The Rise and Fall of the Neoliberal Order is the title of the book that the Wilmington Progressive Book Club is currently discussing.
The author’s premise is that over the last 200 years or so, capitalism has seen three periods of “liberal” order: classical liberalism, with its emphasis on individual liberty (growing out of the American and French Revolutions and the economics of Adam Smith); New Deal liberalism, with its emphasis on providing a social safety net to facilitate every individual’s liberty; and neoliberalism, which focused on the idea that unleashing capitalism from the fetters imposed by the New Deal liberals would promote strong economic growth and thus “lift every boat”.
According to the author, a new “order” arises out of the crises of the old order and the felt need for a new approach to deal with these crises. As the broader political spectrum consolidates around this new approach (which initially can be seen as a movement) it becomes transformative and ushers in a new order.
Neoliberalism, which had its theoretical foundation in the post WW II era, began to replace the New Deal order starting in the late 1970s as a result of the economic, political and social crises of the 1960s & 70s. While the neoliberal movement (not yet an “order”) achieved power in the early 1980s (think Reagan and Thatcher), it became an order in the 1990s, when neoliberalism came to dominate the opposition political parties (think Clinton and Blair) as well. Neoliberalism then provided the political and economic foundation for globalization.
The author, Gary Gerstle, posits that we are seeing the fall of neoliberalism as a result of the policrises (not his term, but one that is becoming quite common in the literature) brought on by that order. It began with the economic meltdown in 2008-9 and has morphed into a series of interrelated crises, hence the term policrises. He points to the rejection of neoliberalism from both right and left (think Trump and Sanders) in the election of 2016.
Further evidence of this can be seen in an article from Adam Tooze’s Chartbook #182. Tooze asks “Are we witnessing a fundamental shift in the politics of trade in the US?” His answer is that, while it is still early days “all the signs are that we are indeed witnessing a profound shift in the positioning of US power towards the world economy. Already in the 2016 Presidential election the US Chamber of Commerce was alarmed to note that none of the three leading candidates - Trump, Sanders or Clinton - could be described as favoring further trade liberalization.”
In other words, the US is moving to rein in globalization, an essential economic component of neoliberalism. Tooze writes that couched in terms of supply train issues and national security, it “looks like the US is abandoning the structures of global trade that it did so much to build between 1945 and the early 2000s. It smells as though it is. It sounds as though that is the plan. Can it possibly be true?”
“The tone of Paul Krugman’s recent piece in the New York Times is telling. The leading trade economist of his generation cannot avoid the conclusion that something dramatic is happening. The willingness of the Biden team to flaunt the view of the WTO and its partners, Krugman writes, is a very big deal, much bigger than Trump’s tariff tantrums. Trump may have huffed and puffed, but Biden is quietly shifting the basic foundations of the world economic order.” (Tooze, Chartbook #182)
So, are the bastions of the neoliberal order collapsing? Possibly, but I would like to offer one caveat. It has to do with the military/industrial complex and US foreign policy. Both the war in Ukraine, precipitated by the continuing expansion of NATO and the rising conflict with China, which led to massive increases in an already bloated military budget, indicate a consensus among Democrats and Republicans on a very aggressive militaristic approach to challenges to US hegemony, the maintenance of which is a central pillar of neoliberalism. How this fits with Gerstle’s analysis of the fall of neoliberalism is unclear, but one possibility is that we are seeing a desperate and reckless response of the neoliberal order in an attempt to stave off its demise. If the US’s Empire of Liberty is losing its grip and responding in ways that other declining empires have in history, we are facing another existential crisis along with climate change.
What is needed in the US today is a strong anti-imperialist movement to challenge this. Two organizations that are working towards this a Code Pink and Massachusetts Peace Action. You can sign up for their newsletters at https://masspeaceaction.org/ and https://www.codepink.org/
A luta continua, vitória é certa
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