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 6: Institutionally embedded neoliberalism

Damien Cahill

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


It has already been demonstrated that the state has been a central player during the neoliberal era. Rather than being retrenched, or withering away, states constructed a new institutional architecture as part of the ‘roll-out’ of new neoliberal forms of regulation, even as they ‘rolled back’ older forms of socially protective regulations. Thus ‘actually existing neoliberalism’ is quite different from the image of neoliberalism presented by those wedded to idealist modes of thinking. Chapter 4 argued that neoliberal practices have become embedded in a range of social processes – institutions, class relations and ideological norms – and that these contribute to its expanded reproduction and lend it significant durability. This chapter elaborates upon the ways in which neoliberal practices have become institutionally embedded. By this is meant the development of institutional frameworks that predispose states to neoliberal policy practices. Two broad institutional frameworks that contribute to institutionally embedded neoliberalism are examined. The first is the regulatory bias towards neoliberalism through formal rules that privilege neoliberal policy practices, including various forms of competition policy as well as new rules governing the conduct of monetary and fiscal policy. The second is the privileging of neoliberal policy practices by international lending agencies, most notably the International Monetary Fund (IMF) and the World Bank, which states are mandated to follow as a condition of receiving loans in times of budgetary distress. In each of these cases, neoliberal practices are institutionally embedded by quarantining such practices from popular deliberation.

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