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The Limits of Neoliberalism
"Brilliant... explains how the rhetoric of competition has invaded almost every domain of our existence." - Evgeny Morozov, author of To Save Everything, Click Here "A sparkling, original, and provocative analysis of neoliberalism... a distinctive account of the diverse, sometimes contradictory, conventions and justifications that lend authority to the extension of the spirit of competitiveness to all spheres of social life." - Professor Bob Jessop, University of Lancaster
"In a world that seems to lurch from one financial crisis to the next, this book questions both the sovereignty of markets and the principles of competition and competitiveness that lie at the heart of the neoliberal project." - Professor Nicholas Gane, University of Warwick Since its intellectual inception in the 1930s and its political emergence in the 1970s, neo-liberalism has sought to disenchant politics by replacing it with economics. This agenda-setting text examines the efforts and failures of economic experts to make government and public life amenable to measurement, and to re-model society and state in terms of competition. In particular, it explores the practical use of economic techniques and conventions by policy-makers, politicians, regulators and judges and how these practices are being adapted to the perceived failings of the neoliberal model. By picking apart the defining contradiction that arises from the conflation of economics and politics, this book asks: to what extent can economics provide government legitimacy?
"In a world that seems to lurch from one financial crisis to the next, this book questions both the sovereignty of markets and the principles of competition and competitiveness that lie at the heart of the neoliberal project." - Professor Nicholas Gane, University of Warwick Since its intellectual inception in the 1930s and its political emergence in the 1970s, neo-liberalism has sought to disenchant politics by replacing it with economics. This agenda-setting text examines the efforts and failures of economic experts to make government and public life amenable to measurement, and to re-model society and state in terms of competition. In particular, it explores the practical use of economic techniques and conventions by policy-makers, politicians, regulators and judges and how these practices are being adapted to the perceived failings of the neoliberal model. By picking apart the defining contradiction that arises from the conflation of economics and politics, this book asks: to what extent can economics provide government legitimacy?
240 pages, Hardcover
First published January 1, 2014
12 people are currently reading
672 people want to read
About the author
William Davies
14 books107 followersWilliam Davies' writing has appeared in New Left Review, Prospect, the Financial Times, and Open Democracy. He's Reader in Political Economy at Goldsmiths, University of London.
Librarian Note: There is more than one author by this name in the Goodreads database.
Librarian Note: There is more than one author by this name in the Goodreads database.
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Displaying 1 - 9 of 9 reviews
October 21, 2019
I found this to be quite a difficult book, unlike the other two by the same author I’ve read recently. I think this is because I tend to think of neoliberalism as a variety of economic theory – that is, of radical free market economics – but this book also looks at how radical free market economics has impacted both government and the legal profession.
This book helps to situate neoliberal ideas and how they relate to those of other economic theorists, such as, say, Keynes, but also how a commitment to laissez-faire capitalism cannot merely be an economic theory, but necessarily must also be one with legal and political implications. The book does this by giving something of an abbreviated history of these ideas including a thumbnail sketch of many of these ideas’ major proponents. It does this to show how and why these ideas have come to dominate western political thought to the extent where even the global financial crisis of 2008 might barely case a ripple in their acceptance as the major lens through which our world is understood. It is perhaps useful to remember that these ideas were once considered to be worse than crack-pot. But as Milton Friedman said, the important thing is to have ideas ready and lying around for the time when they will prove useful. This is a lesson the left have never learnt – being far too prone to be ‘anti’, which then means that whatever positive agenda they have can be overlooked, because being ‘anti’ means always fighting on someone else’s ground.
This book focused on the nature of competition. I’ve always known that free market economics venerates competition, but the author unpicks this in ways I’d never thought through before.
The logic is that the world is fundamentally unpredictable. This is a key structuring idea of neoliberalism. Since the world is unpredictable, we need an information source that will help us grapple with that uncertainty. The only real source of information we can ultimately trust is price. This is because movements in price signal two things: demand, as our desire for products; and the effort required for producers to meet that demand. Therefore, anything that interferes with price signalling – say, rent controls – destroys the informational content of economic exchanges and therefore distorts the entire system. By definition, nothing good can come from such interference.
As good as price is at providing signals to buyers and sellers on commodities and their prices, even this is inevitably imperfect and that means that decisions of what we are to do next are always fraught. That means that the entrepreneur, virtually by definition, needs to be a risk-taker, often needing to think with their gut more than their head. A while ago I read Trump’s Art of the Deal. I thought at the time that the book was mostly bollocks since he kept going on and on about how good his gut was – it turns out he was spouting standard neoliberal economic theory. Who’d have thought?
The entrepreneur is not alone in seeking to meet the desires of customers, and so is always in competition with other entrepreneurs. These people are nominally all equal when they being seeking to meet consumer demand, despite it then being inevitable that the outcome of competition will soon divide into winners and losers. It’s important to notice that the limits of our knowledge concerning the outcome of the economic game is (and needs to be) asserted as both fundamental and inescapable. This is why markets are presented as being incontestably better than any other means of organising economic activity – because any other means relies on us knowing what neoliberalism bars us from knowing a priori. Markets with producers in competition to meet the desires of consumers may appear wasteful, since having losers automatically means that products will be produced that will never be consumed, but it is asserted that this competition is less wasteful than other means of structuring economic activity.
The role of society, then, is to provide enough freedom for competition to occur. While some neoliberal types say things like, government needs to be shrunk to a size where it can be conveniently drowned in a bathtub, others prefer to say that government has two roles: to provide an army and police force (ultimately to protect property), and to provide a mechanism to ensure people live up to their obligations under contracts. However, competition is even more central to this worldview than even these two roles might imply. While governments set the rules for competition, for competition to be a truly revolutionary force, it must constantly challenge and even seek to transgress those rules. Here sporting metaphors are used, except that it is not how you play the game, but how well you win that is all that matters.
A small and mostly ineffectual government is all that is needed, since competition itself is the ultimate deterrent of collusion and since any collusion itself will bring about inefficiencies into the activities of those trying to game the system and these inefficiencies will make these players susceptible to competition. There is, it seems to me, an almost childlike innocence and circularity to these ideas – but it is important to remember that some of the smartest people of the last couple of hundred years have believed this as their gospel.
The problem was 2008. That was when it became blindingly clear that the free market system could not be left to its own devices. Rather, without the governments of the world stepping in and taking charge, there were fears there simply would not be a world economy. All of the normal rules of the free market were suspended, something that obviously undermined the philosophical justifications for the uninhibited operation of pure market forces. These protections had been freed up over decades and rather than this proving to be the ultimate preventative against crisis – it brought about a crisis that very nearly ruined the world economy.
These problems have yet to have gone away. For instance, the IMF are currently talking of a global synchronised slowdown of the world economy. Few of the issues that brought about the GFC have been address in the decade since. In large part this is because there has not been an alternative set of ideas lying around – but that is also largely due to those who one the media being the same people who benefited from the near collapse of the world’s financial markets. What, at the time, looked like having only losers, proved to have had quite a few winners too.
This review amounts to the bits of this book I thought I understood – there is a large part of this that I did not understand at all – much of the discussion of the legal processes involved in all of this was well over my head, as were some of the nuanced discussions around the more subtle ideas of neoliberal economics. That said, I still feel I learnt things from this book – despite coming away wishing I was smart enough to understand the parts of this that I barely noticed as they whizzed past me.
This book helps to situate neoliberal ideas and how they relate to those of other economic theorists, such as, say, Keynes, but also how a commitment to laissez-faire capitalism cannot merely be an economic theory, but necessarily must also be one with legal and political implications. The book does this by giving something of an abbreviated history of these ideas including a thumbnail sketch of many of these ideas’ major proponents. It does this to show how and why these ideas have come to dominate western political thought to the extent where even the global financial crisis of 2008 might barely case a ripple in their acceptance as the major lens through which our world is understood. It is perhaps useful to remember that these ideas were once considered to be worse than crack-pot. But as Milton Friedman said, the important thing is to have ideas ready and lying around for the time when they will prove useful. This is a lesson the left have never learnt – being far too prone to be ‘anti’, which then means that whatever positive agenda they have can be overlooked, because being ‘anti’ means always fighting on someone else’s ground.
This book focused on the nature of competition. I’ve always known that free market economics venerates competition, but the author unpicks this in ways I’d never thought through before.
The logic is that the world is fundamentally unpredictable. This is a key structuring idea of neoliberalism. Since the world is unpredictable, we need an information source that will help us grapple with that uncertainty. The only real source of information we can ultimately trust is price. This is because movements in price signal two things: demand, as our desire for products; and the effort required for producers to meet that demand. Therefore, anything that interferes with price signalling – say, rent controls – destroys the informational content of economic exchanges and therefore distorts the entire system. By definition, nothing good can come from such interference.
As good as price is at providing signals to buyers and sellers on commodities and their prices, even this is inevitably imperfect and that means that decisions of what we are to do next are always fraught. That means that the entrepreneur, virtually by definition, needs to be a risk-taker, often needing to think with their gut more than their head. A while ago I read Trump’s Art of the Deal. I thought at the time that the book was mostly bollocks since he kept going on and on about how good his gut was – it turns out he was spouting standard neoliberal economic theory. Who’d have thought?
The entrepreneur is not alone in seeking to meet the desires of customers, and so is always in competition with other entrepreneurs. These people are nominally all equal when they being seeking to meet consumer demand, despite it then being inevitable that the outcome of competition will soon divide into winners and losers. It’s important to notice that the limits of our knowledge concerning the outcome of the economic game is (and needs to be) asserted as both fundamental and inescapable. This is why markets are presented as being incontestably better than any other means of organising economic activity – because any other means relies on us knowing what neoliberalism bars us from knowing a priori. Markets with producers in competition to meet the desires of consumers may appear wasteful, since having losers automatically means that products will be produced that will never be consumed, but it is asserted that this competition is less wasteful than other means of structuring economic activity.
The role of society, then, is to provide enough freedom for competition to occur. While some neoliberal types say things like, government needs to be shrunk to a size where it can be conveniently drowned in a bathtub, others prefer to say that government has two roles: to provide an army and police force (ultimately to protect property), and to provide a mechanism to ensure people live up to their obligations under contracts. However, competition is even more central to this worldview than even these two roles might imply. While governments set the rules for competition, for competition to be a truly revolutionary force, it must constantly challenge and even seek to transgress those rules. Here sporting metaphors are used, except that it is not how you play the game, but how well you win that is all that matters.
A small and mostly ineffectual government is all that is needed, since competition itself is the ultimate deterrent of collusion and since any collusion itself will bring about inefficiencies into the activities of those trying to game the system and these inefficiencies will make these players susceptible to competition. There is, it seems to me, an almost childlike innocence and circularity to these ideas – but it is important to remember that some of the smartest people of the last couple of hundred years have believed this as their gospel.
The problem was 2008. That was when it became blindingly clear that the free market system could not be left to its own devices. Rather, without the governments of the world stepping in and taking charge, there were fears there simply would not be a world economy. All of the normal rules of the free market were suspended, something that obviously undermined the philosophical justifications for the uninhibited operation of pure market forces. These protections had been freed up over decades and rather than this proving to be the ultimate preventative against crisis – it brought about a crisis that very nearly ruined the world economy.
These problems have yet to have gone away. For instance, the IMF are currently talking of a global synchronised slowdown of the world economy. Few of the issues that brought about the GFC have been address in the decade since. In large part this is because there has not been an alternative set of ideas lying around – but that is also largely due to those who one the media being the same people who benefited from the near collapse of the world’s financial markets. What, at the time, looked like having only losers, proved to have had quite a few winners too.
This review amounts to the bits of this book I thought I understood – there is a large part of this that I did not understand at all – much of the discussion of the legal processes involved in all of this was well over my head, as were some of the nuanced discussions around the more subtle ideas of neoliberal economics. That said, I still feel I learnt things from this book – despite coming away wishing I was smart enough to understand the parts of this that I barely noticed as they whizzed past me.
February 6, 2017
Neoliberalism represents the enchantment of politics by economics (via management) - the "elevation of market-based principles and techniques of evaluation to the level of state-endorsed norms". So, if "it's easier to imagine the end of the world than to imagine the end of capitalism", how about analysing the limits of an ideology which many technocrats claim (like fish who can't see water) not to really exist?
In this work of "interpretive sociology", the author - a rather brilliant scholar with an increasingly public profile - explains and contextualises the rise of neoliberalism. In examining its limits and looking beyond neoliberalism, he reminds us that the phrase "better the devil you know" is a cliché for a reason. Economists, if they are to avoid their field being reduced to "groundless babble", take note.
In a neoliberal society, price is the ultimate arbiter of everything - a "modern fact" (though if we are in a post-fact, post-truth world then are we also post-price?) In order to sustain this, the state is (perhaps surprisingly) a powerful instrument of neoliberalism, and yet we see the state apparently under attack under neoliberal conditions - do the neoliberals dig their own grave?
Davies convincingly explains the history of neoliberalism, tied up with the rise of law and economics - which bakes concepts of competition into legal frameworks, achieving a "commensuration" of evidence in order to dethrone anti-trust principles by the "mere possibility" that a dominant firm could be challenged in the future being enough to put a lid on anti-monopolistic sentiment. The "science" of management's contribution to neoliberalism's rise comes in various forms, from strategy to new public management, not to mention managers' role as neoliberalism's executioners.
The contingent neoliberalism that emerges from a period of crisis lacks even the concept of equality of competitors and in such sense is "post-liberal". The book leaves us contemplating the riddle that politics struggles to deal with the fact that people are individuals AND part of a collectivity. Thus, answering the riddle requires a wit and imagination to escape the knee-jerk response to fight competition with competition. On the eve of the inauguration of a fascist political leader to the office of President of the United States of America, it's hard to be optimistic right now.
In this work of "interpretive sociology", the author - a rather brilliant scholar with an increasingly public profile - explains and contextualises the rise of neoliberalism. In examining its limits and looking beyond neoliberalism, he reminds us that the phrase "better the devil you know" is a cliché for a reason. Economists, if they are to avoid their field being reduced to "groundless babble", take note.
In a neoliberal society, price is the ultimate arbiter of everything - a "modern fact" (though if we are in a post-fact, post-truth world then are we also post-price?) In order to sustain this, the state is (perhaps surprisingly) a powerful instrument of neoliberalism, and yet we see the state apparently under attack under neoliberal conditions - do the neoliberals dig their own grave?
Davies convincingly explains the history of neoliberalism, tied up with the rise of law and economics - which bakes concepts of competition into legal frameworks, achieving a "commensuration" of evidence in order to dethrone anti-trust principles by the "mere possibility" that a dominant firm could be challenged in the future being enough to put a lid on anti-monopolistic sentiment. The "science" of management's contribution to neoliberalism's rise comes in various forms, from strategy to new public management, not to mention managers' role as neoliberalism's executioners.
The contingent neoliberalism that emerges from a period of crisis lacks even the concept of equality of competitors and in such sense is "post-liberal". The book leaves us contemplating the riddle that politics struggles to deal with the fact that people are individuals AND part of a collectivity. Thus, answering the riddle requires a wit and imagination to escape the knee-jerk response to fight competition with competition. On the eve of the inauguration of a fascist political leader to the office of President of the United States of America, it's hard to be optimistic right now.
August 1, 2020
The book is a thoughtful and engaging analysis of neoliberalism. Following a french poststructuralist approach, it digs deep into the social and discursive logic of neoliberalism as a "subjectivity". Don't expect a detailed analysis of policy outcomes or an institutionalist discussion of actors behind the diffusion of neoliberalism. Also don't expect a shallow polemical-political rebuttal of neoliberalism (though you might get some inventive ideas to improve your positions in public debates against neoliberalism). What you get is a theoretical and historical description that will make you think deeply about neoliberalism.
Davies sees neoliberalism as the "enchantment of politics" by economics, elevating the logic of the economy and the market above everything else. Yet, Davies also warns that it's a misunderstanding to think of neoliberalism as a movement opposed to the state. Neoliberalism does not shrink state power, but it does involve it shifting from spheres designated (pejoratively) as ‘political’ to those viewed as unpolluted by the dangers of politics - as he writes. Many early neoliberal thinkers had a latent respect for the political ideas of Schmitt and even Lenin and saw democracy as something worth circumventing in pursuit of economic liberty. Neoliberalism depoliticises but does not decrease state power.
I found the chapters on competition the most engaging. Davies shows how neoliberals (the Chicago school of economics) ended up with an efficiency-based definition of competition, measured by economic experts. This definition allowed the shift from anti-trust to much less restrictive competition policies that favour capital concentration - reducing competition in many ways. The key concern of neoliberals is political power used to reign in the pursuit of profit. Political power that expands the conditions of profitability is welcome. Neoliberals have relinquished any concern with economic power - the only question is efficiency: as long as it's efficient, there's no problem with monopolization.
The book is not easy to read, especially if you're not particularly enthused by French poststructuralism, like me. Yet, it's worth the effort, Davies managed to write one the most insightful theoretical analyses, avoiding shallow polemics without falling into the trap of inaccessible theorisation.
Davies sees neoliberalism as the "enchantment of politics" by economics, elevating the logic of the economy and the market above everything else. Yet, Davies also warns that it's a misunderstanding to think of neoliberalism as a movement opposed to the state. Neoliberalism does not shrink state power, but it does involve it shifting from spheres designated (pejoratively) as ‘political’ to those viewed as unpolluted by the dangers of politics - as he writes. Many early neoliberal thinkers had a latent respect for the political ideas of Schmitt and even Lenin and saw democracy as something worth circumventing in pursuit of economic liberty. Neoliberalism depoliticises but does not decrease state power.
I found the chapters on competition the most engaging. Davies shows how neoliberals (the Chicago school of economics) ended up with an efficiency-based definition of competition, measured by economic experts. This definition allowed the shift from anti-trust to much less restrictive competition policies that favour capital concentration - reducing competition in many ways. The key concern of neoliberals is political power used to reign in the pursuit of profit. Political power that expands the conditions of profitability is welcome. Neoliberals have relinquished any concern with economic power - the only question is efficiency: as long as it's efficient, there's no problem with monopolization.
The book is not easy to read, especially if you're not particularly enthused by French poststructuralism, like me. Yet, it's worth the effort, Davies managed to write one the most insightful theoretical analyses, avoiding shallow polemics without falling into the trap of inaccessible theorisation.
November 7, 2019
Or short: the neoliberalism has a unforgivable shortcoming: it does not pay a number of leeches comparable to any form of socialism.
September 18, 2022
The Limits of Neoliberalism all-to-often feels like 'The Limits of Twisted Definitions'. The central thesis of the The Limits of Neoliberalism is an interesting one - neoliberalism is not just an economic ideology of minimal state intervention - but a centrally political. However, much of the books aimed rebuke of neoliberalism rests too heavily on a premise that is twisted and contorted beyond my recognition. Consequently, whilst Davies manages to justify when state-based competition has its limited utility, such a premise seems to run away from the most interesting, critical discourse on neoliberalism that the modern day requires. Don't read if you want to be informed on neoliberalism, read its author Hayek's The Constitution of Liberty , or the negative aspects of the modern political and economic discourse, read instead John Saul's The Collapse of Globalism .
August 26, 2018
It's not always easy to enter the terminology of a different field and I find myself reading this book fairly slowly at times. But to be honest I have a feeling that it is fairly densely argued in itself as well. But, it is also very interesting and Davies gives a very insightful analysis on neoliberalism and why neoliberalism probably is dead, but looks like it is not. Davies argues that economy is governed by politics in ways that was not suppose to be the case if neoliberalism was going to have its say. The problem with neoliberalism is that its logic permeates the whole of society, competition and evaluation.
I am a little unsure as to how he stands with communitarianism. It sounds like it is problematic at times but at other times it sounds like it is a proper challenge to the neoliberalism agenda. I think I need to work that out a bit more.
I am a little unsure as to how he stands with communitarianism. It sounds like it is problematic at times but at other times it sounds like it is a proper challenge to the neoliberalism agenda. I think I need to work that out a bit more.
November 11, 2019
This book just proved the inadequacy of neoliberalism in creating a financial system for measuring government expenditure, or imposing a cost benefit ratio to all forms of expenditure,as is pointed out early in the book some forms of the government expenditure. The book does explore the downfalls of this particular form of accounting, though it does so inadequately, and it leads to a rather postmodern (lazy) conclusion.
August 1, 2021
Descriptive and historical account of Neoliberialism, in particular the American and European schools of thought explored through the Chicago and Benthamian schools respectively
Self-described as not explicitly critical, which was disappointing given the title of the book
Unfortunately I found the writing style of the author excessively academic and most of the book as uneasy to parse and engage with
Self-described as not explicitly critical, which was disappointing given the title of the book
Unfortunately I found the writing style of the author excessively academic and most of the book as uneasy to parse and engage with
May 11, 2020
Hoped for a book detailing the issues with Neoliberalism as an ideology, but what I got was a book that tried to explain the concepts of neoliberalism using overly technical jargon and show how that leads to a contradiction. I have decided to look elsewhere to understand neoliberalism, because so far, all I understand is that competition is key, but that's a bout it.
Displaying 1 - 9 of 9 reviews