The last straw for neoliberalism?

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‘There’s no such thing as society,’ Margaret Thatcher claimed in 1987.

In the 1980s, Thatcher, along with Ronald Reagan and a number of other world leaders, had ushered in a new era for politics. During the decade, parties on both the left and right in Western politics would converge on the centre, united by the values of globalism and laissez-faire capitalism. European countries with proportional representation would see coalitions between right- and left-wing parties. Neoliberalism was here, and here to stay.

23 years on, however, things have changed. Now, the message from Number 10 is ‘there is such a thing as society’, uttered by the avowed Thatcherite Boris Johnson. Uttered in the unique context of promoting unity during lockdown, granted, but this direct contradiction of one of Thatcher’s most famous lines was no accident: it was a sign of the times. Johnson himself was elected on the platform of leaving the EU (a fundamentally pro-business and globalist organisation), of ending austerity and boosting government spending, which ex-Chancellor Sajid Javid has since said he as a small-government conservative could not support. This anti-neoliberal trend has also occurred across the pond; while President Trump is a peculiar sort of neoliberal, supporting both nationalist and pro-business values, his promises of tax cuts for businesses were not what got him elected: protectionism and anti-immigration were his flagship policies. 

In almost every democracy in the West, populism has risen to prominence, largely by virtue of its opposition to the neoliberal establishment, promising more government support for workers, and an end to globalisation. Importantly, this is not just a right-wing phenomenon; anti-neoliberal leftist candidates such as Jeremy Corbyn and Bernie Sanders have become immensely popular, and while neither have been elected, both have shifted the Overton window a lot further left, as the mainstream left abandons the centrist ‘social democracy’ that characterised the 1990s and 2000s. So why is neoliberalism falling out of favour?

Neoliberalism came into fashion as Western nations transitioned from industrial to postindustrial societies. They changed from manufacturing-based to service-based economies, and their demographics changed with them; the traditional working class was shrinking, replaced by a socially mobile middle class. The neoliberal dream of unfettered capitalism became appealing to those who wanted a part of the wealth. Millions of people were sold on the idea that once inefficient government was out of the way, anyone could be rich if they worked hard enough, and they wouldn’t have to pay taxes to subsidise the so-called work-shy poor. Now, it has gradually become clear to these people that neoliberalism does not make everyone rich, no matter how hard they work; it makes the rich richer. This feeling of dissatisfaction was exacerbated by the 2008 crash, which was partially caused by the neoliberal policy of soft-touch regulation on banks, and massively increased in the aftermath due to renewed spending cuts. As a result, people who already felt that they were not as rich as they ought to be were now in serious financial trouble, with houses worth next to nothing. The effects of austerity are still felt today, and people have flocked to support anti-neoliberal parties and politicians.

Neoliberalism was, then, on very thin ice in most Western countries. Cue the biggest economic depression in 90 years: coronavirus. In true Joe Exotic fashion, the neoliberal establishment looked at this humanitarian crisis and said, ‘I am never going to financially recover from this’. Businesses have closed, millions have lost their jobs, and the economy is in turmoil, as the free market, which Adam Smith proudly declared consisted of nothing but self-interested agents making each other richer, was just that: self-interested agents, with no inclination towards the common good. That is not a condemnation of those agents, for they are behaving in exactly the way the system intended. The problem is the system. In this time of need, the free market that was supposed to bring us all prosperity has failed us, and all across the world governments have had to step in, paying people’s wages, lending or giving money to businesses, and jumpstarting economies. If not for the government, these economies would be collapsing entirely. There is indeed, it seems, such a thing as society.

So will this be the straw that breaks the camel’s back? Will people decide that there should in fact be such a thing as society even outside of crises? Has Adam Smith’s invisible hand been outmuscled by the iron fist of government? 

The answer to all of these questions is ‘probably not, but perhaps’. It is very rare for a mainstream ideology to be permanently disregarded, especially one with an entire establishment behind it. The neoliberal settlement is supported not just by the vast majority of prominent politicians, but also by the rich, who have the power to keep a political movement relevant if they so wish. Since the ultra-wealthy have immense personal interest in maintaining neoliberal policies, it would be very surprising if, for example, the billionaires who own newspapers and TV networks did not use their influential platforms to promote neoliberal views. Moreover, it is worth noting that both of Sanders’ runs for the Democratic nomination ended in defeat; likewise, as Corbynites occasionally need to be reminded, Jeremy Corbyn did not win the 2017 election, and has since been replaced by a more moderate candidate. Neoliberals will hope that this trend is nothing more than a flash in the pan, and they have good grounds to expect that it will not be.

If nothing else, however, this should serve as a reminder that big businesses are not God’s gift to the working classes, and that the government is, at least occasionally, a good thing. After all, nothing inspires reform like a global crisis.