For a quarter of a century, the remedies of neoliberalism appeared to work. Growth returned, if at a markedly lower pace than in the quarter of a century after the Second World War. Inflation was mastered. Recessions were short and shallow. Rates of profit rebounded. Economists and pundits hailed the triumph of what the future chairman of the Federal Reserve in the United States, Ben Bernanke, extolled as the Great Moderation. The success of neoliberalism as an international system didn’t rest, however, on the recovery of investment to the levels of the postwar era in the West: this would have required an increase in economic demand precluded by the wage repression central to the system. It was built, rather, on a massive expansion of credit – that is, on the creation of unprecedented levels of private, corporate and eventually public debt. In Buying Time, his pathbreaking work of 2014, Wolfgang Streeck describes this as claims on future resources that have yet to be produced; Marx more bluntly called it ‘fictitious capital’. Eventually, as predicted by more than one critic of the system, the pyramid of debt caved in, causing the crash of 2008.
Por un cuarto de siglo, los remedios del neoliberalismo parecieron funcionar. El crecimiento regresó, aunque a un ritmo significativamente más bajo que en el cuarto de siglo después de la Segunda Guerra Mundial. La inflación se contuvo. Las recesiones fueron cortas y poco profundas. Los márgenes de beneficio regresaron. Los economistas y luminarias saludaron el triunfo de lo que el Jefe de la Reserva Federal americana, Ben Bernanke, ensalzó como la Gran Moderación. El éxito del neoliberalismo como sistema internacional, sin embargo, no se basó en la recuperación en el Oeste de los niveles de inversión de la posguerra: ello habría exigido un incremento de la demanda económica excluido por la contención de salarios sistémica. Fue construido, sobre todo, por una masiva expansión del crédito- esto es, por niveles sin precedentes de deuda privada, corporativa y pública. En Buying Time, su original trabajo de 2014, Wolgang Streeck lo describió como pretensiones sobre recursos futuros que todavía no se han producido; Marx más rudamente lo llamó “capital ficticio”. Hasta que, tal y como se predijo por más de un crítico del sistema, la pirámide de deuda se hundió, causando el crash de 2008.
The crisis that ensued was, as Bernanke confessed, ‘life-threatening’ for capitalism. In magnitude, it was fully comparable to the Wall Street Crash of 1929. Over the next year, global output and world trade fell more rapidly than during the first twelve months of the Great Depression. What followed, however, was not another great depression, but a great recession – a big difference. A starting point for understanding the political position the West is in today is to look back at the sequence of events in the 1930s.
La crisis que siguió fue, como Bernanke confesó, una “amenaza de muerte” para el capitalismo. En magnitud, fue completamente comparable al crash de Wall Street de 1929.En el año siguiente, el producto global y el comercio mundiales cayeron más rápidamente que durante los doce primeros meses de la Gran Depresión. Lo que siguió, sin embrago, no fue otra gran depresión, sino una gran recesión- una gran diferencia. Un punto de partida pare entender la posición política en la que el Oeste está hoy es mirar atrás a la secuencia de sucesos de la década de 1930.
When Black Monday hit the American stock market in October 1929, conservative governments were in office in the United States, France and Sweden, while there were social democratic governments in Britain and Germany. All, however, were more or less indistinguishably faithful to the economic orthodoxies of the period: a commitment to sound money – that is, the gold standard – and balanced budgets, policies that simply deepened and prolonged the Depression. It was not until the autumn of 1932 and the spring of 1933, a time-lag of three years or more, that unconventional programmes to combat the situation began to be introduced, first in Sweden, then in Germany and finally in America. These corresponded to three quite different political configurations: the arrival in power of social democracy in Sweden, of fascism in Germany and of an updated liberalism in the United States. Behind each of these lay pre-existent heterodoxies, ready to hand if rulers cared to adopt them, as Per Albin Hansson in Sweden, Hitler in Germany and Roosevelt in America were to do: the Stockholm school of economics descending from Knut Wicksell to Ernst Wigforss in Sweden, Hjalmar Schacht’s valorisation of public works in Germany, and the neo-progressive regulatory inclinations of Raymond Moley, Rexford Tugwell and Adolf Berle – FDR’s original ‘brain trust’ – in the United States. None of these was a fully worked out or coherent system. Schacht in Germany and Keynes in Britain had been in touch with each other since the 1920s, but Keynesianism proper – The General Theory of Employment, Interest and Money didn’t appear until 1936 – was not a direct input into these experiments, though all involved the enhanced role of the state. Such were the scattered technical toolkits of the time.
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The scenario following the crash of 2008 differed entirely. In the United States, policy ambulances were on the spot immediately. Under Obama fraudulent banks and insurance companies and bankrupt automobile corporations were rescued with huge infusions of public funds never available for decent healthcare, schools, pensions, railways, roads, airports, let alone income support for the worst-off. A massive fiscal stimulus, ignoring budgetary discipline, was unleashed. To prop up the stock market, under the polite euphemism of Quantitative Easing, money was loosed by the central bank on a massive scale. On the quiet and in defiance of its mandate, the Federal Reserve bailed out not only failing American but also European banks in transactions hidden from Congress and public scrutiny, while the Treasury ensured – in close liaison behind the scenes with the People’s Bank of China – that there was no Chinese faltering in the purchase of T-bonds. In short, once the central institutions of capital were at risk, every shibboleth of neoliberal economics was thrown to the winds, with doses of mega-Keynesian remedies beyond Keynes’s own imagination. In Britain, where the crisis struck quickest in the countries of Europe, these went so far as temporary nationalisation of what the American gift for bureaucratic euphemism termed ‘troubled assets’.
El escenario que siguió al crash de 2008 difirió por completo. En los Estados Unidos las ambulancias con medidas estuvieron disponibles inmediatamente. Bajo Obama los bancos defraudadores y las compañías de seguros y automóviles quebradas fueron rescatadas con inmensas cantidades de fondos públicos nunca disponibles para salud, escuelas, pensiones, ferrocarriles, carreteras, aeropuertos, y ni siquiera para ayudar económicamente a los desfavorecidos. Un estímulo fiscal masivo, ignorando la disciplina fiscal, fue adoptado. Para elevar el mercado de capitales, bajo la eufemismo de Relajación Cuantitativa, el dinero fue inyectado por el banco central a escala masiva. Tranquilamente y desafiando su mandato, la Reserva Federal no solo rescató los bancos americanos fracasados sino también los europeos mediante transacciones ocultadas al Congreso y al escrutinio público, mientras el Tesoro aseguraba- en estrecha relación detrás de bastidores, con el Banco Popular de China- que no faltara la contribución china en la compra de T-bonds (americanos). En resumen, una vez las instituciones centrales del capital estuvieron en riesgo, todos los dogmas sagrados de la economía liberal saltaron por los aires, con dosis de remedios megakeynesianos más allá de la imaginación de Keynes. En el Reino Unido, donde la crisis golpéo antes en Europa, los remedios llegaron tan lejos como nacionalizaciones temporales de lo que el don americano para los eufemismos burocráticos denominó “activos en riesgo”.
Did all this signify a repudiation of neoliberalism and a turn towards a new international regime of accumulation? In no way. The core tenet of neoliberal ideology, coined by Thatcher, had always lain in the attractively feminine-sounding acronym TINA: There Is No Alternative. Taboo-breaking as the measures to master the crisis looked, and in good part were, judged by neoclassical canons what they essentially amounted to was a mathematical squaring, or cubing, of the underlying dynamic of the neoliberal epoch, namely the continuous expansion of credit above any increase in production, in what the French call a fuite en avant – a flight forward. So, once the measures required by its life-threatening emergency had stabilised the system, the logic of neoliberalism rolled forward again, in country after country.
Significó ello un repudio del neoliberalismo y un desvío a un nuevo régimen de acumulación? De ninguna manera. El mantra central de la ideología liberal, acuñado por Thatcher, residió siempre en el atractivo acrónimo con resonancia femenina TINA: No hay alternativa. Aunque las medidas para controlar la crisis parecieran rompedoras de tabús, y en buena parte lo eran, juzgadas por los cánones neoclásicos consistían esencialmente en un cuadratura o cubicación matemática de la dinámica subyacente de la época liberal, es decir la continua expansión del crédito por encima de cualquier incremento en la producción, en lo que los Franceses llaman un fluite en avant- un vuelo hacia delante. Así, una vez que las medidas requeridas por la amenaza de muerte estabilizaron el sistema, la lógica del neoliberalismo se desplegó de nuevo hacia adelante, país tras país.
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None of this meant, or could mean, that after reigning for a quarter of a century and then suddenly stumbling to its knees, the neoliberal system was left without opposition. After 2008, its accumulated social and political consequences started to come home to roost. Social consequences: a steep and in some cases (the United States and United Kingdom above all) staggering escalation of inequality; long-term wage stagnation; a spreading precariat. Political consequences: wholesale corruption, growing interchangeability of parties, erosion of meaningful electoral choice, declining voter participation – in short, the increasing eclipse of the popular will by a hardening oligarchy. This system now generated its antibody, deplored in every reputable organ of opinion and respectable political quarter as the sickness of the age – namely, populism. The widely differing set of revolts comprised under this label are united in their rejection of the international regime in place in the West since the 1980s. What they oppose is not capitalism as such, but the current socio-economic version of it: neoliberalism. Their common enemy is the political establishment that presides over the neoliberal order, comprising the alternating duo of centre-right and centre-left parties that have monopolised government under its rule. These parties have often, though not always, offered two slightly different variants of neoliberalism: one is disciplinary, and typically more innovative in its initiatives, as with Thatcher and Reagan; the other is compensatory, offering side-payments to the poor that the disciplinary variant withholds, as with Clinton or Blair. Both versions, however, have been unswervingly committed to furthering the common objective of fortifying capital against any untoward shocks.
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If we look at the populist revolts against neoliberalism, they roughly divide, as everyone knows, into movements of the right and of the left. In that respect, they repeat the pattern of the revolts against classical liberalism after its debacle in the Slump: fascist on the right, social democratic or communist on the left. What differentiates today’s rebellions is that they lack any comparably articulated ideologies or programmes – anything that matches the theoretical or practical consistency of neoliberalism itself. They are defined by what they are against, far more than what they are for. What do they protest against? The neoliberal system of today, as yesterday, embodies three principles: escalation of differentials in wealth and income; abrogation of democratic control and representation; and deregulation of as many economic transactions as is feasible. In short: inequality, oligarchy and factor mobility. These are the three central targets of populist insurgencies. Where such insurgencies divide is over the weight they attach to each element – that is, against which segment of the neoliberal palette they direct most hostility. Notoriously, movements of the right fasten on the last, factor mobility, playing on xenophobic and racist reactions to immigrants to gain widespread support among the most vulnerable sectors of the population. Movements of the left resist this move, targeting inequality as the principal evil. Hostility to the established political oligarchy is common to populisms of both right and left.
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For a full seven years after the crash of 2008, however, the political impact of the populist revolts in Europe was quite modest – nothing remotely comparable to the storms that swept through Europe and America in the 1930s. The Northern League and the AfD were stuck below 5 per cent of the vote. Ukip, the Sweden Democrats, the Dutch Freedom Party, the Norwegian Progress Party and the Front National were winning between 10 and 18 per cent of the electorate. All these were populisms of the right. Reaching just over a fifth of the active citizenry were the Freedom Party in Austria and the Danish People’s Party, also on the right, and Podemos on the left. The two most successful populisms were recent creations of the left, in Italy the Five Star Movement gaining a quarter of the votes, in Greece Syriza more than a third.
What changed all this were four further events. In Britain, the ruling Conservative Party, under both internal pressure and the threat of losing voters to Ukip, allowed a referendum on membership of the European Union which its leaders assumed would produce a fairly easy victory for the status quo, given that three-quarters of MPs, the totality of high finance and big business, the top levels of trade-union bureaucracy and the massed ranks of the country’s intelligentsia and cultural establishment all favoured continuing membership. To general astonishment, a clear-cut majority of the population voted for exit from Europe, with a much higher turnout than in general elections. Decisive in the result was the revolt of the most abandoned regions and classes of the country against the bipartisan neoliberal establishment that had been continuously in power since the 1990s. This was the first time a populist rebellion became the expression of a political majority in any capitalist country, and in so doing altered the course of its history. It was a revolt orchestrated by forces of the right: Ukip, the traditionalist wing of the Conservative Party and most of the tabloid press. But its success rested on their mobilisation of widespread parts of the population that had in the past been bastions of the labourist left.
A few months later came Trump’s triumph in the US presidential election, for which he had hailed Brexit as a dress rehearsal. His campaign, as distinct obviously from his administration, was undilutedly right-populist in tone and content – chords struck for the last time in his inauguration speech, which combined blistering denunciations of political involution, increasing inequality and loss of national sovereignty with hostility to immigration. His national victory was in a sense accidental: had the Democrats picked virtually any other mainstream candidate less unpopular than Hillary Clinton, he would probably have been defeated. Falling well below an absolute majority, with fewer aggregate votes than Clinton, Trump’s victory not only didn’t reach the same proportions as Brexit, but was dependent for its success on hijacking reflex partisan loyalties among those willing to vote for any candidate provided they were Republican, no matter how otherwise distasteful. Yet Trump’s victory was won not on a single yes/no issue like Brexit but on a broad ideological-political platform, and his support among working-class voters may have been higher than Brexit managed: some 70 per cent of those voting for him lacked a college degree. Nor was this the only populist outbreak in America that year, with Bernie Sanders proving a formidable challenger for the Democratic nomination from the left. If we reckon those from the less privileged classes who cast their ballot for Trump in the presidential election, and those who voted for Sanders in the Democratic primaries as a pro rata percentage of those who did so for Clinton in November, about a third of those who voted in 2016 were susceptible to a populism of the right, and a fifth to a populism of the left.
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In 2018 the highest hurdle yet was jumped in Italy, where two explicitly populist parties, the Five Star Movement on the left and the League on the right, together got 50 per cent of the vote – an earthquake in Italy, and by far the most alarming result yet for the European establishment, since both announced they had no intention of submitting the country to the dictates of any more austerity from Berlin, Paris or Brussels. The Italian election also marked the first time that, when ranged head-to-head, a populism of the left surpassed by a wide margin a populism of the right: 33 per cent for the M5S, 17 per cent for the League. Everywhere else, it was the other way round. In France in 2017, Le Pen’s vote exceeded Mélenchon’s. In Britain, Corbyn was heavily defeated in 2019 by the Conservative demagogue Boris Johnson, flamboyant embodiment of a simulacrum of populism of the right.
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The problem, indeed, is a more general one. No populism, right or left, has so far produced a powerful remedy for the ills it denounces. Programmatically, the contemporary opponents of neoliberalism are still for the most part whistling in the dark. How is inequality to be tackled – not just tinkered with – in a serious fashion, without immediately bringing on a capital strike? What measures might be envisaged for meeting the enemy blow for blow on that contested terrain, and emerging victorious? What sort of reconstruction, by now inevitably a radical one, of actually existing liberal democracy would be required to put an end to the oligarchies it has spawned? How is the deep state, organised in every Western country for imperial war – clandestine or overt – to be dismantled? What reconversion of the economy to combat climate change, without impoverishing already poor societies in other continents, is imagined? That so many arrows remain missing in the quiver of serious opposition to the status quo is not, of course, just the fault of today’s populisms. It reflects the intellectual contraction of the left in its long years of retreat since the 1970s, and the sterility in that time of what were once original strands of thought at the edges of the mainstream. Remedial proposals can be cited, varying from country to country: Medicare for all in the US, guaranteed citizen incomes in Italy, public investment banks in Britain, Tobin taxes in France and the like. But so far as any general, interlocking alternative to the status quo is concerned, the cupboard is still bare. If a populist party or movement comes to power at present, to see the probable outcome we have only to look at the turncoat fate of Syriza in Greece on the left – in opposition a rebel against the diktats of the EU, in office a submissive instrument of it – or on the right, the overnight standardisation of Trump’s first presidency, as he breathed fire against establishment complacency and inequality on Inauguration Day, and did nothing about them once in the White House. Politically speaking, neoliberalism has been in no great danger from either.
Into this scene, the Covid virus struck like a bolt of lightning in 2020, forcing lockdowns across the world. Trump and Johnson, riding high a year earlier, were each felled by its impact. Trump would all but certainly have been re-elected that year if his administration had not been hit by the pandemic. Johnson was ousted by his own party in 2022. Under the Covid shockwave, international trade plummeted, and five hundred million jobs were lost worldwide in a few months. In the United States the stock market crashed and gross domestic product suffered its worst drop since 1946, contracting by 3.5 per cent in 2020. In Britain, GDP fell by 10 per cent, in the European Union by 6 per cent. As global supply chains frayed, inflation started to rise across the OECD and with it unemployment. In this emergency, the last year of Trump’s first administration saw a massive fiscal stimulus to prevent a deeper recession. From 2021 onwards, with Biden in the White House, a still larger intervention by the state to stabilise the American economy was set in motion with the so-called Inflation Reduction Act, pumping $750 billion into the economy, with a huge package of state subsidies to encourage new investment, sustain household incomes and alter energy usage; followed by the Chips and Science Act of 2022, which poured another $280 billion of public expenditure into the country’s semi-conductor and allied industries, together with a battery of protectionist measures designed to defeat hi-tech competition from China. This was a programme proudly described by supporters of the Biden administration as a 21st-century version of Roosevelt’s New Deal: its recipes would modernise American industry, help the worst-off and equip the country’s armed forces to combat the threat posed by the rise of China. Many hailed its sweeping statist interventions and embrace of active industrial policies as a break with neoliberalism comparable to and as decisive as Roosevelt’s break with palaeo-liberal doctrines in the 1930s. Others applauded Biden’s revival of the Cold War policy of building alliances against deadly foes abroad, whether around the Black Sea, in the Middle East or in the Far East, in the best spirit of Truman in the 1940s and 1950s.
Mainstream opinion, not only in America but equally and often even more ardently in Europe, greeted the results of this change as little less than a miracle.
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What Trump’s second presidency will mean for America, and the world, remains indeterminate, given the long-standing gap between his words and his deeds. At home, he might no more keep his electoral promises this time, to impose tariffs of 60 per cent on all goods from China and to deport all eleven million illegal immigrants in the United States, than he kept his promises last time to rebuild America’s crumbling infrastructure and construct an uncrossable wall along the whole Mexican border. Yet given Republican control of both Houses of Congress for at least two years, he is more likely to act on some of his promises than discard all of them, and in matters of trade to force allies as well as adversaries to pay greater monetary tribute to America than in the past. Abroad, he could stop the war in Ukraine by cutting off all aid to Kyiv, or he could escalate it, if Russia declines the terms on which he hopes to bring the fighting to an end. He believes in the advantage of being unpredictable, and certainly the European Union, Britain and Japan, even if they dislike what he does, are too weak as subordinate partners to deflect him from it.
The government of Germany – the strongest power in Europe – collapsed the day after Trump was elected, when Scholz dismissed his finance minister and lost the third party on which his coalition depended. No such event had ever occurred in the Federal Republic before. New elections have doubled the vote of the AfD to a fifth of the electorate, yielding another establishment coalition rushing to ram through higher defence spending in a Bundestag voters have just rejected, in yet one more demonstration of how little European elites care about the democracy they volubly proclaim. In France, the government appointed by Macron after his defeat at the polls last summer collapsed within a couple of months, overthrown by a combination of right and left opposition in the National Assembly, in a revolt the country has known only once before, more than sixty years ago. Few believe its precarious successor, resting on a grudging co-option of the Socialist Party, will last very long. In short, Trump’s version of right-wing populism, abominated by half the country as a deadly threat to democracy, has taken over in Washington at a moment of institutional disarray in Berlin and Paris, and with a government in London that is now even less popular than the discredited opposition it routed a short while ago. Everywhere the scene is one of instability, insecurity, unpredictability. ‘All is disorder under the heavens,’ and there is little sign of a return to order, as understood by those accustomed to rule the West.
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The obese share of finance in American GDP has not dropped, it has increased. The American government’s deficit has tripled in the last decade. In the same period, public debt in the United States has jumped by $17 trillion, an increase equivalent to that in the previous 240 years. In the OECD as a whole, total sovereign debt, which stood at $26 trillion in 2008, has more than doubled, soaring to $56 trillion in 2024. An international regime which a decade ago capsized and all but drowned in the sea of debt it had created, is drenching itself with a still larger flood of debt, with no end in sight.
So are we finally witnessing the arrival of a regime change in the West, one already announced many times this century?
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In some ways a yet harsher indictment of the socio-economic balance sheet since Reagan comes from a former admirer of the Gipper, the Indian American banker Ruchir Sharma, formerly chief global strategist at Morgan Stanley, in What Went Wrong with Capitalism.4 Its leitmotif is that ‘the periodic financial crises – erupting in 2001, 2008 and 2020 – now unfold against the background of a permanent, daily crisis of colossal capital misallocation,’ the result of enormous infusions of easy money injected into the advanced economies by central banks to prop up steadily declining rates of growth. Such state-dispensed torrents of cash are the ultimate, overriding truth of the period. Sooner or later, Sharma warns, a momentous shock to the system is bound to come. What remedy would that bring? Sharma’s answer: return to a smaller state and tighter money, the classic recipe of Mises and Hayek – neoliberalism rendered whole once more.
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An international regime being lowered into the ground, or rising anew like Lazarus? The stand-off in such expert verdicts has its correlate in the political landscape, where the conflict between neoliberalism and populism, the adversaries that have confronted each other across the West since the turn of the century, has become steadily more explosive, as events of the past weeks show – even if, for all its apparent compromises or setbacks, neoliberalism retains the upper hand. The first has survived only by continuing to reproduce what threatens to bring it down, while the second has grown in magnitude without advancing in meaningful strategy. The political deadlock between the two is not over: how long it will last is anyone’s guess.
Does that mean that until a coherent set of economic and political ideas, comparable to Keynesian or Hayekian paradigms of old, has taken shape as an alternative way of running contemporary societies, no serious change in the existing mode of production can be expected? Not necessarily. Outside the core zones of capitalism, at least two alterations of great moment occurred without any systematic doctrine imagining or proposing them in advance. One was the transformation of Brazil with the revolution that brought Getúlio Vargas to power in 1930, when the coffee exports on which its economy relied collapsed in the Slump and recovery was pragmatically stumbled on by import substitution, without the benefit of any advocacy in advance. The other, still more far-reaching, was the transformation after the death of Mao of the command economy in China in the Reform Era presided over by Deng Xiaoping, with the arrival of the household responsibility system in agriculture and the ignition by township and village enterprises of the most spectacular sustained burst of economic growth in recorded history – this too was improvised and experimental, without pre-existent theories of any kind. Are such cases too exotic to have any bearing on the heartland of advanced capitalism? What made them possible was the magnitude of the shock and depth of the crisis each society had suffered: the Slump in Brazil, the Cultural Revolution in China – tropical and oriental equivalents of the blows to occidental self-assurance in the Second World War. If disbelief that any alternative is possible were ever to lapse in the West, the probability is that something comparable will be the occasion of it.
¿CAMBIO DE RÉGIMEN EN EL OESTE? (LRB, PERRY ANDERSON, 3-04-2025) https://t.co/FnuzdlNOje
— Guillermo Ruiz Zapatero (@ruiz_zapatero) March 26, 2025
Resume aquí como historiador la gravedad de la coyuntura política, económica y social de la crisis actual y la paralización por el choque de las fuerzas en conflicto: "populismo" vs. TINA
— Guillermo Ruiz Zapatero (@ruiz_zapatero) March 25, 2025
En la actualidad, aunque cueste decirlo, solo la corrupción lo explica
— Guillermo Ruiz Zapatero (@ruiz_zapatero) March 26, 2025
Depicting Europehttps://t.co/kEwFd2TQaS
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