ABSTRACT
The Lehman shock of 2008 and the following world financial crisis attracted public attention as a once-in-a-century crisis. Many political economies found some limits of neoliberalism and market fundamentalism in this crisis or confirmed a crisis of finance-led capitalism. At the same time, some political economies anticipated a historical turning point or epochal refraction in the crisis. However, eight years after the Lehman shock, neoliberal ideas and policies seem to be as dominant as ever, in spite of serious failures, including political control by Wall Street in the USA. It also does not seem that the form of capitalism dominated by finance has disappeared. Or are we witnessing a sprouting of new and strong politico-economic systems or ideas that have to substitute those of neoliberalism? Further, even if so, will the new ones really pave the way for a democracy that meets contemporary requirements? It is true that, in the midst of the crisis, not only were economic emergency measures taken, but various institutional reforms were also carried out at the level of central government and central banks. Reforms were also carried out in regional banks and individual companies. But are these measures and reforms as a whole constituting a new socioeconomic regime going forward? Eight years after the shock, frankly speaking, it seems difficult for us to be sure about the direction in which the regime is evolving. We must, therefore, consider both the tenaciousness and variability of institutions and regimes. This leads us to the question of what determines institutional change and how it occurs. This chapter, keeping problems of today’s neoliberalism in mind, proposes some basic theoretical elements concerning the crisis of the neoliberal regime. The word “regime” refers to a political, economic, and ideological system with some coherence, domestically or internationally. A regime consists of institutions that, as a whole, are complementary and hierarchical to one another. Two concepts of regime are relevant to us. The first is the concept of a “policy regime,” proposed by Przeworski (2001, 2014). According to him, in modern democratic politics, major political parties, regardless of their partisan stripes, tend to propose similar policies. That is, once a party comes to office by making a major successful policy innovation, those policies will be followed by the
opposition party, if elected. The difference between the two parties thus becomes so small that one can identify a movement of convergence toward a new state of policy equilibrium, referred to as a “policy regime.” A policy regime lasts for decades and changes infrequently. A successful policy innovation in a country may be followed by the other countries, thus spreading internationally. Przeworski identifies two policy regimes over nearly the past 100 years: (1) the Keynesian one from the 1930s through the high economic growth following World War II, and (2) the neoliberal one from the 1970s/1980s to the present. This concept of a “policy regime” is attractive because it describes a main trend in world history, especially concerning the current trend of the international spread of neoliberal policies and ideologies. However, its shortcoming is that it understands contemporary world history as a mere paradigmatic change from Keynesian to neoliberal policy regime. Countries under the same policy regime do not necessarily converge to the same socioeconomic system. Diversity and specificity of capitalist countries matter. We therefore need a second concept of regime, a “growth regime.” This originates from the French régulation theory, and generally implies a set of overall regularities in macroeconomic variables of a particular country at a particular time. A growth regime may generate a vigorous “mode of development” when supported by proper institutions and “mode of régulation,” but, if not, the regime will decline and fall into crisis.1 In this chapter, however, we use the term “growth regime” expansively, that is, almost in the connotation of a “mode of development.” See Table 5.1 for the
Table 5.1 Growth regime and policy regime
1950s-1960s 1970s/1980s
Policy regime Keynesian Neoliberal
Growth regime Hegemonic growth regime Fordist or industry-led Finance-led
Spatial diversity of growth regime/socioeconomic model Hall and Soskice (2001) on main OECD countries
LMEs CMEs
Amable (2003) on main OECD countries
Market-based Asian Continental European Social-democratic Mediterranean
Boyer (2011) on the world as a whole
Dominant financier Innovative industrialist Developmentalist Rentier Dependent financier Disarticulated Pre-industrial
existing growth regimes or socioeconomic types; the table has been created based on the studies of Hall and Soskice (2001), Amable (2003), and Boyer (2011).2 In this chapter we will mainly cover the finance-led growth regime, focusing on the USA, the hegemonic country. In short, “regime” here designates either the concept of a “policy regime” that grasps trends in world history, or a “growth regime” that covers the spatial varieties of capitalism. As was mentioned above, a regime, be it policy regime or growth regime, consists of a coherent body of institutions. Regime changes therefore presuppose changes in the regime’s core institutions, and regime crises involve crises of core institutions as well. After some theoretical discussion on institutional changes (Sections 2 to 4), this chapter proposes a critical viewpoint on the current neoliberal policy regime and on the finance-led growth regime (Section 5), before ending with concluding remarks (Section 6).
