Critical Encounters. Wolfgang Streeck
wisdom by emphasizing the contribution of trade unions and collective bargaining to post-war democratic capitalism, and generally the significance of the capital-labour relationship during the Golden Age. Kotz also, and justifiably so, spends time and space on the question of why and how the post-war social compromise fell apart in the 1970s. Here he offers useful material for what one could call the defection-of-capital explanation, in particular evidence of the important contribution of organized business in the United States, first to the domestication and then the liberation of capital and capitalism. Kotz associates that shift with a transition from the Committee for Economic Development (CED) to a new organizational form, the Business Roundtable, reconstituting capital as an active political agent after decades of having to serve as an inanimate wealth-creation machine. The role of business interest associations in the American political economy has long been underestimated in comparative politics, and Kotz joins political scientists such as Paul Pierson and Jacob Hacker who have recently begun to remedy this.
The Rise and Fall of Neoliberal Capitalism is about the United States of America. No other country appears, except for a short reference to New Labour and how it continued Thatcher’s British transition to neoliberalism, following the example of Clinton and the New Democrats, who continued the work of Reagan. There are reasons for this that should not be taken lightly. The US was and still is the centre of the capitalist world, and the revolt of capital against social democracy began here, making the United States the birthplace of the neoliberal capitalism that culminated in the global crisis of 2008. Without a sufficient understanding of the United States as the engine of contemporary capitalist development, neoliberalism cannot be properly appreciated.
At the same time, being the centre implies a relationship of dominance vis-à-vis a periphery, in the present case with other capitalist or precapitalist countries and regions, from Europe to China, not to forget the raw material supplying regions of Africa and the Middle East. Just as political-economic development in the US and its politics of change and reform will have repercussions on the wider world system, it will be and is affected by that system in turn. Without detracting from Kotz’s achievement, widening the scope of social structure of accumulation theory from American to global capitalism seems an urgent task. This would involve figuring in the constraints and opportunities for American capitalism in a global context, including the role of the American military. For example, the financialization of the American economy, detrimental as it has turned out to be for the stability of American capitalism, cannot easily be reversed as long as it is needed to compensate for low competitiveness in other sectors by extracting resources from the rest of the world, including credit to pay for American consumption.*
Kotz begins with a summary defining neoliberalism, invoking the usual suspects of globalization, deregulation, welfare cuts, lower minimum wages, reduced marginal tax rates, de-unionization, financialization, fiscal consolidation, etc. Nicely synthesizing two theoretical traditions, Kotz ends up defining neoliberalism as both domination of capital over labour and expansion of market relations into social relations. Chapter 3 recounts the shift from post-war regulated capitalism to post-1980s neoliberal capitalism, paying special attention to the profit squeeze of the 1970s and the subsequent re-orientation of business vis-à-vis organized labour from cooperation to conflict and suppression. Chapter 4 investigates how the neoliberal social structure of accumulation ‘worked’ economically and socially. In short, while for the economy as a whole it worked less well than regulated capitalism, it worked much better for the rich, at the expense of the poor. Accounting for the economic expansion of the 1990s, Kotz points to an ‘interaction among growing inequality, large asset bubbles, and speculatively oriented financial institutions, which together propelled consumption-led growth financed by consumer borrowing’, accompanied by low inflation due to de-unionization.
Chapter 5, the longest of the book, reviews the crisis of neoliberalism in 2008 and beyond. Kotz shows how inequality, asset bubbles and speculative finance had given rise to ‘three unsustainable trends over the course of the neoliberal era: growing household and financial sector debt ratios, the spread of new toxic financial instruments throughout the financial sector, and increasing excess productive capacity in the real sector of the economy’ – trends that ultimately brought the neoliberal accumulation structure to its knees. On the response to the crisis, Kotz argues that while there was initially some fiscal stimulus, it was not enough, which he believes accounts for the sluggishness of the recovery. The ‘Keynesian moment’ having passed, ‘austerity’ became the fashion of the day, with unjustified fear of government debt driving a return to pre–Great Depression ‘sound money’ policies. Kotz blames this for the prolonged stagnation – something on which the last word may not yet have been spoken. Important, in any case, is his account of the high price an entire generation has already paid and is still paying for the failed neoliberal experiment.
Chapters 6 and 7 are exercises in lesson drawing, putting the rise and fall of neoliberalism in the context of history while organizing history in the framework of social structure of accumulation theory. As mentioned, capitalism is held to have gone through five stages, each of which ended in a ‘structural crisis … followed by major institutional restructuring’. In the process, liberal and regulated accumulation regimes alternated: the first two liberal regimes, the Gilded Age and the Roaring Twenties, were each succeeded by a regulated regime, raising the prospect that this will now repeat itself. Here we note the functionalist character of the theory, its tendency to dwell more on systemic needs than on the political actors required for satisfying them. It is from this vantage point that Kotz’s final chapter explores ‘possible future paths’; this chapter is easily the book’s weakest.
Predictions, as Keynes is said to have said (some say it was Yogi Berra), are always difficult, especially if they are about the future. Kotz is not unaware of this: change, or non-change, he points out, ‘will be the outcome of struggles among various groups and classes’ which, however, he abstains from specifying. Nevertheless, Kotz sketches out four ‘future courses’: ‘continuation of neoliberal capitalism’, ‘transition to a business-regulated form of capitalism’, ‘transition to social democratic capitalism’, and ‘transition to democratic-participatory planned socialism’ – the final three being versions of regulated capitalism, their difference consisting in who will do the regulating: capital (especially finance capital à la Hilferding), capital and labour, or labour. This menu looks a little too neat to be true, due perhaps to social structure of accumulation theory positing more or less explicitly that whenever a social structure of accumulation becomes obsolescent, it must and therefore will soon be replaced with a more up-to-date successor. In this it is similar to French régulation theory, for which an unregulated world is inconceivable (although Kotz’s ‘continuation of neoliberal capitalism’ comes close to such a world). That the next phase in the history of modern capitalism may be a long period of chaotic interregnum – an age of indeterminacy – is precluded by both. Unfortunately, however, this is what may most likely be in store, due not least to the absence of historical agency strong enough to re-order a now profoundly disorderly capitalist world, a condition that Kotz seems implicitly to recognize when he speaks in all-too-general terms of ‘groups and classes’.
Seen from outside the usually optimistic American centre, the most likely scenario is one in which the United States, the historical host of twentieth-century capitalism, will be too weak to enforce its own order while remaining strong enough to prevent others from enforcing theirs. Assuming this to be our future, Kotz’s somewhat pedantic list of the pros and cons of ‘democratic-participatory planned socialism’ appears more than a little anachronistic. A brief look at global capitalism’s periphery may make clear what this might mean. In more and more countries – from Central America to North Africa, the Middle East, Afghanistan, Pakistan, not to forget the Russian periphery and Russia itself – the Western model of ‘development’ has failed, and so have most local states, typically with the active contribution of their