Inequality is on the rise in advanced capitalist countries. While the rich are getting ever richer, the number of people living in precarious circumstances is growing, and the middle class is increasingly worried about becoming a thing of the past. This changing economic situation also influences politics, as the precarious and the worried have grown angry or alienated. Protest movements on the political left and the political right are emerging, expressing their discontent, but they are seldom heard. What are the alternatives to the current economic orthodoxy? What can be done to help people in need? How can people negatively affected by ordinary capitalism change their situation? These are some of the most fundamental questions of our time.
In his rich book, Sanford Schram identifies neoliberalism as the main culprit for these “dark times” (p. 173). Under neoliberalism, the economic logic of markets is expected to enter every aspect of human life, be it welfare, education, or philanthropy. However, neoliberalism is more than just the reliance on market forces to organize social and economic life. It also entails what Schram calls “neoliberal governmentality,” which refers to the insistence that “people adhere to the standard of the self-sufficient individual all the more intensively just at the moment it begins to fade away as a credible ideal” (p. 37). In this dark world, we are on our own. If we cannot cope with market forces and the survival of the fittest, then it is because we are not trying hard enough and need to be disciplined. And if this is not enough, there is always a solution: more market and more discipline.
Schram substantiates his unsettling account by numerous examples from the U.S. context. Although The Return of Ordinary Capitalism provides more of an overview of research (including his own) than a rigorous empirical analysis, the narrative is convincing and some of the examples are stunning. Ultimately, it is the sum of examples of neoliberal governmentality and their skillful deconstruction that make the book almost overwhelming.
Ambitious books are never without problems. Generally, I find Schram to be too dismissive of markets, public–private partnerships, or private-interest governments. Markets are not always bad. In fact, markets can be highly efficient ways of coordinating supply and demand. The problem is that markets are the one-size-fits-all solution provided by neoliberal ideologues and lazy thinkers. These people rarely think about how to create a functioning market, possibly because the fact that markets need to be embedded in society in order to work properly is still not taught in mainstream economics courses at universities. Markets do not always work, and if we want them to work, they need to be properly regulated and embedded. However, it would be wrong to dismiss markets out of principle.
Similarly, public–private partnerships and private-interest governments can be used for good. Consider, for instance, skill-formation policies in Western Europe. In so-called collectively organized training systems, which can be found in countries such as Denmark, Germany, or Switzerland, firms, state agencies, and intermediary organizations of both business and labor cooperate in skill formation. Among others, employers and their associations are involved in the financing and administration of training, meaning that collective skill-formation regimes presuppose public–private partnerships and employers that are willing to participate in collective action. Still, the system works. In countries with collectively organized training systems, workers are skilled, unemployment is low, and wages are high. However, in these systems, employers are not free to do whatever they want. Rather, employers’ behavior is constrained by institutional regulations and normative arrangements. Put differently, state and society have imposed what Wolfgang Streeck has called “beneficial constraints.”
In fact, although Schram claims to target markets and public–private partnerships, the real culprits seem to be austerity and a hostility to state intervention. His dismissive discussion of attempts to improve people’s human capital is telling in this regard. I can see no wrong if people are encouraged to invest in their human capital. But acquiring skills should empower rather than discipline them. Consider, for instance, active labor-market policies. Anglo-Saxon-style active labor-market policies try to pressure the unemployed into accepting any job, while Scandinavian-style active labor-market policies try to support the unemployed in acquiring the skills necessary to find a good job. Both forms of active labor-market policies are perfectly compatible with market logic, but they differ with regard to costs. While the former type is cheap in the short run (but potentially disastrous in the long run), the latter entails a costly public investment in the short run in the hope of reaping a decent return in the future (in the form of an employed tax payer). In this process, cooperation with employers can help to ensure that there is a market for the newly trained worker.
Hence, in my opinion, the problem is not markets or public–private partnerships (broadly understood) per se but, rather, attempts to “starve the beast.” When reforms are first and foremost about saving money and minimizing state intervention, goals other than austerity are (unsurprisingly) likely to suffer. Of course, part of the reason why the beast is being starved is some of the very people Schram identifies as the victims of neoliberalism. Although for Schram the private investor class dominates the public policymaking process to an ever-greater extent (p. 170), the real problem is that some of the victims of neoliberalism, in particular the adherents of the Tea Party movement, in fact support policies that seem to go against their economic and social interests.
Two questions thus arise, and here I found Schram wanting. First, what is the alternative to the neoliberal and austerity narrative? And second, how can we build a large coalition that is able to feed this counternarrative into the public policymaking process? The first calls for more (rather than less, p. 179) research on the (perilous) effects of austerity, on the (necessary) embeddedness of markets, or on the (imagined) structural power of business. Just look at what the research by nongovernmental organizations such as the Tax Justice Network has done to further the cause of tax justice.
The second calls for narratives that allow reaching out to other groups, trying to convince them that a less austere state is in fact in their interest. However, to convince a middle class worried about loss of social status, we must engage in discussion and compromises. Occupy Wall Street may be able to bring issues onto the agenda, but if they cannot build bridges and form large coalitions, there will be no change. Here, the two questions come back together because good research can provide convincing arguments that may also convince skeptics.
We may “live in dark times” (p. 173), but there is still room for politics. Alternative ideas about what to do and a large coalition to support them are what is needed. It is too early to resort to the “guerillas of the bureaucracy” (p. 196). What we truly need are better arguments.
