Capitalism Moving Beyond Neoliberalism: Crises, Changes, and What Comes Next.

Michael Roberts is an Economist in the City of London and a prolific blogger.

Cross-posted from Michael Roberts’ blog

The 16th Annual Conference in Political Economy took place in Lisbon, Portugal last week.  Organised by the International Initiative for the Promotion of Political Economy (IIPPE), the theme of this year’s conference was Capitalism Moving Beyond Neoliberalism: Crises, Changes, and What Comes Next.

IIPPE was founded in 2006 with the aim of “developing and promoting political economy in and of itself but also through critical and constructive engagement with mainstream economics, heterodox alternatives, interdisciplinarity, and activism understood broadly as ranging across formulating progressive policy through to support for progressive movements…. Although we do expect Marxist political economy to have a strong presence and to be engaged with seriously as such by participants, IIPPE is a pluralistic forum where all progressive brands of political economy are welcome.”

There were two keynote speakers. Clara Mattei is from the University of Tulsa, Oklahoma and the Founding President of FREE: Forum for Real Economic Emancipation.where she hosts a weekly FREE podcast. She also launched the ambitious new Center for Heterodox Economics (CHE) in Tulsa.

In her works, Mattei argues that ‘austerity’ is not a technical policy error, but a permanent, structural tool used to protect the capitalist order and suppress working-class power. As detailed in her book of 2022, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, modern austerity was engineered in post-WW2 Britain and Italy to neutralize rising working-class radicalism.

Mattei argues that austerity is a top-down political intervention designed to keep the majority economically insecure and dependent on the private labour market for survival. Poverty, inequality, inflation and unemployment are not accidental failures of capitalism; they are fundamental mechanisms weaponized to prevent workers from gaining bargaining power. Mainstream economics is presented as a neutral, scientific truth, but its models actually serve elite interests by convincing the public that “there is no alternative” to capitalism.

In her new book Escape from Capitalism, Mattei continues her argument that social democratic reforms can only stabilize rather than transform the system. Instead, capitalism must ultimately be replaced rather than repaired. The purpose of capitalist production is not the creation of use-values to support human flourishing, but the endless accumulation of exchange-value by one class through its control over the labor of another. The anger generated by decades of downward pressure on living standards and the retrenchment of welfare states through increasingly harsh austerity — which have been necessary for capital — has created fertile ground for far-right politics.

From this flows what is the alternative to the economic organisation of society, if not markets and capital accumulation for profit. Mattei raises this but does not elaborate. As Stephen Maher and Scott Aquanno point out in a review of Mattei’s latest book: if capitalism must be ‘escaped’ from, that will only be possible by replacing markets with planning at the national and international level. Workers’ cooperatives and community-run financial institutions will not do the trick. ‘Escape’ requires replacing competition among private firms with macro-level coordination of publicly owned enterprises. 

Before I discuss the second keynote speech by Alfredo Saad-Filho, let me take up some of the other sessions at the IIPPE conference.  As usual, there were far too many to cover in a short post (even if in two parts).  Also, I was not present physically at the conference; I participated and attended only the online hybrid sessions.  But I did collect some papers and presentations from some sessions to discuss.

The China Working Group of IIPPE had a myriad of online sessions and started with a special panel on the nature of the Chinese economy and state, with the provocative title: China is not capitalist. This attracted a good attendance both in Lisbon and online.  There were four speakers. 

I started with my presentation with a question: Is China capitalist or is it socialist? In my view, it is neither. The first argument is historical.  China had a revolution in 1949 that expelled the military forces of capitalists and landlords and began to nationalise the land, industry and finance with a central plan, Soviet-style.  In my view, China was thus clearly not capitalist from 1949 onwards. The Deng reforms of 1978 expanded the private sector and markets, encouraged foreign investment and began urban industrialisation. Central planning of the Soviet type gave way to ‘indicative’ planning through guidance and direction. But five-year plans remained in place, the state sectors dominated key industries and finance and capital, and controls on cross-border capital flows remained. 

So in my view, from 1978 China did not revert to capitalism, but instead developed a ‘hybrid’ economy with the state machine under the Communst party still in control. Capitalism expanded, billionaires appeared and a stock market emerged.  But the economy remained dominated by the state and public investment.  Indeed, that was why China jumped from a relatively poor agricultural economy to a manufacturing powerhouse and exporter in just 40 years, taking over 800m Chinese out of poverty, as defined by the World Bank. That would have been impossible if China was just another capitalist economy, with its booms and slumps, as India or Brazil are.

The size of public stock as % of GDP; compared to private sector and public investment to GDP (%)…(Source: IMF public investment database).

But China is not socialist, or even moving towards socialism as the Chinese leaders like to claim.  Socialism, in Marxist terms, is human social organisation without markets, without private capital, without money and where the state machine (armed bodies of men) has been replaced by a civil administration of things on a world scale. So what is China?  It is a transitional economy, where the law of value still operates (wages, money, profits) and where there are sizeable inequalities of income and wealth. Moreover, China is surrounded by imperialist states dedicated to its destruction and the establishment of capitalism. There is no socialist world. But in China the development of the productive forces are still in the hands of a (bureaucratic) state, not a capitalist class. For a more rounded account of my arguments, see my paper:

My fellow presenters also agreed that China was not capitalist, although perhaps they were more inclined to accept that China was ‘moving towards socialism.’ Torkil Lauesen argued that, while China is not capitalist, it is not socialist, at least not yet.  Indeed, there is no socialist country and there never has been. Instead, the anti-colonial struggles of the 20^th century led to a special group of states that had abolished capitalism but remained in transition. These states attempt to survive against the imperialst powers while also trying to develop the productive forces based on public ownership and planning. These transitional states have proved to be superior to the western capitalism in economic growth and social needs. And China has now become the technological leader across a wide range of industries. While I would be concerned that China’s transitional state could still revert back to capitalism, Lausen remained more optimistic and reckons China could move ahead towards a socialist mode of production in the next decades.

Mick Dunford is Professor at the School of Global Studies, University of Sussex and author of Revisiting Uneven Development that I recently interviewed him on. He argued that we need to see the world through non-Western lenses. China has avoided a transition to capitalism and instead is policy-driven and designed to fulfil human needs, where social recognition derives from ‘what you contribute to the shared work of cultural and material life’, rather than “the endless transformation of human labour into abstract value, represented by money.”  Dunford reckons that China is on its way to socialism. There have been three phases of the transition to socialism in China.  First, a turbulent phase of socialist construction in a context of capital shortage and US embargoes (1949-78); second, a phase of reform and opening up in an era of neoliberal globalisation, whose early roots lay in the early 1970s’ rapprochement with the US (1978-2017); and now a ‘New Era’ dating from 2017, which is concerned with innovation, green development, common prosperity and an equitable global order.

Dic Lo is a political economist at Lingnan College Sun Yat-sen University and SOAS. He started by saying that socialism has as its ideal, the emancipation of labour from alienation. ‘Feasible’ socialism implies that the realization of that ideal must be based on the creation of the necessary material conditions. The cruelty of history is that socialism-aspired revolutions have only succeeded in economically backward societies, but have failed in advanced societies. Hence, primitive socialist accumulation has been the overarching task for these revolutionary societies. Countries of the former Soviet bloc had great achievements, but, in the end, failed in this regard. But Lo reckons that China’s “socialist market economy” appears to be approaching success. The question now is whether China will become just another advanced capitalist economy, or will transcend that in the direction of socialism. “Much depends on the interplay between the state, capital, and labour in the Chinese political economy, in the context of the uncertainty of capitalism on the world scale.” Indeed.

So all the speakers agreed that China was not capitalist in Marxist terms.  But they differed on whether China was socialist or on the way to socialism. In contrast, speakers from the floor were mostly (not all) opposed to the view of the platfrom that China is not capitalist. One speaker from Brazil argued that Chinese investment in Brazil was just another example of imperialist exploitation as in the West, ie extracting resources using Chinese labour or operating exploitive conditions. Another speaker said China was clearly capitalist as most Chinese workers were employed in capitalist firms and so the state was not dominant.  Another raised the question of whether China was really a special form of capitalism, state capitalism, where the state controls the surplus for a tiny elite.

In my view, China’s investment in the Global South aims at obtaining vital raw materials for its industrial development, maybe at the expense of labour in those countries, but unlike Western-led institutions like the World Bank or IMF which often impose strict governance, fiscal austerity, and lengthy bureaucratic conditions on loans. China offers rapid financing for critical infrastructure—such as railways, ports, and power plants—that developing nations struggle to fund otherwise. I would add that the transfer of surplus value from the Global South economies to China through trade and investment is tiny compared to the extraction of surplus value from China and the Global South to the West (see my paper and also work by Andrea Ricci who also presented at Lisbon.

Yes, most Chinese workers are employed in the capitalist sector, but that does not decide whether an economy is capitalist or not.  Would we say that as most American workers are employed in small to middling firms (73%) that the US economy is dominated by small capitalists?  No, what matters is control of the means of production.  In China, the public sector dominates.  Of the top 100 Chinese companies, around two-thirds are state-owned or controlled.  Domestic and foreign-owned capitalist firms are a distinct minority.  No other country in the world has such an ownership composition.

As for whether China is a state capitalist economy – I refer you to my cited paper above in this post. The productive forces of China’s economy have expanded at an unprecedented rate since the 1949 revolution (eg compared to India), and without experiencing any recession or slump in any of the years that global capitalism did (se graph of chnage in real GDP below).  If that is an example of capitalist or state capitalist expansion, then maybe we should recognise that capitalism can still deliver on taking humanity forward.  Instead, I think not. China is not a model of capitalist success but one of public ownership and planning over capitalist profitability.

In the second part of my review of IIPPE 2026, I shall look at some sessions and papers on AI, the rate of profit, dollar debt and the role of money in capitalism.

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