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Constructing Neoliberalism: Economic Transformation in Anglo-American Democracies. By Jonathan Swarts. Toronto: University of Toronto Press, 2013. 312p. $70.00

Published online by Cambridge University Press:  31 August 2016

Philip G. Cerny*
Affiliation:
University of Manchester and Rutgers University-Newark
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Abstract

Type
Book Reviews: Comparative Politics
Copyright
Copyright © American Political Science Association 2016 

Neoliberalism has become the hegemonic paradigm of politics and political economy in the late 20th and early 21st centuries and is the subject of numerous studies, both academic and more popular. Several core issues dominate the debates, including the basic content and substance of the phenomenon, the causes for its rise across diverse parts of the world, how it has become entrenched in both elite and popular political culture, its internal consistencies and inconsistencies, its impact on political processes, policymaking and policy outcomes, and the roles of particular actors and groups in embedding it in political practice and relations of power.

One of the main dimensions of these debates concerns the relationships between changing material conditions in the political economy and the transformation of ideas, imaginaries, and discourses of what is necessary, what is practical, what is right in a turbulent world—in other words, between the material and the ideational. Jonathan Swarts provides a fascinating illustration of the latter, i.e. the constructivist interpretation or approach, applying it systematically to comparative case studies of Britain, Canada, Australia and New Zealand. His knowledge of the cases and of the arguments is impressive and thorough, and one comes away with an excellent understanding of this dimension of neoliberalism in both theory and practice.

Swarts begins with a theoretical/analytical chapter on the constructivist approach and why he believes it to be the main underlying causal explanation of the rise and embedding of neoliberalism in these countries. This is followed by two chapters on the prelude to neoliberalism and its early rise to dominance in the 1980s, leading in turn to a crucial chapter on “the strategic construction of the neoliberal political-economic imaginary,” focusing on the role of norm entrepreneurs. Their roles are crucial in explaining how the economic crises of the 1970s and 1980s came to be understood, how the neoliberal revolution in economic theory influenced not only economists but, crucially, economic bureaucrats, and how the structure of political institutions, especially in the parliamentary systems of these four countries, enabled political parties and leaders to adopt and implement neoliberal reforms. In the penultimate chapter, he looks more closely at his key comparative policy issue-area case study, that of labor market reforms (especially deregulation and the loosening of ties between politicians and labor unions), before concluding that, at least in ideological and ideational terms, “the market has won.” All of these chapters are well-woven analyses of the constructivist/ideational dimension of the entrenchment of neoliberalism and deserve close reading.

Nevertheless, his overall argument is notable not so much for what it says but for the need to see it in the context of broader analyses of the neoliberal phenomenon. For as useful as the constructivist approach can be in describing crucial aspects of the dominance of neoliberalism, it also is prone to various weaknesses—weaknesses that Swarts either denies or skirts around. This involves, in my opinion, a misreading of both a range of material variables and the wider comparative context in which neoliberalism has developed.

In the first place, Swarts states that: “a remarkable feature of this common neoliberal shift in the Anglo-American democracies is that it occurred in countries that differed so significantly across a wide range of ‘material’ factors, including population and geographic size, total economic output, degree of integration in the world trading system, levels of state ownership of industry, the structure of labour market regulation, and so on. … Put simply, there was no material change or factor that can fully explain the common shift to neoliberalism” (pp. 7–8).

This unfortunately is to ignore the worldwide decline in mature economies—only partly counteracted by some “emerging” economies—of the so-called Second Industrial Revolution of large, integrated, nation-state-based mass production firms, whether privately owned or state-owned, along with the trade union movements, redistributionist welfare state bargains, Keynesian aggregate demand management policies, mass consumption trends, and so on that had buttressed it. Not only were these structural underpinnings eroding by the 1960s, by the 1980s the coming of the Third Industrial Revolution and the vast technological changes it brought with it—from production processes to transnational interdependence to “flexibilization” of working practices to increasingly individualized consumption patterns—was upending the post-war political settlement. “Stagflation,” only briefly treated by Swarts, was changing everything.

The crisis—or increasing crises—of the 1970s therefore were not merely separate national crises merely exacerbated by the Third Industrial Revolution but fundamental material changes in the world economy. Indeed, it could be said that the shift from a traditional productive economy to a disaggregated, semi-dematerializing transnational one, was the underlying cause of a desperate search for alternatives. But that search took place mainly at the nation-state level, so each country was trying to adapt and adjust to a world they did not know or understand. This was when the concept of “globalization” came to be a central part of the discourse; not just economic globalization, but a need—undermined by disparate national governments struggling to adapt—to deal with the limits of political globalization and what has been called “the fragmentation of global governance.” Indeed, the Second Industrial Revolution economy, driven by productive investment, is being replaced by a debt economy that mainly expands by bidding up existing assets, as British former senior financial regulator Adair Turner has recently argued in Between Debt and the Devil (2015), while the productive economy is no longer producing system-wide added value, as Robert J. Gordon argues in The Rise and Fall of American Growth (2016).

In this context, material factors and ideational factors are not competing explanations for the rise of neoliberalism. They represent an ongoing dialectic, as not only economists but also economic bureaucrats and political leaders search for poorly understood alternatives—not to mention mass publics on both Right and Left, as reflected in Thomas Frank’s What’s the Matter with Kansas? (2004), the Tea Party in the United States, Trumpism, the Occupy Movement, the National Front in France, the “illiberal” elites in post-transition Eastern Europe, the impact of the growing slowdown and environmental crisis in China on the “authoritarian neoliberal” regime there, and indeed the growing clashes between reinvented tribes and “centralizing elites” analyzed by Ahmed Akbar in The Thistle and the Drone (2013). Neoliberalism in its different varieties—and there are many, not just in Swarts’s Anglo-American democracies but, for example, in the relationship between the “paleoliberal” and the Ordoliberal versions—dominates in what is otherwise an ideational vacuum, seeking to deal with new and poorly comprehended material facts. As Pierre Dardot and Christian Laval argue in La nouvelle raison du monde: essai sur la société néolibérale (2009), a complex new “raison du monde” is replacing traditional raison d’État.

So part of the problem here is that constructivism, while a necessary dimension that Swarts develops, is simply part of a wider dialectic and does not explain much (if anything) on its own. Another problem here is the choice of country case studies. Just looking at Britain, Canada, Australia and New Zealand, is, up to a point, not a study in contrasts, but in relative lookalikes. The United States of Milton Friedman and Ronald Reagan, not to mention more recent actors and trends, is not brought into the comparison. Neither are countries like Japan that tried neoliberalizing in the 1990s but failed, nor a wide range of other countries that have tried it and found it wanting, often leading to political upheavals and instability, like Brazil—not to mention the European Union, where neoliberalization has undermined the relative social consensus of the pre-Single Market era, or even Britain, currently going through an even more radical austerity programme that is coming apart at the seams (and interacting at the time of writing with potential British exit—“Brexit”—from the E.U.).

Finally, neoliberalism crosses so many policy issue-areas that it has what Susan Strange called a “pick and mix” quality, a Humpty Dumpty character of making words mean whatever the speaker wants them to mean—that means that norm entrepreneurs have to adapt their policy prescriptions and actions to the “realities” of very different conditions. Swarts’s only policy issue-area case study looks at labour market regulation and the different kinds of relationships between neoliberalism and the role of trade unions, contrasting Britain and Canada, where a form of paleoliberalism has dominated, with Australia and New Zealand, where more traditional neocorporatist relationships have persisted, at least until recently. But what about financial deregulation/re-regulation—in my opinion a much more central building block in the neoliberal construct? What about privatization and the regulation of natural monopolies? What about debt and austerity? These issues are not sufficiently addressed here.

Of course, had Swarts tried to cover all these ideas, issues, places, and economic-material variables, the country-level descriptions would be much thinner. That’s presumably why he restricted himself to four country cases and one issue-area. But Constructing Neoliberalism really needs to be seen in a much wider context—not only in theory, but also in practice. It’s like Kuhn’s concept of “paradigm.” Dominant paradigms, in this case like the “postwar settlement,” decay and fragment in the face of changing conditions where the old prescriptions no longer work. Gradually, micro-level and meso-level findings that say the opposite to the dominant paradigm start coming together in new forms. To be powerful, they require ideational plausibility, simplicity, and “stickiness.” Furthermore, in politics, as Sheldon Wolin argued in the 1960s, this usually leads to paradigmatic competition and conflict rather than settling on one dominant paradigm. The post-1970 hegemony of neoliberalism, after its victory over the postwar settlement and John Ruggie’s “embedded liberalism,” has always been contested, but the question today is whether it now will be even more contested and whether there will be a convergence around an alternative paradigm, or set of post-neoliberal paradigms, that will replace it in turn. What will we imagine next, and how will that interact with neoliberalism? To reinforce it, or to relegate it to the paradigmatic dustbin of history?