In this chapter Innes explores how Soviet economics, and the neoclassical economics behind British neoliberalism, came to conceive of the political economy as a closed system, governed by predetermined economic laws and dependable behaviours. Both orthodoxies are shown to depend on arguments about the universal truths of the political economy that are not just utopian, but tautological - circular - in their reasoning. Their axiomatic assumptions and actions are valid, as distinct from true, by virtue only of their logical formulation, and their end goals are consequently as impossible to realise as they are to refute. By exploring the evolution of both Soviet and neoclassical economic thought, Innes outlines the affinities between the ‘social physics’ of neoclassical economics and the deterministic assumptions of Stalinist central planning, and explains why it is that even the relatively critical, ‘second best world’ neoclassical economics that became associated with New Labour policy is freighted with no less determinism than the ‘first best world’ assumptions adopted by the New, neoliberal right.

The chapter examines what gets lost analytically when governments move from thinking empirically about complex interdependent systems to relying instead on decision-making models that assume an unchanging mode of human rationality and fixed economic laws. Having set out the neoclassical theory behind outsourcing, privatisation and agencification, the chapter investigates how these policies have played out in practice. It demonstrates that although more critical i.e. ‘second best world’ neoclassical economic theories help us understand the chronic contractual, regulatory and oversight problems that prevail at the microeconomic level, it is the lessons of Soviet enterprise planning that tell us more about the systemic failures of these policies. Soviet planning failures illuminate why these reforms induce bargaining games between firms and ‘firm-like’ state agencies that the state cannot win, and why government attempts to solve chronic policy failures with remedial regulations that conform to orthodoxy create an ever more rigid bureaucracy over time, and in the case of outsourcing, increasingly informal relations prone to corruption, exactly as they did in the USSR.

This chapter sets out the dystopian critique of the liberal democratic state that emerged when neoclassical economic reasoning was applied to the political realm. The resulting ‘public choice theory’ made assertive claims of democratic state failure that became a mainstay of neoliberal argument, but here they are shown to possess clear affinities with the Leninist account of bureaucracy as the ‘real’ centre of power in a bourgeois democracy. It follows from the deterministic, closed-system reasoning in both Leninist and neoclassical 'public choice' theory that these affinities continued into the respective prescriptions for the preferred constitutional order. The ideal constitution of limited government set out in public choice theory, most notably by James Buchanan, Gordon Tullock, and Geoffrey Brennan is shown to be a logically inevitable counterpart to the ‘withering away of the state’ under socialism anticipated by Lenin. The adjacent constitutional arguments of Friedrich August von Hayek are also considered, as is the more empirically robust account of bureuacracy as an essential feature of modernity set out by Max Weber.

This chapter examines UK welfare reforms. The strategy of ‘quasi-markets’ in welfare was a New Labour innovation, and this chapter sets out why even intentionally ‘progressive’ neoliberal state reforms succumb to the flaws in neoclassical reasoning. The ‘choice and competition’ agenda was conceived in arguments about the relative benefits for ‘end-users’ of publicly funded but privately provided welfare services. As a closed-system argument about a marketplace, it thus wished away the actual terrain of education policy in which the state becomes the disempowered, and yet still responsible planner of outsourced educational enterprises, now governed through contract. The chapter investigates how quasi-market theory played out in the Academy Schools programme in England. It demonstrates why outsourcing complex welfare provision will tend create the worst of public and private regimes: the exploitation of incomplete contracts by producers, informational fragmentation, a loss of public accountability, financial corruption and increasingly Kafkaesque efforts at bureaucratic remedy, all reminiscent of Soviet enterprise planning failures.

This chapter shows how successive UK governments have applied a first-best-world neoclassical approach to climate policy: one that understands risk as something that can be calculated, modelled, and integrated within market mechanisms by essentially rational market actors. This was not just the economics that gave us the Global Financial Crisis, the chapter shows that the underlying Rational Expectations and Efficient Markets hypotheses are the market analogues to Soviet theories of optimal planning, and built on the same ontological and epistemological fallacies. The chapter explores how dependence on closed-system reasoning condemns government to ‘write out’ the uncertain dynamics of the climate emergency and the precautionary principle that should follow. The empirical section shows how successive governments of New Left and New Right have implemented regulatory and market-making policies built on the assumption that market agents not only can but will behave rationally in the face of future risk. They have also relied on carbon budgeting, forecasting and audit as dependable methods of risk management, though such methodologies are only coherent in a closed-system world.

British neoliberalism was taken up by democratic parties in an open society, so this chapter explores what, if any, lessons about its political consequences can be drawn from the political evolution of the Soviet Union. Political parties in Western Europe by the 1970s were struggling to keep pace with the changing social needs and preferences of their electorates when neoliberalism emerged. This social dis-embedding of parties would only worsen in the UK, however, when neoclassical economic diagnoses became the bipartisan methodology, and electoral choices around economic strategies were duly narrowed. The chapter traces how, as the tide of neoliberal developmental failures has risen, the Conservative Party embraced the same political strategies as late Soviet regimes. The ‘combat task’ rhetoric of economic change was replaced with the charismatic politics of nationalism, and governments increasingly resorted to demonstrable lies and invented realities to deflect from the real effects of policy and after 2016, its most utopian expression: Brexit. The chapter also reviews the rise of political corruption under neoliberalism, another Soviet affinity, as ideology morphs into alibi.

Neoliberalism is often framed as the victorious doctrine against Soviet communism: its nemesis and antidote. When we examine how Soviet and neoliberal economics understand the nature of political economic reality, however, British neoliberalism and Soviet communism turn out to be exact mirror images. In this introduction, Innes sets out the book’s argument, and the philosophy of science perspective on which it is based. Why do Soviet and neoliberal orthodoxies have such affinities? Both are based on closed-system reasoning about the political economy; both assert that there are predetermined laws of the economy that each doctrine alone can apprehend, and both schemes require the operation of a universal and consistent rationality: socialist versus utilitarian. The ‘critical realist’ perspective in the philosophy of science focuses on how we apprehend reality, and what we can reasonably claim to know about it, and the introduction explains how this lens allows us to see why a ‘governing science’ built on closed system reasoning is doomed to produce a rising tide of unanticipated social and institutional consequences in societies that are evolving, open, and hence uncertain systems.

Neoliberals argue that when economies compete to lower corporate tax rates and regulation, business investment will rise as the state’s ‘distortions’ of the market are withdrawn. Tax competition was also joined to the principle that firms should focus on the maximisation of shareholder value, in preference to any deeper social role. Innes examines the highly value-laden nature of tax models and explains how they replicate the Soviet planning assumption that enterprises are dependably productive economic actors. In the empirical section Innes shows how this policy combination in the UK has produced negative developmental outcomes across the board: for the nature of the large business corporation, for wider economic performance, for the fiscal authority of the state, and for public faith in the integrity of the political class. The theoretical dependence on a closed system ontology of the economy condemns neoclassical tax modelling to edit out the real terrain of corporate incentives and behaviour. As in the Soviet system it also endows firms with excessive political leverage in relation to the state, for example, through the significant corporate capture of tax strategy in HMRC.

This chapter reflects on how both Soviet and neoclassical economic doctrines impose a practice of ‘organised forgetting’: the omission and rejection of knowledge that does conform to the presumed ontology. In adopting the language of science, both Soviet and neoliberal ideologies would attack their political opponents as primitives, unschooled in their singular methods of reasoning. Neoliberalism, in particular, is neverthless more accurately understood as working against the scientific method, depending as it does on argument from abstract, de-historicized assumption, as distinct from evidence-based justification, theoretical review and adaptation. The chapter traces how neoclassical theory was translated into a political agenda for the New Right through the 1970s. It closes by introducing the neoliberal governmental toolkit of the New Public Management, and explains why, following the isomorphism in their forms of reasoning, NPM would recreate the Stalinist toolkit of quantification, output planning, targets and managerial ‘correct lines’, only now in capitalist form. The analytical foundations are thus set for the policy chapters that follow.

This chapter explores why the promises of allocative efficiency in neoliberal and Soviet economics - neoclassical ‘general equilibrium’ and the Soviet's ‘balanced plan’ - cannot be fulfilled. Early Soviet conceptions of planning had aspired to be based on an evolving social reality, in contrast to the highly abstract, competition-based, and hence de-historicized neoclassical arguments for general equilibrium. The Stalinist shift to synoptic planning had nevertheless confronted Soviet economists with the same challenges their neoclassical colleagues faced in the west: that of how to produce essentially machine-like models of allocative efficiency in social reality. These challenges would drive later generations of Soviet and neoclassical economists to fixate on, and fail to solve, the problem of how to account for the information that was evidently ‘lost’ both in planning and in market mechanisms. Innes explains why both concepts of allocative efficiency had proved even theoretically incoherent by the 1970s, and demonstrates that it was at this, the lowest point of intellectual credibility for the theory of general equilibrium, that it became a foundation of neoliberal orthodoxy.

The UK languishes under a political economic orthodoxy at the height of its structural power, but built on a demonstrably mistaken blueprint that can no longer command broad social support. This chapter argues that, so long as the UK’s parliamentary parties remain committed to this materialist utopia, the country will continue to suffer the decadent politics characteristic of the late Soviet era: a fate examined with reference to the dissident literature of that period. The Soviet system was ended by revolutions for democracy, albeit fatally timed at the height of neoliberalism. Innes closes by suggesting that the UK now stands at a critical juncture with highly uncertain outcomes. She suggests that if the UK's political parties relinquished their failing paradigm they could find renewed social, moral and economic purpose in the resolution of the ecological emergency. This paradigm shift to empiricism and new social purpose is urgent. Like Soviet communism, neoliberalism is a materialist utopia: a politics for the end of time. But in the era of the intensifying ecological emergency, its perpetuation has the capacity to hasten the end of human history, for all time, for real.