We need a Mont Pelerin of the Left

The neoliberal world is in turmoil. The economic ideology which has been a dominant feature of international politics for several decades faces its biggest challenge to date with the response to COVID-19. Neoliberalism in many countries, especially in the West, has reached hegemonic status and it continues to have a profound impact on developing world countries as well.

The emergence of neoliberalism onto the global stage in the 1970s and early 1980s was the result of decades of intellectual and ideological development by right-wing academics and economists. The seminal meeting in the formation of neoliberalism was the meeting at Mont Pelerin, Switzerland in 1947. This followed on from an earlier meeting at the Colloque Lippmann in Paris in 1938. Presiding over the meeting was the leading right-wing economist Friedrich von Hayek, who a few years earlier had published his most well-known work, The Road to Serfdom. Alongside Hayek were the leading neoliberals of the time including Hayek’s mentor and fellow Austrian economist Ludwig von Mises, the Chicago economist Milton Friedman and the leading Ordoliberal economist, Wilhelm Röpke. All the major schools of neoliberal thought were represented at Mont Pelerin: the Austrian School, the Chicago School and the Ordo School.

The Mont Pelerin gathering laid the foundations of the Mont Pelerin Society, along with a statement of six aims which gave an ideational basis to neoliberalism. Over the decades that followed, Hayek and Friedman worked to establish a public policy basis for what Friedman was already calling by 1951 “neo-liberalism”. The ideas of neoliberalism were disseminated by academic research institutions such as the Economics Department of the University of Chicago and leading right-wing think tanks such as the Institute of Economic Affairs (IEA) established in the United Kingdom in 1955.

What began to emerge therefore was the framework of an international ideology which has become established as neoliberal hegemony. Today that hegemony has been challenged by the global coronavirus crisis like never before, as domestic governments extensively expand their intervention in the economy to counter the public health crisis. Neoliberalism has faced substantial challenges in the past, such as the North Atlantic Financial Crisis of 2008. Back then the narrative was that neoliberalism was finished and that a return to a more statist, if not Keynesian, economic order seemed likely. This did not happen and instead a new phase of neoliberal austerity began with unprecedented cuts to social welfare and public services.

This time must be different. There can be no going back to austerity. Even leading British right-wing think tanks appear to see that the writing is on the wall for austerity. What progressives need to ensure is that a viable alternative replaces neoliberalism which places the values of social justice, the common good, ethical economics and economic democracy at its heart. To do this, there will need to be a project not too dissimilar to the one which began to forge transatlantic neoliberalism at Mont Pelerin. In the aftermath of the coronavirus crisis, there will need to be a consensus on the left as to the form an alternative to neoliberalism should take. This will inevitably include a gathering of leading progressive intellectuals. The likes of Rutger Bregman, Mariana Mazzucato, Thomas Piketty, Ha-Joon Chang, Naomi Klein, Guy Standing and Amartya Sen would seem like obvious candidates to provide the ideas to shape such an alternative.

What issues would a Mont Pelerin of the left need to resolve? Firstly, how best to deliver social justice and a radical redistribution of wealth from the richest to the poorest in society. One idea which has achieved greater prominence since the current crisis began, is that of the universal basic income (UBI). While UBI has committed supporters from the socialist left to the libertarian right (even Friedman advocated a form of it with the negative income tax), the real battleground will be around the form a UBI takes, how generous it is and how it is funded. A libertarian model of flat taxes and minimal welfare provision to deliver UBI would seem greatly unpalatable to socialists, social democrats and social liberals.

Another issue that would need to be resolved is the politics of ownership. Should key industries be nationalised and taken back into the public sector? What role should there be for employee models of ownership, profit-sharing and traditional worker cooperatives? Not to mention the reorganisation of the firm as an institution with a view to making it more democratic and accountable to both its workforce and customer base.

An overriding theme of any alternative to neoliberalism has to be a commitment to ending that other major global crisis which risks the stability of the world, the crisis of climate change. Ideas such as the Green New Deal would help to facilitate a sustainable economy with a high reliance on renewable energy sources built on solid Keynesian foundations. If the current crisis has shown anything it is that the reckless pursuit of profit and growth as being the only viable ends to the economy is hollow and even destructive. There is more to an economy than just GDP. New measurements of the economy will have to be adopted as well, perhaps those which measure levels of inequality and wellbeing.

            The international academic left will have to bring together the multiple strands of thought which it advances against neoliberalism into a single project with a multinational basis. What is needed is a new form of progressive politics for the world of the twenty-first century, just as social democracy and Keynesian social liberalism were well-placed to effectively address the socioeconomic inequalities of the post-war era. A post-Keynesian and progressive gathering similar to that at Mont Pelerin could begin to usher in an effective and viable alternative to neoliberalism. The ideas of such a programme could inform policy research in numerous academic institutions and progressive think tanks around the world with the potential to construct a new progressive hegemony. The old economic order is crumbling and must be replaced by something more progressive and egalitarian than what went before. There is no time to waste.

Bibliography

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