The new book by the prestigious American historian and professor at the University of Cambridge Gary Gerstle, Rise and fall of the neoliberal order (it will be published in Spain by Planeta), has been described as an "instant classic" by the Financial Times and reviewed by the Fund International Monetary Fund (IMF).
Even the IMF is talking about neoliberalism...
It's true. It was a bit risky to use that neoliberal term as the organizing principle of the book. Here in the US there was talk of conservatism. But it is not the best way to understand a transformation of capitalism at the end of the last century that brought down the old hierarchies and was innovative and convulsive.
What is the genesis of the neoliberal order?
It has to do not only with Hayek or Friedman, or Von Mises, but also with the Adam Smith tradition of liberalism. I mean, it's part of the modern world. He intended to free the animal spirits of capitalism. It generated significant economic growth, but it also created serious problems and, in the end, enormous disappointment.
It was never laissez faire...
No. It gave more power to the state if it was necessary to facilitate the functioning of the markets. For example, the exclusive power over the money supply by central banks.
The political order transcends the electoral cycle, right?
Yes. There are ideas that are dominant regardless of who wins the elections. After twenty years in which the Democrats held power in the US, Eisenhower fully embraced the ideology of Roosevelt and the New Deal. He accepted the importance of the regulatory state, social protection and the power of unions. He maintained an extremely progressive tax system, with rates above 90%. He was the hegemon of the New Deal, which lasted until the 1970s.
And the same thing happened with Reagan and Clinton, right?
Yes, the other way around. Reagan was the ideological architect of the neoliberal order; Clinton, his enforcer, because he did more to deregulate the economy. The Washington consensus that made the neoliberal order an already global project acquires that name with the Democrats. And he had to do with the collapse of communism. At that time there was a quantum leap in the power of multilateral institutions like the IMF and the World Bank but under the control of Washington. All countries had to surrender to the global market.
But the IMF at the beginning was part of the previous order, the New Deal, right?
Hayek and von Mises wanted global institutions to govern capitalism from the point of view of capital. But it is true that Washington's institutions were established when the New Deal political order was very strong. Although they never wanted to change too much the relationship between what was then called the free world and the Third World, that is, the Global South.
There were elements of the counterculture of the sixties that were identified with neoliberalism, right?
Yes. It wasn't just the right that was drawn to neoliberalism, but parts of what was called the new left. It was a creation of the sixties and seventies. A reaction against the conformism of those times, the man in the dark suit of the big corporation. Everything was grey, individuality crushed. The New Left criticized the capitalist industrial elites, the government elites and the Big State. This somehow fit into the neoliberal project. There were individuals who defended the idea of the freedom of the market and the need to free the mind from the control of others.
How who?
The pioneers of the personal computer. People like Steve Jobs and Stewart Brand – one of the pioneers of cyberspace – who in a cultural sense considered themselves to be on the left. They believed that the new computer industry could be a tool for personal liberation.
Now the tech company has become the gray corporation…
There was a techno-utopianism at the height of neoliberalism in the 1990s. Not anymore. We will have to regulate the monopoly power, even dismantle some of the big tech companies.
What can be the new order after the neoliberal?
There are three possibilities. A progressive paradigm could reincorporate the New Deal order, with a strong central state in a democratic context. Or an authoritarian order: Trump, Bolsonaro, Modi, Putin, Xi. Third option: a long period of disorder without hegemony. The only thing that is known is that we are heading towards something else.
Does any consensus emerge?
Since the pandemic and with the war, both the Democrats and the Republicans are supporting industrial policies that assume that the State must manage the economy. For Democrats it is about using the State to combat the inequalities of the market economy. In the case of the Republicans, it is a matter of national security against China or Russia and favors the military-industrial complex. But both are state industrial policies. There is common ground for a new relationship between the State and the market.
