Frank Litton on policy-making, the civil service and the malaise of Ireland's democracy.

Neo-Liberalism and Failed Political Solutions

Oct 6, 13 • Political Culture5 Comments

Neo-liberalism has been in the news. Colin Crouch’s The strange non-death of neo-liberalism [Cambridge: The Polity Press 2011] provides an interesting analysis of the financial crisis of 2008-2009 and the challenges it poses. He places the crisis in the context of the history of western political economy with particular attention to the period from the 1970s onwards when the ideas of neo-liberalism came to dominance. Whatever the particularities of our history, we are part of that history; its problems and the response to them, are, in large part, our problems and our responses. His account merits our attention.

Much attention has been paid to economics and its contribution to our woes. The limitations of its analyses, and, indeed the moral character of economists has been criticized. Better economic analysis and ethics courses for students of economics should put us on the right track. It may not be so simple. As has been observed, ‘economics has gained the title of queen of the social sciences by choosing solved political problems as its domain’ (Abba Lerner The economics and politics of consumer sovereignty). Crouch’s contribution is particularly valuable for prompting attention to the weaknesses of these political solutions. These surely contributed to our troubles and they deserve examination. They weaknesses can be traced to effects of globalisation and the transformation of political culture.

Even the briefest examination of a society will reveal inequalities of power, competing or conflicting interests and the clash of ideas in which these are justified and challenged. All of these are based on the interdependencies from which we cannot escape, or dominate, however hard we try to manipulate them. The enduring problem for any society is the institution of a ‘collective’ that will contain the conflicts while sustaining the interdependencies. The collective translates the diversity of interests and interdependencies into a manageable form.  In the western world, the liberal democratic nation-state eventually emerged as the most successful form of collectivity.  Its central mechanisms for translating interests were the market, social classes, and political parties. These were underpinned by the nation whose welfare was the horizon in which all interests located themselves. From the 1960s onwards things began to change. As the importance of manufacturing declined, the ties that united individuals in allegiance to social class weakened. The political parties that once carried class identities into the collective lost this role and with it their roots in society. The notion of the ‘nation’ lost much of its unifying force. In Bobbitt‘s well known formulation 1 western states no longer claimed legitimacy with their claim to defend and advance the welfare of the nation. With (traditional) political parties gone, with social (class) identities gone, we are left with the market and the individual: the nation-state has become the market state that justifies itself with its claim to maximise the opportunities of its citizens.

The transformation in the role of political parties is especially important. They no longer bring the concerns of social groups to the attention of the state. They have become agents of the state mobilising support for its endeavours. As one positive result, this allows actors and issues that were excluded in the aggregating efforts of political parties to emerge demanding that their voices be heard. Political parties proposed the transformation of society to benefit the groups that they represented. To-day, voters are no longer interested in programmes for social change. They demand accountable governments that respect the dignity of all individuals and work to vindicate their rights. We can now recognise how many voices and issues were excluded, how much was lost as political parties translated society’s concerns into politics. Nonetheless, the transformation brings many difficulties, as I have discussed in previous posts. These have been ignored by all and sundry in Ireland.

While inclusion does mean that you are recognised and that your concerns are taken seriously, it also means that you are in the public gaze and expected to justify yourself. The powerless gain power by being included and brought into the fray, the powerful may lose power. What has those powerful agents, modern corporations, to gain by being included? At one stage, in the United States, they were included. They did not like it as regulations attempted to curtail monopolies and police the predatory pursuit of profit. They escaped from the collectivity and as Crouch demonstrates the financial crisis was the result.

How did they escape? Economics provided substantial assistance. For example, politicians, and public opinion were convinced by the case, argued by some economists, that the share price of a company is a reliable summation of all the evidence that might be gathered on how efficiently it deployed its assets to give people what they wanted at a price that they could afford, so maximising overall welfare. Regulation was therefore unnecessary. This was just as well, since experience showed that the powerful almost always succeeded in distorting regulation to serve their own interests. Globalization also played a role. Trans-national corporations find it easy to escape the control of territorially bound states. While our state can make life comfortable for Intel, it is inconceivable that it would make it uncomfortable, even in pursuit of wider social goals.

What can be done? As Crouch so convincingly demonstrates more realistic economic analyses would help. While these will not provide solutions, they will make it impossible for us to go on believing that markets will solve our problems. Far more importantly, we need to look again at the solutions to political problems that provide the domain of economics. Politicians, left, right and centre turned to economics as they turned away from the problem of reforming the collective to meet the challenges of a globalizing, individualizing, world. Crouch in clear, succinct prose blocks this escape route.

To blame, as some experts in the science and practice of politics do, ‘false economic paradigms’ for the problems that follow from this lack of political responsibility,  is not only presumptuous, it further delays confronting the problems.  Ignoring the beam in their own eye-the failure of the social and political sciences-they do nothing to help answer the question posed by Crouch’s analysis: how can we bring the corporation into the collectivity where it can take responsibility for its actions in acknowledging the interdependencies on which its endeavours depend?

Crouch’s discussion of this question is more successful in underlining the difficulty of finding answers than it is providing them. He recognises hopeful signs in ‘civil society’ where we find groups challenging corporations, drawing attention to their misdeeds (eg use of child labour, degradation of the environment). Consumer hostility with its threat of declining sales can awaken dormant social consciences. This, of course, depends on a sense of solidarity. He asks where we can find the values that sustain and nurture this. He acknowledges the contribution of the Churches in giving public voice to them. However, in a secular Ireland it is hard to see them having much success in nurturing them.

Reading Crouch should stimulate political scientists and theorists to address the reformation of our collective.  After all, the problem does belong to their domain. Until it is solved, we will have to endure the damaging consequences of the ‘non-death of neoliberalism’.


  1. Bobbitt, P (2002) The shield of Achilles NewYork: Alfred A Knopf

Tags: , , , ,