And the neoliberal capitalist model that had reigned supreme for a generation had crashed.
The second was the fallout from the crash of 2008 and the crisis of the western-dominated capitalist order it unleashed, speeding up relative US decline.
And its most devastating impact was on those economies whose elites had bought most enthusiastically into the neoliberal orthodoxy of deregulated financial markets and unfettered corporate power.
The baleful twins of neoconservatism and neoliberalism had been tried and tested to destruction.
The neoliberal model was discredited, but governments tried to refloat it through savage austerity programmes.
For 30 years, the west\’s elites insisted that only deregulated markets, privatisation and low taxes on the wealthy could deliver growth and prosperity.
Long before 2008, the \”free market\” model had been under fierce attack: neoliberalism was handing power to unaccountable banks and corporations, anti-corporate globalisation campaigners argued, fuelling poverty and social injustice and eviscerating democracy – and was both economically and ecologically unsustainable.
The case against neoliberal capitalism had been overwhelmingly made on the left,
And while neoliberalism had been discredited,
The same would be true in the aftermath of the crisis of the neoliberal order, as the need to reconstruct a broken economy on a more democratic, egalitarian and rational basis began to dictate the shape of a sustainable alternative. Both the economic and ecological crisis demanded social ownership, public intervention and a shift of wealth and power.
Here\’s the thing. In all the many millennia of human civilisation we\’ve not actually found a method of increasing the standard of living of the average man, significantly and continuously, that isn\’t some mild variation on this capitalism and free markets thing that Milne is describing as \”neoliberal\”.
There are flavours of it, most certainly. The Nordic vision is distinctly more neoliberal than even most Tories would consider acceptable in the UK: plus eyewatering taxes to redistribute the benefits of that red in tooth and claw. The Anglo Saxon is actually less neoliberal and more lightly taxed. The Latin is both regulated and highly taxed: which does indeed go some way to explain both the inequality in such places (Italy is, by market incomes, even more unequal than the US) and also their slow growth.
But places that don\’t even try to have this strange capitalism/market mixture simply aren\’t as wealthy. Full blooded socialism hasn\’t produced even middle income status for any country, ever. Nor has feudalism, one party or one man dictatorship, autarky, planned economies or, well, nothing other than some flavour of this capitalism/markets stuff.
Entirely worthwhile to debate on the flavour: although that does require acknowledging what actually makes the flavours work (vide that Nordics thing). But in terms of the real argument, yes, the debate is over. If you want to have an economy that produces what we now regard as a modicum of wealth for all of the population then you do indeed have to have some flavour of that neoliberalism: that mixture of capitalism and markets.
Sure, you can mix in more cooperatives, worker/consumer owned. You can weaken that capitalism part to at least some extent: markets are much more important than the method of ownership. Take out the oil states and there ain\’t no one in that top 50 that hasn\’t had a decent century or so of such an economy. There\’s a number who had it interrupted by state socialism but they\’ve had that century all the same.
History really is over: there ain\’t no alternative that actually produces the goods.
The failure of both accelerated the rise of China, the third epoch-making change of the early 21st century. Not only did the country\’s dramatic growth take hundreds of millions out of poverty, but its state-driven investment model rode out the west\’s slump, making a mockery of market orthodoxy and creating a new centre of global power.
And that\’s very amusing indeed. As China\’s economy has grown the portion of it which is state-driven investment has fallen. What we\’re really seeing there (and don\’t forget, China is still 94 on our little list, well behind those who have had our neoliberalism) is how much growth you can and will get when you exit the Maoist nonsense of planning everything.