Light at the end of the tunnel – the end of the neoliberal era

For a long time, I've been seeking explanations to why we have been haunted by the neoliberal economic policies and new public management (NPM) during the past 30 years or so, notwithstanding the obvious damage it has done in most quarters except for a small minority of rich people. In interviews I made in the 1990s for radio series on the dismantling of the Nordic welfare state and related issues, the message was unison among people associated with the trade union movement as well as researchers in the social field and socially oriented people, that the policies then pursued were detrimental. This is by now a well-established fact. And, at long last, we get research offering the bigger picture, announcing that the neoliberal era is at its end. But that is not the end of the story. How to undo these policies and how to proceed are no simple matters. But this is a good start.

Gary Gerstle offers an impressive analysis in his book The Rise and Fall of the Neoliberal Order (2022). His book will be our guide here complemented with articles by Patrick Dunleavy et al. New Public Management Is Dead—Long Live Digital-Era Governance (2006) and Göran Sundström's analysis of the situation in Sweden in Moving beyond new public management - A historical-institutional analysis of the case of Sweden (2022).

Gerstle's book offers a wide-ranging perspective on the driving forces in the US that led to the emergence and fall of the neoliberal order from its origins in the 1970s and 1980s, through its dominance in the 1990s and 2000s, until its fragmentation and decline in the 2010s. The 2020 pandemic delivered the coup de grace, Gerstle says (Gerstle, p. 4). Also, Dunleavy et al. tell, in their article published in 2006, that the new public management wave has largely stalled or been reversed in some key ‘‘leading-edge’’ countries. To this picture, Sundström gives us examples of the challenges they face in Sweden when trying to reverse the neoliberal trend. We're here faced with a challenging reform agenda that requires new-thinking.

An interesting aspect of the neoliberal policies is that they were campaigned for both by the right and the left. On the right, we have neoliberalism with its roots in Europe where the economists Friedrich Hayek and Ludwig von Mises were leading personalities. Mont Pèlerin Society (Switzerland) was founded by Hayek in 1947, as a forum for debate, discussion, study and self‐education among its members, who were not only economists, but also politicians, among others. In the 1940s, the movement got a foothold in US universities, above all in the economics department of the University of Chicago, influencing public policy and politics. In Gerstle's words "Hayek, von Mises, and other pioneering neoliberals wanted to be seen as the creators of a disciplined “thought collective” with the ability to unleash a singularly fresh and coherent liberal ideology on the world." (Gerstle, pp. 73-74). In A Short History of The Mont Pelerin Society, Eamonn Butler is able to report that in the 1980s and 1990s members of the society "had the exhilarating feeling that things were at last going their way. Several countries, starting with Margaret Thatcher’s government in Britain, were privatizing their state industries; governments from China to India to America to France were liberalising, retrenching or cutting taxes; and progress was being made on international free trade." (Butler, p. 20)

On the left we have what has become the founders of our digital era. The New Left’s engagement with neoliberal principles can be seen as a revolt against what it regarded as the over-organization and bureaucratization of American society, as well as a desire to enhance personal freedom. The early cybernetics movement was inspired by leading personalities such as Stewart Brand, the environmentalist and futurist, who with his The Long Now Foundation wants to foster long-term thinking, Steve Jobs, who associated the creation of the personal computer with the quest for individual freedom and Ralph Nader, who wanted to “free” the consumer from repressive corporate and government elites. Gerstle summarises: "Freeing the individual and his or her consciousness from the grip of large, stultifying institutions; privileging disruption over order; celebrating cosmopolitanism—and multiculturalism—and the unexpected sorts of mixing and hybridities that emerge under these regimes: All of these beliefs, each of which marinated for years in the political and culture milieux inspired by the New Left, furthered neoliberal aspirations and helped to make it into a hegemonic ideological force". (Gerstle, p. 8-9)

In 1994, Esther Dyson, George Gilder, George Keyworth, and Alvin Toffler spelled out their vision about the digital age in a manifesto, “Cyberspace and the American Dream: A Magna Carta for the Knowledge Age”. The manifesto was utopian. It saw the cybernetic revolution as a chance to start the world anew and free humanity from past shackles. According to the authors, everything about society and civilization had to be rethought, including "the meaning of freedom, structures of self-government, definition of property, nature of competition, conditions for cooperation, sense of community and nature of progress.” (Gerstle p. 160)

The ICT development has, for sure, cut so deeply into the societal fabric that assessments of its nature frequently oscillate between utopia and dystopia. In the utopian 1990s, the self-knowledge resulting from this revolution was held up as delivering on the neoliberal promise of personal freedom and emancipation. But, says Gerstle, now that the technological utopianism of the 1990s and 2000s is gone, perhaps a visionary with a Stewart Brand-like imagination will arise to call for freeing human consciousness from tech-imposed fetters (Gerstle p. 293). For my part, I consider that there are great empowering potentials in the digital era so to focus on them should be a high priority both among researchers and policy makers.

Both the right and the left neoliberal orientations have largely managed to make a reality of their ambitions, but at what societal cost? What is, at this point, missing from the bigger picture, is the dismantling of protective provisions in working life and social security, which were hallmarks of the social welfare state. Squeezed between the right's mission to free the markets on the one hand and the (initially?) left oriented tech people's focus on personal freedom, we humans were, in our capacity as working people, thrown out like the baby with the bath water. A political and democratic spirit was replaced by an entrepreneurial one. This is the storyline I have, as a working life researcher, been following and assessing since the 1980s from a human rights and social justice perspective. My conclusion is that we here need to focus on root causes to the human and social predicament.

Despite the deep societal changes that the economic and technological developments have caused, the premise and perception of work have remained intact since labour law was introduced as a new legal discipline around a century ago, to protect workers in the industrial society. Despite the flexibilisation of working life and the introduction of new work formats, labour law's premise has remained the same, long-term full-time employment. This is the backdrop to and explanation for a growing precariat and a growing number of working poor, as an increasing number of persons will not qualify for the protection that labour legislation and associated structures are meant to give. We need a changed premise for labour law that would be in tune with the changed nature of work. My proposal is that we should take account of all activities in which people are engaged. (To make this an economically sustainable solution, a universal basic income would be needed, of which more later).

Not even in the fluid conditions of work on digital platforms does there appear to be any departure from the labour law premise. In 2021, the Commission of the European Union, EU, presented a proposal for a directive on improving working conditions in platform work, something that the labour movement has been calling for for years. As a general rule, the proposed directive covers persons who have, or who based on an assessment of facts may be deemed to have, an employment contract or employment relationship as defined by the law, collective agreements or practice in force in the Member States (emphasis added). This formulation is meant to allow a correct determination of the employment status, by including situations where the status of the person performing platform work is unclear, such as instances of false self-employment. (Proposal for a Directive of the European Parliament and of the Council on improving working conditions in platform work, 2021, p 16).

This delimitation of the coverage of the directive is both ineffective and unjust. It feeds bureaucracy without any guarantee for a person to qualify for the protection intended by the directive. Persons in the weakest position have the least chance to qualify, thus becoming innocent victims of an unfair regulation. In this light, EU:s promise about workers' rights sounds shallow: "The right of every worker to working conditions which respect their health, safety and dignity, and workers’ right to information and consultation are enshrined in the Charter of Fundamental Rights of the European Union. The European Pillar of Social Rights states that “regardless of the type and duration of the employment relationship, workers have the right to fair and equal treatment regarding working conditions and access to social protection.”" (Directive proposal p. 2).

Neoliberalism in a nutshell

Here is the neoliberal scenario we ended up with. Rodney Lord has depicted the economic scene in 1991 in an article Privatization - the boom goes on. One of the biggest business opportunities of this century is how he labels the global movement towards economic liberalisation and privatisation. He reports that in the past three years governments worldwide have sold assets worth close to $ 100 billion. This has created big investment opportunities. It has also meant that governments have given access to private business in areas, from which they have previously been barred. This new outlet for private business has also had its spill over effects on services, with increased demands for investment banks, tax accountants, pension consultants, insurance brokers, public relations companies and many other services for which they had little use in the state sector. Lord notes: "Often multinationals are best placed to exploit these opportunities... Multinational companies with their global reach can follow the trail of liberal economics as it leads on from market to market and use their financial muscle to take advantage of new opportunities as they arise." According to Lord even the least far-reaching changes from the point of view of the public sector can revolutionise the shape of an industry and create billions of dollars of new business for private sector firms. "Given political stability, an efficient private sector company operating in a competitive market place should be able to extract significantly more profitability from a state enterprise than its public sector owners who are subject to all kinds of political pressure (for instance to maintain employment (emphasis added))" (Lord, pp. 3, 6, Storlund, To each one's due at the borderline of work, 2002, p. 52).

Parallel with Lord's rosy picture of business opportunities in the 1990s, we have had economic crisis and austerity policies that have affected people in a vulnerable position hardest. In a report by the Organisation for Economic Cooperation and Development, OECD, on Public Management Reform and Economic and Social Development in 2001, we learn that countries that have reduced social expenditures relative to GDP have generally managed to achieve their reductions by restraining cash benefits. This involves unemployment benefits and often also programmes on which public authorities have a high degree of discretion, such as labour market programmes and housing benefits (Michael Keiting, OECD 2001, p 169). In this market intoxication of the 1990s, as Gerstle puts it, Nobel Laureat Joseph Stiglitz recalls thirty years later, “we were all deregulators. . . . By adopting deregulation language [ourselves], we had in fact conceded the battle.” This concession, this participation on the part of progressive Democrats is, Gerstle says, yet another sign that neoliberalism had become dominant, its advocates compelling all political players to work within its ideological matrix (Gerstle p. 171). Gerstle recapitulates: The effects of the neoliberal order that had prized global free markets and free movement of people had left too many people behind. It had favoured Wall Street over Main Street, tolerated extreme levels of inequality. It had ignored the massive loss of wealth experienced by minority homeowners in the wake of the Great Recesssion (Gerstle, p. 290).

Outsourcing is a central feature of the neoliberal policies. Susanne Wixforth and Christian Berger mentioned in 2022 that around 19 per cent of European gross domestic product is spent annually on procurement by public authorities. They gave an illustration of what the situation could look like. In Austria, a call for ecological subsidies that was announced in October 2022 resulted in more than 23,600 applications (Social-ecological public procurement, Social Europe). Here we clearly have a problem that would require careful scrutiny. In a post-NPM era the first question to ask should be who is most suitable to carry out a task in question, the public sector or private enterprise? This would reduce the nuisance associated with current application practices that hardly meets an efficiency test.

Gerstle, summarises the tech side of the neoliberal scenario. The 1990s was the decade of IT’s extraordinary triumph. The first web browser, Mosaic was launched in 1993 and Netscape, the forerunner of Google, in 1994. Jeff Bezos founded Amazon in 1994. Peter Thiel and his colleagues launched PayPal in 1998, the same year as Larry Page and Sergey Brin launched Google. Steve Jobs returned to Apple in 1996 putting it on its present path. In Gerstle's words, "Stewart Brand and his band of tech hipsters had completed the journey from acid-besotted merry pranksters to cybernetic masters of the universe, increasingly toasted at gatherings of the world’s economic and governmental elites at Aspen and Davos." (Gerstle, p. 160)

The way ahead

Dunleavy et al. see a radically increased institutional and policy complexity as a reason for the death of new public management that they announced in their article published in 2006. There has been a cumulation of adverse indirect effects on citizens’ capacities for solving social problems. The decisive question now is, how to remedy the damages caused by the neoliberal economic policies? As the way ahead, Dunleavy et al. focus on a new Digital-Era Governance (DEG) that should reintegrate functions into the governmental sphere that the new public management had discarded. Through holistic reforms the entire relationship between agencies and their clients should be simplified and changed, stripping out unnecessary steps, compliance costs, checks, and forms. They also stress that the government should be more ‘‘agile’’, able to respond speedily and flexibly to changes in the social environment. The government should be opened both to others and to itself. This includes being open to civil society stakeholders' activities (Dunleavy et al. pp. 467, 480).

Also in Sweden, the new public management-oriented policy that had permeated reform in the Swedish public administration, has for some time been the object of critical scrutiny among researchers and increasingly so among the public at large. In 2014, this prompted the then red-green government to call for new governance models ‘that go beyond NPM’. Pragmatic and reality-grounded measures have been called for, including a need for increased cooperation, reduced financial administrative regulation and more trust in the relationship between those who govern and those governed. This reform project has been named the "Trust reform" (Sundström, 2022, pp. 389, 439-440).

But it turned out that alternative ideas and approaches to NPM have been few. Sundström points out that talk about new forms of governance and alternative ways of organising the administration has not been accompanied by any decisions that would make a clear break with the NPM paradigm. Instead, most things have remained the same, with a continued limited scope for critical reflection on established steering models, as well as in-depth learning and innovative thinking. As an explanation for this, Sundström notes that although there is a political will to reverse policies introduced in Sweden, there appears to be an inertia, and an inability to think in new ways.

This can largely be explained by the way in which NPM-oriented ideas were initially introduced, such as specialised agencies, units, functions, regulations and language. These arrangements have supported both the marketisation and managerialisation of the state. NPM ideas are thus deeply absorbed in the Swedish state, which gives those who work with and advocate these ideas a powerful position. In order for new ideas about governance and organising to be able to emerge, and be implemented in an appropriate manner, the government needs to organise this policy sector (administrative reform) in new ways (Sundström, p. 398, 399).

Despite uncertainties, Dunleavy et al. consider the current period to be unique. It holds out the promise of a potential transition to a more genuinely integrated, agile, and holistic government, whose organisational operations are visible in detail both to the personnel and broader public agencies, as well as to citizens and civil society organisations. A certain penumbra of fashions and regressions will almost inevitably surround the swing to DEG strategies in leading-edge countries, they say. But a strong, underlying, upward modernization momentum can still persist and achieve cumulative improvements (Dunleavy et al. p. 489). Gerstle closes his book The Rise and Fall of the Neoliberal Order with the observation that what comes next is the most important question we now face, in the United States and the world (pp. 293-294).

Through the human rights and social justice perspective that I have monitored and assessed the effects of the neoliberal policies since the 1980's, I've come to the conclusion that a universal basic income would offer a decisive break with the neoliberal policies. As a universal basic income would accord people a personal autonomy, it would bring humans centre stage and favour self-organising processes in civil society. This echoes Dunleavy et al.'s DEG strategies for a genuinely integrated, agile, and holistic government, open to citizens and civil society organisations.

To Sundström's observation about a lack of new-thinking, there is quite a lot of new-thinking in civil society, articulating a human perspective. Here is one illustration: the Nordic basic income networks have presented a pamphlet Basic Income – Cornerstone of the Nordic Welfare State that in a variety of ways present alternatives to the neoliberal policies.

Just like the neoliberal movement, the Basic Income Earth Network (BIEN), is one that has been abiding its time. It is a network of academics and activists interested in the idea of basic income, a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement. The movement started in 1986 in Europe, and has subsequently expanded to a world-wide movement. It harbours a wealth of research as well as studies of basic income pilot projects. Here are two of my blog posts that summarise my views of how to move ahead: Why we need basic income and how to go about it, A roadmap for turning crisis into utopia .

Gerstle mentioned that the 2020 pandemic delivered the coup de grace for the neoliberal era. In the US, Republicans and Democrats agreed in March 2020 to pass a $2.4 trillion relief package, for measures to help individuals and families, as well as small businesses and corporations. This package was more than twice the size of the one passed under Obama in response to the Great Recession of 2008–2009. Despite its size the 2020 package generated almost no dissent on either side of the partisan divide. It distributed as many benefits to individuals and small businesses as it did to large corporations—a principle of equity (Gerstle, pp. 279-280). Similar measures were taken in many other countries. The challenge now is not to repeat the austerity policies of the past but continue to open up to citizens and civil society. Geoff Crocker offers us guidance in his book Basic Income and Sovereign Money: The Alternative to Economic Crisis and Austerity Policy (2020) (see my blog post A roadmap for turning crisis into utopia).

References

Brand, Steward, The Long Now Foundation

Butler, Eamonn, A Short History of the Mont Pelerin Society accessed 26.12.22

Crocker, Geoff, Basic Income and Sovereign Money: The Alternative to Economic Crisis and Austerity Policy,2020

Gerstle, Gary, The Rise and Fall of the Neoliberal Order, America and the World in the Free Market Era 2022

Dunleavy, Patrick, Margetts, Helen, Bastow, Simon, Tinkler, Jane

New Public Management Is Dead—Long Live Digital-Era Governance

Journal of Public Administration Research and Theory, Volume 16, Issue 3, July 2006, Pages 467–494, https://doi.org/10.1093/jopart/mui057

Keiting, Michael, Public Management Reform and Economic and Social Development, OECD 2001

Lord, Rodney, Privatisation - the boom goes on, The Economist Intelligence Unit, Multinational Business, Autumn 1991

Proposal for a Directive of The European Parliament and of The Council on improving working conditions in platform work, Brussels, 9.12.2021 COM(2021) 762 final 2021/0414 (COD)

Storlund, Vivan, To each one's due at the borderline of work, 2002

Blog posts at www.vivanstorlund.com

Sundström, Göran, Moving beyond new public management - A historical-institutional analysis of the case of Sweden, in Förvaltning och rättssäkerhet i Norden, Utveckling, utmaningar och framtidsutsikter (Administration and legal certainty in the Nordic countries) 2022, Eds. Sebastian Godenhjelm, Eija Mäkinen & Matti Niemivuo

Wixforth Susanne and Berger, Christian, Social-ecological public procurement, Social Europe, 15th December 2022