention to climate change, social welfare and tax justice.
Such obituaries are nothing new. For 30 years, both the champions and critics of neoliberalism have regularly pronounced it dead.
After the election of Donald Trump, the philosopher Cornel West wrote: “The neoliberal era in the United States ended with a neofascist bang.” The historian Samuel Moyn tweeted “RIP” neoliberalism.
But 25 years earlier, one Latin American politician deemed neoliberalism “dead” after the election of another US president – Bill Clinton. Elegies resurfaced in the wake of the Asian Financial Crisis in 1997, and returned again when left-wing leaders came to power in Latin America during the 2000s (Evo Morales declared “neoliberalism is dead” in 2003), and peaked in the wake of the financial crash of 2008. The Nobel Memorial Prize-winning economist Joseph Stiglitz declared neoliberalism dead that year, and again in 2016 and 2019.
[See also: Why states must adapt for this new age of disorder]
Whence does neoliberalism derive its apparent immortality? It helps to start with definitions. From Tokyo to the Vatican, one thing critics of neoliberalism share is a belief that the last 40 years have borne witness to the total liberation of free markets. But the world economy was not set free from the 1990s in the sense of existing in an ungoverned space. Rather, it has been increasingly legalised, and moved from the oversight of governments to the oversight of law.
Deregulation has always meant re-regulation amid proliferating forms of multilevel governance. To name one example, bilateral investment treaties – intergovernmental agreements designed to protect foreign investors, and allow companies to sue national governments – have increased from 500 in 1990 to nearly 3,000 today.
The supposedly “flat world” of post-national globalisation pronounced by votaries of the free market, such as the New York Times writer Thomas Friedman, is in fact a thicket of trade law, arbitration courts and investor protection treaties.
The founding text of the WTO in 1994 was more than 30,000 pages of agreements, annexes and legal decisions, and understandings. The draft UK-EU Comprehensive Free Trade Agreement published in early 2020, the upshot of “taking back control”, is itself 300 pages long. So much for the end of red tape in an era of “deregulation”.
We are better off thinking of the recent past (and the present) as a period of the legal encasement of markets rather than their liberation. When Pope Francis argues for the strengthening of international organisations to ensure more humane and egalitarian societies, he is not proposing order against chaos, rationality against “magic theories”, but an alternative form of regulation.
[See also: How the left can reclaim entrepreneurship]
Hannan is right. Free marketeers do not traffic in economic miracle cures. They promote the more worldly arts of constraining governments from public spending; putting assets in trusts to shield them from taxation; establishing arbitration tribunals where corporations can sue governments for lost profits; subjecting public services to time-wasting audits; writing tax codes that allow the wealthy to write off losses and avoid income tax; prohibiting workers from unionising.
The fantasy of neoliberalism’s demise may be pleasurable for some, especially on the left, but the tangle of ideas and practices that perpetuate and accelerate economic inequality will not die of natural causes, superannuation, or the pushing of an imaginary “reset” button.
For the critics of neoliberalism, it may make political sense to focus on elites and the super rich. But neoliberalism is primarily an institutional phenomenon.
Take the EU. For every case against tax evasion by a giant corporation, such as Apple, there is another to overturn it. (This happened in July, when the EU General Court overturned a 2016 decision requiring the tech giant to pay Ireland €13bn in back taxes.) For every call for central banks to abandon austerity and address climate change and inequality, there is a former central banker, such as Otmar Issing of the European Central Bank, warning against it. And as Antoine Vauchez and Pierre France argue in The Neoliberal Republic, for every appeal to use regulation to protect the less fortunate, there is a troop of corporate lawyers ensuring the state remains an ineffectual bystander to more privatisation.
It is not in the realm of ideas but in the scrum of interests and institutions that neoliberalism lives on. And it is there that it will die, or not. Containing neoliberalism will come less in edicts from the Alps or Saint Peter’s Square than in what the Germans call Maulwurfsarbeit, the work of the mole.
[See also: Inside the Museum of Neoliberalism]
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