Democracy in default : finance and the rise of neoliberalism in America

"Neoliberalism is widely explained as an affirmative political choice inaugurating a new stage of capitalism, typically made by conservative politicians at the behest of capital. From this perspective, Friedrich Hayek, Milton Friedman, and the Mont Pèlerin Society provided the intellectual ammunition for the right-wing seizure of the state and the theoretical blueprint for dismantling the institutional and ideological legacy of the New Deal. But what if this story got its cause and effects backwards? What if it was not neoliberalism that ushered in financialization but rather financialization that allowed neoliberalism to take root? Democracy in Default argues that financialization was a tactical response to a political crisis within liberalism, and that financialization in turn supports neoliberal governmental policy that displaces democratic processes and accountability. Both claims move against conventional wisdom, which treats neoliberalism as a response to a crisis of capitalism, and financialization as the offspring of neoliberal deregulation. Judge begins by exploring the ways that liberal political doctrine disavows the problem of distributive conflict-the general condition in which people vie for increasing shares of the social product-and is consequently vulnerable when these conflicts erupt. It then revisits the nature of the crises that produce the turn to financialization to show how finance both responds to renewed conflicts and enacts a fundamental transformation in liberal democratic governance. The second half of the book presents three case studies in which one sees vividly how governing for the people, while never fully realized in capitalist democracies, was radically displaced by the shift to financial market constituencies: the bankruptcy of Stockton, California; the investment strategy of the California Public Employees' Retirement System; and the 2008 financial crisis."