Not available in 2022/23
EU467      Half Unit
The Political Economy of the Neoliberal State

This information is for the 2022/23 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 critical analysis of the neoliberal revolution of the last forty years: the tendency towards the strong marketization of the state and the reformulation of the state's role in the wider political economy. The course focuses on the UK as the critical case: that which went furthest and longest with this reform process. The course begins by exploring the 'critical realist' perspective in the philosophy of science and how this highlights a shared quality between Soviet and neoliberal economics, namely their dependence on a closed-system ontology and epistemology of the political economy. As Pareto observed in the late 1890s the idealised market and the idealised social planner are formally identical. As these ideas moved from ideals to practical ideologies it turns out these affinities will come to the fore. To establish perspective the course compares the 'open-system ontologies' of the political economic orthodoxies that dominated policy-making in Europe in the post-war 'Golden Age' of growth, e.g. Keynesianism, Rehn Meidner, Ordoliberalism and Dirigisme, with the closed system ontologies of Stalniist and neoclassical economics. 

As we move to explore the wider philosophical foundations of the neoliberal revolution we explore the public choice critique of the state and its adoption by parties of the New Right. Public choice theory is contrasted to the Leninist critique of 'bureaucracy' in a bourgeois state. We also consider the idealised constitution in both systems of thought: the ideal that the state will 'wither away' to produce a system of automatic economic efficiency free of conflict.  On reflection we can see how strong the affinities between the materialist utopias are: they range from the shared assumptions of universal rationality (socialist or utilitarian), the impulse to erase political conflict and sociological complexity to create a blueprint that is good for all time to the asserted ‘automaticity’ of the political economy in the post-revolutionary world.  The reforms of the last forty years are thus placed in their deeper philosophical context.

The second half of the course offers a theoretical and practical evaluation of neoliberal 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’ neoclassical economics of the neoliberal agenda with the relatively critical, but still closed-system dependend reasoning of ‘second-best world’ neoclassical theory and we also apply the critical political economy of Soviet Communism for more systemic lessons. One of the historical ironies that emerges is that not only does neoliberalism share conceptual and ideological affinities with Marxism Leninism at the ontological and epistemological level, 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 lectures and seminars totalling a minimum of 25 hours across Lent Term. The teaching will be delivered this year through a combination of online and on-campus formats (or if required, online only). This course includes a reading week in Week 6 of Lent Term, and 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


  • Michael Ellman, Socialist Planning, (Cambridge University Press, 2014, 3rd Edition)
  • Kenneth Jowitt, The Leninist Extinction (Berkeley, University of California Press, 2001)
  • Abby Innes, The limits of institutional convergence: why public sector outsourcing is less efficient than Soviet enteprise planning, Review of International Political Economy, 6th July 2020, 
  • 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.

Key facts

Department: European Institute

Total students 2021/22: 22

Average class size 2021/22: 11

Controlled access 2021/22: Yes

Lecture capture used 2021/22: Yes (LT)

Value: Half Unit

Guidelines for interpreting course guide information

Course selection videos

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.

Personal development skills

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