This chapter comes from "Beyond Neoliberalism: Insights from emerging markets," a report exploring the ongoing debate over the future of capitalism and policy choices across a range of domains.
A decade after the global financial crisis, a wide-ranging debate has opened in both the United States and Europe on the future of capitalist economic models and the need for new economic thinking.1 This was spurred not only by the failures that precipitated the crisis, but also by a deepening realization that the dominant neoliberal paradigm had underdelivered for many people in many places over many years. Recently academics and policymakers on the left and the right in the U.S., the U.K., France, and Germany have begun to stake out alternative visions for organizing society.
Across emerging markets, meanwhile, the debate on neoliberalism has also reignited. Neoliberalism spread unevenly across emerging markets, embodied in the Washington Consensus policies embraced by the World Bank, International Monetary Fund, and U.S. Treasury in the immediate post-Cold War period. Yet even at the height of neoliberalism’s influence, it was an incomplete guide for economic development. Indeed, neoclassical economics has always had difficulty in addressing key development problems. How to build a nation out of the ashes of colonialism? How should one think about poverty traps and transition dynamics? How much importance should be given to capacity-building of governments, firms, and businesses? How to build strong institutions and the rule of law in countries with weak bureaucracies? Is a comparative advantage in agriculture a dead end for sustainable growth? Is foreign aid necessary, sufficient, or even useful? Are global trade, investment, and tax rules stacked against developing countries? These core questions found little guidance in neoclassical equilibrium economics.
This project surveys the state of neoliberalism and its alternatives across emerging markets, and seeks to understand how countries are extending, revising, and rejecting aspects of neoliberalism in redefining their economic policies. This introductory brief provides a conceptual definition of neoliberalism, suggests some reasons why opposition to neoliberalism is growing, and sets the stage for a broader discussion of what comes after neoliberalism.