The End of Laissez-Faire?

The End of Laissez-Faire?

On the Durability of Embedded Neoliberalism

Damien Cahill

When the global financial crisis hit in 2007, many commentators thought it heralded the end of neoliberalism. Several years later, neoliberalism continues to dominate policy making. This book sets out why such commentators got it so wrong, and why neoliberalism remains so durable in the face of crisis.

Chapter 1: The idealist view of neoliberalism

Damien Cahill

Subjects: economics and finance, political economy, politics and public policy, political economy

Extract

In April 2009, well-known Marxist historian Eric Hobsbawm predicted that the global financial crisis heralded the end of the neoliberal era. He wrote that ‘the global free market [had] imploded’ and that ‘[w]e don’t yet know how grave and lasting the consequences of the present world crisis will be, but they certainly mark the end of the sort of free-market capitalism that captured the world and its governments in the years since Margaret Thatcher and Ronald Reagan’ (Hobsbawm 2009). In one sense, Hobsbawm’s prognosis was understandable. When Hobsbawm wrote this article, the global economy had, in the space of less than two years, plunged into a crisis, the magnitude of which was only matched by the Great Depression of the 1930s. Unemployment was on the rise, aggregate demand and economic growth were plummeting, private sector credit had all but dried up and governments had launched massive rescue packages to bail out private sector companies, including the nationalisation of some of the world’s largest corporations – a move that just a couple of years previously would have been considered virtually unthinkable. Given this, it was perhaps reasonable of Hobsbawm to conclude that he was witnessing a turning point in the global capitalist economy.

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