PIG IRON 2: The Rise and Fall of Neo-Liberalism

Essay Two — The Winning Idea and Its Exhaustion

Why Neoliberalism Won, Why Populism Followed, and Why Neither Has Answers

Let us start with something the left finds genuinely difficult to say and most needs to say.

Neoliberalism got some things right.

Not the caricature version — the cartoon of pure greed dressed as theory, the Thatcher handbag, the Reagan smile, the shock doctrine imposed on populations who never voted for it. That version is real enough as history. But it is not the whole story and treating it as such has been one of the left’s most consistent and most costly intellectual failures.

The serious version of the neoliberal argument deserves to be stated seriously before it is contested. Central planning has genuine information and incentive problems that markets handle better. Prices do something genuinely remarkable — they aggregate the dispersed, localised, tacit knowledge of millions of individuals and translate it into signals that coordinate economic activity across vast distances without any central authority needing to understand or direct it. They actualise trust and drive progress. Friedrich Hayek’s insight here was real and important and is not diminished by the uses to which it was subsequently put.

Competition, under the right conditions, does drive innovation, efficiency and the elimination of waste. The postwar Keynesian settlement, for all its genuine achievements, had real rigidities — restrictive practices that served producers rather than consumers, public institutions captured by their own bureaucratic imperatives, inflation used as a lazy substitute for structural reform. The frustrations that Thatcher and Reagan mobilised were not manufactured from nothing. They were responses to real institutional failures that the left, too comfortable in its postwar settlement, had stopped taking seriously.

The intellectual honesty to acknowledge this is not weakness. It is the precondition for being taken seriously about everything that follows.

But the serious version of the neoliberal argument was not what won.

What won was something more ambitious and more politically effective than a set of economic propositions. What won was a story. And the story was extraordinarily good.

Freedom. Your money. Your choices. Your life. Against the bureaucrat who thinks he knows better. Against the union that holds you to its collective interest whether you share it or not. Against the state that takes your earnings and distributes them to people you didn’t choose to support. Against the paternalism — sometimes caricatured, sometimes entirely real — of institutions claiming to serve you while primarily serving themselves.

This story had genuine moral force. The experience of bureaucratic condescension — of being processed, categorised, managed by institutions with more concern for their own continuation than for the people they were supposed to serve — was real and widely shared. The left’s response, which was largely to defend those same institutions without acknowledging their failures, was both politically and intellectually inadequate. You cannot win an argument about freedom by defending unfreedom, even when the unfreedom is more complicated than the story makes it sound.

The story also had a fifty-year runway before it reached power. This is the part that is least understood and most important for understanding what any serious alternative requires.

The Mont Pelerin Society met in a Swiss hotel in 1947. Hayek, Friedman and a small group of economists, philosophers and journalists gathered to develop and sustain what they understood as a minority intellectual position in a world dominated by Keynesian consensus. They were not naive about the relationship between ideas and power. They understood that ideas needed institutional infrastructure — think tanks, academic departments, journals, networks — to travel from seminar rooms to policy documents to political programmes to common sense. They built that infrastructure patiently and deliberately over three decades. The Institute of Economic Affairs in London. The Heritage Foundation in Washington. The Adam Smith Institute. Mont Pelerin alumni seeding economics departments across the English-speaking world.

By the time Thatcher came to power in 1979 the ideas were ready. The intellectual work had been done. The policy proposals were detailed and specific. The narrative was polished. The personnel were trained and waiting. Thatcher did not create neoliberalism. She was the political moment that decades of patient intellectual and institutional work had been preparing for.

That timeline — 1947 to 1979, thirty two years — is the most important number in understanding what any serious alternative requires. Not a better argument. Not a charismatic leader. Not a crisis that reveals the existing arrangement’s failures. All of these are necessary. None of them is sufficient without the patient, unglamorous, long-term construction of intellectual and institutional infrastructure that makes ideas travel.

The material results came. And they were real enough to sustain the narrative for a generation.

Consumer abundance in the 1980s and 1990s. The fall of the Berlin Wall — whose timing was exquisitely convenient for a narrative that identified markets with freedom and planning with tyranny, regardless of the complexity of the actual causes. The apparent vindication of Western capitalism against Soviet planning. China’s extraordinary growth — actually the product of aggressive state direction of capital investment, which bore almost no resemblance to the neoliberal model but was narrated as market liberation anyway.

And for billions of people globally, genuine improvement. The reduction of extreme poverty over the last forty years is real. Life expectancy, child mortality, access to medicine and education — these improved across large parts of the developing world during the period of globalisation. The causation is complex and contested. The improvement is not. Dismissing it, as some on the left reflexively do, is both intellectually dishonest and politically self-defeating. People who experienced that improvement, or whose families did, are not wrong to value it.

What was not real was the distribution. The growth was genuine. Its fruits accumulated with extraordinary concentration at the top of the income and wealth distribution. The Gini coefficient — the standard measure of inequality — rose in almost every advanced economy from the late 1970s onward. Labour’s share of national income fell. Capital’s share rose. The financial sector value added grew from roughly 4% of the American economy GDP in 1980 to over 8% by 2008, extracting an ever larger share of economic output while contributing an ever smaller share of productive investment.

The financial sector’s share of total US corporate profits went from roughly 10% in the early 1980s to over 40% by the mid 2000s. Finance had become not one sector among many but the dominant profit centre of the entire economy. (Add technology and the picture becomes more concentrated still. By 2024 the six largest technology companies alone had a combined market capitalisation exceeding the entire GDP of every country on earth except the United States and China).

And then 2008.

The financial crisis of 2008 should have been the moment the narrative broke.

In a just intellectual world, the collapse of the global financial system — built on precisely the deregulated, self-correcting, efficiently pricing markets that neoliberal theory predicted could not fail — would have discredited the theory as thoroughly as the Berlin Wall’s fall had discredited Soviet planning. The “market” had spoken, as its advocates liked to say. What it said was — we have created a system so fragile, so interconnected, so dependent on the perpetual inflation of asset prices, that its collapse required the largest peacetime state intervention in history to prevent.

The banks were saved by the state. Their losses were socialised onto public balance sheets. Their executives retained their bonuses. Their shareholders were largely protected. And then, with a speed and completeness that remains breathtaking in retrospect, the political and intellectual establishment pivoted from rescuing the financial system to demanding austerity from the public that had rescued it.

This was not an accident. It was the operation of a by-then deeply embedded intellectual and institutional infrastructure. The think tanks, the economics departments, the financial press, the Treasury orthodoxies — all oriented toward a set of conclusions that austerity confirmed and that any serious reckoning with what had actually happened would have challenged. The ideas had become, in Gramsci’s precise sense, common sense. They did not need to be argued for because they were the water in which the relevant fish swam.

The left’s response was analytically correct and politically catastrophic. It explained the crisis accurately — the deregulation, the incentive structures, the captured regulators, the moral hazard of implicit government guarantees. It had almost no political traction. Because explanation without narrative is a lecture. And lectures, however accurate, do not move people who are frightened, angry and looking for someone to blame.

Into that vacuum walked populism.

And here it is worth being precise about what populism actually is, because the word has become so broadly applied as to be almost meaningless.

Populism, properly understood, is not a set of policies. It is a political logic. It divides society into two groups — the pure people and the corrupt elite — and claims that politics should be the expression of the popular will against elite betrayal. This logic is available to both left and right. Chavez and Trump, Corbyn and Orbán, Podemos and the Rassemblement National — all are in some sense populist in this technical sense, despite the vast differences in their actual programmes and moral character.

What made right-wing populism more electorally successful in most Western contexts after 2008 is a question worth sitting with seriously rather than answering with condescension.

It had a clearer enemy. The metropolitan elite, the liberal establishment, the cosmopolitan class that looked down on ordinary people while selling their jobs to China and their communities to developers — this enemy was identifiable, emotionally resonant and close enough to real to be genuinely persuasive. The actual causes of deindustrialisation, wage stagnation and community disintegration — the structural dynamics of financialised capitalism — are complex, diffuse and resistant to the kind of narrative simplification that political mobilisation requires. The immigrant, the bureaucrat, the distant liberal — these are simple. Simple wins.

It spoke to real experiences of loss. Not just economic loss, though that was real enough. Loss of status, of predictability, of the sense that the rules were fair and that playing by them led somewhere. The communities that voted most heavily for Brexit and for Trump were not, in most cases, the most economically deprived. They were communities that had experienced relative decline — that remembered something better and felt the distance between that memory and the present as a daily indignity.

Indignity. We will return to that word. It is, we will argue throughout this series, the key to understanding both what has gone wrong and what a serious alternative needs to address.

And right-wing populism, for all its fraudulence about solutions, was at least speaking the language of felt indignity. The left, increasingly comfortable in metropolitan professional culture, had largely stopped doing so.

The left’s sleep — to use the image from our manifesto — was not simply an electoral failure. It was an intellectual and organisational one that preceded and produced the electoral failures.

Deindustrialisation destroyed the sociological base of the left — the unions, the working men’s clubs, the dense working class communities where collective identity and collective action were reproduced across generations. This was not accidental. The Thatcherite assault on trade union power in the 1980s was explicitly understood by its architects as an attack on the organisational infrastructure of the Labour movement as much as on any specific set of labour market rules.

With the base went the transmission mechanism — the means by which political ideas reached the people whose interests they were supposed to serve. The party became professionalised. Special advisers replaced shop stewards. Focus groups replaced branch meetings. The voter became a consumer to be targeted rather than a citizen to be organised.

Then the Third Way accommodation to finance capital hollowed out the programmatic content. Blair, Clinton, Schröder — the dominant centre-left politics of the 1990s and early 2000s — essentially told the working and middle class that the financial sector’s preferred economic arrangements were not just inevitable but desirable, with redistribution at the margins as compensation. Gordon Brown stood in the City of London and praised its “financial creativity.” He was not being cynical. He believed it. That was the deeper problem.

The result was that when 2008 created the legitimacy vacuum — when the financial system whose creativity Brown had praised collapsed and required public rescue — the left had neither the organisational base nor the coherent programme to fill it. The energy went elsewhere. Into Occupy, which named the 99%/1% dynamic with real precision but had deliberately rejected programmatic politics. Into identity politics — not because identity doesn’t matter, it does, but because it became the available language of grievance when class politics had been so thoroughly dismantled. Into the brief, remarkable insurgencies of Corbyn and Sanders, which demonstrated that the appetite for something genuinely different existed but could not convert it into durable coalition or institutional power.

Which brings us to now.

The populist moment is not over. It would be dangerously complacent to read the defeat of specific populist politicians — and many have not been defeated — as the exhaustion of the populist impulse. The conditions that produced it have not been resolved. The inequality is greater. The institutional distrust is deeper. The demand deficit is more entrenched. The climate crisis, largely unaddressed, is beginning to produce the economic disruptions — extreme weather, supply chain fragility, resource competition — that will generate new waves of fear and anger.

But there is a contradiction at the heart of economic nationalism that is becoming visible in real time. You cannot simultaneously assert that your nation has been uniquely victimised by the global economic order and that other nations making the same assertion are your enemies rather than your allies. You cannot simultaneously promise to restore manufacturing jobs through tariffs and maintain the consumer abundance that cheap global supply chains produce. You cannot simultaneously denounce the establishment and govern in its interests, as every populist government has ultimately done. You cannot deliver on empty promises to Labour as producer and consumer and to Capital.

These contradictions are not fatal to populism as a political form — political contradictions rarely are, in the short term. But they create the conditions for disillusionment. When the tariffs produce inflation rather than jobs. When the promised restoration does not arrive. When it becomes clear that hating someone else is not, in the end, going to pay the bills — the question of what fills the resulting vacuum becomes urgent.

History’s answer to that question is not reassuring. Disillusionment with failed populism does not automatically produce thoughtful progressive politics. It can produce deeper radicalisation, the search for more extreme versions of the same politics, exhausted depoliticisation, or — in the worst cases history offers — something considerably more dangerous than what preceded it.

The 1930s parallel is overused but not wrong. What made that decade catastrophic was not the Depression itself. It was the political economy of response — the absence, in most places, of institutions with sufficient legitimacy and a coalition with sufficient coherence to channel legitimate grievance into systemic reform. Where that coalition existed — Roosevelt’s New Deal, Scandinavian social democracy emerging from intense labour-capital conflict — the outcome was genuinely transformative. Where it did not — Germany, Italy, Spain — the outcome was something else entirely.

So where does that leave us?

With a set of questions that are more urgent than the current political conversation in almost any country is equipped to address.

Who builds the intellectual and institutional infrastructure that a serious alternative requires — understanding that it will take decades rather than electoral cycles, and that the moment of political opportunity will come before the work is finished and has to be met with whatever has been built so far?

Who carries the narrative — not the explanation, not the programme, not the policy document, but the story that speaks to felt indignity, that names the actual beneficiaries of the current arrangement clearly and without apology, that offers a direction rather than a destination?

Who builds the coalition — across the still-functioning democracies, across the remaining institutions, across the divide between those inside the system who understand its fragility and those outside it who bear its costs?

And how do you do all of this without reproducing the failures — the condescension, the vanguardism, the progressive impatience, the treatment of people’s actual political choices as false consciousness requiring correction — that have undermined every previous attempt?

These questions do not have clean answers. They have directions. And the direction these essays are trying to map runs through a concept that is both simpler and more radical than most current political language allows.

Dignity. Not as sentiment. Not as aspiration. As political economy. As the set of material, social and political conditions under which people can actually flourish in the ways they themselves report mattering. As the thing that the current arrangement systematically denies and that a serious alternative systematically provides.

The bond trader sings in the bath. The hedge fund manager has a mother he phones on Sunday. The think tank economist has a child whose future he worries about in the dark. These are not contradictions of their professional identities. They are the human substrate that those identities have been carefully constructed to suppress in the relevant contexts.

The question the rest of these essays keep returning to is not — are these people evil? They are not. The question is — which self do they want organising their lives? And what institutions, what stories, what political economy would make it easier to choose the one that sings in the bath over the one that prices the risk?

That is not a small question. It is, in the end, the only question.

Next: Essay Three — The Arrangement and Its Costs. Harvey, alienation, and why the three existential contradictions are existential.

The manifesto these essays argue toward — Listen to Me — is on this blog. The gaps in these arguments are real and acknowledged. If you see them, say so. The conversation is the point.