The Crisis of Neoliberalism [Hardcover]

Gérard Duménil (Author), Dominique Lévy (Author)

Book Description

Publication Date: January 1, 2011 | ISBN-10: 0674049888 | ISBN-13: 978-0674049888

This book examines “the great contraction” of 2007–2010 within the context of the neoliberal globalization that began in the early 1980s. This new phase of capitalism greatly enriched the top 5 percent of Americans, including capitalists and financial managers, but at a significant cost to the country as a whole. Declining domestic investment in manufacturing, unsustainable household debt, rising dependence on imports and financing, and the growth of a fragile and unwieldy global financial structure threaten the strength of the dollar. Unless these trends are reversed, the authors predict, the U.S. economy will face sharp decline.

Summarizing a large amount of troubling data, the authors show that manufacturing has declined from 40 percent of GDP to under 10 percent in thirty years. Since consumption drives the American economy and since manufactured goods comprise the largest share of consumer purchases, clearly we will not be able to sustain the accumulating trade deficits.

Rather than blame individuals, such as Greenspan or Bernanke, the authors focus on larger forces. Repairing the breach in our economy will require limits on free trade and the free international movement of capital; policies aimed at improving education, research, and infrastructure; reindustrialization; and the taxation of higher incomes.

Editorial Reviews

Review

This original and rigorous political-economic discussion of neoliberal global capitalism shows how deep the roots of the current crisis are and how stubbornly resistant it will be to conventional policy remedies.
--Duncan K. Foley, author of Adam's Fallacy

An ambitious and original treatment of the ongoing global economic crisis. Duménil and Lévy provide both an in-depth statistical and historical narrative and an overarching analytical framework.
--Thomas R. Michl, author of Capitalists, Workers, and Fiscal Policy

The Crisis of Neoliberalism is an insightful account of the factors that have led to the economic downturn. As Duménil and Lévy make clear, the economy cannot just return to its pre-crisis path.
--Dean Baker, Center for Economic and Policy Research

French economists Gérard Duménil and Dominique Lévy proceed from the somewhat heterodox proposition that ruling ideas arise not from their persuasive power or inner logic but from the interest of ruling groups… Duménil and Lévy move directly to the social and political history that led us to this turn, the underlying situation in which such intellectually bankrupt ideas could prevail. And what might become of a world that can no longer sustain such beliefs… Though elements of their analysis proceed (in their words) 'à la Marx,' the book is scarcely what one might thereby expect—that is, the opposite of [an] unreflective apologia for capitalism's premises… The two argue…that neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a class strategy designed to redistribute wealth upward toward an increasingly narrow fraction of folks. This transfer is undertaken, they argue, with near indifference to what happens below some platinum plateau—even as the failures and contradictions of the economic system inevitably drive the entire structure toward disaster. Duménil and Lévy offer two provocative and interlocking schemas. They decline the bluntest of Marxist oppositions, which supposes a world divided only between owners and workers. But they equally abjure the endless proliferation of categories and distinctions, the slippery slope of micro-differences that leads to the paradoxical homily of conventional American thought: that individuals are just that, and thereby classless—and that everybody is middle-class. One might well see in this the shadow of Thatcher's other hyperbolic dictum of neoliberalism: 'There is no such thing as society. There are only individuals and families.'
--Joshua Clover (The Nation 20110425)

Amid the torrent of books on the 2008 financial meltdown and the North Atlantic 'great recession,' this important new contribution from Paris stands out as an analytical beacon… Duménil and Lévy conclude with a comparison of the aftermaths of 1929 and 2008, an assessment of the significance of the crisis for U.S. hegemony and some sober prognoses on the social and economic order likely to emerge in its wake. The authors aspire to the kind of influence that Baran and Sweezy achieved with Monopoly Capital some forty years ago—and on this reading, they deserve it. Like Monopoly Capital, the analytical framework of Crisis of Neoliberalism uses some Marxian categories and language, but leavened with (often implicit) elements of Veblen, Chandler, Galbraith, Keynes and Polanyi. The result is a highly distinctive—and compellingly radical—approach, which demands serious attention… By any measure, The Crisis of Neoliberalism is a landmark intervention in the post-crisis debates… Young workers or students who have had the misfortune to enter the labor force during the Great Recession will require a far-reaching education in the history of capitalist crises if they are to begin to craft an alternative exit from the present one. This book should help.
--Thomas Michl (New Left Review 20110701)

About the Author

Gérard Duménil is a Director of Research at the Centre National de la Recherche Scientifique, Paris.

Dominique Lévy is a Director of Research at the Centre National de la Recherche Scientifique, Paris.

Product Details

• Hardcover: 400 pages
• Publisher: Harvard University Press (January 1, 2011)
• Language: English
• ISBN-10: 0674049888
• ISBN-13: 978-0674049888
• Product Dimensions: 6.1 x 1.3 x 9.2 inches
• Shipping Weight: 1.6 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #909,146 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

16 of 18 people found the following review helpful

5.0 out of 5 stars Unique and Stimulating Account of the Great Financial Recession of 2008 June 6, 2012

By Hans G. Despain

Format:Hardcover

This book can be highly recommended as a book on the Great Financial Crisis of 2008, and a book of politics, political economy, class analysis, sociology, and history. Very impressive accomplishment.

The strength of this book on the Great Financial Crisis of 2008 is that Dumenil and Levy place the crisis in a larger historical perspective. They maintain it is a mistake to isolate it merely in the context of the financial innovation and deregulation occurring from the late 1990s. Instead, capitalism has particular historical tendencies and specific class relations.

This is a very impressive volume published by Harvard University Press. It offers a play by play of the Great Financial Recession of 2008, beginning from 2000 in chapters 12 - 17, the political response and the continued stagnation in domestic economies and instability within the international economic order in chapters 18 - 20, along with very interesting historical policy observations and recommendations for this current crisis in chapters 21 - 25. Nonetheless the real power of this book occurs in its historical analysis of capitalist development since 1970s described in great detail in chapters 1 - 11.

According to Dumenil and Levy the historical tendencies of capitalism are radically mediated by politics and social class configurations (i.e. alliances). They argue capitalistic development, since 1880s, has gone through four primary stages and corresponding crises. They emphasize these developments are not historically necessary, but contingent on politics and social class configurations. Moreover, their analysis is particular to the capitalistic development in the United States and Western Europe, they are able to generalize or internationalize their analysis because of the U.S. global hegemony (although they certainly accept there are modes of resisting this hegemony (e.g. Iran, Venezuela, Cuba, China, etc.)).

Dumenil and Levy have demonstrated in previous work the tendency of the rate of profit to fall in capitalistic economies. However, because politics and social class alliances can change, so can the profitability. The current crisis was not caused by falling rates of profits, but by financial innovation, credit overextension, and the particular social class alliances facilitating these activities. There is no single cause of the crisis, but broader social political mechanisms at work and in the process of transformation.

The basic story goes like this: following the Great Depression of 1930 a strong social political alliance emerged between the management class and "popular classes" (this popular class includes blue and white collar workers, including quasi-management, clerical, and professional, which cannot be reduced to the traditional "working-class"). In the 1970s there was a severe profitability crisis, the legislative and institutional response to this crisis caused a fracture between management and popular classes, and a re-alliance between management and capitalist classes (which includes ownership and financial classes).

Once the alliance between capitalist classes and management had been forged in late 1970s and 1980s, profitability returned and financial incentives and financial innovation reconfigured personal incentives and corporate motivations. Most important according to Dumenil and Levy is that these historical transformations manifested a "divorce" between ownership/finance and the domestic economy and its actual production process. The political system did nothing to reconcile this disconnect, indeed expedited the divorce via deregulation and financial innovation, what the economic literature calls "financialization" (although, to repeat in several countries the response was radically different and in specific opposition to U.S. hegemony and the neo-liberalism which the U.S. Treasury, IMF, World Bank, and WTO exported to the rest of the world).

This is a very tightly and elegantly argued book. It has a huge advantage over other books on the Great Financial Crisis of neoliberalism in that it places the crisis in both an historical and socio-political perspective. Further they provide the political implications, or what is to be done.

Dumenil and Levy maintain the current system, especially the "divorce" between the ownership/financial and the domestic economy, is not economically sustainable. Hence is also not political sustainable. Thus, they suggest several political possibilities that could manifest. However, they advocate an alliance between the "popular classes" and management (reminiscent of the New Deal/Fair Deal alliances). Nonetheless, it does not yet appear management has the political incentives to agree to forge such an alliance.

This book will have a hard time finding its audience. Mainstream audiences will charge Dumenil and Levy with being overly Marxist, while Marxists will complain they deviate too far from classical Marxism. Nonetheless this is political economy at its best. This book deserves a wide audience and Dumenil and Levy deserve credit for the construction of a unique and stimulating account of the Great Financial Recession of 2008.