What is neoliberalism – and how do we escape it?

A LOT of people seem to think we live in a capitalist society and that many of the things harming society are the fault of capitalism. However, that only makes sense if you believe we live in a capitalist society – we haven't for a couple of decades now.

Don't get me wrong, capitalism failed (so did socialism). But instead of replacing the failed economic approaches of the last century the world just kept going with an unworkable mutation of capitalism called neoliberalism. This has created a zombie-economy in the Global West with the most committed neoliberal nations being thrown into a slow political and economic death spiral.

The reason this isn't widely recognised is that in the past when the economic system was no longer fit for purpose, a new approach, fit for the times, was swiftly implemented. After the great depression, Keynesianism and the new deal and after Second World War the Bretton Woods Conference opened the floodgates to global trade and ended the gold standard.

However, after the financial crash of 2008, nothing. We just kept on going with a failed economic system. Politicians across the mainstream political spectrum keep pushing that failed ideology till this day, hence the zombie-economy.

The three big reasons

Firstly, people don't know about it. Most still assume the values of old capitalism (some good, some bad) are still at play but they are not.

This is because neoliberalism operates like a virus, it infected capitalism, took control of it and no one noticed as it remained largely anonymous. It's hard to oppose something you don't know the name of.

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Secondly, it became more of a religion than an economic theory. Neoliberalism's mantras of small government, deregulation, globalisation, financialisation and deregulation have become faith-based ideas that politicians feel they can apply to all situations (hence Brexit). They had accrued the status in the majority of academic and political circles of the laws of physics, or universal truths that must not be challenged – but that is changing.

Finally, in 2007/8 there was no new progressive economic paradigm ready to replace it. Why not? Because, any enlightened system that looks to address the ailments of the world today and create an economy that can still function whilst addressing climate change doesn’t benefit the super rich. So the media doesn't champion it and big business/oligarchs don't throw millions at fake think tanks to lobby for it.

Neoliberalism simultaneously became the dominant ideology and anonymous as its emergence came at a time where TV debates were changing the very nature of politics, creating cults of political personality.

Neoliberalism’s political champions lent their names to the theory. We know the early iterations of neoliberalism as Thatcherism (UK) and Reaganomics (US).

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When their reigns ended you could be forgiven for thinking that the ideas they named died with them but they just became an anonymous unchallenged set of values underpinning everything. Tony Blair and Gordon Brown accepted the neoliberal mantra and New Labour killed the left in the UK. Clinton was the same in the US.

The left’s Dead Cat Bounce

In the UK no serious challenge to neoliberalism was mounted for decades. Jeremy Corbyn emerged following the banking crash, too little, too late and with a socialist platform too anchored in the past. Now Keir Starmer’s Labour are doubling down on neoliberalism, just as Tony Blair did.

Starmer’s election promise is to be more Tory than the Tories, which in all likelihood will work (in England) and may well make some inroads in Scotland's central belt. Sadly, these are the areas most negatively impacted by Westminster's neoliberal approach, and its consequent, inequality, austerity, recession, Brexit and cost of living crisis.

Even though the neoliberal outcomes are demonstrably bad for society, the economy and the environment, many people will vote for more of the same, but from a different party. It's a matter of faith that there is no alternative.

There is a better way

I wish I could tell you that an alternative system has been accepted that will change everything in double quick time but there is still work to be done.

The wellbeing economic approach is this century's big idea. It recognises that the neoliberal rules were written by politicians and interest groups that benefited from them. It recognises they are not gospel and can be rewritten by civic society, environmentalists alongside progressive business groups, commentators and enlightened politicians. We can find a balance between the trifecta of society, the environment and the needs of business.

The idea that economic growth conquers all evils will be consigned to history, replaced with one that realises that a nation's wellbeing is based on finding balance within that trifecta. Embedding the values of a wellbeing economy in the rules and regulations and performance frameworks that manage the operations of a government takes time.

It's also a sad truth that the nations that are most interested in doing this work are smaller nations such as Iceland, Norway, Sweden, New Zealand and nations such as Scotland and Wales that currently don't have the power to make the changes the nation’s need.

So the work goes on, we will keep championing the wellbeing economy and independence. The breakthroughs will come.

Gordon MacIntyre-Kemp is the CEO of Business for Scotland, the chief economist at the wellbeing economics think tank Scotianomics, the founder of the Believe in Scotland campaign and the author of Scotland the Brief.