November 2016.

What is neoliberalism, and why are we being told it's finished?

1 answer

Neoliberalism is an economic policy strategy consisting of deregulation of labour markets, financial deregulation, privatization and globalisation of trade openness. I certainly wouldn’t say that neoliberalism is finished. It has run into problems because financial deregulation has badly backfired and the IMF has said that it has performed below expectations. 

Politically, it’s increasingly under pressure in the globalisation of trade openness – think of the Brexit vote, or what Labour and similar political organisations around the world are moving towards nowadays – but if it has lost its hegemony it’s still the mainstream of economic policy. I would say the European Union’s economic policy regime is a form of neoliberalism; it’s a less finance-oriented version than the Anglo-Saxon model but it essentially has the market deregulation and labour market flexibility, and doesn’t really want to regulate finance either.

Is neoliberalism finished for Britain after Brexit? Well, the change in political discourse has been quite surprising, not only from the Labour party which now has a leadership that wants to do something different but also from the new Conservative government, which has marked a certain break with neoliberal policy. Whether they’ll do anything in practice, however, I’m a lot less convinced. 

Britain has an economy particularly heavily tilted towards the financial sector and essentially a debt-driven growth model, and for now I don’t quite see what else the engine of growth might be. For that reason, neoliberalism is likely to be around for a while; it seems that it will be a somewhat less cosmopolitan and more xenophobic version of neoliberalism that we’re heading for but I would be surprised if we had a big regime shift of policy in the near future.