the collapse of Bear Stearns, Lehman Brothers, AIG, Northern Rock, Lloyd’s Bank, Anglo Irish Bank, Kaupthing, Landsbanki, Glitnir (and a parade of lesser institutions) would at least cut through the smarmy triumphalism of those who claimed to fully comprehend the workings of the globalized economy? Such a simultaneous worldwide collapse, first of finance, then of the rest of economic activity, had up till then been the hallmark of conspiracy theorists, apocalypse mongers, and some unreconstructed historical materialists. As the world witnessed the meltdown in dazed disbelief, it was not so outlandish to imagine that epochal events so seared into everyone’s consciousness could not help but prompt them to reevaluate their previous beliefs. How could anyone deny something had gone badly awry? The next step in the syllogism, but the link fated to fail, was that everyone would perceive that the prior bubble was the direct consequence of certain modes of thought, and thus, it was these doctrines that would be refuted. Collect those doctrines together under the umbrella term “neoliberalism,” toss into the mix a Little Bo Peep falsificationist psychology, and there materialized the widespread perception that we were living through the demise of an entire way of thinking:
The first intellectual consequence of the economic crisis was to undermine Neoliberalism—or the belief in the sufficiency of markets to secure human welfare—as the age’s default ideology.7
The free market project is on the ropes. Never before has the question of neoliberalism’s political, economic and social role—culpability might be a better word—been debated with such urgency, so globally, in such a public manner.8
Neoliberalism has self-destructed. The thirty year long global march of free market ideology has come to an end.9
Today there has been a partial awakening . . . A striking number of free market economists, worshippers at the feet of Milton Friedman and his Chicago colleagues, have lined up to don sackcloth and ashes and swear allegiance to the memory of John Maynard Keynes.10
The crisis revealed the strategy’s unsustainable character, leading to what can be denoted as the “crisis of neoliberalism” . . . No distinction is made between hegemony and domination as in approaches of Gramscian inspiration.11
The promises of neoliberalism are revealed for what they were: a sham. An ideology that seduced most of the population is broken. The psychic and political consequences are incalculable.12
The fall of Wall Street is to neo-liberalism what the fall of the Berlin Wall was to communism.13
This naturalization of market logic (or “values,” to use Massimo de Angelis’s language) was nothing more than a spell. This spell was broken in 2008, a year after The Beginning of History was published. The point of all this: When I argue that we now live in a postneoliberal world, I do not mean that its practices or program have ceased (Ireland, Greece, and Portugal make it loud and clear that it’s alive and kicking), but that the narrative of the market’s universality is no longer unchallenged. The market is not the one and all; it has an outside, it has a limit.14
Just so it doesn’t appear that I am unfairly taking advantage of a certain class of people who might have been overly inclined to jump the gun, let’s sample some people closer to the orthodoxy in American economics like, say, Joseph Stiglitz:
Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.15
In an interview with the Berliner Zeitung, Stiglitz was quoted as saying, “Neoliberalism like the Washington Consensus is dead in most western countries. See the debates in South America or other countries. The U.S. has lost its role as the model for others. Everyone only laughs when U.S. technocrats give lectures in other countries and say: ‘Do as we do, liberalize your financial markets!’”16 Stiglitz, as one of the few neoclassical economists who has periodically attempted to intellectually refute neoliberalism over the course of his career, should therefore be regarded as someone who had significant credibility tied up in expressing his conviction that the demise of neoliberalism was at hand.
Or, alternatively, suppose we consult an eminent proponent of globalization analysis, Saskia Sassen, prognosticating “The End of Financial Capitalism”: “The difference of the current crisis is precisely that financialized capitalism has reached the limits of its own logic.”17 David Harvey more tentatively and cautiously asked whether it was “really” the end of neoliberalism.18 Some members of the faculty at Cambridge and Birkbeck declared, “The collapse of confidence in financial markets and the banking system . . . is currently discrediting the conventional wisdom of neo-liberalism.”19 Various politicians temporarily indulged in the same hyperbole: Prime Minister Kevin Rudd of Australia openly proclaimed the death of neoliberalism, only to succumb to his own untimely political demise at the hands of his own party; Senator Bernie Sanders prognosticated that as Wall Street collapsed, so too would the legacy of Milton Friedman. Yet, unbowed, the University of Chicago solicited $200 million in donations to erect a monument in his honor, and founded a new “Milton Friedman Institute.”20 “Wakes for Neoliberalism” were posted all about the Internet in 2008–9; a short stint on Google will provide all the Finnegan that is needed.
More elaborate analyses of the unfolding of the crisis by academics on the left followed suit. John Campbell, for one, has argued that the financial meltdown was itself a manifestation of the crisis of neoliberalism, in that defective understanding of markets led to the loosening of financial regulation and other trickle-up government policies—that ideas were just as important as the inertia inherent in institutions.21 Of course, Campbell tempers the analysis with the warning, “Despite theoretical arguments about the moment of crisis triggering radical change, many scholars now recognize that institutional change tends to be much more incremental even at historical junctures like this one.” Others were a bit less cautious. Yet, whether circumspect or perfervid, each crisis diagnostic held fast to the syllogism that people can learn from their mistakes; the deep contraction and financial breakdown stands as irrefutable evidence that neoliberalism is false; and therefore, neoliberalism must be on its last legs. That credo was the fuel of the machine that churned out reams of crisis commentary from 2008–10; it put the hi-fi in early litanies of financial reform. One encounters this admonitory approach to the death of neoliberalism in the most diverse accounts of the crisis.22 It could even be found in authors who would not themselves otherwise be caught dead using the term “neoliberalism” in elevated company.
While it would be a digression to plunge into the bramble thickets of formal epistemology in a book about the crisis, there was at least one major flaw in all these prognostications that needs to be taken into account here. Social psychology, the history and philosophy of science, and the sociology of knowledge all combine to instruct us that people don’t generally behave like that. Only the most ersatz Popperian believer in the awesome power of local falsificationism would begin to presume that some finite observation would immediately impel people to cast their most cherished beliefs into doubt and reconsider long-held ideas that anchor much of their worldview. Such conversions have been known to happen, but they have been few and far between. Predominantly, the long history of schooling, socialization, and past experience induces a stubborn inertia into cognitive processes. More commonly, people react to potential disconfirmation of strongly held views by adjusting their own understandings of the doctrine in question to accommodate the contrary evidence; this has been discussed in the social psychology literature under the rubric of “cognitive dissonance,” and in the philosophy literature as Duhem’s Thesis. Cognition sports an inescapable social dimension as well: people cannot vet and validate even a small proportion of the knowledge to which they subscribe, and so must of necessity depend heavily upon others such as teachers and experts and peers to underwrite much of their beliefs.23
