Critical Policy Studies

ISSN: 1946-0171 (Print) 1946-018X (Online) Journal homepage: http://www.tandfonline.com/loi/rcps20

Globalization and the resilience of neoliberalism

Philip G. Cerny
To cite this article: Philip G. Cerny (2014) Globalization and the resilience of neoliberalism,
Critical Policy Studies, 8:3, 359-362, DOI: 10.1080/19460171.2014.944370
To link to this article: http://dx.doi.org/10.1080/19460171.2014.944370

Published online: 20 Aug 2014.

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Date: 28 October 2015, At: 16:15

Critical Policy Studies, 2014

Vol. 8, No. 3, 359362, http://dx.doi.org/10.1080/19460171.2014.944370

Globalization and the resilience of neoliberalism

Philip G. Cernya,b*
Politics and Global Affairs, University of Manchester, Manchester, UK; bRutgers University,
Newark, NJ, USA

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Neoliberalism is the hegemonic paradigm in most of the world today, including not only
the United States and Europe, but also most of the developing world and, indeed, even
in authoritarian neoliberal states like China (Breslin 2014) that are attempting to
introduce elements of market competition into their domestic and foreign economic
policies. As Vivien Schmidt and Mark Thatcher argue and as I have suggested elsewhere (Cerny 2010, chapter 7, forthcoming) it is the very flexibility and adaptability of
neoliberalism that have enabled the approach to transcend its early Thatcherite and
Friedmanite legacy of doctrinaire laissez-faire in a world of transition. But neoliberalism
could only thrive on a world where fundamental material conditions as well as ideas were
in transition. That material change, perceived nonetheless in the context of a growing
vacuum of alternative ideas, has been globalization. Schmidt and Thatcher do not use the
word globalization in their piece although the world global does appear twice in
passing thereby missing the key instructions as to how to put the pieces of the puzzle
together.
There are several sets of factors in the rise and resilience of neoliberal hegemony.
Probably, the most important temporal factor in the embedding of neoliberalism was the
crisis of social democracy in the 1970s and 1980s. The failure of the so-called postwar
settlement, especially in the United States and the United Kingdom with Reaganism and
Thatcherism; the ongoing liberalization of trade and capital flows and the failure of the
Bretton Woods fixed exchange rate regime in the early 1970s (Strange 1986, 1998); and
the Third World debt crisis of the 1980s, among other developments, were crucial. They
not only led to the delegitimation of 1950s/60s style embedded liberalism (as described
in Ruggie 1982) but also to a growing neoliberal domination of both of the economics
profession and of policy-makers of the Chicago boys school (Klein 2007). Thus, a major
part of the embedding of neoliberalism is the perceived failure of alternatives in a
globalizing world and the quasi-discovery of the neoliberal alternative in the context of
crisis.
The second factor or set of factors is found in the history and content of
neoliberalism itself. The original neoliberalism of the Mont Plerin Society had two
potentially contradictory strands. One of these strands was the quasi-laissez-faire
version of the Chicago School and Milton Friedman in particular as the popularizer
of neoliberalism in the United States and around the world and the other was a
particular version of the Austro-German Ordoliberal school (Foucault 2008, Mirowski
and Plehwe 2009, Bonefeld 2012, Stedman Jones 2012). Unlike the more Hayekian free
market school that argued (with some qualifications nonetheless) that unregulated
markets were spontaneously self-regulating, more traditional Ordoliberals believed
*Email: pgcerny@rutgers.edu
2014 Institute of Local Government Studies, University of Birmingham

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P.G. Cerny

that efficient competition the sine qua non of efficient markets was not a natural,
spontaneous process.
Rather, Ordoliberals believed, market participants and economic institutions, left
to themselves, would pursue opportunistic strategies and tactics monopolization,
oligopolization and cartelization. Only with a strong superstructure of pro-market, procompetitive rules and regulations would market actors act efficiently (Cerny 1991). This
argument is perhaps best illustrated in the title of Steven K. Vogels (1996) book Freer
Markets, More Rules. Thus, despite the hegemony of what might be called a deregulatory
paradigm within neoliberalism, pro-market regulations were never far behind. Indeed,
with every economic and financial crisis, from the Third World debt crisis to the Asian
and Russian crises of 19978 (Cerny 2009), and eventually to the post-2007 Global
Financial Crisis (it is debatable whether this last crisis is fully over yet), new and often
very stringent regulatory reforms were attempted even if they often proved limited or
stillborn (Bair 2012, Barofsky 2012, Cerny 2014).
A third set of factors, of course, as Schmidt and Thatcher point out, concerns the
political contexts the constraints and opportunities within which neoliberalism was put
into practice. This was partly due to the endogenous flexibility of neoliberal policies
themselves. To use Susan Stranges (1988) term, neoliberalism has a pick and mix
quality. Neoliberal policies ranged from privatization of industries and social services
(including quangoization, agencification and contracting out); financial orthodoxy (antiinflationary austerity or the growing financialization of fiscal policy, plus support for everincreasing household indebtedness and so-called financial literacy to compensate for
cutting back the welfare state); labor market deregulation versus an active labor market
policy; and the quasi-deregulation of the financial sector. This diversity echoed Humpty
Dumpty: When I use a word, Humpty Dumpty said, in a rather scornful tone, it means
just what I choose it to mean neither more nor less. The question is, said Alice,
whether you can make words mean so many different things. The question is, said
Humpty Dumpty, which is to be master that's all. These attributes have also enabled,
for example, the Workers Party governments under Luiz Incio Lula da Silva and Dilma
Rousseff in Brazil to keep most of the neoliberal reforms of Lulas predecessor Fernando
Henrique Cardoso while introducing popular welfare measures like the bolsa familia.
Governments around the world are tinkering with such measures (Wylde 2012), which
might be called (paradoxically) social neoliberalism. The Third Way in Britain under
the New Labor governments in the 1990s and 2000s was intended to bridge the old leftright divide in this way, although whether they succeeded is highly debatable.
But none of these sets of factors would have developed and interacted in both
virtuous and vicious circles without globalization. The economic crises of the 1970s and
1980s arose in a context of a priori reduction in international economic and financial
barriers as American hegemony and, in particular, the explosion of international capital
flows after the Nixon Administrations ending of the gold exchange standard (itself a
response to crisis: Block 1977, Gowa 1983, Helleiner 1996) imposed a range of liberalizing measures either directly or indirectly on other countries. Globalization was not only
a necessary precondition of the spread of neoliberalism, but it also enabled neoliberalism
to flourish and expand in the late twentieth and early twenty-first centuries. This process
had several dimensions. The most obvious, usually thought of as the core of the globalization process, have been trade liberalization and the freeing of cross-border financial
flows. Other economic dimensions include the expansion of international production
chains and the development of transnational networks of elites, enabled by the incredibly
rapid development of information and communication technologies. Thus, material

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conditions dramatically increased global awareness and empowered political, bureaucratic, social and culturalideological as well as economic entrepreneurs to think in
terms of a global governmentality or raison du monde (Cerny 2010).
In this context, the role of the state itself including, at an intermediate level, the
institutional arrangements of European states in the European Union has been transformed. The state is everywhere predominantly a Competition State today rather than a
welfare state (Cerny 1997) or at least the states welfare functions have been reduced
politically and socially (even if not always in terms of proportion of GDP) to propping up
the international competitiveness of domestic economic activities within a more open
world. In this sense, the state and state actors are undermining their own traditional
domestic roles of pursuing a wider public good because without going along with
globalization economic growth is not possible. British policy-makers understood this in
the nineteenth century (although they were overtaken by the Second Industrial Revolution
and imperial competition) and American policy-makers learned it in the 1930s and 1940s
with such measures as the Reciprocal Trade Agreements Act of 1934 and the Economic
War Aims elaborated in the United States Embassy in London during World War II itself
(Penrose 1953, Gardner 1964).
And, as Michel Foucault has written, economic growth is in the last analysis the only
social policy of neoliberalism. Yes, globalization was kick-started by postwar liberal
internationalization along the lines of the American and Bretton Woods models, but
once the process was transformed and institutionalized from the 1970s onward, neoliberalism became the polymorphous creed of globalization itself. Globalization may be an
uneven process, two steps forward and one step back, but it is an inexorable one that is
transforming politics, economics, society and ideas. And despite the setbacks of the
Global Financial Crisis, globalization continues and neoliberalism, once thought to be
under threat from protest and reregulation, is alive and well, back in the drivers seat both
politically and economically.

Notes on contributor
Philip G. Cerny is Professor Emeritus of Politics and Global Affairs at the University of Manchester,
Manchester, United Kingdom, and Rutgers University-Newark, NJ, USA. He is the author of The
Politics of Grandeur: Ideological Aspects of de Gaulles Foreign Policy (Cambridge University
Press 1980), The Changing Architecture Politics: Structure, Agency and the Future of the State
(Sage 1990), and Rethinking World Politics: A Theory of Transnational Neopluralism (Oxford
University Press 2010), as well as the editor or coeditor of several books, most recently Power in
Contemporary Politics: Theories, Practices, Globalizations (Sage 2000) and Internalizing
Globalization: The Rise of Neoliberalism and the Erosion of National Varieties of Capitalism
(with Susanne Soederberg and Georg Menz, Palgrave Macmillan 1995). He has also published
articles in journals including International Organization, Millennium: Journal of International
Studies, the Review of International Studies, the European Journal of International Relations, and
the European Review of International Studies.

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