Neoliberals may have been wrong in saying that the ideology would increase growth, or that a rising tide would float everyone’s boats. About one thing they were correct: the ideology was global. Its true aim was to shift power towards capital and away from labour, acting as a safety net for big corporations.
International liberalisation was supposed to raise economic growth for all, as trade and capital flew between countries, levelling out prices and boosting efficiencies. But this internationalisation wasn’t inevitable; the brand of globalisation we experience was built on purpose rather than a process of natural evolution.
The Washington Consensus was central to the push to globalise neoliberalism, dating back to the 1980s. Under the ‘Consensus’, the World Bank and the International Monetary Fund (IMF) told developing country governments to spend less, to liberalise trade and capital, and to sell off state enterprises. If they didn’t, loans were withheld. Such threats were still alive in the IMF bail-out conditions until very recently.
A deliberate strategy
The ‘neo’ always did a lot of work in neoliberalism, which was remarkably hands-on. It didn’t, as advertised, let markets take their own course. The Washington Consensus was a deliberate, manufactured programme, actively pursued by the world’s leading economic institutions, enforced by well over a hundred billion dollars of loans and grants. Other international policy strategies could have been possible.
It wasn’t just the Washington Consensus; neoliberalism’s purposive, political nature can be seen in the expansion of the major neoliberal states from the 1980s onwards. US government spending grew from 31% of GDP in 1975 to 40% in 2025, peaking at nearly half of GDP during the massive condition-free corporate bailouts during the financial crisis of 2008 and Covid in 2020.
The neoliberal period also oversaw a massive expansion in public debt. In 1975 the British debt-to-GDP ratio stood at 54%, and in the US, 35%. Mostly due to the financial and Covid crises, by this year debt has ballooned to 96% of GDP in the UK and 125% in the US.
A corporate bonanza
The sums were staggering. During the financial crisis the Federal Reserve and Treasury bailed out American International Group (AIG) with over $180bn. Bear Stearns received a collateralised short-term, 3-day loan of $12.9bn, followed by a $28.8bn loan to help JPMorgan Chase take it over. Fannie Mae & Freddie Mac went into federal conservatorship at a cost of nearly $200bn, one of the most expensive bailouts in history. Emergency loans and equity investments to General Motors and Chrysler totalled $85bn.
During the pandemic, the US passenger airline industry received over $54bn in bailouts. Exxon Mobil used $9.5bn in government-backed loans for shareholder payouts and executive compensation, even as it cut jobs.
The UK government pledged roughly £400bn in support during Covid, with businesses such as British Airways, Rolls-Royce, and EasyJet drawing heavily on state-backed loans and furlough subsidies.
These packages, while averting mass insolvencies, left taxpayers exposed to enormous liabilities – greater than the entire annual education budget – and deepened the fiscal strain now driving demands for spending restraint.
That’s not to mention the roughly £14bn that Boris Johnson’s government wasted on dodgy covid contracts to his corporate friends.
These bailouts were choices. Governments attached few strings. This was deliberate corporate welfarism, not an inevitable necessity.
Despite neoliberals saying they wanted to shrink state expenditure, the size of the state grew under neoliberalism.
For the few, not the many
Does it matter that the ideas behind neoliberalism turn out always to have been rotten, or that no self-respecting thinker can now muster an argument in its favour?
The ideology may be over, conclusively debunked, but in practice, its legacy persists like a ratchet that no-one’s unwinding. Its effects are pervasive. So what if neoliberalism was a crock and it failed on its own terms? That’s little solace to the world’s poorest, whose lives it degrades.
It’s worth putting yourself in their shoes, which presumably fit no differently. Does Mpho, a 36 year old factory worker from Lesotho, who lost her job and turned to prostitution, as a result of Trump’s tariffs, care if neoliberalism is ideologically inconsistent? I doubt it.
The Pacific islanders, whose lives are turned upside down every couple of years during the ever more violent cyclones, due to neoliberalism’s carbon binge, probably find victory over the ideology hollow. Their countries still sink, along with their cultures and histories.
What about the 165–175 million more people around the world living in extreme poverty since 2020?
Can you really feel smug about neoliberalism’s internal contradictions as you struggle to pay for food and rent; lose sleep about losing your temporary work contract; fear sickness; and worry about saving for retirement?
A technique of power
Neoliberalism was a technique of power. It did its job as a mechanism for profit, securing low-cost access to resources and cheap labour. It was never really about growth, efficiency or enlarging the pie for everyone. The environment was an afterthought: when profits were at stake, bosses saw carbon overload as a price worth paying.
Neoliberalism opened up markets, shrank social spending and de-risked investment. It deregulated and made labour more flexible. Its aim was to swell corporate coffers and to transfer power away from workers to big companies. In this, it succeeded.
Part two of a four-part series. Parts three and four will show how, despite neoliberals and doom-mongers conveying the impression that there is no alternative, we can resist sliding into further inequality and exploitation, and create a better future.
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