The Bureau conversation examined the implications of the recent widespread embrace of industrial policies, tariffs, and subsidies, and interventionist economic policies more generally. The steep tariff increases on Chinese goods that US President Joe Biden’s administration recently announced are just the latest in a long string of interventionist economic policies that fly in the face of decades of neoliberal orthodoxy. And the Biden administration is hardly alone: the EU has just followed suit in slashing tariffs on Chinese electric vehicles and, more generally, a growing number of governments, economists, and institutions are rethinking the free-market doctrine to which many of them long subscribed. Against that background, the lead speaker posed the provocative question whether the time has come to bid farewell to the neoliberal era of the past four decades or so.
While most participants replied in the affirmative, views were nuanced with respect to the assessment of the recent revival of an interventionist economic agenda. One participant strongly warned against governments increasingly using the fig-leave of concerns about geopolitics, national security, supply-chain resilience, climate change, and the erosion of the middle-class to forsake reliance on markets only to be replaced by harmful and inefficient state intervention. Most participants, however, were broadly welcoming the state making a comeback, with many finding no reason to mourn the passing of the neoliberal consensus given its wide array of shortcomings and blind spots; but there was also widespread agreement on the need of carefully calibrating interventionist strategies given the risk of vested interests and falling into the traps of zero-sum or negative sum games. Specifically, one discussant, quoting inter alia Joe Stiglitz, argued that the neoliberal era had anyway been largely a charade with globalisation, deregulation and privatisation shaped primarily in the interests of large corporations and financial institutions; and she was concerned that “big business interests” may capture the political and intellectual agenda in a similar manner as the neoliberal doctrine did in the 1980s. Other speakers were more optimistic about a constructive way forward tackling genuine social, economic, and environmental problems, aiming to repair the fissures created by neoliberal policies.
In its concluding remarks, the Chair affirmed the apparent shift away from the neoliberal orthodoxy towards more active state interventionism. While welcoming the critical opportunity to rethink and rearrange the balance of the state and the market, the Chair also cautioned against throwing out the baby with the bathwater, emphasising the perpetual risk of the powerful of both making the rules and flouting them at will; in that context, the Chair also noted that in her opinion the so-called neoliberal consensus rather reflected the interests of international economic power players than a genuine ordoliberal agenda. In closing, the Chair expressed her hope for a new constructive playbook at both national and international levels, deliberately using the phrase “without being naïve”.
There is and was no "neoliberal" economic theory, neoclassical economics reigned supreme throughout. But arguably there was and still is to some extent neoliberal economic policy, giving rise to the deleterious Maastricht criteria, the EU's overriding objective of "budget consolidation". But, as noted, all that played into the hands of a) financial market actors and b) large multinational corporations which effected their influence on policy.
While there is more state interventionism today, it does certainly not follow any known economic doctrine. But the danger remains that the state gets captured again by powerful interests. We need effective "countervailing power" (@ Galbraith the elder) by changing the political process involving civil society.