The question’s in the air at the moment. In the Australian blogosphere, John Quiggin thinks the financial markets crisis has killed it off, while Nicholas Gruen is (rightly in my view) more skeptical. [In response to commenters, Quiggin goes on in another post to define what he means by neoliberalism.]
From my (sociological) point of view, the shorter answer to the question is – no.
In fact, I think the way the question’s posed reflects a number of category mistakes. The first is to take the theoretical apparatus that accompanies various ideologies too seriously. As I’ve argued previously, ideologies are ensembles of political forces and political interests and their theoretical baggage is necessary for their reproduction but still contigent and able to be discarded or modified where circumstances dictate. Debating the finer points of “Austrian economics” might be an interesting diversion for those who might have been debating how many angels can dance on the point of a pin in Thomist times, but it’s a side show when it comes to political action. Phil BC at A Very Public Sociologist makes this point succinctly and elegantly:
Academics, armchair economists, libertarians and House Republicans are the only ones who take the “principles” of neoliberalism seriously. Governments here and across the Atlantic only stick with it in as far as it entrenches the rule of capital.
The second error is to assume that neoliberal governments are serious when they talk about shrinking the state. Again, I argued previously that the size of the state is governed by much longer term secular trends, which are less amenable to political management than often thought. Just as the “nationalisation” of banks in the UK and the TARP bailout in the US don’t represent some form of socialism because the state buys junk paper or takes over failing financial institutions, so too an increasing tax take and its redistribution don’t signal the presence of social democracy.
Historically, the equation of socialism with public ownership is an artefact very much of the British (and to a lesser degree the Australian) experience. The Swedish Social Democrats were never all that exercised by it, preferring to shape product and labour markets by other means. And the French dirigiste planners of the right were quite enamoured of public ownership, while German social and Christian democrats intervened at the level of the firm through entrenching co-determination in governance rather than through public ownership.
This brings me to the third mistake – the failure to ask the critical question – cui bono? Neoliberalism historically has been much more about benefiting finance capital at the expense of manufacturing capital (and disciplining labour) than about freedom from government intervention per se. Thatcher’s embrace of monetarism was a massive re-engineering by the state of the economy, forcing up unemployment (deliberately, as Norman Lamont admitted) to destroy manufacturing and coal mining and with them the power of organised labour.
The deep reservations expressed about the beneficiaries of the TARP bailout should make it crystal clear that the American state’s intervention is not directed by any sense that power should be shifted within the economic field as a whole. The power of the state is being employed in this instance to recapitalise financial markets, through a sort of reverse redistribution. Incidentally, the objection about moral hazard has some force here. It’s part of the “Washington consensus” which has only been applied to the finance and banking sectors in other nations – for instance Korea and Indonesia during the Asian financial crisis. We can also see revealed in these events the myth of globalisation as some sort of process floating free of state strategies. Rather, globalised financial markets, and the consequences of their pathologies, are deeply imbricated with the stategies of the US state (and to a degree those of others – as in the G20).
The real significance of the credit crisis lies not in sounding a death knell for neoliberalism, but for what it can tell us about the decline in the power of the American state. That’s been touched on here before, and John Gray has something interesting to say about it in The Guardian.
Russia has already called the US’ bluff in geopolitical terms on Georgia. Now the sovereign owners of the US debt are getting restive. The American power elite is about to find out that debtors can’t continue to call the international tune indefinitely.
The next administration will be presiding over a deeply diminished United States after eight years of George W. Bush. The likelihood is that the TARP bailout won’t be the end of it. US taxpayers will be subsidising the ruins of American financial dominance for some time to come, and US economic and military power will have to come to terms with a more multipolar world. And if (as appears more likely recently) Barack Obama is elected, his ability to bring about any change will be severely constrained by the steps that have been taken in the last week.