We live in a time of economic and political chaos: from the Covid pandemic, to the war in Ukraine to the ever more visible effects of climate change, many adverse events that were thought impossible have become ever more likely. Amid this situation of flux some of the familiar coordinates of the last decades –such as the idea of a global world of open markets and relative peace– seem to come into question leaving us with a sense of profound disorientation in which it becomes increasingly difficult to think about the future.

For Adam Tooze, the author of some of the most influential economic books in recent years from Crashed to Shutdown we need to look at our era as one of "polycrisis", in the sense of convergence of multiple crises. But crisis does not necessarily bring change. Amid the resulting political chaos neoliberalism and globalisation are coming under attack; but more than being completely abandoned –as some contend– they are undergoing a process of adaptation. For Tooze, more than breaking free of globalisation, we are witnessing a radical reconfiguration of global interconnectedness, and while some neoliberal tenets have been abandoned, the main purpose of policy-makers the world over continues to be defending corporate interests and the stability of financial markets. For a real social change, we cannot simply wait for the crisis to continue; rather we should support political efforts to construct institutions and organisations that can empower workers and redefine a balance of forces that over the last decades has been overwhelmingly stacked against them.

Paolo Gerbaudo.- Since the pandemic we have been witnessing major upsets to the economy, now only made worse by the war in Ukraine. Furthermore, we are seeing some quite unconventional policies being adopted by governments, both in terms of fiscal policy, commercial policy and industrial policy. For some people it is neoliberalism as such which is breathing its last; but is this really the case?
 

Adam Tooze.- We need to separate different levels. Neoliberalism's core ideological content, certain basic shibboleths, certain basic intangible foundations and assumptions seem indeed to have been invalidated. This was not so much as result of an ideological shift, but simply because of the full force of reality, because of the evidence of systemic interconnected crises and instabilities which were not supposed to be there. Think about the way we are now obsessing about things like supply chains and nitty-gritty, the input-output diagrams of the world economy due to the disruptions that are affecting them; or the way the entire world economy seems to balance on the vaccine research programmes, and every state in the world is picking winners left, right and centre, going against normal neoliberal recipes.

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This was not an ideological choice but more of an emergency choice, a reflection of necessity: what else were we supposed to do? We needed vaccines and we needed them as quickly as possible so of course we had to pick winners. And it turned out that picking winners worked, with some programmes working better than others. This type of government action raises doubts about the Hayekian fatwa against looking too deeply at what the economy is, the idea that the economy is too complex to be controlled and that the wisdom of humanity should be not to engage in those kinds of analysis.
 

There are now entire teams of people in every government around the world that are doing jobs which neoliberals said they should never be done: for example, trying to actively deblock Los Angeles port. That’s not something neoliberals think the American government should be in the business of, but I know for a fact that there is a crack team in Washington trying to do precisely that.

P. G.- Yet, you seem to remain unsure as to whether this is a complete departure from neoliberalism, not only in ideology but also in actual policy practice. Why is that the case?
 

A. T.- This is because I think neoliberalism was always somewhat different from its ideology. Every smart analysis of neoliberalism has always insisted that it is Janus-faced. Neoliberalism had a bulldozer face, a militant and military dimension involved crushing and destroying opposition that stands in its way and then it has a more a regulative or stand-back dimension which revolves around governing at a distance also through the use of various technologies. At this second level, I see many continuities with neoliberal practice.

For example you look at vast spending programmes such as those in the United States in the last two years, they could be described as welfare without the welfare state. The thing the state would really like to do is to just send you cash through a digital connection, with citizens having an account with the central bank as theorised by some proponents of Modern Monetary Theory. This is also the logic of universal basic income, a measure that was also advocated by neoliberals such as Milton Friedman, through negative taxation where you basically create a single tax scale that adjusts all the bottom incomes up which what Americans do through the tax credit system. This is very different from traditional social-democracy o where you had a broader structure of welfare and government office would show up somewhere and contribute to organise society; what is more it is not all interested in redistributing power in society. The state simply wants to ail social problems by sending small money without doing anything else.

 

P. G.- Another front where some of the assumptions of the neoliberal era seem to be crumbling it is globalisation and its ability to act as a stable framework for the economy at the international level.
 

A. T.- Indeed, I think this is really the level where neoliberalism has really

problem. For the West the lesson of the Cold war seemed to be that the economy is on our side and this view informed the development of globalisation. The logic of the neoliberal market extension, market deepening, market widening programmes over the last decades was to hold as many pieces into the system as possible in a common market, because doing so ultimately ensured that the system centred on Washington. But the integration of China and of Putin's Russia, and the frictions they created

have ended up revealing that the process of globalisation was not politically neutral, but that was tied to geopolitical competition that is now becomingever more apparent.

P. G.- Terms like reshoring and onshoring (as the opposite of offshoring) have become very popular among commentators to express the idea of a reversal of globalisation or a de-globalisation, but is this really the case?

 

A. T.- We need to look at things with a sense of historical perspective. The peak, the great surge in global supply chains and their complexity was really a phenomenon of the 1990s and the 2000 and it is now declining. The surge had two really dramatic manifestations in the auto supply chains and the microchip supply chains which are quite different. The auto supply chain was always regional; there is the North American system, with Mexico and the United States; there is a European one, and there is an East Asian one.


 

With microchips and smartphones there is a more globalised one that is

overwhelmingly centred in East Asia. Now we are seeing some of this interconnectedness coming into question, largely as a consequence of growing geopolitical competition between China and the US. All big US capital agglomerations that were following a logic of live and let live with China, which was hugely profitable of course, are now in the political crosshair. It is not obvious whether any of that globalised business model is viable going forward. Yet, things are changing in complex ways. We have not yet seen the great unravelling of globalisation. There is a discursive shift, I completely agree on that. But Apple’s supply chain and Hollywood is

yet to move out of China, big flows of money from players such as BlackRock continue into China, JPMorgan has not fundamentally distanced itself from its engagement with China. At the moment it looks more like a reconfiguration of globalisation.

 

P. G.- As some aspects of globalisation are coming into question we are also seeing greater growing intervention in commercial policy and industrial policy, and the re-organisation of supply chains seems to be central to this. Some countries like China are also talking of a dual circulation policy to protect some sectors of the economy such as energy, food and technology from global competition. What do you think about these developments?
 

A. T.- Governments are playing a huge role in the transformation of supply chains. With regards to microchips this is spectacular but also effective with regards to EVs, where you see states hassling auto makers towards a future of energy transition, and now a very realistic and very concrete plans for transition over the next 15 years, with governments setting the parameters for that. Obviously, this happens not with governments doing this single-handedly but more through corporatist consultations with the firms themselves. But indeed, it is quite a dramatic development. Or think about the 50 billion euros investment in microchips in the EU.

However, also on this front it is not the end of globalisation, when you try to tempt

manufacturers, such as Taiwanese manufacturers to locate plants in your part of the world. As for protectionist policies, what is becoming apparent is that also at the height of globalisation some sectors were always protected and never completely working according to a global market logic. Think about energy: the big suppliers of oil and gas are state-owned enterprises everywhere such as Petrobras, Saudi Aramco, SinoPec, the Indian coal company etc. As for technology, many of these markets are not really competitive but heavily influenced by governments' innovation policies at the research and development end as shown by Mariana Mazzucato and monopolistic or oligopolistic at the consumer end.

We are also becoming aware of the actual quantitative limits of globalisation. In the case of the US it has never actually been a very globalised economy compared to other countries; but you would never guess from the amount of discursive energy

that is spent arguing over trade policy. Even the China shock in comparison to the scale of the US economy has been a relatively modest thing. It has been a political choice from all sides to attribute the ills of the working class under neoliberalism to the China Shock.

P. G.- Perhaps the most evident form of government interventionism we are now witnessing is the use of indicative planning around climate change, with programmes to reduce emissions and move to renewables. Does this entail a revival of planning as such, which used to be one of the most reviled ideas among neoliberals?

 

A. T.- This is interesting because with climate change we see the rise of a new metric, of a new single standard of value, that is CO2. It is really an extraordinary development, it is not the gold standard, but it is a metrication of the economy in terms of a physical unit, that becomes the guiding parameter for what you can or cannot do, and technology has to organise.

Twenty years ago I wrote a book about the history of economic statistics and this was in the early phases of climate policies in the 1990s and early 2000s and I remember being stunned by the emergence of CO2 as a neo-materialist standard. But then of course what they have done in the neoliberal mode was to create a market for it, a market for emissions. The fantasy is that you would have a central bank for the European emission trading system.

However, now we are seeing a return of planning in many ways. When Europe is thinking on how to cope with an economy without Russian gas, is that you need someone with a spreadsheet. But what is frustrating about the German and other countries' governments' response is that they try to reduce everything to a question of adequacy of economic models. Instead what we need is to make these choices democratic: we could call it a supply chain democracy. There are many things that we should now discuss democratically: how much energy do we actually need? What are the possible alternatives? What do we need to do and what is the timeframe? We are already de facto in a permanent emergency mode. The climate crisis is a permanent emergency situation: we need to reduce emissions by 7% every year! That means today, tomorrow, the next week, and the next month.

But I would guard against seeing planning as a solution to any problem only because neoliberals dislike it. Also because, nobody has ever run a perfectly planned economy, and much less so without democracy, democratic participation and consultation and workers' involvement being part of the picture.

P. G.- Present reality, and the future ahead, is very troubling in many respects, but some also see some glimmers of hope and a possible strengthening of unions. Is there a new space for a social-democratic project in these new conditions?

 

A. T.- I think that for a real return of social-democracy to be possible it would need to comprise precisely the strong element of economic democracy I was talking about. For example, if you think for instance about Tony Blair's government in retrospect, you have to admit that it delivered genuine benefits for working people, especially for children, it reduced child poverty, it significantly improved public education, and its availability for people, and it expanded funding for the health system. So, you could say that it was social-democracy, except for the fact that it lacked the

democracy element: it was technocratic, it was a tweaking of the state

structure inherited from the Tories.

I think that what is mainly missing for a social-democratic project at the moment is the empowerment of citizens and workers. Neoliberalism disempowered workers by separating the political and the economic, in order to depoliticise the economy: the economy had to stop being an arena of power struggle. Now we need to do the reverse: re-politicise the economy. Some of this is already happening discursively: the labour movement has much greater degree of purchase on American politics than what you would expect. But the question for me is how do you turn this opportunity into real power and how does that power become more than something negative, how does it become something that is not merely a veto power but a reimagination of politics at the global level.

 

That is where the green transition and the energy transition can become a

huge imaginative project and an opportunity to revive democracy.