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 2: Actually existing neoliberalism

Damien Cahill

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


This chapter assesses the validity of the idealist understanding of the nature of neoliberalism. It examines the trajectory of the size of the state and of state regulation of the economy over the last four decades in order to test the assumption that the neoliberal era was characterised by a diminished state presence in the economy. In particular, the concept of ‘actually existing neoliberalism’ is used to highlight the discrepancy between the utopian visions of neoliberal theorists and the realities of neoliberalism in practice. While noting the correlations evident between neoliberal normative prescriptions and the policy trajectories of capitalist states at a very broad level of analysis, the chapter nonetheless also demonstrates the existence of significant discrepancies between neoliberal theory and practice with respect to the size and scope of the state. Empirical evidence from international comparative studies is used to illustrate that, during the neoliberal era, the economic size of states was not diminished when measured in terms of relative expenditure. Furthermore, the extensive programmes of deregulation, privatisation and marketisation carried out by most capitalist states during the last 30 years resulted not in a diminution of the regulatory reach of states, but in the concurrent implementation of a host of new regulations and agencies to govern the markets transformed and created through neoliberalism.

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