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Neoliberalism self-destructs
That announcement restored market confidence only briefly. ‘Rushing to safety’ sent gold soaring again and returns on US T-bills below zero: the ‘bottom’ remained elusive and recession seemed inevitable.
These spectacular events reflected an even more explosive reality: the self-destruction of neoliberalism.
Hitherto unstoppable, its crises minor and easily overcome- by September 2008, former neoliberals admitted market excesses, urged government action and bayed for bailouts.
Contrary to some, neoliberalism turned out to contain contradictions after all: they had been skilfully managed, their effects postponed, but were unavoidable.
Free markets were only the rhetoric of neoliberalism. They would have ruined many a corporation and billionaire. After 19th century capitalism crashed in two wars and a depression, capitalism acquired just too many forms of government economic intervention. Then, popular mobilization ensured their use for welfare states and full employment: limited but real gains.
Under neoliberalism, the state tilted more acutely in favour of capital: tax-breaks and bailouts for the rich and harsh market discipline for others.
This tilt can no longer be draped in free market frills. Shredded by crisis, they expose the slovenly slip of class bias. It can only continue in a new form: its three pillars under neoliberalism – financialization, Anglo-centrism and (attempts to restore) US hegemony – were collateral damage in neoliberalism’s implosion.
Financialization permitted neoliberal governments, pre-eminently the US, to confront organized labour at home and by-pass the competitive challenge abroad by sucking in money which sagging exports could no longer earn – through banks during the third world debt crisis and through asset inflations of the stock market and the housing bubbles. Without more assets to inflate, manufacturing, welfare, and unions regain relevance.
Financialised Anglo-Saxon economies – mainly the US and UK – grew by expanding consumption despite neglecting manufacturing and exacerbating inequality.
With higher employment (more workers working longer hours for less) they briefly seemed superior welfare models than ‘sclerotic’ European social democracy. Poised for the severest recessions while the rest of the world, though not ‘de-coupled’, suffers less and exercises more policy options, this model stands discredited.
Finally, US hegemony – its world economic and political leadership – faltered with competition from recovered Europe and Japan in the late 1960s and its decline was predicted. It then recovered thanks to neoliberal strategies permitting the US access to resources in excess of its own productive capacity: monetarism in the 1980s, globalization in the 1990s and ‘empire’ in the 2000s.
With their end, US hegemony can no longer be restored with other peoples’ money. Nor can its overpriced military prevail over two medium-sized nations. Meanwhile with many new centres of accumulation, the current crisis in the biggest capitalist nation is not a crisis of capitalism.
Is war inevitable?
Must war ensue in a multi-polar capitalist world? While folly or hubris are dangers, classical theories of imperialism were not unambiguous. They were also produced when wars with powerful nations could be contemplated, and with weaker nations cost a lot less.
The left must respond by mobilizing working and marginalized people broadly – across gender, racial, ethnic and other divides – to enter the breach of neoliberalism’s self destruction. It must prevent ‘socialism for the rich’, ensuring justice for millions of home- and job-losers, disproportionately women and non-white people.
Production for need; equality; extended, radicalised and de-commodified public services; and solidarity with unions, working people and progressive regimes must be its key platforms. It must expose the link between neoliberalism and the ecological crisis, including climate change.
If we fail: illiberal, authoritarian and narrowly nationalist responses by disarrayed but still powerful capitalist forces will leave us pining for the residual liberalism of the neoliberal era sooner than we think.
Radhika Desai is Professor at the Department of of Political Studies, University of Manitoba, Canada. She is the author of 'Slouching Towards Ayodhya:
From Congress to Hindutva in Indian Politics' (2004) and 'Intellectuals and Socialism: Social Democrats and the British Labour Party' (1994).