In 1996, Susan Strange- the doyenne of political economy and a scholar of scholars- proposed a path breaking thesis wherein she asserted that “impersonal forces were holding sway over domains and “territory” of the state. Titled, “ The Retreat of the State”, Professor Strange , in her thesis, pointed out to the demise of state authority in various and varied domains. The forces that the great scholar pointed out became the precursor of globalization. In hindsight and retrospect, Professor Strange might have been alluding to “neo-liberalism”- the classical philosophy of economics which accord(ed) primacy to markets over the state and state authority.
Neoliberalism became a central creed of most economists and policy makers and practitioners after the post War consensus- Keynesianism and allied political bargains and practices that sought state interventions in the economy , all overlaid by variants of paternalism-frayed and frazzled. What accrued was the large historical megatrend that went by the name of globalization where market forces and technological determinism ruled the roost. Disaggregated, this, among other things, meant free( r) flows of capital, freer movement of peoples, capital and current account liberalization and “footloose” corporations. Added up, all these developments meant and implied , “ the retreat of the state” as delineated by Professor Strange- a point or theme brilliantly adumbrated by another scholar of great merit, Saskia Sassen, in her tome, “ Losing Control: Sovereignty in an Age of Globalization”. Professor Sassen , among other things, called attention to “loss” of many sovereign functions of the state on account of capital oriented and driven globalization.
Neo liberalism, which can also be termed as “free market fundamentalism” , brought prosperity to large swathes of countries- ranging from China to India but there was a structural and cultural downside to this creed. The major failure of neoliberalism lay in its rather structural inability to alleviate poverty; it, in fact, bred inequality. Culturally, given that openness was inherent to this creed, neoliberalism engendered a crisis of “culture” and “identity” –especially in the West. This crisis was sought to be glossed by neoliberal scribblers and spin maestros but gradually and inexorably, these twin crises reached a crescendo and opened up deep fissures and faultlines in Western societies and polities. The result of the opening of these fissures was the opening of the gates of populism in the West, best manifested and reflected in Donald Trump assuming the presidency of the United States. Trump rode to victory on the ramparts and detritus of the accoutrements and manifestations of the neo liberal creed- deep inequality in the United States, angst against immigration and elitism. The slogan that Trump and his team coined and made a campaign credo of was , “ Make America Great Again”.
Broken down, this meant an insular and an inward America which would retreat from the world and in the process give short shrift to globalization. In some senses, it implied a “ return” or more accurately , the reassertion and rearticulation of sovereignty and thereby the state and its authority. Similarly, after Brexit in the United Kingdom, there is a growing clamor for “redistribution”, “ renationalization” and wider immigration controls which, cumulatively, suggest a return of the state. Politics, in much of the Western world , is then veering to a response to the populist tide by a reassertion or return of the state, History then neither is over nor has it ended.
Is the world back to full circle now? What lessons-philosophic , political and policy- can be gleaned from these twists and turns?
First and foremost, to borrow the title of a great historian’s book and employ it as a phrase , albeit in a different context, the past few decades appear to have been an “ age of extremes”- ideationally, philosophically , politically and in terms of policy. The pinnacle and apogee of neo liberalism was touted as an exemplar to be followed by all and the state was attempted to be discredited and thrown out of the equation. But , as events demonstrated rather eloquently, neo liberalism was not the tooth fairy that would , at one fell swoop, resolve the “problem” of development and inequality; it has its Achilles heel. The state was needed and is needed albeit in a way that is in balance with markets and economic freedom thereof. Balance and equipoise needs to be restored to the world- especially in the domain of political economy. This can perhaps only mean arriving at a synthesis or golden mean between the state and markets. It may be stated here that neo liberalism was not all bad and evil. The creed’s practice brought about a more open world which, warts and all, can be for the good. But unalloyed freedom of /for markets can , as recent events- especially the populist turn in the West, indicate, can have “unintended consequences”. For the world to have balance and even perhaps “ equilibrium” , markets need to be tempered by the state. That is, a synthesis between the state and markets might be the need of the hour. It is perhaps this, more than anything else, that the political and economic crises might be foreboding.
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