The rise of neoliberal nostalgia

by | 19 Oct 2021

All of a sudden neoliberal commentators can't talk enough about the 1970s - but it's just the nostalgic sound of their era coming to an end

Neoliberalism is dying and if you need any more evidence for it you can hear it in the death rattle of its advocates. Because every bit as much as the puerile fake nostalgia of a ‘cultural Brexiter’, the neoliberals seem desperate to party like it’s 1999.

That was a great year for neoliberals. ‘They’ had just beat Soviet communism (which in reality had defeated itself) and meaningful socialism was in retreat just about everywhere. The economy seemed to keep growing and people were getting filthy rich. There was no longer any ideological challenge and all we needed to wait for was the trickle-down.

Of course, it didn’t really work out like that. In 1999 we were not long out of a painful housing recession and were staggering into a dot-com crash. Soon after that we’d be setting the Middle East alight in pursuit of the guaranteed cheap oil that underpins neoliberalism.

After that it is a straight run through a massive financial crisis, biting austerity, the collapse of centrism in the face of a new populism, the Covid pandemic (made much worse by the economic patterns of neoliberalism), the supply chain shocks – and all of that with the backdrop of a dying planet, again in large part the fault of our economic order.

So which of these bona fide crises are we talking about in the mainstream political debate? The ongoing crisis of housing? The constantly increasing risk of speculative crash? The never-went-away danger of a deregulated (and out of control) financial system? The great harm of economic inequality and austerity? The breakdown of the social contract? The vulnerability of a just-in-time global economy?

No of course not. The talk of every steamie is… the 1970s. Yup, forget the two generations since then which has seen a conveyor belt of turbulence and failure, let’s focus on the bedtime story right-wingers tell their children to scare them off economic reform.

Of course the story doesn’t stack up. In their telling of the 1970s the neoliberals omit the oil crisis, the collapse of the post-war Breton Woods order and gloss over the fact that Britain’s industrialists failed woefully to invest in the new technologies which would have kept them productive and competitive. It was all about the trade unions and public spending.

It wasn’t, but say it anyway. That Germany or the Nordics had just as strong trade unions and more public expenditure but didn’t have a Winter of Discontent like Britain isn’t to be discussed.

Neoliberal nostalgia is embarrassing in the way that some old Brexit uncle going on about the Blitz Spirit is embarrassing

This neoliberal nostalgia for an era when everyone believed them seems to be everywhere; two right-of-centre columnists in the Herald today alone raised the spectre of the Winter of Discontent (here and here). It is part of the catechism – Corbyn proves that socialism isn’t popular (don’t mention the 2017 election or the hatchet job which was done precisely because socialism WAS proving popular).

It’s a ‘magical money tree’ when the left talk about it but not when the neoliberals do it (as they have been to a stupendous degree since 2007). Thatcher and Blair won because they knew their place in relation to the market – and so on.

It is frankly embarrassing to see. It is embarrassing in the way that some old Brexit uncle going on about the Blitz Spirit or how we didn’t need ‘no Europeans to conquer an empire’ or how we were so much more civilised before all the immigrants came is embarrassing.

This is the sound of people who know their era is over. I don’t mean that in the leftist way of predicting the decline of everything ‘any minute now’, I mean it is already over. The tenets of neoliberalism are all being broken daily – control the monetary supply, balance budgets, reduce wages, deregulate, don’t intervene in the economy, cut taxes, don’t spend, stretch supply chains further, treat trade laws as non-negotiable and so on. All gone.

It isn’t to say we’ve wandered into any kind of socialist utopia; many of these developments are bringing their own fresh kind of hell to society. But they are daily, tangible, unavoidable proof that ‘There Is No Alternative’ isn’t true. We’re already living in the alternative.

And for a true neoliberal the most ‘alternative’ bit about it isn’t the public subsidy to the economy nor the rounds of Quantitative Easing nor the failure of supply chains nor the emerging trade wars, it’s ‘too big to fail’.

And that’s where we are now – a race between economic reality and the extent of the new monetary powers of central banks. How many times can they artificially inflate speculative markets in the face of low productivity?

Neoliberalism was based on the idea of competitions and markets – may the best win out and deil tak the hindmost, over and over again unto the promised land. Yet we live in an era where this isn’t even nearly true any more.

The banks showed the world’s big money players that the casino economy had created conditions in which governments and particularly central banks keep increasing the number of financial interests which are considered ‘too big to fail’ – right down to niche monopoly companies producing CO2 for the food industry. One single obscure gas plant is now to crucial to our economy to fail.

The reality is that we left behind the last remnants of the truly neoliberal economy (as much as there ever was one) a while ago and exist now in a financial, retail and rentier economy. The world revolves around financial investments that no-one is pretending are really worth their own value, complex packages of investments no-one believes are really worth what their being traded for.

But if they fall, the whole show falls – GDP collapses, fear hits the economy everywhere and 2008 looks like small beer. By far the biggest component of Quantitative Easing during the pandemic was money to artificially inflate share prices for the duration of the crisis to ‘reassure the markets’.

And that’s where we are now – a race between economic reality and the extent of the new monetary powers of central banks. How many times can they artificially inflate speculative markets in the face of low productivity, all to keep those ‘Dow Jones up X points’ headlines coming? The truth is that no-one knows – or really knows what happens on the other side when they can’t.

Five years ago we didn’t have the political right going on and on about the 1970s because they didn’t need to go to their ‘happy place’. The regularity with which they are returning there now shows just how vulnerable they feel.

It may look confident, but it isn’t. It is drowning, not waving. It doesn’t tell us much about what is coming next (no-one seems very sure), but it does tell you about what is coming to an end. We are at the end of the Thatcher revolution which is headed for its own extended Winter of Discontent.

The noises you hear? Those are just the frightened sound of a nostalgia trip.

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