(After) Neoliberalism? Rethinking the Return of the State

Ishan Khurana & John Narayan

A number of commentators have recently suggested neo-liberalism is dead, or is in a process of retreat. During the disruption of global commodity chains caused by the Covid 19-pandemic, free-market policies that have dominated the global economy for the past 40 years appear to have less purchase. Here, authors point to a reversion to a national form of capitalism and protectionism, the questioning of globalization and return of state intervention in the economy. A prime example is the Biden regime’s approach to the US economy, which has turned to deficit driven social spending, expansion of union rights and protectionist measures to public procurement. This hasn’t come out of nowhere – with the neo-liberal global economy being zombie-like since the 2008 global financial crisis.

The fracturing of the global economy along national lines may herald conflict and a new cold war between the US and China. However, the retreat of neo-liberalism also seems to offer a possible opening – through a critique of globalization and a return of the state. Here, a rejuvenated politics of the left may be able to avoid the pitfalls of an emergent authoritarian capitalism and launch a new national form of progressive politics around welfare policies such as the Green New Deal and Universal Basic Income in locations such as the UK and US.

… missing from these debates about its demise is a discussion of neo-liberalism in the Global South

Neo-liberalism is in trouble, but missing from these debates about its demise is a discussion of neo-liberalism in the Global South and, thus, the reality of what the crisis of neo-liberalism means for all rather than simply those within the Global North. 

The erasure of the Global South in the ‘end of neo-liberalism’ discourse is curious. Neo-liberal processes in the Global North, such as deindustrialization, privatization and state retrenchment are dependent on dispossession, disarticulated Fordism and super exploitation and forced labour in the Global South. Neo-liberalism was part of a global economic counterrevolution, exported into the Global South through the IMF and the World Bank’s structural adjustment policies.

These programs enforced neo-liberal practices (austerity, privatization, liberalization) through loan conditionality and locked nations in the Global South into asymmetric and exploitative economic relations with economies and multinational corporations in the Global North. Moreover, neoliberal globalization replaced the Third World’s idea of a New International Economic Order as attempts to equalize the global economy fell apart during the debt crisis of the 1980s.

Neo-liberalism and the regime of globalization it has underpinned for the last 40 years, then, is best seen as a form of imperialism – transferring immense value from the Global South to the Global North. In their recent book Capitalism and Imperialism [1],  Utsa and Prabhat Patnaik,  for example, argue that capital accumulation in the Global North is shown to be historically dependent on an imperialist relationship that keeps petty producers and workers of the Global South in a spiral of income deflation – to ward off inflation and maintain the value of money in the North. The neo-liberal regime restored the income deflating mechanism of the colonial era – which had partly been disrupted by Third World dirigiste regimes in the 1960s and 1970s- through the power of international finance institutions and neo-liberal regulation to ward off the higher prices of raw materials and higher wages and purchasing power in the global south.

When viewed through the lens of imperialism, the end of neo-liberalism reads somewhat differently

When viewed through the lens of imperialism, the end of neo-liberalism reads somewhat differently. Writers such as James Meadway point to the US recently giving weight to a potential TRIPS waiver at the WTO that would allow patents for Covid-19 to be temporarily suspended as proof of neo-liberalism’s coming demise. The reality is that a year on from the attempts by India and South Africa to achieve a patent waiver, multinational corporations, such as Pfizer, have been able to successfully lobby for patents to be maintained.

In the meantime, the Global North has begun providing booster shots for its population whilst many countries in the Global South, particularly on the African continent, struggle to secure first vaccine doses for their populations. Further, countries such as South Africa and India have been key producers and exporters of vaccines for Northern corporations and populations. The global economy may be changing but the architecture of global governance is still founded on imperial interests.  

But we can push this view of the end of neo-liberalism in the Global South further through the prism of the Patnaik’s view of imperialism and income deflation. Here the current crisis of neo-liberalism centres on the fact that it does not have growth mechanisms other than asset-price bubbles. With the so-called return of the ‘Keynesianism’ in the guise of the Biden regime’s stimulus packages for the US, which come on the back of Trump’s own stimulus packages, Prabhat Patnaik argues that the imperial tendency would be to control inflation in the Global North by imposing income deflation in the Global South:

‘So we may end up having a situation where there is Keynesianism in the First World and austerity in the Third World. Now that is something which is again really going to really worsen the plight of the working people, peasants, workers and so on in the Third World. Actually makes matters much worse. That is something which is a fallout of, if you like, what the capitalist solution might actually lead to’ [2]

The power of international financial institutions such as the IMF during the Covid-19 pandemic suggests such a tightening of imperialism. As the Covid 19 pandemic took hold of the global economy, disrupting supply chains and throwing economies into reverse, nations in the Global South again turned to the IMF. As with the 2008 Global Financial Crisis, the IMF seemingly responded to the Covid-19 pandemic with arguments for stimulus on health and social expenditure. 

However, research from Oxfam suggests that much like the fallout of the 2008 Global Financial Crisis the IMF has returned to recommending austerity and neo-liberal orthodoxy in the Global South once the pandemic subsides. Oxfam’s research discloses that 85% of the 107 loans negotiated in 2020-21 between the International Monetary Fund (IMF) and 85 national governments in Sub-Saharan Africa, the Middle East and North Africa, Latin America and the Caribbean and Eastern Europe, indicate plans to undertake fiscal consolidation after the pandemic. It may very well be that the income deflation of the South is already taking shape alongside the ‘return of the state’ in the Global North.

Reading the crisis of neo-liberalism through the lens of imperialism raises questions about the so-called end of neo-liberalism. There is no coincidence that those who will not receive Covid vaccinations until 2022/23 whilst rich nations offer third ‘booster’ vaccinations are in the Global South. But the imperial factor also raises the spectre that the return of the state in the Global North – and welfare ideas attached with this return such as Green New Deals and Universal Basic Income – may be tied to further immiseration of those in the South. 

The sustainability of the British welfare state currently relies upon imperial relations of production which, through cheap labour and resource extraction in the Global South, make consumer goods affordable with current levels of wages and welfare payments. Once again following Utsa and Prabhat Patnaik, we discuss the impact of an increase in supply price on the affordability and availability of key consumer goods, and the implications of the consequent depreciation in purchasing power at a fixed level of welfare payments. 

Within the UK economy, the primary source of income for most households is through the labour market (supplemented in the case of low pay through universal credit). For households that cannot access the labour market due to a lack of jobs, illness and disability or because of retirement, income is primarily in the form of state benefits (including state pension – though of course there are private pensions for some).

The adequacy of the amount of money paid out depends on the price of consumer goods as the role of these welfare payments is to ensure that the recipients can purchase necessary items and services on the market. A rise in the supply price of things like food, fuel, clothes, or transport threatens the effectiveness and viability of the welfare system to meet needs. 

Many of these goods reach the UK through global supply chains and are produced by workers in former colonies and neo-colonies under conditions of super-exploitation, commonly characterised by the prevalence of unfree labour, starvation wages, or work days lasting over 14hrs. And, as discussed earlier, the social relations in the Global South that provide the foundations for this super-exploitation were shaped through European colonialism, resisted during decolonisation, and have been violently reasserted through ongoing neoliberal interventions.

… super-exploitation is well documented and rife in the supply chains that produce the goods sold to British consumers

Such interventions have of course been resisted, one can point to the recently successful farmers’ protest in India against attempts to further entrench neoliberal practices in one of the world’s largest agriculture markets. Be it conditions of workers in electronics factories in China, garment workers in Bangladesh, cocoa growers in Ghana, or tea producers in India, super-exploitation is well documented and rife in the supply chains that produce the goods sold to British consumers.

It is important to highlight this, not only because such imperial relations of super-exploitation lead to vast profits for the companies utilising such labour, but crucially because it is an essential feature in the global economic architecture responsible for the provision of cheap consumer goods in Global North at prices affordable for consumers and profitable for retailers.

Crucially, an increase in wages in the global south without a rise in productivity would inevitably lead to a rise in inflation in the imperial cores through an increase in the costs of production. Such an increase in inflation in the UK without an associated income rise implies a decline in real incomes for UK households and therefore a reduction in their purchasing power. Therefore, under conditions of rising inflation, adequate cash payment levels (e.g. pensions, disability payments, fuel allowances), minimum and living wage levels, as well as the costs of welfare services like the NHS would all have to see a rise. 

This includes any future cash transfer policies like Universal Basic Income that are often proposed by social democrats in Global North countries as a counter to the neoliberal order. Although such a policy can amount to desirable income redistribution within the national economy, if paid for through taxes on wealthy individuals or corporations, achieving the desired effect of raising living standards still relies on inflation being kept under control, and therefore (under the current systems of production) would rely on continued income deflation in the Global South.

It has also been proposed that such cash transfer policies could be funded through sovereign wealth funds that would pay out a Basic Income through returns on investments made. If composed in ways similar to existing sovereign wealth funds, such an implementation would further entrench the link between value extraction in the Global South by multinational companies and welfare in the North and would hardly represent a move away from neoliberal structures. 

Similarly, the popularity of policy proposals like the Green New Deal are also hailed as a sign that the neoliberal consensus is breaking down. However, as Max Ajl has outlined in his recent book A People’s Green New Deal, the green social democratic project’s promises (like a million electric cars) can only be kept through continued imperial extraction of critical materials. Therefore, making no change to the Global North’s dependence on resource extraction from the Global South and by extension the contemporary neoliberal structures that facilitate this extraction. Paraphrasing George H.W. Bush, from the perspective of commentators in the Global North, the American (or indeed European) way of life is not up for negotiation.

This is exemplified in the regime of bordering that has defined the neoliberal period and its role in maintaining a racialised access to the welfare state. As Nadine El Enany has outlined in her book (B)ordering Britain, the 1970s and 1980s (the decades post-decolonization commonly associated with the advent of neoliberalism) see the British state introducing immigration controls targeting racialized subjects and commonwealth citizens. This border regime now excludes migrants from welfare state – through short term visas and no recourse to public funds policies – whilst using their labour to fill shortages in the very welfare state they are now excluded from accessing.

… the bordering practices of the neoliberal era are a central part of the existing neoliberal political economy

Such controls on the flow of labour through bordering are part of the same architecture that requires unrestricted global flows of capital. While many newly independent Global South nations were subjected to IMF and World Bank structural adjustment programs leading to imposed austerity and neoliberal policies, the ability for labour in these nations to move to the imperial core was heavily restricted. Although often neglected, we argue that the bordering practices of the neoliberal era are a central part of the existing neoliberal political economy. It is through both bordering the Global North and neoliberal interventions in the Global South that the imperial nations can maintain their welfare.

Commentary on contemporary political economy in the UK that ignores the relation between neoliberal restructuring in the periphery and the prosperity of the core can naturally lead to premature claims that a rise in welfare state spending in the imperial centres signals an end to neoliberalism. Therefore, to avoid such parochial Eurocentrism, we reiterate the need to situate analyses on national economies within an understanding of the global economic system and its imperial underpinnings.

Indeed, given the recent victory of the Indian farmers over neo-liberal policy in India the stage for the end of neoliberalism for all of the world appears ever closer. But it these agents of change, rather than the old white men in charge of western nation states, and their needs and desires that must be included in any future horizon we wish to head towards. Anything else, regardless of being or not being neo-liberal, is simply imperialism.


[1] Utsa Patnaik and Prabhat Patnaik (2021) Capitalism and Imperialism: Theory, History and the Present. Monthly Review Press.

[2] Lynn Fries and Prahbat Patnaik (2021) ‘Imperialism then and now: Capital relocation, inequality, encroachment and protracted crisis – Part 3/3Monthly Review Online

Ishan Khurana is a Connected Sociologies Sociological Review Fellow working on the Connected Sociologies Curriculum Project, a PhD student at UCL working on the LUX-ZEPLIN dark matter experiment, and a co-organiser of Consented. He has previously worked as a Data Researcher at the think tank Autonomy.

John Narayan is a Lecturer in European and International Studies at King’s College London. His most recent research has focused on the understudied transnationalism of US and British Black Power and the political theory created by groups such as the Black Panther Party. He also sits on the Editorial Working Committee of Race and Class.

Header Image Credit: Randeep Maddoke, Wikimedia Commons


Khurana, Ishan and John Narayan 2021. ‘(After) Neoliberalism? Rethinking the return of the State’ Discover Society: New Series 1 (4): https://doi.org/10.51428/dsoc.2021.04.0003