War and strange non-death of neoliberalism: The military foundations of modern economic ideologies
| Published date | 01 June 2021 |
| DOI | 10.1177/0047117820978273 |
| Author | Takeshi Nakano |
| Date | 01 June 2021 |
| Subject Matter | Articles |
https://doi.org/10.1177/0047117820978273
International Relations
2021, Vol. 35(2) 236 –255
© The Author(s) 2020
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DOI: 10.1177/0047117820978273
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War and strange non-death
of neoliberalism: The military
foundations of modern
economic ideologies
Takeshi Nakano
The Ministry of Economy, Trade and Industry, the Japanese Government
Abstract
This essay provides a hypothesis about how geopolitical environments significantly affect the rise
and fall of modern economic ideologies. First, it articulates how the two world wars transformed
political, social and ideological conditions into those favourable for the rise of Keynesianism.
Second, it theoretically identifies the political and social foundations of Keynesianism with
expanded state capacity, social cohesion and social equality, all of which were by-products of
major wars. Third, it shows how the transformation of geopolitical environments and the change
of the nature of warfare since the late 1960s undermined the political and social foundations of
Keynesianism and paved the way for the rise and dominance of neoliberalism. By shedding light on
military and geopolitical dimensions of international environments, our hypothesis well explains
the sudden fall of Keynesianism in the 1970s and the current robustness of neoliberal dominance.
Keywords
Keynesianism, neoliberalism, war
Introduction
The global financial crisis of 2007 and 2008 and the following recession seemed to
undermine public confidence in neoliberalism, the economic ideology that had been
dominant in the Western world since the late 1970s and in many other regions since the
end of the Cold War. There are several variations of ideas and practices of neoliberalism,
but they share the view that free markets in which individuals seek their own self-inter-
ests are the best means for advancing human well-being and that the role of politics and
Corresponding author:
Takeshi Nakano, the Ministry of Economy, Trade and Industry, the Japanese Government, 1-3-1
Kasumigaseki, Chiyoda-ku, Tokyo, 100-8901, Japan.
Email: nakano-takeshing@meti.go.jp
978273IRE0010.1177/0047117820978273International RelationsNakano
research-article2020
Article
Nakano 237
particularly of the state should be limited to creating and maintaining an institutional
framework appropriate to free markets.
The global financial crisis shook these neoliberal beliefs because financial markets,
the purest form of the free market, melted down. Nonetheless, neoliberalism has not yet
lost its powerful influence over political-economic practices and thinking. The global
financial crisis certainly paved the way for the sudden and global return of Keynesianism,
which neoliberals strongly oppose. Major countries such as the United States, China,
Japan, and even Germany stimulated their economies to avoid depression. However, this
return of Keynesian fiscal policy did not last more than twelve months.1
One might argue that the EU referendum in Britain and Donald Trump’s victory in
the U.S. presidential election in 2016 were signs of a turning tide. Britain’s decision to
leave the EU arguably reflected the majority of Britain’s neoliberal fatigue. However,
Theresa May, who became the Prime Minister after the referendum, followed Tory aus-
terity policies. It is also true that Trump won the election owing to his populist rhetoric
against market-led globalisation. However, in spite of his assaults on the TPP (the
Trans-Pacific Partnership) and NAFTA (the North America Free Trade Agreement),
Trump consistently proposes massive tax cuts and deregulation for big business and the
financial industry. He is far more neoliberal than his supporters would believe.2 As
Colin Crouch says, ‘What we have to understand today is, therefore, the strange non-
death of neoliberalism’.3
Why does neoliberalism die hard? Crouch argues that the social power of global cor-
porations, especially in the financial sector, is strong enough to capture politics and
maintain the neoliberal policies that are most beneficial for their economic interests,
while the working class of Western industrial society has been in decline and losing its
social power since the 1970s.4 David Harvey also sees neoliberalism as a political project
for ruling classes to restore and enforce their power. After World War II, advanced capi-
talist countries built the consensus that the economic power of ruling classes should be
restrained. However, when low growth and high inflation in the 1970s seriously threat-
ened their economic interests, they had to move decisively to maintain their economic
and political power. Neoliberal policies, justified and legitimised by neoliberal theories,
have remarkably succeeded in restoring and even enforcing their class power.5 Once the
state was highjacked by financial classes, financial crises could never undermine neolib-
eral dominance.
These political-economic approaches seem to persuasively explain the surprising
robustness of neoliberal dominance by highlighting the role of politics. Because it is the
political will of the state that takes a neoliberal stance to build and protect the neoliberal
economic order, it is appropriate to explore whose particular interests and class powers
operate and in what ways they work in the organisation of the state. However, as Otto
Hintze once emphasised, ‘we must direct our attention particularly to two phenomena,
which conditioned the real organisation of the state. There are, first, the structure of
social classes, and second, the external ordering of the states – their position relative to
each other, and their over-all position in the world’.6 Crouch and Harvey approach the
first, the domestic aspect of the neoliberal state. In turn, this essay will discuss the sec-
ond, the international aspect. In particular, it will shed light on military and geopolitical
rather than economic dimensions of international environments.
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