Farewell, Neoliberalism: an interview with Wolfgang Streeck

Johannes Lenhard & Rebecca Liu
December 14, 2017
© MPIfG/Manolo Finish

Wolfgang Streeck is emeritus director of the Max Planck Institute for the Study of Societies in Cologne. His latest book, How Will Capitalism End?, explores  the crisis of capitalism today, which Yanis Varoufakis has deemed a  brilliant exposé of ‘the deeply illiberal, irrational, anti-humanist  tendencies of contemporary capitalism.’ KR editors Johannes Lenhard and  Rebecca Liu caught up with the economic sociologist on his thoughts on  Corbyn, the EU, and whether there is such thing as a ‘good capitalism’.

KR: In your recent NLR piece  you characterise neoliberalism as “Free-trade agreements […] global  governance [..] enabling commodification, and […] the competition state  of a new era of capitalist rationalisation“. Do you see any possibility  for capitalism to exist without being neoliberal? Can there be good  capitalism?

Wolfgang Streeck:

Capitalism wasn’t always  neoliberal: there was merchant capitalism, industrial capitalism,  old-liberal capitalism, Hilferdingian finance capitalism,  state-administered New Deal capitalism, you name them. All of them  embodied complex historical compromises between classes, nations, social  life and the profit-making imperative… Were they “good”? For some they  always were, and there were times, in the heydays of the  social-democratic class compromise, when wage-earners, too, could  perceive capitalism as fair. It didn’t last. We now face rising  insecurity, declining growth rates, growing inequality, exploding  indebtedness everywhere – a high-risk world run by a tiny oligarchy, or  kleptocracy, who are working hard to de-couple their fate from that of  the rest of the societies that they have asset-stripped.

You also seem to imply that neoliberalism is necessarily  about the decline of the state in favor of free markets. However, Paul  Sagar has argued in a piece for the KR  that neoliberalism includes the continuous involvement of the state,  albeit not in favour of its citizens, but rather its corporations. This  is also an issue raised by Chris Prendergast in his exchange with you, also in KR. Is there such thing as a neoliberalism that occurs not at the detriment to, but in concert with, state power?

I was sometimes sloppy here. Cutting back the state is an eminently  political operation, and keeping it cut back requires a lot of state,  indeed continuous state intervention. What is cut back is the  democratic-redistributive state of social democracy, not its  repressive-liberal complement. Neoliberalism is a political formula that  must be imposed on societies with political power. In the 1980s Andrew  Gamble wrote a book on Thatcher titled “The Free Economy and the Strong  State”. That sums it up. Thatcher’s main ideologue, Hayek, ultra-ultra  liberal that he was, found it imperative for his market society that  democracy as we know it be rooted out by vigilant, aggressive  government.

In your piece in Inference, you trace the recent ‘death of  the centre left’, a political movement across the West in the 1990s that  was marked by its faith in liberalised international markets. How has  neoliberalism contributed to the collapse of the ‘centre-left’ in Europe  (see your piece in Inference)? Is internationalisation – not only of markets but of governance – in for instance the form of the EU part of this demise?

At some point in the 1990s both the center-right and the center-left  in Europe had concluded that future prosperity would depend on opening  national economies to the world market, combined with “structural  reforms” of national institutions to make them more “competitive”, i.e.,  attractive to free-wheeling international capital, especially finance  capital. Internationalism and neoliberalism thus came hand in hand. In  Europe there was agreement among governments that the EU should and  could be converted from what had in the 1970s become a supranational  welfare state-in-waiting, into an engine of coordinated liberalization.  Using the EU for this had the advantage that it allowed national  governments, left or right, to evade responsibility for the market  pressures and institutional revisions they had unleashed on their  peoples, by claiming that these had been imposed on them from above and  that they were part and parcel of an internationalist “European idea”  anyway. Very importantly, European Monetary Union, created in the 1990s  under global pressures for fiscal consolidation – to reassure the  “financial markets” of the solvency of increasingly indebted states –  served as a vehicle for the constitutionalization of balanced budgets in  national states, something that would have been much more difficult if  not impossible if it would have had to be sold by democratically elected  governments to their voters. In that sense, the demise of the  center-left parties was self-inflicted: they had underestimated the  capacity and resolve of their peoples ultimately to defend themselves,  if need be by turning to new “populist” parties and movements.

On the other end of the political spectrum, you define the  problem of the right as crucial. Not only are new radical rightwing  parties formed, such as the AfD, they also manage to profit from the  death of the left. You describe how members of the former communist  party (SED) are now likely to vote radically right. Does ideology really  not matter anymore? Are then perhaps the terms left and right not the  right references to describe Western political landscapes?

SED membership did not mean much ideologically; we are talking about a  communist state party. But it is true, not just in Germany but also  elsewhere, especially in France, that a relevant share of left voters  have turned to the right. The most important reason, I think, is that  they no longer felt represented by their former center-left parties, who  had joined the center-right by telling voters that they couldn’t help  them anymore because of “globalization”, and they now had to fend for  themselves: become “flexible”, get “retrained” etc. I believe that in  countries where the left manages to produce leaders like Jeremy Corbyn,  one can still meaningfully distinguish between left and right. But it is  true that proletarian self-defense may also turn right. Moreover,  internationalism, anti-nationalism, and “pro-Europeanism” may no longer  be left, in the sense of protective of the weakest members of a society;  it may have become appropriated by a new middle-class of human capital  owners living in “global cities” and tired of being reminded that they  should let themselves be taxed to prevent the gap between them and their  respective hinterland becoming ever larger.

The death of the centre-left has also led to the rise of the  Right. You note in your piece that working class white women  overwhelmingly voted for Trump, while Clinton lost votes among African  Americans and Latinos compared to Obama’s election in 2008. How have so  many social groups associated with the Left – the working class,  minorities, women – turned away?

That’s a difficult question as the “racial” complexities of American  politics in particular are endless. Basically I believe that at some  point material deprivation trumps (if the word is allowed) cultural  identification, especially if the alternative – in this case, Clinton –  is so unattractive and indeed untrustworthy. Clinton’s hobnobbing with  the Californian movie stars and other celebrities, let alone her  material greed and the incredible sums she collected for her Wall Street  appearances, must at some point have destroyed her claim to defend  “hard-working Americans and their families”. What was left then was  Trump. I think we have reasons to believe that had Bernie Sanders been  allowed by the Democratic party machine to will the nomination, he could  have defeated Trump handily, certainly in places like Iowa, Wisconsin  and Ohio.

You call populist politicians all over the world ‘Trumpists’:  Haider in Austria, Glistrup in Denmark, Johnson in the UK, Wilders in  the Netherlands. What do they have in common? What kind of context lends  itself to be governed by a Trumpist, or in other words: what kind of a  world do we have to avoid in order to prevent Trumpists from coming to  power?

There is lots of randomness, of sheer chance in politics – see my  Trump-Sanders example. In France, a few more votes for Mélenchon in the  first run of this year’s presidential election, and the run-off would  have been between him and Le Pen, with Mélenchon winning. We must look  at the underlying dynamics, more than the chance outcomes. They have to  do with the simultaneous demise of the center-left and the center-right  in most of the “globalized” political economies of the “West”. Other  expressions of the same trend include the fragmentation of party  systems, growing difficulties in forming coalition governments, high  volatility of voting, low rates of voter turnout biasing electoral  politics in favor of the middle class (unless there are “populist”  newcomers). We will have to see if established parties will learn to  accommodate at least some of the concerns addressed by the “populists”,  for example international competition and migration. Maybe there is such  a thing as “responsible nationalism”, advocated recently by, of all  people, Larry Summers, for long chief mechanic in the engine room of  financialized capitalism – a policy line the old center might be able to  adopt, to keep the Trumps out. But, to be honest, there may already be  too much accumulated hatred, grown on both sides of the “culture wars”  over, of all things, sex and sexuality, for a united left to be able to  return and rally around the project of a new “state-managed” democratic  capitalism, where the managing state can only be a national state.

After the election of Trump, the Left in America has been dogged by the question of ‘identity politics’ going forward, touching on a long debate within the Left on the relationship between cultural and economic struggle. Mark Lilla has recently come out against the rise of discourses on race and gender  within the Left, arguing that it has hampered the success of the  Democratic Party. Likewise, in your piece on Inference, you express  doubt about the political efficacy of Obama’s push for transgendered  restrooms. How are these disparate movements for social recognition  placed within a broader anti-capitalist economic struggle?

I would like to know this as much as you. I tend to feel that a  capitalist society has a lot of tolerance for individualism and what you  may call cultural creativity. Basically these should be easy to  accommodate into contemporary consumerism. That people oppose “marriage  for all” or ever new individualistic expressions of “gender” or other  “lifestyles” clashes less with capitalism than with traditionalism – and  in many ways capitalism, always on the lookout for new ways of making  profit, is an enemy of traditionalism. Maybe all of this is a matter,  not for anti-capitalism but for anti-traditionalism, and not for  socialism but for liberalism. Can capitalism coexist with lifestyle  liberalism? If you ask me, easily so. In fact “marriage for all” and  similar causes are winning everywhere, and often with the strong  material support of the so-called “financial community”.  Perhaps at  some point issues like these will lose the capacity to cover up the  fundamental problems of political economy today, including the  destruction of the natural environment. Racism, incidentally, I locate  in a different corner than sexism as it is much closer to the core of  the “order of inequality”.

The Left is Dead, Long Live the Left! After Trump’s victory,  Slavoj Zizek was condemned for what was interpreted as his celebration  of the news, as he argued that Trump’s appointment opened up space for a  new revitalised Left against the centrist, market-friendly inertia of  the Democratic Party’s centrist status quo. Is there any hope for the  Left in this current state of affairs? What is in it for the future for  the Left – are there any paths to victory?

Again, I would like to know. Yes, the Trump victory could teach us  that the Clintons of this world are not the ones that will end the rot –  they are to the contrary part of it. But what sort of future the Left  may or may not have I could only guess. Generally I tend to be  pessimistic these days, some of the reasons for which I have outlined in  a recent essay, “Whose side are we on? Liberalism and socialism are not  the same”, in David Coates, ed., 2017: Reflections on the Future of the Left, Newcastle upon Tyne: Agenda Publishing.

You note that ‘internationalism’, with its stress on the  globalised economic and social modernity, has been a significant factor  in discrediting the tenets of the centre-left. A recent move made by  Left populism, however, has been to co-opt the language of a revitalised  nationalism. Jeremy Corbyn, for example, has held a long ambivalence  with the EU, and in July this year was quoted as saying that wholesale  EU immigration has destroyed conditions for British workers. Can there  be an ‘internationalism’ that is in line with the Left? Is the only way  forward for the Left to look inward to the nation state?

Act local, think global. The only ones that can act globally are the  CIA and Goldman Sachs, and only as long as there is no effective local  resistance. In the real world, there is no democracy above the  nation-state but only big technocracy, big money, and big violence.  Revitalizing the nation-state need not be the same as looking inward.  Quite to the contrary, if we want to contribute to justice on a global  scale, we must first keep our own house in order, or we lose the support  of our fellow-citizens. The neoliberals have persuaded not a few people  on the Left that international solidarity today means workers in old  industrial countries allowing themselves to be competed out of their  jobs by workers in poorer parts of the world. In fact, international  solidarity among workers meant and means organizing together to prevent  capital from pitting them against one another in “self-regulating”,  meaning unregulated, “free” markets.


All by
Johannes Lenhard & Rebecca Liu