Since the world economic crisis of 2007, commentators have pointed to the dangers of a capitalistic system that seems incapable of delivering sustainable growth and well-being.
This bold new book offers an exhaustive diagnosis of global capitalism across the world’s nations. David Lane examines the nature and appeal of neoliberal capitalism according to different schools of thought, and he analyses proposals for its reform and replacement from state socialism and social democratic corporatism to self-sustaining networks.
Looking ahead to a novel system of economic and political coordination based on a combination of market socialism and state planning, this book offers crucial insights for scholars thinking about alternatives to capitalism.
The introduction outlines the significance of global neoliberal capitalism – its achievements, failures and contradictions. Despite recurrent crises of capitalism, current critical thinking in the social sciences reveals unpredictable and uncertain futures. The introduction summarises the thinking of leading writers, which include: spontaneous collapse leading to the rise of a new but undefined social formation, a reformed liberal capitalism, state capitalism or the rise of parallel autonomous economies. Among the social scientists discussed are Randall Collins, Nick Srnicek and Alex Williams, Leo Panitch and Colin Leys, Michael Mann, Branco Milanovic, Craig Calhoun and Georgi Derluguian, Immanuel Wallerstein, Alexander Buzgalin, Daniel Chirot, Wolfgang Streeck, J.K. Gibson-Graham and Samir Amin. The introduction explains why it is important to distinguish, theoretically, between different forms of capitalism and globalisation, and outlines six major alternatives. The book is organised into three parts: the three introductory chapters outline and criticise globalisation and neoliberalism; the next part outlines 20th-century alternatives to capitalism, it discusses their merits and failings; the final part considers current alternatives – their strengths and weaknesses – and finally my own proposal of regulated market socialism.
Chapter 2, Global Neoliberalism and What It Means, defines modern capitalism, contrasting Weberian and Marxist approaches. The ambiguities in the understanding of ‘neoliberal capitalism’ and its diversity in the practice of modern economies are outlined. On the basis of the writings of Friedrich von Hayek and Milton Friedman, neoliberalism is defined. Contemporary neoliberalism enlarges the 20th-century version of liberalism to include a social economy, financialisation of social relations and a propensity to expansion on a global level. Neoliberalism is considered to be a comprehensive theory of how economy and society should be ordered, and its psychological, political, economic and social dimensions are discussed. A contrast is made between the collectivist views of Emile Durkheim and Francis Fukuyama’s neoliberal approach. Contradictory features of neoliberalism are discussed with particular reference to the contradiction between bureaucratic regulation and free market exchange.
Despite many crises and widespread public and academic criticism, neoliberalism survives as a hegemonic ideology. Following a summary of neoliberalism’s development, seven dimensions of theory and practice are outlined where it may be faulted. Neoliberal theory by putting individual behaviour as the drivers of economic development and wealth creation gives insufficient attention to the unequal division of economic and political power. The absence of countervailing power may lead to economies operating for long periods of time at sub-optimal conditions. States, rather than countervailing economic forces, have resolved economic crisis caused by systemic economic imbalances. While promoting diversity and mobility, neoliberalism ignores the constitution of inequality which is based on the unequal ownership of property. The theory is unable to articulate holistic knowledge. It is contended that societies and collaborative human behaviour create civilisations, rather than the neoliberal assumptions of individual self-interest working through market mechanisms.
Chapter 4, Socialist Visions, outlines ideas that have driven the socialist movement – both social democratic and socialist. Whereas liberalism in is various forms was grounded on the rights of individuals, socialism promotes collective rights, which in turn liberate individuals. Socialism is a social and political system that is predicated on the universal fulfilment of human needs, which can only be met by the attainment of three other objectives: public property, social equality and a classless society. Two distinct approaches to socialism are delineated, social democracy and socialism. which have remained the two foremost adversaries of capitalism. The views of Durkheim, Mill, Marx and Engels are contrasted. The practice of state socialism and the planned socialist economy is considered an alternative to liberal competitive capitalism and social democratic welfarist forms of capitalism. Social democracy and socialism have a collectivist, rather than an individualistic, frame of reference.
State socialism, as it appeared in the East European socialist bloc and China after the Second World War, was a hierarchical state-administered publicly-owned planned economy. The communist party state was hegemonic. State socialism is considered the first comprehensive form of state-led industrialisation, ensuring not only economic growth but a transformation of the social structure that prioritised economic growth, relatively low income differentials and a comprehensive welfare state. By the 1960s, state socialism was an effective form of welfare state industrialisation. However, as economic growth declined and real income fell, public aspirations for higher living standards were not fulfilled. State socialism was challenged ideologically by reformers who advocated market socialism and participatory electoral democracy. Criticisms of the planning system mirrored those of the neoliberal economists. The state socialist system is appraised as an effective but imperfect alternative to liberal market capitalism. Two alternatives to the difficulties of Soviet planning are outlined and discussed: market socialism as proposed by Oskar Lange and participatory socialist planning as advocated by Ernest Mandel.
In the immediate post-Second World War period, Western European countries introduced coordinated welfare societies, exemplified by the British Labour Party. The reforms sought to promote social equality and social justice, and they were accompanied by significant nationalisation of key industries, high levels of taxation, a full employment policy and the introduction of comprehensive social services. The chapter discusses the decline of Labour’s socialist policy and electoral failure followed by Margaret Thatcher’s turn to neoliberalism. The chapter explains her success. Like the Eastern European societies, industrial and commercial developments had led to the rise of a non-manual middle class. There arose a new spirit of capitalism and a post-industrial political culture. Concurrently, capitalism became global in character accompanied by de-industrialisation and the decline of the nation state. Social democracy failed as an alternative to the neoliberal moral and economic order which, from the 1980s, became a potent international force, Neoliberalism provided feasible answers to the inadequacies of post-war forms of economic and political coordination.
Chapter 7, The Conversion of Social democracy to the ‘Third Way’, considers how traditional social democratic parties responded to Margaret Thatcher’s neoliberal alternative. Continual electoral failure precipitated the rise of a left-wing type of liberalism, defined in terms of individual rights, diversity promotion and equality of opportunity, a system of values compatible with neoliberalism. Left-wing marginalised class analysis and focussed on the duality of hierarchy and democracy. The chapter turns to an analysis of identity, diversity – which defined the liberal new left, and class – which no longer appealed to the socialist left. The chapter relates how changes in the social structure prompted a shift from class rights to social rights (of gender, sexual orientation, ethnicity, rights to abortion). A new post-capitalist society had arrived and a convergence took place between right-wing and left-wing forms of neoliberalism. The chapter outlines discussion in academia and the media where the fundamental causes and remedies were identified, and in the Party which focused on the policies and images which would further victory at the ballot box. In place of the dualism between capitalism and socialism, the political antithesis was now defined as being between ‘democracy’ and ‘authoritarianism’. The chapter details how New Labour policy was put into effect by the Party’s leadership under Tony Blair. It concludes with the fall of New Labour and poses the question of whether the leadership of Jeremy Corbyn presages a return to socialist policies.
Relying on the experience of the USSR, the chapter shows how convergence to neoliberalism arose out of the failure of the statist economy to adapt to the technological advances that were under way in the transition from industrial to post-industrial society. Reform of state socialism led by Gorbachev, was influenced by Thatcher’s reforms, and supported by the rising strata of professional educated people who formed the ‘service class’. The geo-political dimension in favour of neoliberal reforms is shown to be crucial for the dismantling of state socialism. The two area comparisons bring out how, in both the Western social democratic and the East European socialist parties, domestic social support for neoliberal political reform was generated by the ascendant professional white collar social strata and the failure of state led politics. The chapter analyses how Mikhail Gorbachev’s reforms effectively dismantled the planned socialist economy, ending an alternative to capitalism and instigated the arrival of a neoliberal capitalist economy.
Globalisation is defined as a spatial and temporal set of relationships involved in and between networks and transactions embedded in different political systems. For different countries and regions, charts are used to illustrate the political, social, personal, cultural and economic growth of globalisation. Distinctions are made between internationalisation, globalisation and glocalisation. Globalisation is considered part of a movement from national industrial based capitalism to post-industrial capitalism underpinned by neoliberalism. The hegemony of the USA and the rise of transnational corporations (TNCs) are outlined. Various graphs show changes in world national income by continents over a 200-year period. Losers and winners are defined in terms of countries and social groups. Significant changes are identified between different groups of countries, notably the rise of China, and social groups in different countries. The author discusses the dilemma of democracy, organised on the basis of the nation state, and economic coordination, taking place on a global level.