EU467      Half Unit
The Political Economy of the Neoliberal State

This information is for the 2020/21 session.

Teacher responsible

Dr Abigail Innes CBG 6.03


This course is available on the MSc in Political Economy of Europe, MSc in Political Economy of Europe (LSE and Sciences Po) and MSc in The Global Political Economy of China and Europe (LSE and Fudan). This course is available with permission as an outside option to students on other programmes where regulations permit.

Course content

This course offers a political economic account of the neoliberal state. It offers critical analysis of the supply-side revolution of the last forty years – the tendency towards the strong marketization of the state – that has characterised not just strongly neoliberal advanced capitalist economies such as the UK but also, increasingly, those such as Sweden we traditionally think of as social democratic. The course begins by looking at how ‘the state’ is currently understood (and indeed, somewhat neglected) in comparative political economy in theory. The course then establishes the historical and analytical context in which orthodoxy around the ‘optimal’ role of the state in the political economy shifted: thus we look at the turn from the mixed market and Weberian states of the post-war era through to rise of neoliberalism.

Moving to the intellectual foundations of the supply-side revolution we  explore the roots of reform in deductive ‘public choice theory’. From a normative political theory point of view these arguments have strongly utopian qualities and to investigate these we examine the idea of the state in neoclassical economics and specifically, in the public choice analyses of state failure, and the idealised economic constitution. Given the highly utopian qualities of these arguments we then compare these operating assumptions and goals with those of Marxism Leninism: the other closed system ontology of the economy in twentieth century political economic thought. Marxism Leninism is a body of theory shares remarkable intellectual affinities with neoliberalism, from the dependence on hyper-rationality in the model for human motivation to the idealisation of a post-state utopia; from the assumptions of a blueprint that is good for all time and places to the asserted ‘automaticity’ of the political economy in the post-revolutionary world. In demonstrating the common teleology of revolutionary completion and an idealised constitution the reforms of the last forty years are placed in comparative intellectual context.

The second half of the course is constituted by a theoretical and practical evaluation of supply-side reforms within the UK. This evaluates the logic of reform in the state’s main functions in the political economy: welfare, regulation and the management of future public risk. The course offers a consistent methodology for this analysis: it contrasts the ‘first best world’ economics of the supply-side agenda with the ‘second-best world’ economic theory that comes from critical neoclassical economics and the more holistic rational choice institutionalism of political economy, but also from the critical political economy of Soviet Communism. One of the historical ironies of the supply-side revolution is that it not only shares conceptual and ideological affinities with Marxism Leninism but in practical terms it also replicates a remarkable number of the pathologies of the Soviet planning system, from the central planning of private enterprises (via public sector outsourcing) to the dependence on quantification, metrics, target-setting and performance measurement and a rejection of relational, pluralist, tacit-knowledge based systems of government and organisation. The course closes by considering the political-system consequences of state transformation and indeed, policy and state failure.

The findings of the course hold clear implications for emerging markets and less developed economies, where these reforms are also increasingly on the agenda, and where they pose particular risks.


This course is delivered through a combination of seminars and lectures totalling a minimum of 27.5 hours across Lent Term.  This year, some or all of this teaching will be delivered through a combination of recorded lectures, flipped lectures (online discussion of lecture materials), and in-person (or, if School closure demands it, online) seminars. This course includes a reading week in Week 6 of the Lent Term.  A review session will be held at the start of the Summer Term to prepare for the online assessment.


Formative coursework

Students will be expected to produce 1 essay and 1 presentation in the LT.

Students write a short (1500 word) formative essay during the term, submitted within two weeks of their class presentation, and this is purely to enable the student to receive feedback on their understanding of the subject matter but also on their essay writing technique more generally. This means that students receive due preparatory help for the later summative work, which is also essay based.

Indicative reading

  • Abby Innes (forthcoming) The Neoliberal System: The political economy of the state in the supply-side revolution
  • Michael Ellman, Socialist Planning, (Cambridge University Press, 2014, 3rd Edition)
  • Kenneth Jowitt, The Leninist Extinction (Berkeley, University of California Press, 2001)
  • Tony Lawson, ‘What is this ‘school’ called neoclassical economics?’ Cambridge Journal of Economics, vol. 37, 2013: 947-983
  • Paul Davidson, Reality and Economic Theory, Journal of Post-Keynesian Economics, June 1, 1996
  • Deidre McCloskey, The Trouble With Mathematics and Statistics in Economics, History of Economic Ideas, Volume 13, (3) 2005: 85-202
  • John Cassidy, How Markets Fail (London: Penguin Books, 2009)
  • Patrick Dunleavy, Democracy and Public Choice: Economic Explanations in Political Science, (Harvester Wheatsheaf, 1991)
  • Peter Self, Government by the Market? (Macmillan Press, 1993)
  • Ruth Dixon and Christopher Hood, A Government That Worked Better and Cost Less? Evaluating Three Decades of Reform and Change in UK Central Government (Oxford: Oxford University Press, 2015)


Online assessment (100%) in the ST.

Questions will be made available at a set date/time and students will be given a set period in the ST to complete the answers to questions and upload their responses back into Moodle.

Important information in response to COVID-19

Please note that during 2020/21 academic year some variation to teaching and learning activities may be required to respond to changes in public health advice and/or to account for the situation of students in attendance on campus and those studying online during the early part of the academic year. For assessment, this may involve changes to mode of delivery and/or the format or weighting of assessments. Changes will only be made if required and students will be notified about any changes to teaching or assessment plans at the earliest opportunity.

Key facts

Department: European Institute

Total students 2019/20: 26

Average class size 2019/20: 12

Controlled access 2019/20: Yes

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

  • Self-management
  • Team working
  • Problem solving
  • Application of information skills
  • Communication
  • Commercial awareness