Capital Resurgent: Roots of the Neoliberal Revolution

by Gérard Duménil, Dominique Lévy

The advent of economic neoliberalism in the 1980s triggered a shift in the world economy. In the three decades following World War II, now considered a golden age of capitalism, economic growth was high and income inequality decreasing. But in the mid-1970s this social compact was broken as the world economy entered the stagflation crisis, following a decline in the profitability of capital. This crisis opened a new phase of stagnating growth and wages, and unemployment. Interest rates as well as dividend flows rose, and income inequality widened.

Economists Gérard Duménil and Dominique Lévy show that, despite free market platitudes, neoliberalism was a planned effort by financial interests against the postwar Keynesian compromise. The cluster of neoliberal policies--including privatization, liberalization of world trade, and reduction in state welfare benefits--is an expression of the power of finance in the world economy.

The sequence of events initiated by neoliberalism was not unprecedented. In the late nineteenth century, when economic conditions were similar to those of the 1970s, a structural crisis led to the first financial hegemony culminating in the speculative boom of the late 1920s. The authors argue persuasively for stabilizing the world economy before we run headlong into another economic disaster.

Genres: Economics, Nonfiction, History

256 pages, Hardcover

First published April 30, 2004

Reviews

[Gabor Scheiring · Rating 5 out of 5]

If you want to read one book about the structural-economic causes of the neoliberal revolution, then read this one. To summarise in one long sentence, the book argues that neoliberalism is the expression of the desire of a class of capitalist owners and the institutions in which their power is concentrated, which the authors call "finance", to restore the class's revenues and power, which had diminished since the Great Depression and World War II as a result of the social-democratic class compromise. Duménil and Lévy use a wide range of long-term data on key macroeconomic trends (profit rates, technological change, etc) to underpin their narrative. Their project resembles that of Piketty, though their framework is more ambitious and their data is less innovative. Another comparable book is Robert Brenner's The economics of global turbulence, which similarly focuses on the decline of profitability and the reaction of the ruling class as the main cause of the neoliberal revolution (Duménil and Lévy attacked Brenner for explaining the declining profit rate by reference to declining profitability of manufacturing due to international competition, which D&L think is misleading, they argue a-la Marx that they central cause is declining technological progress in the US). Duménil and Lévy tend to downplay the sociological class struggle aspect of neoliberalism and emphasise the structural determinants. For example, they do not place much emphasis on tracking and explaining the collapse of fixed exchange rates, the gold standard and capital controls – Rawi Abdelal’s book is great on that (Capital rules), neither do they bother much with the role of economists, think tanks, political parties, or trade unions (there are some great books on these aspects of the neoliberal revolution too that offer a nice extension to D&L's account). The lack of sociological sensitivity and their over-emphasis on structural determinants notwithstanding, this is one of the best books the roots of neoliberalism.

[Rohit · Rating 3 out of 5]

This is a somewhat strange book. Sometimes it makes some bold claims and backs it up with little to no evidence (i.e. some of the early commentary on the relationship between technology and unemployment); other times, it delves quite deeply into a particular matter, but in such a way as to require a certain level of knowledge about Marxist economics or monetary theory or whatever.

There is a lot of interesting original research the authors have done, complete with nice little graphs thrown around everywhere. Definitely a lot of food for thought scattered throughout. But overall, this is some very dense and hard to chew food a lot of the time! This book is definitely more like a textbook than, say, a popular economics book.