EU467      Half Unit
The Political Economy of the Neoliberal State

This information is for the 2023/24 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 Fudan) and MSc in Political Economy of Europe (LSE and Sciences Po). This course is available with permission as an outside option to students on other programmes where regulations permit.

This course has a limited number of places (it is controlled access). In previous years we have been able to provide places for all students that apply but that may not continue to be the case.

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 went furthest with this reform process, but it also encourages international comparison. The course begins by exploring the 'critical realist' perspective in the philosophy of science and how this illuminates 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, these affinities in theory have emerged in practice. To gain perspective, the course compares the 'open-system ontologies' of the political economic orthodoxies that dominated post-war European policy-making in the 'Golden Age', 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. We thus explore how the system affinities range from the shared assumptions of universal rationality (socialist or utilitarian), the impulse to erase political conflict and sociological complexity to create a blueprint good for all time, to the asserted ‘automaticity’ of the political economy in the post-revolutionary world. The reforms of recent decades are thus placed in their deeper philosophical context.

The second half offers a theoretical and practical evaluation of neoliberal reforms primarily within the UK, but with comparable case studies also welcome. Here we evaluate how neoliberal reform logic plays out in the state’s main political economic functions: 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 reasoning of ‘second-best world’ neoclassical theory: the 'withing system' critique. But we also apply the critical literature on Soviet Communism for more systemic lessons. An historical irony emerges: 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 many of the pathologies of the Soviet planning system, from the central planning of private enterprises (via public sector outsourcing) and the presumption of a socially-constructive enterprise rationality, to the dependence on quantification, metrics, target-setting and performance measurement; and from a rejection of relational, pluralist, tacit-knowledge based systems of government, to policy and state failure.

The findings of the course hold clear implications for emerging markets and less developed economies, where these reforms have also played a promiment role, and where they pose particular risks.


This course is delivered through a combined lecture/seminar of two and half hours (with a short tea break included!), totalling a minimum of 25 hours across Autumn Term. This course includes a reading week in Week 6 of Autumn Term, and a review session will be held at the start of the Spring Term to prepare for the online assessment. 

Formative coursework

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

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.

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, Late Soviet Britain: Why Materialist Utopias Fail (Cambridge: Cambridge University Press 2023)
  • 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.

The online assessment for this course will be administered via Moodle. 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 2022/23: Unavailable

Average class size 2022/23: Unavailable

Controlled access 2022/23: No

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