The Lost History of an Era?

Commentators have announced neoliberalism’s time of death before. Back in 2008, many rushed to declare the failure of a doctrine that had finally collapsed under the weight of its own hubris. This watershed year inspired the Scottish sociologist Neil Davidson to attempt a deeper analysis of the period since the 1970s, one that had seen so many defeats for the international working-class movement, an explosion in inequality, and the entrenchment of capitalist power. Though it had to be recovered in a somewhat fragmentary form after Davidson’s untimely death in 2020, this work helps us think through the nature of shifts at the top of capitalist society.

Davidson was a sociologist with a historian’s cast of mind. He had an acute understanding of how the outcomes of class conflict tend to distort our image of historical eras. There are three broad ways in which the very success of neoliberalism has obscured its origins and form.

First, the defeats experienced by the working class in the neoliberal era, and the gross inequalities that emerged from them, have fostered a view of the postwar consensus it shattered as an antediluvian golden era. Since waves of deregulation and privatization characterized the triumph of the capitalist class under neoliberalism, the mixed economies and expanding living standards of the 1950s and ’60s must have represented the embedding of a different balance of class forces in state policy. This is the theory behind David Harvey’s assertion that neoliberalism involved the “restoration” of capitalist power.

This tendency to view neoliberalism as a countercharge against a somehow less full-bloodedly capitalist postwar consensus draws further strength from the claims of neoliberal ideologues. Since those ideologues put forward insincere anti-statist rhetoric, Davidson argues, their opponents tended to argue as if the champions of neoliberalism “really do see states and markets as antipodes,” leading them in turn to “invert the supposed value judgement involved, treating the state as a welcome restraint on market excesses.” Reactive thinking of this kind has obscured the real nature of the postwar era, which was in fact dominated by a distinct period of capitalist globalization.

The idea that the postwar settlement had its roots in the victories of the Left or the working class is also a simplification. In Europe, the postwar order was at least as much a product of the political right as the Left: “In most of Western Europe outside Scandinavia, it was Christian Democrat governments who were instrumental in establishing welfare states.” This was true to some extent, Davidson argues, even in the iconic case of the UK, where the wartime, Conservative-dominated coalition anticipated the reforms of Clement Attlee’s Labour government.

Capitalists were not simply cowed into accepting this program, although there certainly was working-class pressure at the time. They chose it, partly as a form of adaptation to the new political and economic realities of the Cold War world, and they benefitted from it in crucial ways, at least for a time. The postwar consensus, like the neoliberal era that would follow it, was a complex of factors located in system-wide tendencies: geopolitical competition (including the global arms race, which Davidson holds to have created the conditions for high profitability), and the changing composition and skills needs of capital, and the changed expectations of the postwar working class.

Misreading the ’60s

Second, the concomitance of wider cultural, social, and demographic changes at the end of the postwar period has further mystified the process of transition from one phase of capitalist development to another. With relish, some commentators present the radical movements of the late 1960s and early ’70s as forerunners of a narcissistic “neoliberal man.” In many such accounts, it was precisely the comfort of the postwar decades that bred a generation fit for the neoliberal revolution. Despite talk of social emancipation in student protests, negative freedom, soulless individualism, and the desire for consumer satisfaction always resided in the secret heart of youth subcultures.

This reading collapses decades of history into a simple, linear story. Crucially, it evades the breadth of the movements that characterized the era. May ’68 in France famously combined demands for mixed dormitories with mass wildcat strikes involving millions of workers. Worldwide, the period involved a vast array of struggles linking the Western and Eastern blocs with the Global South.

In one of the most obviously incomplete parts of the book, Davidson concludes that these movements only experienced the outcomes that class conflict afforded them. The defeat of the workers’ movements, and the eventual incorporation of paramilitary anti-colonialism into the world capitalist system, left the bohemian impulses of young professionals and indolent gurus free to run amuck, but also to adapt themselves to the industrial and state forces that emerged triumphant.

Policymakers and corporations alike were happy to selectively recruit from the succession of protests, riots, strikes, armed campaigns, and experimentations in music, clothes, and sexual mores. Naturally, they selected the latter and not the former for purposes of commercialization and ideological legitimation. The new order thus expressed the defeat of the movements of the late 1960s and early ’70s, not their full consummation.

The image of neoliberalism as a product of boomer subversion shares its idealism with the third major obfuscation of neoliberal history. The degree of dominance enjoyed by neoliberal tropes over decades has encouraged the belief that a victory in the battle of ideas resulted in an entirely new regime of capitalist organization.

Popular folk histories emphasize neoliberal origins in small groups of intellectuals such as the Mont Pelerin Society or the economics department at the University of Chicago. Yet the most important of these intellectuals were lonely voices for decades before the crisis of the postwar regime brought them into fashion among politicians.

This picture of neoliberalism as a triumph of the intellectuals often gives the impression that there was a planned, monolithic steamrolling of the old consensus, in which the terraforming of global capitalism followed the same sequence of advances everywhere, and its victory was complete. Davidson goes to some length to show that the neoliberal offensive generally faced resistance, often with partial or temporary success, meaning that we are ultimately left with many national variants of neoliberalism.

Varieties of Neoliberalism

A closer look at some of those victories makes clear how alternative paths to the present were possible. Egypt was the earliest testing ground for neoliberalism in the Global South. The fact that we tend to think of Chile as the pioneer is telling, both of the violence with which neoliberal tenets were imposed on that country, and of our tendency to stress the total character of neoliberal victory.

Anwar Sadat’s embrace of economic liberalization, which tracked his geopolitical turn from the Soviet Union to the West, was stymied by bread riots in 1977. This venerable tradition would later return in the scale of a full-blown revolution to dethrone Hosni Mubarak, the Egyptian president who more successfully instituted neoliberal reform from the 1990s.

Latin America is another example of the halting, incremental, and partially reversable progress of neoliberalization. Trade union, land rights, and anti-privatization movements have continually emerged, sometimes buttressing (and sometimes clashing with) left nationalist governments that expressly tied opposition to economic liberalization with resistance to US power. This astonishingly long and explosive history is still unfolding.

Even in the centers of the world neoliberal process, the project was never completed. In Britain, monetarist experiments in policymaking faltered, while the working class ferociously resisted and defeated the poll tax. While Conservative and Labour governments have left the National Health Service internally fragmented and structurally weakened, popular support has nonetheless kept it alive over the course of decades.

Davidson demonstrates how the camera obscura effect of historymaking has elided so much of this detail. Lost causes today seem to have been lost from the start, and accomplished facts suggest their own inevitability. With only this concrete present to work on, we read it backward into past events in ways that conjure the image of a golden era and the shadowy, irresistible conspirators who undermined it.

The story of the collapse of the postwar consensus, and especially the disintegration of the trade union movement, social democracy, Third World nationalism, and finally state socialism, bears down relentlessly on modern students of the recent past with an ineluctable conclusion. Only in recent years has it been revealed to growing layers of society that, much like the postwar settlement before it, neoliberalism cannot survive its own mounting contradictions.

Material Origins

Davidson faces two challenges. The first — to reconstruct an account of neoliberalism that goes beyond folk history — we have already outlined. The second is to vindicate the conceptualization of neoliberalism as a distinct period in the history of capitalism.

This second line of argument is one he directed against co-thinkers on the Marxist left, for whom neoliberalism was merely “an ideology, or perhaps a set of policies” supporting a general tendency for capitalism to reverse the gains made by workers in a past generation. One problem with this view is that it assumes a natural state of capitalist competition, which can be ameliorated by a separate world of politics or the state.

Periodization is one way to think of the necessarily political construction of capitalist economies. It has the benefit, too, of being able to accommodate the synchronicities of the neoliberal era. So many state regimes, with very different economies at various stages of development, with diverse political structures and national cultures, all commenced similar projects of reform within years of each other. They also did so following the breakdown of the old paradigm.

If we accept the periodization but reject the folk histories of capitalist reconquest, intellectual conspiracy, or individualist zeitgeist, we are left seeking the material foundations of neoliberalism. For Davidson, these foundations are located in the internationalization of capitalism and its transformative effects on state functions.

Such developments include the growing importance of imports and exports over internal national trade, the extension of international production chains, and especially the growth of international investment. All of these developments had the effect of complicating state capitalist forms and encouraging the suite of policies that came to characterize the neoliberal era.

These changes do not amount to a simple retreat of the state. In the core of the capitalist system, states have stubbornly maintained their scale after decades of schemes to roll back regulatory, planning, and welfare functions. Today beleaguered right-wing dogmatists announce with consternation that economic liberalization and “big state” largess have gone hand in hand.

In reality, things could not have gone in any other way, as Davidson notes. The social disintegration encouraged by liberalization required a state that could mop up the mess and dole out discipline where required.

The Neoliberal State

Beyond the expansion of state structures to meet the daily consequences of the neoliberal reordering, the state also must bear the risk of the concentrated, complex, and transnational capitals for which it seeks to provide a safe harbor. The US state has been forced to intercede at increased frequency to rescue major industrial concerns across the neoliberal era.

This process spanned the 1970s with the bailout of Chrysler, the 1980s with the state marshalling of US banking through the Latin American debt crisis, and the 1990s with the protection of the Long-Term Capital Management hedge fund, to name just a few notorious incidents. The most profound confirmations of this trend were the giant state bailouts after the financial crash in 2008 and during the COVID-19 pandemic.

The extension of state action over the increasing transnationalization and financialization of global capitalism has gone together with alterations in the constitution of the state. These changes have transferred sovereignty and accountability to levels both supranational — as in the case of the EU — and local (UK devolution, for example). States have also outsourced their everyday functions to a vast variety of private businesses, NGOs, social enterprises, consultancies, and arm’s length companies of all varieties.

Riffing on Philip Bobbitt’s notion of a “market state,” Davidson foresees a world where central state functions narrow but intensify, while the provision of public welfare devolves ever further down into private life. With centralization and localism united by a new ethos of surveillance and manipulation, the rational economic actors of the neoliberal ideologue are morphing into what Mark Olssen has called “manipulatable man” — a creation of the new state–market nexus, groomed for responsiveness to prompt and inducement.

Ready as ever to challenge feelings of nostalgia for a golden age, Davidson implies (in what seems to have been another unfinished thought) that this process is rooted in the decaying social democratic paradigm. Welfare states provided an original program for depoliticizing a previously more independent and self-reliant form of working-class politics. The market state is only completing the movement to controlled, post-political atomization.

A False Polarization

Critics of neoliberalism diverge on the question of whether it has radically refounded personality types and state forms in this way. At one extreme, those who speculate in such terms can descend into hopelessness, depicting resistance as impossible, preempted, or co-opted. Their arguments strongly echo the view of 1968 as an inevitable prelude to the narcissism of the neoliberal era. This perspective often dismisses young people, born to the new dispensation, as hopeless prey to a “neoliberal self,” robbed of a sense of history and the possibility of genuine solidarity.

At the other extreme, there is a persistent tradition of treating neoliberalism as essentially a superficial phenomenon, or merely a case of the long-term preoccupations of capital having been laid bare. For those who cleave to this view, the emergence of neoliberalism has only confirmed the socialist critique without complicating it.

This false polarization between doom-mongering and trite activist-think obscures a more important debate that has quietly haunted left appreciations of the neoliberal era. So much of the canonical left literature has treated the phenomenon as “economic” in the kind of one-sided way that Marxism traditionally rejected. Davidson’s account helps us return to an understanding of neoliberalism as a form of political regime founded in class relations, state forms, and international order.

We can question whether Davidson goes far enough in this direction. Is the signature action of neoliberalism the privatization of a nationalized industry, or the signing of treaties that recast sovereignty?

For decades, as part of a melancholic attachment to older formats of capitalism, many on the left challenged neoliberalism by presenting it as an economic creed for which more humane policies could be easily substituted. This often meant treating the era’s new political forms as secondary or even benign features. This would produce enormous confusion once the political forms came into crisis.

Social Base

One of the great strengths of Davidson’s account is his separation of neoliberal history into two principal phases: a vanguard phase, marked by the aggressive Margaret Thatcher– and Ronald Reagan–type regimes, and a consolidation phase, marked by the social neoliberalism of the Bill Clinton and Tony Blair type.

However, the reader would be forgiven for thinking that the social neoliberals achieved this phase of consolidation principally through the expression of kindly words and noble sentiments. It might be easy from this perspective to see ersatz social democrats like Blair as no more than figures painting makeup on a pig — taking the brutal victories of the Thatcher era and re-presenting them as a pathway to modernization, multiculturalism, and the cultivation of modish lifestyles.

Any regime of accumulation requires some form of mass consent — or at least mass resignation — to the new order. Few on the Left have difficulty accepting this in the case of past eras of capitalist development. The postwar order generated this base through various means. Generally, these involved nation-building enterprises such as state control over strategic industries, the extension of new state services or provisions, and the cycle of parts of the working class into emerging industries — the generation of the so-called “new middle class.”

Our tendency, criticized by Davidson, to view neoliberalism as the devil’s bulldozer means that we neglect the “positive” side of the phenomenon — the world-building that any regime of accumulation must sustain to make it viable. We can, at a glance, identify at least four important processes, none of which are uniform across the global reach of neoliberalism.

The first is the expansion of the university sector, taking the UK as an exemplar. The real income of higher education providers in England doubled in the thirty years up to 2022/23. By that same academic session, the size of the national student body in the UK reached almost three million.

The signs of this explosion are to be found everywhere. Student housing has transformed the appearance of many provincial British cities, and micro-economies have emerged around growing campuses. Along with the rise of finance, these are the signature urban developments of neoliberal Britain. However, the boom has overextended itself. Debt-burdened institutions now struggle to attract lucrative international students amid global shocks.

Gender Trouble

The expansion of the university sector is linked to another major development: the so-called feminization of the professional sector. By 2017, 55 percent of UK women were attending university before the age of thirty. A much higher proportion of women now attend university than men across a swathe of the most advanced economies including the UK, the United States, Canada, South Korea, Norway, and others.

In the UK, female employment increased two and a half times between 1951 and 2018. Female labor-market participation rates increased from 55.5 percent to 74.2 percent between 1971 and 2018. Over the course of the neoliberal period, female labor became more full-time and professional. By 2013, female labor in the UK was proportionately more professional than male, with 21 percent of all female and 19 percent of all male employment in professional roles.

Another landmark was reached in 2023, when the pay of women exceeded that of men in the twenty-one to twenty-six age range by 2.1 percent. Women are now 51 percent of all professional employees in the UK between the age of twenty-two and twenty-nine. These figures elide an array of measures by which women are still heavily disadvantaged in employment. But they all point to a process of economic renewal decades in the making, generating new workforces and industrial cultures.

We can observe the decline in the stability of both these pillars — the expansion of female professional employment and of higher education as forms of limited social mobility and labor-integration — in right-wing attacks on neoliberalism. The denigration of women’s employment as a promoter of demographic crisis, of the university as a sphere of coddled and feckless elitism, and of career employment as a waste of life for society’s “losers,” reflects an awareness on the Right of the contradictions of the general paradigm, and an ability to incorporate these problems into a partial and motivated criticism.

This process is now so advanced that even the most inarticulate and vulgar reactionaries can make hay. What else is Andrew Tate’s “Matrix” but the constellation of failing liberal institutionalism? Conservative influencers like Tate reject the “feminine” world of careers and education, offering instead a worship of those aspects of neoliberalism that birthed conspicuous “winners” — lenders, rentiers, and lifestyle hucksters. These new layers of winners are themselves by-products of the third and fourth pillars: the extensions of asset ownership and credit.

Asset Inflation

Once again, countries like the UK and the United States that consolidated the neoliberal project lead the way in the explosion of asset wealth. In some cases, most famously in the UK, governments consciously sought to generate a new base of asset holders through the sale of public housing and shares in formerly nationalized industries.

The most conspicuous winners here were not the increasing number of homeowners. Rather, the concentration of assets has redefined wealth in the twenty-first century, with the gulf between ownership and labor being reenforced by so-called “popular capitalism.” By the end of the project in the UK, fifty families owned more wealth than half the population — 33.5 million working-class people. Multitrillion-dollar asset-management firms like Blackrock and Vanguard in the United States have become the international symbols of this shift.

A fourth pillar — one that Davidson explores in more depth — is the extension of more credit and private debt to working-class households. This, combined with growing female labor-force participation, helped maintain purchasing power against stagnant or falling wages. Notably, debt spiked after neoliberal crises in 1997 and then the dotcom crash at the turn of the century. The better-off parts of the workforce gained more ready access to credit, which they could secure against assets.

Davidson cites Citicorp research that describes the rise of “plutonomy,” in which consumption, debt, and savings are now all so skewed that talk of an “average” consumer has become meaningless. The recent waves of inflation have exposed the inability of politicians to comprehend how fractured the public experience of economic hardship has become.

These latter tendencies, closely connected with financialization, helped secure an element of popular support or acquiescence for neoliberalism, argues Davidson. Those who have attained a disproportionate share of asset-based wealth and consumption — though such gains pale beside the enormous wealth of the capitalist class proper — are overrepresented in the social layers that still regularly vote and are more likely to engage in areas of devolved and localized responsibility.

It is from parts of the new middle class that neoliberalism fostered a populist sensibility, Davidson contends:

Neoliberal attitudes towards the mass of the population involve an uneasy combination of private suspicion over what they might do without state surveillance and repression, and public disquisitions on the need to listen to The People, provided of course that politicians are being asked to listen to the right sort of people.

Forms of sub-representational democracy thus prefigured a demagogic political style, led by the real winners of the neoliberal regime of accumulation.

Culture Warriors

The melancholic regard in which so many people hold the postwar order meant that they have often treated its innovative forms as if they were secular and organic tendencies and associated them with a transhistorical march of “progress” rather than distinct material processes of capital accumulation. In this way, it becomes possible to disassociate the phase of “social neoliberalism” from the wider history of the era.

Adherents of this perspective could thus view supranationalism, devolution, and NGO-ization as neutral, unambiguous factors of modern life. The consequences became particularly apparent from 2016 onward, when right-wing backlash drove much of the Left into a reflexive defense of liberal institutionalism.

The new right currents emerging from neoliberalism were no less disorientated. Not only did they share the fixation on a lost world of honorable national capitalism. They had also, like the Left, been house-trained in the culture of neoliberal detachment from public life. Davidson argues that this shaped the contours of the new right: “The increasingly narrow parameters of neoliberal politics, where choice is restricted to ‘social’ rather than ‘economic’ issues, has encouraged the emergence of far-right parties, usually fixated on questions of migration.”

On the Left, too, politics gave way to single-issue campaigns, localism, and ad hoc “community” building. Davidson indicates that these attempts to mimic the lost associational culture of the postwar decades mirrored the logics of neoliberalism, its drive away from the burdens of national and putatively representative governance.

The phenomenon often referred to as the “culture war” reflects this general fragmentation of politics. The retreat into private life that the institutional array of neoliberalism enabled wasn’t merely a spiritual migration, but a material one borne along by petty asset ownership, cheap credit, low inflation, and new career pathways.

As each escape tunnel has collapsed, many, especially in the once aspirant social layers, have been forced to the surface. Yet they lacked the language for politics as such, and instead announced their anger and paranoia through new tribal identities. In the end, the culture war was always likely to benefit the new right, whose partisans can afford to wallow in the atomization and baseness of private drives and mutual antagonisms that corrode democratic politics.

The fact that it is Trump, above all others, who finally seeks a new dispensation so many years after 2008, indicates seminal features of the world at the end of neoliberalism. It speaks volumes about the degree of structural damage previously inflicted on the workers’ movement that processes of geostrategic and intra-elite competition are now fashioning the new era, with broader layers of society mainly contributing to the process by demurring from neoliberal forms of rule.

There is much anger, and political engagement and activity have increased, as have shocks to decrepit establishments of one kind or another. But the existing left demonstrated its unwillingness to face down neoliberalism at crucial moments. Left populism broke apart on contact with guiding institutions of the neoliberal process like the EU in Europe and the Democratic Party in the United States.

Trump is a unique figure in the new fundament. Across Europe, the combined processes of state enervation, post-sovereignty, supranationalism, and de-industrialization have left political leaders adrift, incapable or unwilling to confront the obvious need for a change of course. However, the office of the President of the United States still retains real power, and Trump is determined to use it.

At an early stage in his treatment of neoliberalism, Davidson insists that the necessary task of identifying distinct eras of capitalism must not lead us into drawing hard borders between them. Inevitably, every new era carries over key features from the last. This is not only true of the most essential relations underpinning the entire capitalist epoch, but also long-wave trends that help shape each subperiod. Recognition of such continuities leaves us with a difficult task in identifying how these longer trends can condition forces across different phases.

The rise of sovereign wealth funds, aggressive trade measures, near-shoring, fiscal stimulus, and other “state capitalist” methods has been a notable feature of the interregnum between 2008 and Trump’s second term. Yet as Alberto Toscano has noted, “Today’s protectionist gestures mostly respect the boundary conditions of neoliberalism and its class imperatives.” Deglobalization and multipolarity reflect the pressures toward a new geopolitical competition. But they show no sign of actually reversing the internationalization of capitalism.

In conditions where capital will remain transnational, it would be crude to allow the Right to impose its own ideological prognosis of a conflict between nationalism and globalism. Rather, we could view Trump’s neo-mercantilism — a shift in state function to the aggressive pursuit of trade on favorable terms, at the expense of the pretense of global leadership — as a consequence of maximal globalization.

The integration of the global market has brought forth a peer competitor for the United States in the form of China, destroying the basis for Washington’s old strategies of shepherding capitalist interests (ultimately self-interested and nationally based though those strategies of course were). The next best option is the one that has fired Trump’s imagination for many years: to turn the world’s most powerful state from a shepherd into a wolf. In this way, his realist-mercantilist worldview, half-formed and erratic though it may be, plays an analogous role to the doctrines of the neoliberal ideologues all those decades ago.

Those who view Trump’s new order as an inversion — the ideological photonegative of globalized neoliberalism — are likely to be confounded in the same way as those who viewed neoliberalism as the inversion of a social democratic golden age. This new regime of capital accumulation and geopolitics will be “globalist” in scope and nature alike. It, too, will be forged through conflict, without a guaranteed outcome.