Defeated by reality

Why did neoliberalism, in its domestic and international components, fail? I ask this question, in much more detail than I can do it in a short essay here, in my forthcoming The Great Global Transformation: National Market Liberalism in a Multipolar World. I am asking it for personal reasons too: some of my best friends are neoliberal. It was a generational project of Western baby-boomers which later got adopted by others, from Eastern Europe like myself, and Latin American and African elites. When nowadays I meet my aging baby-boomer friends, still displaying an almost undiminished zeal for neoliberalism, they seem like the ideological escapees from a world that has disappeared long time ago. They are not from Venus or Mars; they are from the Titanic.

When I say that neoliberalism was defeated I do not mean than it was intellectually defeated in the sense than there is an alternative ready-made project waiting in the wings to replace it. No: like communism, neoliberalism was defeated by reality. Real world simply refused to behave the way that liberals thought it should.

We need first to acknowledge that the project had many attractive sides. It was ideologically and generationally linked to the rebellious generation of the 1960s, so its pedigree was non-conformist. It promoted racial, gender and sexual equality. By its emphasis on globalization, it has to be credited by helping along the greatest reduction in global poverty ever and for helping many countries find the path to prosperity. Even its much-reviled Washington consensus—while some of its commandments were taken to an extreme length and other ignored—is fundamentally sound and has much to recommend itself. Not least that it provides an easily understandable shortcut to economic policy. It does not require more than an hour to explain it to the most economically ignorant person.

So, to go back to the original question, why did neoliberalism not remain the dominant ideology? I think there are three reasons: its universalism, hubris of its adherents (which always comes with universalism), and mendacity of its governments.

That neoliberalism is universal or cosmopolitan requires, I believe, little convincing. Liberal ideology treats, in principle, every individual and every nation the same. This is an asset: liberalism and neoliberalism can, again in principle, appeal to the most diverse groups, regardless of history, language or religion. But universalism is also its Achilles’ heel. The pretense that it applies to everybody soon comes into conflict with the realization that local conditions are often different. Trying to bend them to correspond to the tenets of neoliberalism fails. Local conditions (and especially so in social matters which are products of history and religion) are refractory to the beliefs founded under very different geographical and historical conditions. So in its encounter with the real world, neoliberalism retreats. The real world takes over.

But all universalists (communists among them too) refuse to accept that defeat. As they must because every defeat is a sign of non-universalism. That’s where the intellectual hubris kicks in. The defeat is seen as due to moral flaws among those who failed to adopt neoliberal values. To its votaries nothing short of its full acceptance qualifies one as a sane and morally righteous person. Whatever new social contract its votaries have determined is valid, were it only a week ago, must unconditionally be applied henceforth. The morality play combined with economic success that many proponents of neoliberalism enjoyed due to their age, geographical location, and education, gave it Victorian or even Calvinist undertones: becoming rich was seen not only as a sign of worldly success but as an indication of moral superiority. As Deng Xiaoping said, “getting rich is glorious”. This moral element implied lack of empathy with those who failed to find their right place within the new order. If one failed, it was because he deserved to fail. Faithful to its universalism, Western upper middle-class neoliberals did not treat co-citizens any differently from foreigners. Local failure was no less merited than the failure in a faraway place. This contributed more than anything else to the neoliberals’ political defeat: they simply ignored the fact that most politics is domestic.

The hubris which comes from success (and which got elevated to unheard-of heights after the defeat of communism) was reinforced by universalism—a feature shared by all ideologies and religions that by their very construct refuse to accept that local conditions and practices matter. Syncretism was not in the neoliberals’ playbook.

Finally, mendacity. The failure to observe, especially in international relations, even the self-defined and self-acclaimed “rules-based global order”, and the tendency to use these rules selectively—that is, to follow the old-fashioned policies of national interest without acknowledging it, created among many the perception of double standards. Western neoliberal governments refused to own to it and kept on repeating their mantras even when such statements were in glaring contradiction with what they were actually doing. In the international arena, they ended in a cul-de-sac, manipulating words, reinventing concepts, fabricating realities, all in the attempt to mask the truth. A part of that mendacity was present domestically too when people were told to shut up and not complain because the statistical data were not giving them reason and thus their subjective views were wrong and had to be ignored.

What next? I discuss that in The Great Global Transformation. I think there is one thing on which most people would agree: that the past fifty years have seen the debacles of two universalist ideologies: communism and neoliberalism. Both were defeated by the real world. The new ideologies will not be universal: they would not claim to apply to the entire world. They will be particularist, limited in scope, both geographically and politically and geared toward the maintenance of hegemony wherever they rule; not fashioning it into universal principles. This is why the talk about global ideologies of authoritarianism is meaningless. These ideologies are local, aiming at the preservation of power and of the status quo. This does not make them averse to the old imperialist temptation. But that temptation can never be extended to the world as a whole nor can various authoritarianisms work together to accomplish that. Moreover, since they lack universal principles, they are likely to clash. The only way for authoritarians not to fight with each other is to accept a very narrow set of principles, essentially those of non-interference in domestic affairs and absence of aggression, and leave it at that. Xi Jinping’s proclamation of five such narrow rules at the recent Shanghai Cooperation Organization meeting may be based on such a calculation.