Abstract
This article conceptualizes the market as a concept to ask ‘how is neoliberalism able to go on?’ A question that was raised in the aftermath of the 2008 Great Financial Crisis and the persistence of market-based policies. It argues that one of the reasons is to be found in the performance of failure. Recent contributions have started to point to the cultural and ideological preconditions of failures. The following discussion seeks to contribute to this debate by identifying three distinct notions of failure: as empirical fact, as communication and as institutional fact. These three notions give rise to technological, reflexive and critical debates respectively. This article argues that market-based problematizations of failure translate communicative and institutional failures into empirical ones with the consequence that reflective and critical debates morph into technocratic ones.
Keywords
Introduction
In the 2016 special issue of Millenium, Andreas Nohr, Aaron McKeil, and Scott Hamilton explored the status of failure and denial in International Relations (IR). When they touched on the issue of failures, they showed little interest in mere empirical descriptions of what could or could not fail but wanted to see explorations into their ‘background conditions’, epistemology, and hence politics.
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What the debates at the conference revealed was that while failure was frequently used in all its grammatical variations, like ‘to fail’ or ‘being a failure’, it was quite difficult to capture the concept in its own right.
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As soon as failures were identified, the focus moved quickly to possible causes and consequences rather than their epistemology and politics.
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In a similar vein, the editors of the recent
As different as these various contributions to a ‘critical failure studies’ are, they do show that failure is a far more complex and political concept than what it is usually assumed to be.
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By taking the existing interest in neoliberal failure as a vantage point, this article seeks to contribute to this debate in IR. Yet it does so by pursuing a slightly different research question: instead of examining the
To pursue this question, I propose two moves: first, it has been pointed out that it is useful to reconstruct neoliberal thought via the notion of the market. 15 The possible ways to address, reconstruct, and conceptualize neoliberalism are plentiful and varied if not even contradictory. 16 To approach neoliberalism via the market offers a more targeted approach as the market is, as Foucault has shown, at its conceptual center. 17 As Watson and Eagleton-Pierce have equally pointed out, the market itself has no voice, but it has agency. It cannot be touched, but it can hurt. It is nowhere to be ‘seen’, but it is made visible through numbers, graphs, and statistics that we encounter in every newspaper. 18 They both point out that the market today is treated like a ‘subject’ that judges, evaluates, needs confidence, and that can also fail. Indeed, it is striking that it is possible that the concepts of the market and that of failure go so well together. It is almost natural to speak of market failure or to argue that someone has failed against the market. 19 Yet what kind of failure do we talk about when we use it in relation to the market? Is it the same kind of failure as the failure to meet a deadline, to repair a machine, or communicate effectively?
To see how failure and the market relate to one another, I secondly suggest that it is possible to differentiate three notions of failure: the concept of failure works quite differently and points to different consequences whether it refers to some empirical ‘fact’, to a failure in communication, or to the failing of the existing institutional landscape. This article seeks to show that these two moves (from neoliberalism to markets and the identification of different notions of failure) offer a window into how neoliberal thought works: while critiques of neoliberalism address ‘failure’ as a particular mode of organization and would like to see an alternative ‘regime’ of failure, neoliberals can – via the notion of market failure – translate this into an empirical question that has to be answered by empirical data and through which they reduce debates to a technical questions and thereby are able to go on.
In the following, the discussion unfolds in three steps. The first section reconstructs the debate on neoliberalism as pursued by economic historians, international political economists, and heterodox economists. This section does not claim to offer a comprehensive overview over all dimensions of the debates on neoliberal thought, a task that would require a handbook rather than a section. Instead, the purpose of this section is to highlight how neoliberalism is linked to a specific branch of economics and, hence, a particular way of addressing problems that put the market at the core of discussions. A way of ‘problematization’ that experiences a ‘strange non-death’ after the 2008 world economic disaster but that nevertheless highlighted the ‘flaw in the ideology’, as Alan Greenspan has aptly put it. This question of this nondeath, of how neoliberalism is able ‘to go on’, motivates the discussion of the second section that introduces the three notions of failure: as an empirical fact; as a collapse of communication, and as a feature of a specific mode of organization. Via the three notions of failure, this section shows how they each give rise to a specific ‘discourse’: the failure as empirical fact fosters a technical discourse on causes and consequences. A discourse that will utterly misfire when we deal with communication failures. Here, the discourse is based on explications of positions and the exchange of reasons and justifications. Finally, failure in the mode of organization demands a ‘critical’ discourse that takes the existing structures not as given but contingent. 20 This notion highlights the very exclusionary logics, structural preconditions, and invisibilities as highlighted above. The third section uses the example of market failure to show how the ‘critical’ discourse is translated into a technical one through which neoliberalism is able to go on.
Critique in/of the Age of Neoliberal Reason
Neoliberalism is like time: we all know what it is until we are asked to define it. Its use in political discourse and its wide application to describe and ‘criticize’ dynamics and tendencies make it an essentially contested concept: there is no definition that could adequately capture all its uses. That it has become common to define and differentiate different
An attempt to trace all the different uses and bring them into a coherent order would constitute a formidable task of its own. 30 A task that runs the danger of moving in circles and that either gets lost in details or has to work with too many shortcuts. 31 Any story would then need to engage in some kind of genealogy that is usually linked to Hayek and Friedman in both their Austrian and Chicago variations. The story would eventually then also show how Chicago Economists were instrumental in the 1973 reforms by Pinochet, Thatcherism in the United Kingdom, and Reaganomics in the United States. There is certainly still much to be explored here.
Instead of going into all these details, let us hold on to the notion of failure instead. In
Yet even though its failure is easy to see, we also witness a
In a recent book chapter, Philip Mirowski has offered some suggestions in this respect. Here, he starts with a nice example of the neoliberal underpinnings of Wikipedia and other Silicon Valley companies. For Mirowski, these Silicon Valley companies draw their inspiration from the neoliberal thought collective, that is, the descendants of the
For Mirowski, this internal friction between the ‘preaching’ of ‘free expression’ and the internal hierarchical mode of organization – as visible in the thirst for data and profiles – is characteristic of today’s Big Tech companies such as UBER, Google, YouTube, and the social media platform formerly known as Twitter. This allows for the extraction of massive profits for a few and bestows celebrity status onto the CEOs of these companies. The way Elon Musk preaches free expression of will but at the same time decides on how that will can be expressed (with people being of dissenting opinions being released in video calls), shows quite clearly the rather contradictory nature of the ‘organization’ of knowledge in neoliberal institutions. 40 What is more important, however, is that for Mirowksi this contradiction is the reason why neoliberalism is able ‘to go on’: The free expression of will plays with the ideal of human rights and individual freedom, but at the same time is also used by very right-wing organizations to support conspiracy theories and the spread of racist and misogynist opinions. Yet that story also offers an easy – eventually too easy – solution: if knowledge is the problem, then it should be possible to offer publicly owned alternatives. There is no reason why either open source or state-led platforms could not offer data protection, forbit the selling of profiles, and return profits to the public hand. The reason why neoliberalism is able to go on, in the end, is due to the lack of political will to develop alternative institutions.
While there is much to be liked in Mirowki’s account, there is also a second story to be told here, a story that equally focuses on the epistemology of the market but starts with failure rather than with the organization of knowledge. As I will show, it is via the ‘failure regime’ to define failures as empirical questions that neoliberalism continues to go on. As a consequence, it is not the unwillingness to build alternative platforms or infrastructures, but the inability to challenge the specific ‘problematization’ of failures, to use Foucault’s term, through which every critique is translated into a technical question that has to explore empirical causal chains. To explore this avenue further, the next step will first introduce the three notions of failure before the third section traces how the inner logic of neoliberalism’, so to speak works via the notion of market failure. I am aware that there are other avenues and stories to be told, but this here hopefully proves the fruitfulness to think through and more via the notion of failure.
On the Contingency of Failure
The notion of failure has started to attract attention. Instead of taking the notion of failure as an unproblematic given that can be used quite randomly, a literature has emerged that already points to its structural preconditions, invisibilities, and exclusionary logics and that also has established a tight connection between neoliberalism and ‘regimes of failure’. 41 To trace this link, this section suggests that it is possible to differentiate three notions of failure: as an empirical ‘fact’, a communication failure, and the failure of the existing institutional setting. 42 As I will show, in all three settings, the notion of failure works differently which leads to different forms of ‘critiques’ and specific forms of ‘debates’ around them. 43
Empirical Failures
The first understanding is eventually the most frequently and commonly used one: the notion of failure is used when
After the failure is invoked, a second step kicks in: a debate unfolds that identifies and dissects the ‘cause(s)’ of that failure. Via the identification of specific links and causal chains, questions of responsibility and accountability are negotiated and possible solutions are proposed. The bank clerk may point out that the increase was caused by an absence due to illness. The university can show that the underperformance of one indicator was due to an overall drop in research funding or demographics that hit all universities alike. Debates then are
Communication Failures
Let me start the discussion of the second notion of failure with a nonbiographical thought experiment. Imagine a couple (ego and alter) where ego says to alter ‘I love you’. Imagine that this couple has been together for years and so alter responds with a slightly cold ‘I know’. Ego is disoriented as a slightly warmer reaction was expected and thus reinforces the point: ‘No, you don’t understand’, ego says, ‘I mean I love you’. Again, alter answers by saying ‘I know, but please can we talk about something else now?’ Somehow disoriented, ego feels misunderstood and laments: ‘all I wanted to say is that I love you’ and then adds a couple of more sentences about relationships in general that can be disregarded for now. Obviously irritated, alter now turns around asks ‘what’s wrong with you?’ From there, a longer discussion about their relationship and expectations evolves.
In this context, failure does not refer to ‘just’ some empirics but to the way communication evolved and ultimately collapsed where the ‘empirical’ fact of ego’s ‘true’ feelings that has ‘caused’ ego to utter those words simply becomes irrelevant. In these moments of communication failures,
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empirical evidence moves either to the background or can make things much worse. The reason being that ‘expectations’ are not directed against some empirical fact, but circulate among different actors (ego and alter).
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When two cyclists meet on a narrow bridge and try to direct their mutual expectations on how they can pass without having an accident, then they form expectations on the basis of certain inter-subjective standards and rules that help them to coordinate. But they do not just
As expectations circulate among different actors, the verification system in terms of quantities does not work. What instead usually happens is that the acknowledgement of the ‘failure’ to communicate triggers a
It is worthwhile to remember that John Austin reminds us in
Institutional Failures
In order to carve out the third notion of failure, let me revisit the situation between ego and alter above. In the previous relational setting, ego and alter both form expectations on how that relationship is supposed to work. Those expectations concern what positions both in that relationship occupy and also what counts as normal and acceptable behavior. Every relationship might occupy these normalized expectations where deviance is then also normatively observed. Now let us assume that ego and alter joined the ‘institution’ of marriage. As soon as the relation is ‘institutionalized’, three differences can be identified with regard to (a) how the relation can end; (b) how institutions produce a set of prestabilized positions; and (c) the production of ‘exclusionary logics, invisibilities, and silences’. Imagine ego has enough of the communication failures and decides to end that relationship and walks away. This inevitably then terminates that relationship. Yet even if marriages fail and are terminated, that does not end ‘marriage’ as an institution. The institution of marriage exists independently of the ‘inter-subjective’ expectations between ego and alter. The institution of marriage existed before and will continue to exist after ego and alter’s specific ‘relation’. This is true for all institutions as they define already the range of possible positions and roles that ‘actors’ can take on. Nobody operates within an institution as ‘just’ a human being, but an actor is always a patient or a doctor, a passenger or a pilot, a professor and student. Actors take on positions that are defined by the institution itself. As Wittgenstein’s notion of the language game reminds us,
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only on the basis of
At the same time, these rules and norms also deny access, exclude some to enter, and produce silences as one is not able to ‘speak’ the language of the game. In every social formation, there are marriages that are impossible or not allowed; there are those who are not granted access to a hospital or who cannot enter higher education. Of course, these positions and limits are subject to change and transformations. The institution of ‘marriage’ itself changes over time: marriage today means something different than in the 19th century as many of social preconditions, the institutional settings, and parts of its legal ‘infrastructure’ have changed. Yet that does not deny the fact that institutions work for some and not for others, that institutions include and exclude, and that institutions serve specific – impersonal – objectives such as the provision of health, the spread of wisdom, the reproduction of society. 53
As institutions are not based on merely intersubjective, relational expectations but include expectations about the workings and ‘objectives’ of the institution themselves, we also encounter here a different notion of failure: To argue that the ‘institution’ of marriage fails means something else than to say that ‘a marriage’ fails. That the institution of the university fails is something else than to say that a student or a professor failed to communicate appropriately, and thus to say that the market fails is something else than to say that
As a brief summary, this section has outlined three notions of failure: the first notion of failure describes an empirical delta between what was ought and what was happening. The expectations were directed here toward some empirical fact. The debate around the failure then fosters a technical debate about causes and consequences. In the context of communication failure, the expectations circulated among different actors. As soon as communication fails, a second-order discussion sets in that leads to a reflective exchange of reasons and justifications that exemplify the position from where utterances were made. In the context of the institutional setting, the expectations are directed toward the constitutive rules that define ‘the game’ in the first place. To say that the institution fails thus demands a critical debate that takes existing structures not as given and that point to these exclusionary logics, invisibilities, and structural preconditions as outlined above. Much more could be said about how these notions of failure are linked to different understandings of what language does (as information, dialogue, or discourse) and how notions of language also change of what ‘counts’ as ‘critical’. 56 The next section will now ‘reconstruct’ how failure links to a critique of the market.
The Failure of the Market
With these three notions of failure in mind, we can come back to the question how neoliberalism is able ‘to go on’. For that, this section briefly looks at two recent events where ‘failure’ has been featured prominently: the 2008 Great Recession, which until today is one of the most important events in the history of finance if not even the world economy, and the question of climate change. Much has already been said on both examples. 57 The following discussion does not claim to offer a substantive contribution on how they are to be solved. Rather, this section simply tries to shed a light on how the notion of failure is put to work and thereby allows for a certain set of arguments and a certain kind of evidence to ‘go on’.
Let us first revisit the 2008 ‘Great Recession’ as it is called today.
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We may have still the dramatic pictures in mind when Lehmann Brothers went bankrupt on 15th September 2008 which sent shock waves around the globe. We might not be fans of references to popular culture, but the moment in the movie
In April 2009, the G20 entrusted the task to oversee this transformation to the International Monetary Fund (IMF), the Financial Stability Board (FSB), and the Bank of International Settlement (BIS) that accompanied the process with extensive review, policy briefs, and progress reports.
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Already in October 2009, both the IMF and the FSB submitted a joint report to the G20 on Because of accumulated weaknesses in risk management and underwriting standards, and the sheer scale of the adjustment required, attempts by individual institutions to contain their risk exposures have led to reinforcing dynamics in the system as a whole [. . .]. Weaknesses in public disclosures by financial institutions have damaged market confidence during the turmoil. Public disclosures that were required of financial institutions did not always make clear the type and magnitude of risks associated with their on- and off-balance sheet exposures. There were also shortcomings in the other information firms provided about market and credit risk exposures, particularly as these related to structured products. Where information was disclosed, it was often not done in an easily accessible or usable way.
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This quote nicely takes up a classic topic of the market failure literature on asymmetric information. Without going into details on various issues around adverse selection or moral hazard, the framing of the ‘failure’ in terms of information and data problems puts emphasis on questions of how to extract and aggregate data, develop common standards, and report regularly on risk exposures that pushed the debate towards the restoration of market confidence and improvement of market resilience. A framing that located the failure outside the market mechanism itself: not the market does not work, but the available information and data infrastructure. 64 How to improve that ‘infrastructure’ became the task of various expert groups that could deliberate on problems, propose solutions, and identify tasks ahead. The logic of the debate followed the functionalist argumentation of the ‘empirical failure’ framework flanked with impressive statistics and publicly available progress reports. 65
For a slightly different take on market failure, we have to move from 2008 to 2015. In preparations of the COP 21 Conference in Paris, the G20 asked the FSB to explore the possible impact of climate change for the stability of financial systems. In the same year, the Bank of England (BoE) published a report that came to the conclusion that a scenario with a higher than the two degree target would severely impact the stability of financial markets. 66 This provided the context in which Mark Carney, then Governor of the BoE and Chair of the FSB to publicly adressed this issue for the first time on 29th September. 67 This speech on ‘The Tragedy of the Horizon’ is seen as the starting point of a debate that led Central Bankers to take seriously the issue of climate change. The very title plays with the ‘tragedy of the commons’ framework in the market failure literature that points to the overuse of resources in the face of insufficient allocation of private property rights.
In his speech, he outlined that apart from the physical risks of extreme weather incidents, also ‘transition risks’ have to be taken into account: a too slow a path would render the two degree scenario impossible and will have a negative impact on financial stability. However, a too quick a change would equally wipe out important financial assets of the brown economy which equally threatens financial stability. For him, the political issue was thus one of the right timing. Yet he was convinced that ‘a “market” in the transition to a two-degree world can be built. It has the potential to pull forward adjustment, but only if information is available and crucially if the policy responses of governments and the technological breakthroughs of the private sector are credible . . . With better information as a foundation, we can build a virtuous circle of a better understanding of tomorrow’s risks, better pricing for investors, better decisions by policymakers, and a smoother transition to a lower-carbon economy’. 68
The solution that Carney proposed is thus quite similar to what was proposed in the context of the 2008 crisis: the problem is a lack of data. Inadequate standards and measures lead to a distorted market mechanism. In response, Carney set up a Climate Disclosure Task Force (TCFD) whose task was to design and enforce standards in consultation with the industry. Under the leadership of Michael Bloomberg, the task force started its operations in 2016, and already in 2018, it was convinced that the industry accepted its standards. 69
Interestingly enough, this is only half of the story. 70 As time went by, it became clear that the market-based solution does not bring about the required changes necessary to fight climate change. In 2018, several Central Bankers founded the Network of the Greening of Financial Systems (NGFS) that tried to change Central Banker’s perspective and advance a more progressive agenda. In 2020, the NGFS, published the Green Swan Report, 71 a report that in fact challenges the view that climate change could be considered a market failure: according to the authors, the magnitude of the devastations surpasses the limit of what could count as a market failure. With the notion of the Green Swan, they pointed out that the issue of climate change needs an epistemological shift that demands immediate actions before the crisis unfolds. The imperative to act now is aligned in this report with a call for a different way of knowing about the economy that these economists search for in earth science and the notion of complex adaptive systems. 72 The report not only calls for an epistemological break from ‘traditional’ practices but also – and quite deliberately – seeks to expand the semantic framework of how ‘failure’ is talked about. The failure of the Green Swan that surpasses the confines of ‘market failures’ and the idea of ‘market neutrality’. The report emphasizes deep uncertainties, nonreversible changes, and even raises doubts on whether the current institutional landscape is adequate for fighting climate change. Whether or not that report succeeds in changing policies, however, remains to be seen as the urgency around climate change was somewhat surpassed by economic questions like high inflation.
If we take these two examples together, however, then we can identify how failure works as a ‘translation device’: If ‘failure’ is understood in market-based and orthodox ways, then the debate follows a technocratic ‘how to’ imperative that invites for functionalist argumentation, the implementation of audit mechanisms, and progress reports with emphasis on empirical measures and standards. Critique then also has to follow the same epistemological trajectory and offer alternative causal chains and ways to ‘fail better’. In the context of the 2008 crisis, there is then talk about a necessary emergency fund and its size, the necessary percentage of equity of banks, the reduction of leverage, the identification of systemic important financial institutions (SIFI), etc. In the context of climate change, debates focused on the right standards and measures that allow for the evaluation of climate-related financial risks. The question of climate change, on the other hand, also points to the limits of this approach and the current search by some central bankers for a different vocabulary to address the ‘market failure’ of climate change differently. As the Green Swan Report then continues to argue, classic ways of knowing about the economy – as inscribed in classic economic concepts and models – will simply fail to reach the objective of keeping global warming at two degree. 73 The search for a different failure regime thus opened the way to search for a different way of speaking and writing about the market. With the calling into question of market failure, however, the Green Swan Report also calls into question the neoliberal conviction that the market produces the socially best outcome.
Conclusion
This article explored the structural preconditions, invisibilities, and exclusionary processes of failures to outline how neoliberalism is able to go on. It offered a conceptual framework that identified three different notions of failure: failure that refers to an empirical case, communication failures, and failure that refer to institutional settings. Those failure-izations operate on different notions of evidence, of how divergent opinions can be voiced, and which form these debates take on. Empirical-oriented failure invite for a functionalist and technocratic debate that focuses on quantities and the pursuit of ‘if-then’ chains. The communication failure demands a more reflexive exchange of reasons and justifications. The failure of the institutional setting invites a critical debate in the sense of Cox where the existing structural conditions are not taken as a given.
The discussion then showed that these three notions can be used to understand why neoliberalism is able ‘to go on’, a question that was recently posed. Philip Mirowski suggested that one avenue leads to how knowledge is put to use within neoliberal institutions. Without wanting to criticize these insights – as they do certainly have their validity – this discussion simply pointed to a second dimension of why neoliberals are able to ‘go on’: in the power to define what counts as a failure.
With the examples of the Great Recession and Climate Change, it was argued that one of the ‘sites’ can be found around the notion of market failure. In an orthodox reading, the notion of market failure invites empirical inquiries into those external factors that hinder the market to work. At the same time however, the notion of market failure presupposes that the market can and should work. In the context of climate change, that assumption is called into question: by openly questioning the common way of understanding climate change in terms of a market failure, the Green Swan Report opens the gateway for different ways of thinking and talking about the economy. Together, these two examples highlight that the market is not just a selection mechanism that invites for competition, but also it comes with an entire semantic field that stabilizes positions, structures arguments, and gives some actors voice as ‘experts’. At the same time, this ‘field’ silences alternative arguments and disallows for a ‘public’ debate where everybody has equal voice. Consequently, it is not good enough to think about alternative institutions. To challenge this tight link between what Foucault would call the sayable and the visible of discourses, the knowledge structures, and the institutional practices, it is necessary to find a vocabulary in which different voices can be heard. It is necessary to look at all those expert commissions and reports through which the market and its semantic field gets stabilized and where failures then translate into policy proposals. Hence, it would be necessary to open those sites to different ways of ‘knowing’ within expert groups, scientific panels, research centers, etc. It would need to challenge the conceptual apparatus through which failures are made sense of. It might be the sad insight that I have considerable doubt that this is going to happen from the outside.
Footnotes
Acknowledgements
I thank all who took the time to comment on earlier versions. It profited from dialogues in the context of the Postcolonial Hierarchies Network, the Center for Political Practices and Orders, and the GLOBE Network. Also, a big thank you to all those who participated in these meetings. I also want to send a special note to the editors and the anonymous reviewers who were gracious beyond belief. The editors were flexible when a personal crisis demanded more time, and I rarely encountered such a generous, critical, and engaging reviewer as this time. You brought back my belief in the review process. All remaining errors – and I am sure there are plenty – are mine.
Correction January (2025):
This article has been corrected with minor grammatical or style corrections since its publication.
Authors’ Note
Versions of this manuscript have been presented at workshops and research seminars at the Graduate Institute and the Vienna Institute for International Studies, and in particular the Millennium Symposium.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
