Will David Cameron and George Osborne become the Pioneers of Third-Wave Neoliberalism, just like Thatcher and Reagan Pioneered First-Wave Neoliberalism?

Former British Prime Minister Margaret Thatcher

Image via Wikipedia

English: David Cameron's picture on the 10 Dow...
Image via Wikipedia

To remind the reader, the strap line for this blog is “Towards greater reflection and insight”.

Last week’s blog, combining public news and personal reading, seemed successful so I have repeated the formula.

This week, I want to focus on the following public news themes:

The common thread to the blog is my own further reading on neoliberalism. This week, I have completed Steger and Roy’s excellent book entitled “NEOLIBERALISM A Very Short Introduction, published by Oxford University Press (the Very Short Introductions series is highly recommended).

Let’s start with David Cameron’s speech, which is well worth reading but this blog is not about NHS Reform per se. What made me reflect this week was the headline “Sticking to the Status Quo is not an Option”. Having been reading about Thatcherism under Neoliberalism, this reminded me of Margaret Thatcher’s famous “This lady is not for turning speech” at the Conservative Party Conference, in Brighton, in 1980. I would encourage the reader to read Margaret Thatcher’s speech and compare it to David Cameron’s – with a gap of thirty years, different context and challenges, it is interesting to dwell on both the similarities and the dissimilarities.

Now I want to introduce Benedict Brogan’s excellent insights. I was interested in his Cameron quote of the three “musts” for the Conservatives to win the next election, namely:

  1. Economic Growth
  2. Public Sector Confidence on the NHS, and
  3. Liberal Democrats Continuing to Support the Coalition

However, it was Benedict Brogan’s conclusion which really caught my attention, namely “he (David Cameron) gives every impression of being a politician who has had enough of revolution, and now wants results”.

The final public news theme concerns this week’s focus on the IMF, following the arrest of Dominique Strauss-Kahn (DSK), the Head of the IMF (until he resigned on Wednesday night). The evolving DSK story is not directly relevent to this blog. What captured my attention and imagination was that the IMF is the High Church of Neoliberalism and DSK was, until Wednesday night, the High Priest of Neoliberalism. Now, there is intense  speculation as to the next Head of the IMF.

I thank the reader for his/her patience, whilst I introduced the various news stories and my reflections but now I propose to spin a common thread, looking at neoliberalism. I shall not bore the reader with detailed discussion of neoliberalism but it would be helpful if the reader has read last week’s blog.

Steger and Roy describe the two waves of neoliberalism:

  • First Wave  dominated by Thatcherism and Reaganomics – Thatcherism “unleashed a comprehensive set of neoliberal reforms aimed at reducing taxes, liberalizing exchange controls,  reducing regulations, privatizing national industries, drastically diminishing the power of the labour unions” – strongly anti-Keynesian and pro-Monetarism.
  • Second Wave was characterized in the 1990s by Clinton’s market globalism and Blair’s Third Way.

Unfortunately neoliberalism was severely criticized and discredited in the global financial crisis of 2008. In January 2009, Nicholas Sarkozy, French President, declared “Laissez-faire is finished” and in April 2009 Gordon Brown, UK Prime Minister, argued “the old world of the Washington Consensus is over”. The Washington Consensus (synonymous with neoliberalism”) was dominated by the IMF, the World Bank, and other Washington-based international economic institutions and think tanks – with the Federal Reserve close at hand. Economic orthodoxy and soft loans were offered to the developing world and more recently, financially troubled European economies, like Greece, Ireland etc. Unfortunately, the strong medicine generally brings much pain to poorer and weaker members of society, with potentially vast financial rewards to the wealthy. I have started to notice a number of commentators offering alternative medicine for Greece, for example  Der Spiegel argued in favour of a Marshall Plan (a Keynesian remedy).

Steger and Roy concluded that neoliberalism was still smouldering and looked towards a third-wave neoliberalism (built on Keynesian principles) being a distinct possibility for the second decade of the 21st century. This brings me back to David Cameron and George Osborne who have applied very strong medicine to the UK economy but are still trying to be compassionate. According to Benedict Brogan, George Osbourne holds enormous power. If Cameron and Osborne are successful they could well become the pioneers of “third-wave neoliberalism”. To be successful Cameron and Osborne will need to focus on Benedict Brogan’s concluding comment and focus on results. Results are difficult territory for governments. This blog believes passionately that success will only be achieved if the Government deploys Professional Interims and reverses Catch 22 practices.

6 responses

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  4. I suspect that David Cameron’s neolberalism is alive and well but that he is biding his time so that when the economy does hopefully start to turn towards the end of 2012 the Coalition will be more popular.

    Until then he has to use Nick Clegg as a “lightning rod” and let the beards,sandals and “environmentalists and the ageing Guardianista woman who used to protest at Greenham Common and at Brightlingsea in Essex and now see themselves as the pot smoking tree huggers of the nation,do their thing.

    People like Chris Huhn will probably self destruct and David Laws will be weakened by the furore over his expenses.
    Once the country has been seen to turn the corner economicallyDavid Cameron and the Chancellor will become more popular and the Liberal Democrats will become marginalised or possibly split in two with the left wing reattached to the Labour Party and the right wing cut adrift ,possibly under Simon Hughes.

    If the predictions of Gerald Celente are correct (and I hope he is wrong), the commodities crisis formented by Morgan Stanley and Goldman Sachs, will have destabilised the Middle East and created a series of brushfire wars which will suck in a resurgent Russia which wants to complete a naval base in Syria as a means of maintaining a Mediterranean presence.

    Brushfire wars in African states which produce oil and other raw materials for China may well provoke a Chinese economic response which America and ourselves have not bargained for but will lead to a counter response from the West.

    What use the Liberal Democrats will be then is questionable given their inability to comprehend the realpolitik of cuts and deficit reduction let alone economic and cyber warfare which is already being waged.

    If Gerald Celente is right and his forecasts have been quite accurate ,to the point where some have said that if Nostradamus was alive today, he would find Gerald Celente giving him a run for his money, then our economy would require Keynsian pump priming in order to move into warfighting mode and a Coalition embracing everyone including the Labour party.

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