The End of Neoliberalism
The virtues it extolled—cosmopolitanism and
competition—led to its demise.
June 15, 2026
By Branko Milanovic, a research professor at the CUNY Graduate Center
If one were to define neoliberal globalization
during the 40-year period from the early 1980s to around 2020, one could say it
was driven by two ideas: cosmopolitanism and competition. One could also say
these same features have now led to neoliberalism’s undoing.
Cosmopolitanism was an essential neoliberal idea going
back to the meetings of the Walter Lippmann Colloquium in 1930s Paris and the
early Mont Pèlerin Society. Cosmopolitanism meant that every individual in the
world was to be thought of as equally important and equally capable of economic
improvement if they faced optimal economic conditions—which implied security of
private property, free trade, low taxes, and a “tolerable administration of
justice.” Very little else, in the words of economist Adam Smith, was needed to
fulfill the universal desire of all persons to “better their own condition” and
for the world to attain unimagined levels of prosperity.
Cosmopolitanism was also the political idea
underpinning a neoliberal world where national government as such would be out
of sight and would leave individuals free to pursue their self-interest. This
was, ideally, a world of small or almost invisible government. In the language
of early advocates of neoliberalism, “imperium”—that is, flags, anthems,
languages, and other paraphernalia of nationhood—would be left to politicians
(and to voters, if citizens insisted on voting), and the more consequential world
of “dominium” would consist of the movement of goods, capital, technology, and
people.
For cosmopolitanism to create global wealth and
prosperity, the world also had to be competitive. Not only would people be
allowed to compete with (or against) one another regardless of national
borders, but they also needed to be stimulated to compete by the display of all
the goods that could be theirs and by the societal approval they would command
if they won in that competition.
Competition produced global growth: Between 1980 and
2020-21, the average world GDP per capita more than doubled, jumping from
$7,700 (in 2005 international dollars, adjusted for purchasing power parity) to
almost $17,000. This makes the worldwide yearly average growth rate 2.1 percent
per capita, an extraordinarily high rate for a period of 40 years. (And this
despite the increase of the world population from 4.4 billion in 1980 to 8.3
billion now.) The more than doubling of per capita income combined with an
almost doubling of the world population means that the total amount of goods
and services produced in the world quadrupled during the era of neoliberal
globalization.
But this “anonymous” growth rate, realized principally
thanks to the high growth rates of Asian countries and notably China, did not
help neoliberals’ case in rich countries. What was politically salient was not
the 2.1 percent global rate but the fact that in the United States and in most
rich Western countries, much of the population registered real (adjusted for
inflation) growth rates of approximately 1 percent per year, while incomes of
the rich grew two to three times faster.
Moreover, the neoliberal period (dated from Ronald
Reagan’s presidency onward) was not only pro-rich, in the sense that incomes of
the rich increased faster than those of the middle class and the poor. It also
represented a slowdown in across-the-board growth compared with the preceding
period. In fact, at every point of U.S. income distribution—except at the very
top—growth was slower during the neoliberal era than during the previous decade
and a half.
The world, at least for a while, seemed to become
uniform, divided not by borders of nation-states, race, or gender but by
differences in people’s abilities, skills, and effort. It was approaching the
neoliberal ideal of a borderless world full of intensively competitive
individuals whose competitive juices were additionally stimulated by the
ability to communicate with any part of the globe and to learn what potential
competitors may do—and then to try to outdo them.
But cosmopolitanism and competition, however
attractive in themselves, were an unstable combination.
Cosmopolitanism crashed against national political
borders. Excessive competition created a world of greed, amorality, and
commercialization of all activities, even those that used to be the most
private ones. Fundamentally, it threatened to make family superfluous.
The winners of neoliberal globalization in rich
countries—inspired precisely by their cosmopolitanism, which they regarded as a
moral virtue (being free of poisonous nationalism)—were quick not only to treat
their less fortunate compatriots’ welfare as of no greater importance as the
welfare of a foreigner or a stranger but also to believe that their
compatriots’ failure in such an open competition was indicative of some moral
flaw. Economic success meant being virtuous, or as Chinese leader Deng Xiaoping,
whose rise to power coincided almost perfectly with those of Reagan and
Margaret Thatcher in the United Kingdom, did not deny: “To be rich is glorious.”
The political system however is organized within
nation-states. The less fortunate compatriots felt forgotten and ignored, and
they were resentful of the way in which they were treated. They saw the
readiness, even eagerness, of the rich to invest in faraway places as
callousness toward domestic workers. Promises of new jobs that would replace
those lost due to cheaper imports or online work elsewhere were hard to
materialize.
The resulting discontent created political turbulence
in the richest democracies. The 2007-08 global financial crisis made obvious
what had previously only been implicit. The rich did not care for those left
behind, and when the costs of the crisis had to be paid, they made sure that
the bill was not sent to them.
The malcontents who in previous times would equally
replenish extreme left-wing and extreme right-wing parties, as they did during
the Great Depression in the 1930s, had now much less choice. The left-wing
parties were either discredited by the failure of the “real-existing socialism”
or, through their accommodative third-way policies, seen as accomplices of the
center-right parties in promoting the type of neoliberal globalization that so
disenchanted Western working and middle classes. Indeed, the peak of neoliberal
globalization was achieved under the notionally left-wing governments of Bill
Clinton in the United States, Tony Blair in the U.K., and François Mitterrand
in France.
So, the disappointed masses turned toward the
right-wing parties that promoted national solidarity, an end to the
(economically) equal treatment of the domestic population and foreigners, and
even a return of industrial jobs. In the international arena, neoliberal
globalization thus became increasingly replaced by neomercantilism, which used
economic coercion, the seizure of foreign assets, import bans, and extravagant
tariff policies to cut, or at least control, the free flow of goods and
services. Free flow of labor was even easier to cut because its political
popularity, even at the peak of neoliberal globalization, was small.
The second part of the neoliberal equation—competition
within society and across borders and time zones—created, with the assistance
of technical advances, a world where the upkeep of one’s homes and cars and
even domestic chores, from cooking to elder- and childcare, were shifted
precisely to the people who no longer had steady jobs and were part of the
class of malcontents. The moral norms that previously held societies and
families together and would have forestalled such outsourcing had become effaced
by a desire to be “glorious”—that is, to be rich. That perceived amorality also
helped the rise of anti-systemic right-wing parties. They grew on the promise
of restoration not only of lost jobs but of self-respect among malcontents and
a return to allegedly traditional values for society as a whole.
In short, neoliberalism has succumbed to its own
substitution by a combination of protective barriers for foreign goods and
foreign people and vain attempts to return to a more traditional world at home.
As in a Greek tragedy, the very features that ensured neoliberal
globalization’s success for decades produced its inevitable demise.
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