ONE ECONOMY TO RULE THEM ALL:

The foundation of neoliberal theory was the idea that 'the market' and 'the state' were two entirely separate spheres, governed by separate logics - one the realm of economics and the other that of politics. The neoliberals argued that all areas of human life should be governed by the economic logic of the market, and that the state should confine itself to creating the conditions within which efficient markets could thrive.

The foundation of this argument was that people could only be free in a society based on free markets. Any attempt to control or restrict the functioning of markets--whether through public ownership, spending, or overly tight regulation--would constrict human freedom and ultimately lead to some form of totalitarianism.

The last fifty years of neoliberal hegemony has reshaped statecraft away from the governance of the market and towards governance by markets. The neoliberal era has been characterised by policies designed to strengthen the market at the expense of the state, whether through privatisation of previously publicly-owned resources, the assault on formerly strong labour movements, cuts to public services, or the introduction of market logics into the state bureaucracy.

But one of the main problems with the neoliberal narrative is that there is no such thing as 'the market' as separate from 'the state'. Markets can only function when states provide the infrastructure within which market interactions take place. And capitalism can only function when states step in to clean up after crises.

In fact, the state never really shrank during the neoliberal era; it was fundamentally reshaped. Rather than spending and legislating to reduce unemployment as it had during the post-war period in which a strong labour movement had been able to bargain directly with both employers and the state, the neoliberal state instead chose to target consumer price inflation and discipline organised labour. In other words, the neoliberal state is not a small state, it is a state designed to meet the interests of capital.

When viewed in these terms, the allegedly radical transformation of capitalism we have seen during the Covid-19 pandemic is not so radical after all. States are spending more money because big business and big finance needs to be bailed out - again. We saw the same dynamic in the wake of the financial crisis when states and central banks all over the world spent trillions of dollars propping up the world's financial system.

Today, governments and central banks in the Global North realise that they have no choice other than to bail out their entire domestic economies in the face of a pandemic that requires the cessation of most economic activity. Some have argued that the resulting increase in state spending suggests the end of neoliberalism; but the way that this spending has been allocated suggests that this is not the case.

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