The British crisis and the ‘end of neoliberalism’

Pia Riggirozzi - Senior Lecturer in Global Politics, University of Southampton

Jean Grugel - Professor of International Development, University of Sheffield

One place to start would be the rich debate in and on Latin America about whether a ‘post-neoliberal’ political economy is possible.  The political-economic crisis in Latin America in the early 2000s led to calls for an end to neoliberal rollback, a new social contract negotiated and managed by a more active state, and the construction of a social consensus that was both respectful of economic growth and sensitive to urgent need to address the poverty legacy, invest in education and create welfare.  As we have ourselves shown, so-called ‘post-neoliberal experiments’ have combined a pragmatic attempt to refocus the direction and the purpose of the economy through state spending, increased taxation and management of exports with a project of enhancing citizenship through a new politics of cultural recognition in Bolivia and Ecuador and attempts to recreate the state-sponsored pact between business and labour in Argentina and Brazil.

Of course, post-neoliberal governance in Latin America is not problem-free.  Inadequate state capacity, the scale of inequality, personalist political leadership and a worrying lack of institutionalisation of reform – plus the threat of external discipline from creditors – all undermine some of the early gains achieved by new left governments.  But, despite their problems, and in the face of often profound criticism from international organisations, ‘post-neoliberal’ governments have proved remarkably durable at the polls, as the recent re-elections of Dilma Rousseff in Brazil and Evo Morales in Bolivia and the support for the re-election of Tabaré Vázquez in Uruguay show.

What’s more, these governments draw support not only from the rural and urban poor but also from the middle classes.  Indeed, the key to understanding calls for an end to a governance model subject entirely to the uncertainties of the global economy in Latin America has been the impact of unregulated markets on private and public sector middle-income groups.  Put simply, the absence of a proper social pact able to balance private profitability with welfare and public investments in the 1980s and 1990s led to immiseration of the middle classes, most dramatically in Argentina where the ‘new poor’ were the motor of the 2001 protest movement and factory take-overs.

There is surely much to reflect on here for analysts of the current crisis in Britain and indeed in Europe more widely.  Despite the difficulties so many people face simply in getting by, set out clearly in the recent Resolution Foundation’s recent report on Low Pay, the political parties in Britain seem unable to take their concerns and needs seriously enough.  One of the lessons from Latin America is that political leaders need to fashion an alternative to neoliberalism as part of their offer to the electorate if they want to win.

So, to go back to Payne’s question: are we in a situation of electoral rebellion, crisis and rising inequality on a scale that could lead to the unravelling of neoliberalism in Britain?  Despite the evident problems, we are sceptical as to whether the current crisis is really the prelude to collapse. Markets are deeply embedded as mechanisms of implementation (even in universities, schools and hospitals); and there are scapegoats that are, worryingly, being forced to carry the blame – immigrants most notably.  British citizens may not yet be ready to turn fully on their political leaders.  In Latin America, the challenge to neoliberalism came from electorates that refused to accept parties committed to free markets but did so in the context of a global political economy that gave Latin American citizens some hope for the future.  Whilst Latin America is part of the ‘rising rest’, Britain, however, is struggling with relative decline.

These important similarities and differences help put the British crisis in context.  Our key point is that the debate Tony Payne has opened about the future of neoliberalism is to be welcomed and we call now for genuinely comparative and global consideration of what ‘post-neoliberal’ political economies might look like, in Britain and elsewhere, and what might be needed to bring them into existence.