Neo-liberalism and the Market State: What is the Ideal Shell?

Abstract

What sort of market state do neo-liberals want? Lenin once remarked that democracy was the ideal shell for capitalism (see Jessop 1983). But he was referring to the sort of propertied democracy emerging in the nineteenth century and to the task of dismantling various forms of absolutist mercantilism that confronted the rising bourgeoisies of Europe. However, the situation has been different for neo-liberals struggling to assert their ascendancy over the mass-based social democracies of the second part of the twentieth century. Neo-liberals like James Dorn of the Cato Institute now see democracies as potential threats to liberalism, incubators for the tyranny of a rent-seeking majority over the private interest. He noted that ‘Democratic government is no substitute for the free market …’ (1993: 601). Thus, for neo-liberal ‘true believers’, the ideal market state was one that essentially guaranteed individual property rights and contracts, and that might not be a democratic state.² As we shall see, it was a vision in which the desire to dismantle the state sat uneasily with the perceived need to create an insulated system of techno-managerial governance that would protect the market from politics and possessed the authority to redefine society in terms of an ongoing series of highly functional voluntary transactions between rational individuals.

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I would like to thank several people for constructive comments on earlier versions of this chapter. These include Vedi Hadiz, Kevin Hewison, Wil Hout and Garry Rodan.