Table of Contents
Cover
Dedication
Title page
Copyright page
Acknowledgements
Preface
About this Book
1 The Previous Career of Neoliberalism
Neoliberalism: Its Origins and False Start
The Social Democratic Moment
Neoliberalism’s New Opportunity
2 The Market and Its Limitations
Market Characteristics and Failures
Market Failures
3 The Corporate Takeover of the Market
The Importance of Antitrust Law
The Paradox of Government in Neoliberal Thinking
4 Private Firms and Public Business
Privatization With or Without Marketization
Private Providers Compete With Public, But Within Publicly Funded System
Remoteness from the Private Sector
Conclusion
5 Privatized Keynesianism: Debt in Place of Discipline
Implications for the Shareholder Model
General Complicity in the Model
After Privatized Keynesianism: The Responsible Corporation?
6 From Corporate Political Entanglement to Corporate Social Responsibility
Corporate Social Responsibility as a Political Theory of the Firm?
7 Values and Civil Society
Civil Society
8 What’s Left of What’s Right?
Back to the State?
Beyond State, Market and Corporation
References
Further Reading
Index
Copyright © Colin Crouch 2011
The right of Colin Crouch to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.
First published in 2011 by Polity Press
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I am grateful to Joan Crouch for many years of listening to and contributing to the ideas in this book; to Mari Prichard for undertaking the hapless task of reading an earlier draft and trying to persuade me to turn social science English into something readable; to Mark Harrison for advising on one or two points of economics; to my colleagues and students in the International Centre for Governance and Public Management at the University of Warwick Business School, in teaching and otherwise working with whom I developed many of my arguments; and to Polity’s three anonymous referees, who gave such kind and constructive advice for improvement of my initial draft. Since I did not necessarily take the advice of any of these and they do not necessarily agree with me, they are not responsible for anything that appears here.
The financial collapse at the turn of 2008–9 seemed to mark a major crisis for the set of economic ideas that have ruled the western world and many other parts of the globe since the late 1970s. Those ideas are generally grouped under the name ‘neoliberalism’. There are many branches and brands of neoliberalism, but behind them stands one dominant theme: that free markets in which individuals maximize their material interests provide the best means for satisfying human aspirations, and that markets are in particular to be preferred over states and politics, which are at best inefficient and at worst threats to freedom.
The financial collapse challenged these ideas because it involved the world’s leading banks. They are profit-maximizers, acting in the purest of markets; how can they possibly not have contributed to the sum of human welfare in all that they did? How could it be that today’s financial markets, the most sophisticated form of the market probably in human history, could run into trouble of such a massive kind, when the most advanced economic theory had demonstrated that unregulated financial markets will be self-correcting? If we have been told, even by governments themselves, that government is far less efficient than firms in the market, and that the less involved government becomes in the market, the better, why did the banks go to governments for enormous sums of money to bail them out of their difficulties? And why did governments accept their arguments? Is it really true that big banks are ‘too big to fail’, and that governments and taxpayers must rush to help them if they get into trouble? But if that is so, are we not admitting that there are severe limits to what the market can achieve, and that neoliberalism has been found wanting in its central claims?
In 1936 George Dangerfield published a book entitled The Strange Death of Liberal England (London: Constable). It tried to explain the sudden collapse in the early twentieth century of the political ideas and political party that had dominated the late nineteenth century in that country. The equivalent task today is, however, not to explain why neoliberalism will die following its crisis, but the very opposite: how it comes about that neoliberalism is emerging from the financial collapse more politically powerful than ever. Whereas the financial crisis concerned banks and their behaviour, resolution of the crisis has been redefined in many countries as a need to cut back, once and for all, the welfare state and public spending. And the issue today is not limited to a single country, as neoliberalism is an international, even global, phenomenon. What we have to understand today is, therefore, the strange non-death of neoliberalism.
At the heart of the conundrum is the fact that actually existing, as opposed to ideologically pure, neoliberalism is nothing like as devoted to free markets as is claimed. It is, rather, devoted to the dominance of public life by the giant corporation. The confrontation between the market and the state that seems to dominate political conflict in many societies conceals the existence of this third force, which is more potent than either and transforms the workings of both. The politics of the early twenty-first century, continuing a trend started in the previous one and accentuated rather than weakened by the crisis, has become, not a confrontation at all, but a series of comfortable accommodations among all three. A central aim of this book is to show why a political debate that continues to be organized around market and state is missing the issues raised by this important phenomenon.
The political power of the corporation is seen most obviously in the extraordinary lobbying activity that takes place, primarily in the United States Congress, but also around many other legislatures and governments. It is also highly visible in the capacity of transnational firms to ‘regime shop’ when choosing in which parts of the world to locate their investments. But these phenomena are considerably reinforced by further factors. First is the increasing tendency of governments to subcontract delivery of many of their own activities to private firms, which then become involved in shaping public policy. Second is the growth of corporate social responsibility, a process whereby firms take on tasks going beyond conduct of their actual business, in effect again making public policy. Third is the one signalled at the outset: the way in which, far from casting doubt on the role of giant corporations, especially financial ones, in contemporary society, the financial crisis of 2008–9 has served only to reinforce their power.
I discussed some of these issues briefly in my book Post-Democracy (Polity, 2004), in which the power of the global corporation appeared as one of a number of factors that I saw as leading our democracy towards becoming something of an empty shell. Further developments in the factors listed above make it necessary to return to the theme, exploring further what happens to democracy and politics when many corporations become not just mighty pressures on, but major insider participants in, the political process. This is something which no economic or political theory defends or advocates in any way; but it is a central reality of our public life.
One consequence is that democracy is joined by the market as a kind of victim. This might seem surprising, as most political debate does not distinguish between the market and firms. But it is precisely in that lack of a distinction that several of our problems lie, rendering rather outmoded the confrontation between ‘state and market’ that occupies so much attention. One might talk of a triangular confrontation among state, market and the corporation, but I prefer ‘comfortable accommodation’. This is partly because corporate power makes it its business to bind them all together, but also partly because the only alternative to some kind of accommodation would be a rather wretched society, in which at least one of the three was crippled into becoming non-functional. It needs only a little reflection to realize how difficult life would then become.
It is not therefore the purpose of this book to argue that somehow we should rid ourselves of giant corporations. The odd bedfellows of Jeffersonian liberals and Marxists who would have sought such an outcome both belong to an unrealistic past. Instead, this book looks to a fourth force, the busy but small voices of civil society, not to abolish, but to criticize, harry and expose the misdeeds and abuses of the cosy triangle. This in no way promises a different social order from corporation-dominated capitalism, but, provided our societies remain open and vigilant, it can make life far better than states and corporations will do if left to themselves.
Badly, very badly, to misquote Andrew Marvell:1
Thus, though we cannot make the corporation
Stand still, yet we will make him run.
Note
1 Andrew Marvell (1621–78) ended his poem ‘To His Coy Mistress’ (a very different context) with the lines:
Thus, though we cannot make our sun
Stand still, yet we will make him run.
Most literature about subjects of this kind is written from the standpoint of someone showing how the world might be changed, either by the authors themselves if they ever got their chance, or by political leaders whom they hope to address. But very few people are ever in a position to change the world, and among those few are many who would change it for the worse. There is a far, far bigger audience of people who have to cope as best they can with the world they find. It is for them that this book is written. Post-Democracy originated in a pamphlet I had written for the Fabian Society, entitled Coping with Post-Democracy. The title was simplified for the book, but the intention was the same: how to cope with a world largely beyond the control of ordinary people. The present book is a sequel to Post-Democracy. It deals with some overlapping themes, and it is also addressed to those who have to cope.
Also like the earlier book, it is addressed to the general reader and is not an academic study. It does not therefore carry the important burden of references and footnotes necessary to scientific work, but just gives a few general references and ideas for further reading for each chapter.
Some of the chapters are attempts to produce more generally accessible accounts of my own academic work, in particular:
Chapters 2 and 4 draw on my chapter ‘Marketization’, in M. Flinders et al. (eds), The Oxford Handbook of British Politics (Oxford: Oxford University Press, 2009), pp. 879–95. This material is used by permission of Oxford University Press.
Chapter 3 makes use of my chapter ‘The Global Firm: The Problem of the Giant Firm in Democratic Capitalism’, in D. Coen (ed.), The Oxford Handbook of Business and Government (Oxford: Oxford University Press, 2009), pp. 148–72. This material is used by permission of Oxford University Press.
Chapter 5 is based extensively on my article ‘Privatised Keynesianism: An Unacknowledged Policy Regime’, The British Journal of Politics and International Relations 11/3 (2009): 382–99.
Chapter 6 makes some use of my article ‘Modelling the Firm in its Market and Organizational Environment: Methodologies for Studying Corporate Social Responsibility’, Organization Studies 27/10 (2007): 1533–51.
Chapter 7 makes some use of my chapter ‘Privates, Publics and Values’, in J. Benington and M. Moore (eds), Public Value: Theory and Practice (Basingstoke: Palgrave Macmillan, 2010).
