The Limitations of the Limited State: Neoliberal Theory Meets the Real World

The neoliberal ideal of the limited state is unrealistic, partly because the damage done by the market’s necessarily disruptive force can rarely remain unaddressed, partly because sustaining the market itself requires considerable continued political attention. This is particularly the case where the very success of neoliberalism’s own programme of destroying opposition to itself creates an economy, not of pure markets, but of powerful corporate interests lobbying governments and regulators to work for them. This chapter contends that without public policy redress, neoliberalism runs the risk of producing inadequate competition, insoluble information problems for consumers in relation to increasingly complex products, unremedied externalities, a lack of public and collective goods, and distortions resulting from growing inequalities and from corruption, which is in turn the product of the fusion of economic and political power. This analysis is also applied to the European Union