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 4: Always embedded neoliberalism

Damien Cahill

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


This chapter outlines the framework for an alternative understanding of neoliberalism to that offered by idealist approaches. Previous chapters demonstrated that ‘actually existing neoliberalism’ is not simply a mirror of the normative prescriptions of fundamentalist neoliberal theorists, nor is it primarily a product of the influence of those ideas. This prompts consideration of the need for a more satisfactory understanding than that provided by the ideas-centred account, as well as the reasons for the discrepancy between neoliberal theory and practice, and the factors which drove the rise of neoliberalism. The chapter first explains why there has always been a discrepancy between neoliberal theory and practice. Using insights from Marxist and Institutional political economy as well as drawing upon historical examples, it is argued that the state has been central to the formation and expanded reproduction of capitalism throughout its history. The growth of the state under neoliberalism simply continues a long-term trend evident at least since the nineteenth century. Because the state plays a central role in the reproduction of capitalism, it was always unlikely that neoberalism in practice would ever achieve the normative goal of the withering away of the state as envisioned by neoliberal theorists. Second, the concept of ‘always embedded neoliberalism’ is developed to provide a useful framework for analysing neoliberalism in practice. This concept is drawn from Fred Block’s (2003) concept of the ‘always embedded market’, by which is meant that markets always depend upon social support structures in order to function.

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