In the global South, notions of development have been bound up with commodity production and export ever since the colonial era.1 Although the exploitation of natural resources and crops was not always a primary motivation for European imperialism (Hobsbawm 1989, 66–68), in most cases, much of the “development” seen in colonial possessions consisted of building the necessary infrastructure to produce, transport, store, and export primary commodities (Rodney 1972, 209). For Immanuel Wallerstein, commenting on the identification of the French term mise en valuer (“making into value”) with the colonial concept of development, development “was a set of concrete actions effectuated by Europeans to exploit and draw profit from the resources of the non-European world” (Wallerstein 2005, 1263).
Such processes are linked to the idea of a “civilizing” European mission, most easily identified with the “white man’s burden” of the scramble for Africa but also very much visible in the earlier colonizations of the Americas. Though the civilizing trope is most obviously associated with social change, particularly with the spread of Christianity, economic development (that is, the exploitation of locally available resources) also could be seen as a task fundamental to human advancement, following Enlightenment principles. Exploitation of untapped minerals and agricultural land, while clearly advancing the material interests of the colonizers, could be dressed up as a progressive historical mission, borne by Europeans in the face of a seeming inability of locals to carry out the task.2 Key to the success of this mission was the coercive power of Europeans to expand territorial claims and to exploit people and resources found in other areas of the globe. By the end of the nineteenth century, the result was the incorporation—unevenly and largely on European terms—of most of Africa, Asia, and the Americas into a global system of production and trade (Wolf 1982).
This situation set the initial conditions around which the problems of development (as now understood) have crystallized. A policy of “making into value” of the resources contained in areas of the world newly integrated into the global system—whether under formal colonial control or not—lined up closely with Ricardo’s notion of comparative advantage. The South, trading with a technologically advantaged industrializing North, was comparatively well endowed with land, natural resources, and, in some cases, the potential for cheap labor.3
For many critical scholars, the persistence beyond independence of this colonial division of labor, whereby manufactured goods produced in the metropole (or center) are exchanged for primary commodities grown or extracted in the colony (or periphery), lies at the root of explaining global disparities of wealth and income among regions.4 In Latin America, this argument had been anticipated in the stance of economic nationalists during the nineteenth century (Grosfoguel 2000), though it was in the decades following World War II that its intellectual underpinnings were fully fleshed out, in the form of structuralism.
Central to the structuralist case was the Prebisch–Singer thesis that terms of trade for commodities (and for commodity-exporting states) tend to decline over time. The basis of this claim is a low income elasticity of demand for commodities, especially when compared to manufactured goods. As incomes increase, demand for commodities (which are more likely to be necessities) grows slowly, while that for manufactured goods (approximating a category of luxuries) rises more quickly, with a consequent impact on relative prices. Thus, rising income in a commodity-exporting peripheral state results in ever-larger volumes of manufactured imports, creating trade deficits that, as relative prices continue to erode, require ever greater quantities of commodity exports to make up the shortfall. For center countries, the opposite holds: as incomes grow, imports of commodities increase, but the cost of these is amply covered by the trend toward higher prices for manufactured goods.5 A second structuralist argument, again empirically based, relates to the instability generated by the reliance of most peripheral states on a narrow range of commodity exports, leaving them vulnerable to price swings, unlike industrialized economies, which tend toward diversified exports and thus are less exposed to price movements in any one market (Prebisch 1949; Singer 1950, 1984; Saad-Filho 2005).
For structuralists, then, peripheral pursuit of comparative advantage by maximizing production in primary products is a self-defeating strategy, which is bound to widen rather than to close the gap with the industrialized center. The proposed alternative strategy of import substitution industrialization (ISI) had its antecedents in mercantilism and in Friedrich List’s infant industry protection but was new insofar as it presented an explicit program for correcting the North–South developmental imbalance. Given the limitations of commodity-based development shown in the Prebisch–Singer thesis, industrialization seemed the only path capable of reversing these inequalities. Establishing and expanding manufacturing industries would, in principle, correct for declining terms of trade, diversify the economy, and, by generating formal employment and urbanization, create an internal market of consumers, reducing reliance upon the vagaries of the world market. In fact, a concentration on developing domestic markets was crucial to the whole effort, since, initially at least, there seemed little possibility of penetrating the markets of the center. Given low productivity levels and a lack of technology, peripheral goods were likely to be of poor quality, with high production costs, and stood little chance of competing with center states’ manufactures on equal terms.
The solution was to turn inward, satisfying national demand for previously imported manufactures with domestic production. Since local firms tended to be just as unable to compete at home as they were abroad, and because they lacked the requisite capital and technology to develop spontaneously, state intervention was required in order that domestic infant industries could be protected and incubated before being (eventually) readied for competition. A mixture of tariffs, multiple exchange rates, subsidies, demand management, infrastructure development, and cheap credit generally were the most important ingredients of ISI strategies (Baer 1972; Hirschman 1968). In many areas, Northern manufacturing firms were invited to produce for the domestic market behind high tariff walls (Cooper 2002, 100). In the face of low levels of domestic private capital, the state often was the only national entity capable of marshaling large concentrations of capital. States would therefore also intervene more directly, sometimes as monopsony buyers and marketers of exports (with the goal of saving for industrialization efforts) and also as owners of state-owned enterprises, particularly in heavy industries such as steel.
In Latin America, and to a lesser extent elsewhere, ISI had in fact preceded its postwar formalization, as a strategic policy response to the unequal global division of labor (Saad-Filho 2005, 130–31). Basic industrialization proceeded with little planning, initially as a consequence of rising demand for bulky, low-technology goods, which were uneconomical to import, and then as the Great Depression and World War II reduced the flow of manufactured imports to most areas of the South and thus stimulated domestic production to meet demand. However, the post–World War II period saw the first systematic effort to understand and counter inequitable features inherent to the global division of labor. In many ways, this turn was a natural complement to decolonization in much of Asia and Africa, bringing to the fore the notion of a third world as a complex of regions with shared characteristics and facing similar obstacles. Political independence for many states joined a rising tide of nationalist aspiration in the South, with the “second independence” of economic autonomy a priority goal for many (see, for instance, Freund 1981). In this era, the idea of development still very much corresponded with an Enlightenment belief in progress, though this now meant industrialization—large-scale socioeconomic transformation that would catapult Southern states to levels of material prosperity similar to those seen in the developed states of the North.
From the North, the influence of modernization theory meant that developing countries tended to be viewed simply as less advanced versions of their developed world counterparts, with states following each other in replicating a series of nearly identical steps on a road to development. The end goal, and developed status, was a society and economy that looked like those of Western Europe and, especially, of the United States (Bernstein 1971; Robinson 2002). Supported by the international financial institutions (especially the World Bank), the proposition of development in the image of a prosperous United States was a key plank of post–World War II U.S. hegemony in the South and served as a bulwark against Soviet influence and more radical third world nationalism (Arrighi and Silver 1999, chap. 3). Though development was therefore a quasi-universal project, state managers in each case were afforded relative freedom to manage the process at the national level. A variety of different development strategies could, in this way, be accommodated within a U.S.-led global regime, which set fixed exchange rates and used the International Monetary Fund (IMF) as a means of propping up the system through short-term loans (McMichael 1996).
The Soviet Union did, however, provide another possible model for Southern states, particularly given an impressive initial post–World War II record of industrial growth and its lack of colonial past.6 U.S. efforts in the South often were clearly framed in terms of Cold War geopolitical competition. Nonetheless, state socialist countries (and those claiming to aspire to such status) tended to hold a view of development that stressed socioeconomic transformation via industrialization, managed at the national level. Though obviously diverging on matters such as property relations, state socialist developmentalism shared several features with predominant views in the West and, most importantly, could be accommodated within the postwar Bretton Woods regime.
Of course, not all states readily accepted U.S. or Soviet tutelage, and significant variations occurred in terms of both intention and implementation, even among those pledged to one sponsor or the other.7 Nevertheless, combined with intellectual contributions from the South itself—importantly Latin American structuralism—a certain synthesis of development ideas coalesced into an “industrialization consensus” (Ocampo 2014, 296), a “development project” (McMichael 1996; 2000), or “embedded liberalism” (Ruggie 1982), which permitted various forms of government intervention in markets and showed a tolerance of national variation contrasting rather sharply with later neoliberalism.
Developmentalism, in this sense, can be viewed as half of a global regime of accumulation, with Fordism–Keynesianism as its Northern mirror. The latter proffered a class compromise that allowed wages to rise with productivity gains and, in most cases, instituted welfare states of one kind or another. High mass consumption as a norm, demand management, and automatic stabilizers helped to dampen both cyclical downturns and the likelihood of political radicalism. Analogous to class compromise in the North was an emerging North–South settlement. First, decolonization met the nationalist aspirations of Southern elites while institutionalizing the nation-state as the universal political unit underpinning the post–World War II international political and economic order. Such states were necessary for development projects to be delegated to national authorities, allowing for the prospect that economic as well as political autonomy might at some point be achieved (though the former was rarely realized). Third, access to the global market and, with it, Northern-style consumption was extended, though, unlike in the developed world, this reached only a minority of most Southern populations (George and Sabelli 1994, 147).
Although at this point structuralism and associated theories began to see specialization in natural resources as fundamentally incompatible with development, it was still envisaged that extractive industries would play an important role in supporting peripheral industrialization. Taxation of resource exports—usually large volumes produced by a small number of foreign companies at a limited number of locations—represented a far easier means of generating revenue than, for example, relying on tax receipts from households or domestic businesses, both logistically and given the small size of formal sectors in much of the South. The ability of the state to act as landlord was thus a means to concentrate relatively large quantities of capital, which could then be deployed toward ISI projects.
Again, these kinds of arrangements might be thought of as indicative of a North–South compromise. Southern states’ demand for a larger slice of the pie was tolerable, so long as the pie continued to expand, which it did both generally (in terms of global growth) and more narrowly (in natural resource sectors), buoyed by postwar reconstruction and then the rise of Japan and Germany. Cold War fears also played a role in shaping Northern flexibility on this point. In Chile, for example—the home of cepalista structuralism—the imposition of royalty payments and profit taxes of 50 to 60 percent in the copper sector did lead the U.S. firms Anaconda and Kennecott to register complaints in Washington. However, geopolitical considerations in the wake of the Cuban Revolution dissuaded U.S. authorities from any kind of intervention, and both companies were still able to post average profits of 14 to 18 percent from 1955 to 1965 (Hellinger 2004a).
Even where partial nationalization took place, as, in the case of copper, occurred in both Chile and Zambia during the 1960s, such moves tended to be tolerated, provided that transnational extractive capital continued to maintain a profit (Larmer 2010). Indeed, as Larmer points out in relation to Zambia, the acquisition of a share of natural resource firms by states was often viewed in a positive light by transnational corporations. Governments’ broader developmentalist goals were not necessarily out of line with profit maximization, and their involvement in the running of extractive enterprises might well help guard against more radical demands.
The United States was forced to abandon central features of the Fordist–developmentalist regime owing to an exhaustion of the potential for continued material expansion under Fordism and mounting pressures stemming from an associated growth of financialization. Productivity gains, which had allowed for both rising profits and wages, began to encounter diminishing returns, even as unionized labor was still powerful enough to continue pushing up pay and expanding welfare provisions. Meanwhile, sponsorship of nationally managed accumulation on the part of key allies, which underpinned U.S. hegemony, served to eventually undermine itself. Capital from the most successful examples of these national projects, West Germany and Japan, was able to adopt U.S. technological and organizational advances in combination with cheaper labor (Brenner 2003, 14–15).
By the late 1960s, increasing competition brought falling profit levels, particularly in the United States, which responded with a devaluation that signaled the first crack in the Bretton Woods system of fixed exchange rates. Concurrently, the growing Eurodollar market offered a means to deposit dollars outside U.S. restrictions. American businesses, allowed to operate within Europe with few restrictions, soon saw the advantages of banking in the less constrictive Eurodollar market rather than back in the United States. This essentially represented large-scale capital flight, coming in the midst of a fiscal crisis brought about by the twin expansionary currents of Lyndon Johnson’s Great Society social spending and the Vietnam War (Strange 1987, 6–7).
Initially, U.S. responses to the crisis aimed at salvaging what was left of the Fordist regime by attempting to reflate the global economy back toward a path of material expansion. This course, though, contained within itself the seeds of its own destruction. The loose monetary policies of the 1970s, as well as the first of two oil shocks, produced stagflation, together with a massive increase in global liquidity, which eventually led to the continuance of U.S. hegemony by other, less stable means—namely, by an acceptance of the primacy of finance capital and a successful attempt to at least temporarily reassert U.S. power through an alliance with and channeling of such forces (Arrighi 1994, 300–10). Despite its apparent freeing of the United States from the balance of payments constraint, the movement away from the Bretton Woods fixed dollar-gold system to one of floating exchange rates, completed by 1973, widened the growing tendential gap between returns on productive and financial capital by opening up significant arbitrage possibilities. This growing systemic bias toward financialization meant that the loose monetary policies of the mid-1970s, bringing with them a liquidity designed to reinvigorate the U.S. economy, instead ended up largely fueling the growth of offshore banking in London and elsewhere.
Compounding both the crisis of U.S. hegemony and the associated growth of dollar liquidity beyond U.S. control was the oil shock of 1973. For commodity exporters, an inflationary environment and depreciating dollar in the early 1970s served to reduce export sector returns, particularly because all major commodities were priced in dollar terms. In this context, the Organization of the Petroleum Exporting Countries (OPEC) decided to collectively hike oil prices, beginning in 1971 but seen most dramatically in the 1973 oil shock, when prices quadrupled in a few months. Partly, of course, this was a political decision led by Middle Eastern states in response to U.S. support for Israel in the Yom Kippur War. More broadly, it represented a new assertiveness, both political and economic, on the part of Southern states emboldened by an apparent waning of U.S. hegemony, symbolized by defeat in Vietnam.
Higher oil prices reverberated through to other sectors, and the effect was strengthened by loose American monetary policy, which promoted a flight from dollar holdings into commodity speculation (Arrighi 2003). Though prices increased across the board, this was accompanied by both greater volatility in the face of global economic turbulence and rising production costs in point-source commodities as easily accessible deposits were exhausted. Attempts were made to copy the OPEC model in other industries, such as copper, and a wave of extractive industry nationalizations, tending toward outright expropriation, moved across sub-Saharan Africa and Latin America, reflecting a desire on behalf of Southern governments to maximize and stabilize rates of surplus retention to be used in increasingly ambitious development programs (Shafer 1983; Toye 2014).
This somewhat more radical trend among commodity exporters culminated in the Declaration for a New International Economic Order (NIEO), advanced by the Group of 77 developing commodity producers and adopted by the UN General Assembly in 1974 (Cox 1979). NIEO demands had their antecedents in the commodity stabilization fund, which Keynes had proposed during the Bretton Woods negotiations, in various ad hoc producer–consumer agreements during the post–World War II years, and, of course, in the United Nations Conference on Trade and Development (UNCTAD), the body from which the NIEO proposals emerged.
Nevertheless, the NIEO was explicitly positioned as a rejection of and alternative to the Bretton Woods settlement and thus to the moderate developmentalist compromise upon which U.S. hegemony in the South rested (Agarwarla 1983, 1–3). The new configuration was to be based on a managed system of stable and high prices for commodities, supported by producer cartels, coupled with freedom for Southern governments to regulate the operations of multinationals, including their expropriation and nationalization, where this was deemed appropriate. These demands coincided with various attempts on the part of national authorities, both North and South, to escape the bounds of the developmentalist consensus (Harvey 2005, 12–13). In the South, the likes of Jamaica and Peru sought to turn apparent mineral bonanzas toward a thorough restructuring of their political economies (Becker 1982; Stephens 1987).
Had American attempts to kick-start a new round of global material expansion in the 1970s worked, it is possible that the ensuing demand for primary products might have strengthened the position of the commodity exporters and helped them achieve many of their aims. Emboldened by the success of OPEC in gaining control over production levels and pricing of oil, international agreements were sought for twenty commodities, though only five were ever concluded (in coffee, tin, cocoa, sugar, and rubber). Of these, only the International Coffee Agreement included OPEC-like producer quotas, through which prices could be controlled. All five lapsed or were broken up during the 1980s and 1990s (Gilbert 2006). In part, this failure rested on the divergent interests of most commodity producers and OPEC, which the G77 had hoped would contribute generously to a buffer fund to guard against commodity shocks (Love 2010; Toye 2014).
OPEC, at times, acted in solidarity with the other commodity producers—in 1976, for instance, it threatened to hike oil prices, should the developed world not also contribute to these buffer funds. High oil prices, though, acted as a drag on oil-importing commodity producers and were a major component of recession in the North, dampening demand for resources such as copper and iron ore, which were used as industrial inputs in energy-intensive production. As the decade wore on, these negative pressures on commodity markets began to outweigh gains arising from the flight from dollars into commodities, which in any case was concentrated in oil and gold.
As the long period of global material expansion started to run into the sand, raw materials prices declined in the late 1970s, while oil remained strong into the 1980s.8 Oil fed financial expansion by injecting massive amounts of liquidity, in the form of petrodollars, into the global financial system. Cheap and plentiful capital, aggressively pushed by Northern banks, was too tempting to resist for many Southern resource exporters, particularly those which had initiated more radical and ambitious development projects during the brief commodities boom (Arrighi 2002; Frieden 1981; Fraser 2010, 6–9). As the export revenues to cover this kind of expansionary fiscal stance dried up, international capital markets were tapped, in the belief that the recession would be a temporary blip in a fundamental restructuring of North–South economic relations. This already rather ragged illusion was finally shattered in 1979, with the so-called Volcker shock, the decision by Federal Reserve Chairman Paul Volcker to hike U.S. interest rates in the face of runaway inflation and a declining dollar, ratcheted up with further increases over the next three years.
For the by now heavily indebted global South, this was a double, crippling blow. On the one hand, credit-sensitive industries in the North, such as construction and manufacturing, were badly hit, together with effective consumer demand, as unemployment in the United States and Europe spiraled, further reducing demand for raw material exports. Even more importantly, the bandage of cheap credit, which had seen natural resource producers through the volatile late 1970s, evaporated as Southern states were placed in the unenviable and untenable position of having to compete with the United States for capital flows. For the United States, a year before the election of Ronald Reagan, this was the decisive turning point in the abandonment of the Fordist–Keynesian settlement and the embrace of an embryonic regime of accumulation that would become fully articulated as global neoliberalism. On another level, it represented the switch from a U.S. policy generally directed in the interests of productive capital to an implicit recognition of—and alliance with—the power of finance capital (Arrighi 1994, 316–19).
The rise of neoliberalism has been exhaustively chronicled (as a small sample, see Harvey 2005; Gill 1995; Fourcade-Gourinchas and Babb 2002; Wade 2006; Duménil and Lévy 2004; Overbeek 1993). Most recently, Slobodian (2018, 30–31) pinpointed its origins in the Austrian chamber of commerce of 1920s Vienna—and in a postimperial concern to place property and the market beyond the reach of the new democratic nation-states. Neoliberalism then emerged more prominently as a heterodox body of economic thought, following World War II. As applied to policy, neoliberal approaches were foreshadowed before the 1970s, as in the U.S. aid plan to Bolivia in the 1950s (Young 2013), though it was only with the crisis of Fordism–developmentalism that neoliberalism began to gain wider acceptance in both intellectual and political circles.
As is well known, neoliberalism’s first full-fledged foray into the South came with the ascendancy, beginning around 1975, of University of Chicago–trained economists in Chile during the Pinochet dictatorship (Valdes 1995). Indeed, it is from Chilean intellectuals’ use of the Spanish term neoliberalismo that the English label “neoliberalism” was widely adopted in reference to Pinochet-like programs of reform, usually with negative connotations (Boas and Gans-Morse 2009). In the North, the 1979 election of Margaret Thatcher in the United Kingdom and, especially, that of Ronald Reagan in the United States, one year later, proved decisive in terms of shifting global momentum toward a thoroughgoing—though never complete—restructuring of global and national regulatory forms around neoliberal principles (Harvey 2005, 9).
Neoliberalism as a phenomenon is notoriously difficult to define, given the divergence between neoclassical theory and neoliberal policy sets as actually applied, the distinction to be made between at least two temporal phases of neoliberal regulatory programs, and a multiplicity of national forms as neoliberalization has been superimposed over existing domestic dynamics, producing a range of varying tendencies and contradictions around the world (Brenner, Peck, and Theodore 2010). There also is the complicating factor that few self-describe as neoliberal and that the term is almost always used by critics (see, however, Ostry, Loungani, and Furceri 2016). Nevertheless, in broad terms, neoliberal approaches build on neoclassical assumptions of individual utility maximization to promote an ideal in which naturally occurring markets should, as far as possible, be left unhindered to do their work as efficient arbiters of the distribution of goods and services.
It is relatively uncomplicated to trace a direct line from these principles to major policy recommendations—privatization, the removal of ISI-style state support for industry, the liberalization of trade and capital flows, an economy-wide lifting of regulations, and the so-called flexibilization of labor markets. Of course, as many observers have pointed out, the state–market juxtaposition that serves as a basis for these kinds of changes is in most respects a false dichotomy, since all require action on the part of the state, both to implement and then to maintain the new structures (Weiss 2010; Harrison 2005). Indeed, even the IFIs, which spearheaded neoliberalization in most of the South, have at various points been criticized on the basis of free market principles, given that, from the 1980s on, their very rationale became one of intervention (Babb 2009, 85–90).
In line with intellectual trends in the United States, the World Bank and the IMF gradually adopted neoliberal ideas over the course of the 1970s. This led to a new diagnosis of the crisis and stagnation that had afflicted much of the South from the second half of that decade. The externalist case, that unequal global economic structures and a vulnerability to trends in the North had hamstrung Southern developmental efforts, was now roundly rejected, whether in its strong (dependency) or soft (structuralist) version. In its place, the internalist case, that Southern governments had themselves been the architects of their own failure, was presented. The new explanation, too, had a softer version—that well-meaning but wrongheaded policies had brought inefficiencies and perverse incentives—and a harder variation—that developmentalism had served as a vehicle for the establishment of patronage networks, cementing the position of corrupt, antidevelopment elites (Arrighi 2002). As Arrighi points out, there were undoubtedly elements of truth to both sets of charges. ISI was also undeniably problematic as a development strategy (Chibber 2002; Saad-Filho 2005), though problems of clientelism, inefficiency, and corruption were not, in most cases, satisfactorily tackled by neoliberal reform (Szeftel 2000; Roberts 1995; Aspinall 2013).
In any case, the problems in many zones of the South culminated in 1982, with the Mexican debt crisis, as it became obvious that, under the impact of U.S. interest rate hikes, states were struggling to pay debts racked up during the preceding petrodollar-fueled period of high global liquidity (Strange 1987). Many Southern states thus required large loans from IFIs (with the World Bank moving into budget support) just at the point where an internalist, neoclassical-inspired vision of the cause of this indebtedness had become embedded in these institutions. The result was a major extension of IFI missions, taking on the restructuring of Southern political economies along neoliberal lines via the lever of conditionality, meaning lending in exchange for policy reform, which became the basis for the now notorious structural adjustment programs demanded of more than one hundred countries between 1983 and 2005 (Saad-Filho 2005).9
Given neoliberalism’s inherent neoclassical assumptions, the common IFI claim of technocratic ideological neutrality is, to say the least, dubious (Hay 2004; Wade 2010). Even if such assertions on the status of adjustment policies in the abstract were to be accepted, however, SAPs were, in practice, inherently political projects that sought, in more or less explicit ways, to alter the balance of forces among domestic groups. Stemming especially from the work of Robert Bates (1981), the hard variant of the internalist critique claimed that corrupt Southern elites, as beneficiaries of the distortionary effects of “bad” developmentalist policies, could not be simply persuaded to adopt “sound” policy, since this would reduce their access to patronage resources and so hinder their ability to maintain a position at the apex of society. SAPs, therefore, should be purposefully used to undermine these sectors, together with allied elements (an urban elite, in Bates’s work on sub-Saharan Africa), via a dismantling of the state apparatus (Arrighi 2002).
Of course, it is important to point out that neoliberalization in the global South was not simply a case of external policy imposition and coercion, nor was it ever evenly or universally applied. First, many domestic elites, especially given the large proportion educated in the United States (or, to a lesser extent, in the United Kingdom), were increasingly convinced by free market logic, or else sided with IFIs to gain political advantage over rivals or to push through unpopular policies (Chwieroth 2007; Teichman 2004; Vreeland 2003). Second, many states in the global South—overwhelmingly those not compelled by debt to accept SAPs—tended toward some combination of largely bypassing the liberalizing trend, avoiding reform until comparatively late, or taking up liberalization gradually and on their own terms. Third, various forms of resistance, disengagement, or defiance of SAPs and the neoliberal agenda more broadly were common across the South, both from elites and the masses (with the latter often giving rise to anti-IMF riots), though such action succeeded mostly in slowing rather than reversing the tide (Wade 2003; Whitfield and Fraser 2010).
Even given these caveats, in my view it makes sense to regard neoliberalism as a global regime of accumulation, following Fordism–developmentalism and corresponding to the phase of financial expansion in a U.S.-led world economic cycle. In this manner, neoliberalism, as with Fordism, should be seen essentially as a tendential externalization of a particular temporal phase of the U.S. political economy (compare Henderson, Appelbaum, and Ho 2013). During the Bretton Woods era, an internally focused, continent-size United States operated relatively independently of the global economy, at least in comparison to the previous hegemonic power, the United Kingdom (Arrighi 1994, 289). A global regime that allowed for post–World War II reconstruction, Keynesian class compromise, and autonomous national developmentalism, therefore, not only furthered U.S. Cold War security interests but also did little to impinge upon U.S. accumulation. This remained true until the success of the leading national accumulation projects (in West Germany and Japan), together with the growth of international finance, began to breach the walls of regulation that separated nationally autonomous spheres (Arrighi 1994, 314).
Following the crisis-prone 1970s, the U.S. embrace of financialization required global as well as domestic restructuring if it was to be employed as a basis for continued U.S. hegemony. In contrast to the fraying developmentalist foundation of relatively protected national spaces of accumulation, taking advantage of the benefits of financialization and neoliberalization called for a global scene in which capital could move freely across the globe. The continuing internationalization of U.S. finance capital (Krippner 2005) built upon the results of the Volcker shock, which reversed capital flows back toward the United States, and the mix of consensual and coerced opening to capital movements around the world, which facilitated the process.
If neoliberalism, considered on a national level, tended to entail a redistribution of income upward (Duménil and Lévy 2001), this was partly built upon another form of redistribution at the global level, as capital shifted back from South to North, with the IFIs as the ultimate guarantors of this process.10 For this reason, Makki (2004) labels global neoliberalism a “tributary regime.” In keeping with Arrighi’s notion of financial phases of accumulation cycles, redistribution upward on multiple scales masked sluggish expansion of the global economy as a whole, with world gross domestic product growth slowing substantially, from an average of 5.5 percent per year in the crisis-prone 1970s to 2.3 percent in the 1980s and 1.1 percent in the 1990s (Wade 2004). Large swaths of the global South were reduced to near stasis for long stretches during the 1980s and 1990s, and Latin America, sub-Saharan Africa, and West Asia’s per capita GNP levels, as a proportion of those in the core, declined over the same period (Arrighi, Silver, and Brewer 2003).11
In broad terms, those regions and states that did not embrace liberalization so readily or early, particularly in East Asia, bucked these disappointing tendencies and registered relative developmental successes (Henderson 2011). Such unevenness in both reform efforts and economic outcomes provides some ammunition for the critique of claims that neoliberalism might be thought of as a global regime (Brenner, Peck, and Theodore 2010). This line of argument contends that an understanding of neoliberalism as a global disciplinary force inadequately accounts for its variegated nature by positing global unevenness not as a constituent feature of neoliberalization itself but as an addendum to an otherwise unidirectional world-historical force. The point that neoliberalizing pressure (both internal and external to a given state) superimposed upon existing political-economic landscapes will produce differential outcomes, unintended consequences, and countervailing forces in different locations is well taken. The second half of this book attempts, in part, to address these concerns via a rescaling of analysis to the national level.
Indeed, in many respects, the notion of a variegated, constitutively uneven process of global neoliberalization is an excellent fit with the overall theoretical stance adopted in this research, of an open-ended world-system conceived of as the outcome of a historical process of part–part and part–whole interaction (McMichael 1990, 2000). If both approaches attempt to incorporate reciprocal rather than unidirectional interaction among global locations, however, it should be noted that the form and level of reciprocity seen in such relationships is to a large degree determined by differentials in political and economic power. Against the backdrop of competition for mobile capital, states in the global South will tend to be much less able to defy, resist, or modify pressures toward the neoliberalization of their political economies than many of the less risky investment destinations of their Northern counterparts. When the scope is limited to those Southern states that accumulated high burdens of debt during the 1970s, thus leaving themselves dependent upon IFI support, the direction of influence is much closer to being unidirectional in nature.
This is not to say, however, that neoliberalization, even when advanced through SAP policy conditionality, is ever entirely determinative of political-economic outcomes. Instead, the global neoliberal regime and its attendant regulatory institutions are best thought of as disciplinary in nature, producing, to borrow a term from Brenner, Peck, and Theodore (2010), a parameterization of national government policies, with the lever of debt allowing for a narrowing of space between parameter walls in those cases most beholden to the IFIs.12 In fact, Fordism–developmentalism might also be regarded as (unevenly) establishing a set of looser parameters for each national state. Within this space, developmentalist projects in the South and Keynesian settlements in the North could be accommodated though efforts such as the NIEO, which attempted to challenge the structures upon which the global regime rested, breached the parameters, and so tended toward destabilization.
Neoliberalism, though, is distinct in that a greater level of discipline is exercised at the global level—whether directly, by IFIs, or indirectly, via capital markets—with less discretion left to national authorities. For this reason, though neoliberal forms show a good deal of temporal and spatial variation, particularly in the North, the neoliberal era has lacked the variety of national political-economic orientations seen during the Fordist–developmentalist period. The examination of post-neoliberal turns that makes up the second half of this research suggests that, with the weakening of neoliberal disciplinary power and the concurrent opening of policy choices seen over the commodity boom years, we witnessed the reemergence of a broader range of distinct developmental strategies in the global South.
This conceptualization provides a basis for the claims upon which this book’s arguments rest. All things remaining equal, in highly indebted states of the global South, a break with a neoliberalizing political-economic trajectory, expressed via governmental policy orientation, was not possible—at least, not without prompting a ruinous isolation from the circuits of the global economy. As detailed in chapter 1, the rise of China and the disruptive influence that its spiraling resource import demand has had on global commodity markets since 2003 provided an escape route from neoliberal parameterization for those states that export these commodities, allowing for a range of possible approaches that, while certainly not limitless, more closely mirrored the degree of scope for the independent, domestic setting of policy priorities seen during the developmentalist era.