Contradictions of the Bailout State

Contradictions of the Bailout State Draft chapter for The Viral Politics of Covid-19, edited by Vanessa Lemm and Miguel Vatter. Introduction Some forty years ago, Clause Offe (1984) diagnosed the contradictions of the welfare state in terms of “the crises of crisis management” (Offe 1984: 35). Mid-century Keynesianism had promised the transformation of crisis management into a technocratic affair at the service of democracy, and for several decades it had seemed to deliver just that. But the 1970s made apparent the contradictions of that order: the very success of the mixed economy model had led to growing demands on the political management of the economy, and the resulting pressure to expand the protections afforded by the welfare state was increasingly inconsistent with the maintenance of robust rates of economic growth. This was what Habermas (1975) famously identified as a “legitimation crisis”. Although this “Frankfurt critical theory” diagnosis highlighted the re-emergence between imperatives of accumulation and legitimation, it nonetheless had rather technical overtones. It understood the key problem in terms of the changing interaction of society’s subsystems, and it viewed the resulting internal contradictions as jeopardizing the only form of capitalist society that had historically proven to have any democratic viability and legitimacy. Its treatment of potential contenders was accordingly somewhat cavalier: emerging ideologies like free-market neoliberalism were seen as so poorly attuned to the institutional requirements of social and political stability that it seemed ludicrous to imagine that they could serve as alternative paradigms of governance shaping coherent future trajectories. This diagnosis cast a long shadow over attempts to come to terms with neoliberalism – it would not be an exaggeration to say that the current surge of explicit theorizing about neoliberalism as a coherent political and ideological project is a belated reaction to it. Wolfgang Streeck (2014) has been one of the main voices in this latter turn, and his engagement with the critical theory diagnosis is helpful in getting a better handle on the conceptual parameters at play. Revisiting debates of the 1970s and 1980s from a post-GFC vantage point, Streeck’s argument is that the Frankfurt critical theory model overestimated the degree to which capital had been effectively integrated into the Keynesian post-war order and underestimated the ability and willingness of capital to organize and assert itself as a well-defined political actor. From this perspective, the neoliberal turn was not best seen as the decline of an overarching, society-wide order; its contradictions were not purely “internal” and did not lend themselves to analysis in the relatively neutral terms of administrative overload and governance contradictions. Rather, neooliberalism was a purposeful attack by capital on the institutions of social democracy and the attempt to construct something else. Streeck’s argument was not exactly new: in previous decades, similar arguments had been made by Marxist political economists (Panitch 1994, Gill 1995), who looked at the way in which corporate and ideological elites pursued state strategies that broke the Keynesian order and replaced it with globalized forms of regulation marked by fiscal austerity and wage repression. Such ideas, which were framed in terms of the extent and impact of globalization, were attacked sharply by commentators who emphasized the stickiness and path-dependency of institutional arrangements (Hirst and Thompson 1997, Pierson 1998), and denied that more than pragmatic adjustment was taking place. But this variation on the “governance problems” paradigm was more optimistic than Offe’s, as its guiding intuition was that neoliberal globalism had only limited efficacy and would be unable to undo the institutions of the Keynesian welfare state in a sustained way. A prime piece of evidence presented by the globalization sceptics was that, despite the claims of Thatcher and Reagan about the need for a smaller government, public institutions showed no signs of shrinking. Streeck’s intervention has found such traction because it was offered by someone with mainstream political and academic credentials who was nonetheless willing to point out that something major had in fact happened, something that could not be reduced to institutional complexity and path-dependency and defied the language of governance contradictions and pragmatic adjustments. Streeck’s intervention was emblematic of a trend to take more seriously neoliberalism as a specific political force that had discrete, traceable intellectual origins and attacked social-democratic institutions with a clear sense of purpose and mission (Mirowski 2013, Slobodian 2018). Nevertheless, the conceptual structure of the contemporary neoliberalism debate has ended up being remarkably similar to that of the earlier globalization debate. The growing interest in neoliberalism as a political and ideological movement has been accompanied by an equally intense interest in the (somewhat banal) idea that labels are unable to capture the complexity of the world and that the trajectory of the recent present can be described perfectly accurately as a series of pragmatic shifts and adjustments (Venugopal 2015, Watts 2021)). The terms of this debate are odd: they revolve around the degree to which the actually existing world of neoliberalism resembles the theory – as if the defining feature of a world-historical force is whether it is able to grasp itself conceptually and to produce an accurate image and transparent understanding of itself. It is worth letting these terms of debate play themselves out to get a better grasp of the issues at stake. On the one hand, the weakness of the neoliberal scepticism argument is that its core point was already anticipated by the neoliberalism literature itself. The latter is keenly aware of the constitutive incoherence of neoliberalism, the contradictions that it manifests when it hits the ground and that render void any possibility of producing a world resembling the fantasies of Friedman and Hayek. Indeed, much of the literature has come to follow a “Polanyian” conceptual template, which argues that neoliberalism effects changes that are all too materially real but also inherently unsustainable and so trigger a series of democratic counter-responses. The difficulty that this basic model has encountered is that democratic institutions have been unable to stage an effective countermovement, and this has given rise to what we may term a “neo-Polanyian” model, which emphasizes the ability of corporate and financial elites to sideline institutions, block the countermovement, and keep neoliberalism going past its date of expiry (Crouch 2013). Streeck’s narrative of neoliberalism is emblematic in this regard. In his depiction, financial expansion – the signature manifestation of capital’s break with the Keynesian pact – has repeatedly failed to deliver what it promised, a failure that he sees as ultimately explained by the fact that financialization is not grounded in the production of real value. This instability provokes disorganization and discontent, but the democratic public has been unable to launch the countermovement that should have emerged according to the basic Polanyian model. He accordingly emphasizes the central role of neoliberal forces themselves in responding to the repeated failures of their own project, and engendering wave after wave of financial growth. With each wave, the discrepancy between the fictitious logic of financialized capital and the world of real value and sustainable growth becomes more apparent. To the neoliberalism sceptics (who don’t really believe in deep-seated contradictions of the capitalist mode of production that can be deferred but not overcome), this argument seems a little contrived and formalistic. A less roundabout way of saying the same thing would be that change has been piecemeal and beset by all the normal unintended consequences and feedback effects that always attend policy change. On their reading, an observer who went to sleep in the early 1970s and woke up now would find the broad institutional make-up of the contemporary political economy perfectly recognizable: she would discern a mixed economy, governed by broadly Keynesian economic policies and techniques and characterized by a welfare state that may be constantly under pressure (as it was back in the day) but nonetheless allows Western societies to offer its populations an unprecedented degree of social security. So, if the neoliberal skepticism may be targeting a strawman to some extent, we should also consider that there is something about the politics of neoliberalism that the neo-Polanyian schema just fails to capture. The central issue here is that it jumps too quickly from an overly technical to an overly political reading – a tendency that has become more apparent as the neoliberalism literature substituted intellectual history for political economy (Mirowski and Plehwe 2009). If the problematic of institutional contradictions has been largely monopolized by a literature centred on question-begging terms like path-dependency, we need to understand better the political forces animating this institutional stickiness. I propose we understand this force in terms of the resilience of a middle-class politics that straddles the Keynesian-neoliberal divide. From this perspective, what is more striking than the differences between the perspectives on neoliberalism discussed (their assessments of its efficacy) is their shared conceptualization of the terms of the problem. For both, the Keynesian post-New Deal represents the normative point of orientation; and both understand neoliberalism an attempt to undo or reverse the Keynesian marriage of capital and democracy. This, however, is to ignore the very real democratic credentials that neoliberalism has commanded. Neoliberalism’s attempt to revitalize a middle-class politics involved a series of policy shifts that have been tremendously consequential. Certainly, many public institutions of the social-democratic era are still in place, but if neoliberalism has never involved a destruction of the welfare state or a contraction of public expenditure, it has certainly brought about a wholesale repurposing of the institutions of the state and its mechanisms of expenditure. This transition from a “welfare state” to a “bailout state” is not sufficiently acknowledged by either perspective. This paper makes the following arguments. First, I will offer some arguments meant to attenuate the intuitive hold that the “capital against democracy” framework has on our intuitions. What gets lost in this framing, I suggest, is a more complex historical and conceptual set of relationships that can be brought to light by re-examining the relations among capitalism, republicanism and democracy. In particular, I will examine how the distinctive understanding of institutional neutrality that we can trace back to the Scottish Enlightenment transformed republican imaginaries and democratic aspirations to their core. I then reconsider the Keynesian mid-twentieth century moment, arguing that it was never a “balance” between capital and democracy conceived as opposed principles. I redescribe the Keynesian era as having organized a historically unprecedented integration of large segments of a democratic public into the future-oriented logic of capital. I then re-examine the interaction of capital and democracy in the neoliberal era. The project does not approach neoliberalism as a “reversal” of Keynesianism but as an intervention into the middle-class politics that it established. Neoliberalism found popular traction by holding up the speculative logic of asset values as the royal road to a neutral (universal and non-exclusive) institutional order. This imaginary is a major support behind neoliberalism’s distinctive middle-class politics, and its deconstruction is a precondition for accessing a democratic politics that does not fall prey to the rationality of capital. Capital’s democracy The contemporary revival of republican thought has typically advanced this paradigm as a forgotten alternative to laissez-faire capitalism (Sandel 1998). That is to say, it has offered a highly communitarian version of republicanism that readily aligns with the “capital against democracy” framework. However, the effectiveness with which neoliberalism has staked its own claim to the republican tradition means that we need to reconsider this relationship – capitalism has interacted with republicanism not merely externally but, rather, the former has reshaped the latter from within. Premodern republics might have had some appealing features, but those were explicitly premised on strict limits on citizenship. The universalist credentials of republicanism would be activated only later, during what we may think of as the Smithian moment (Wood 1991). In that sense, it took the rise of capitalism and the attendant rationalization of capital to activate the democratic credentials of republicanism. Until that time, conceptions of capital were deeply shaped by the church’s condemnation of money-making as an illegitimate activity, irrationally claiming the time of life that was only God’s to give. Central to the Smithian reconceptualization of capital – not as a threat to divine order but as a secular source of order – was the assertion of the market’s institutional neutrality. This entails a very significant shift in our relationship to capital – which appears less and less as a “bad infinity” (Harvey 2018), and increasingly as a benevolent universality, a way of organizing society that has a capacity for endless inclusion. And this shift in thinking about capital was key to the reconfiguration of republicanism, giving it its distinctively modern economic focus (MacGilvray 2011). Money stops being an expression of an irrational movement and becomes a democratic promise of secular life. What occurs here – “capital” apprehended as “the market” – is what Lefort (1988) might have referred to as a moment of foundational occlusion, a constitutive blind spot that occurs when transcendent legitimations of authority lose their power and secularized subjectivity becomes responsible for re-presenting and symbolizing itself. In its Smithian origins, the gap between “capital” and the “market” is almost imperceptible, a crack in the mirror that is only visible when observed from very specific angles. Yet the consequences are profound: henceforth, the problems with capital are increasingly conceptualized in terms of the corruption of its true form of consensus-driven, contractual exchange – the economy as a flat, decentralized institution that privileges no one in particular, counteracts concentrations of power, and rewards effort and merit in impartial ways. No one reading Smith can fail to appreciate the plausibility of his descriptions of the benevolent social effects of commerce and trade, and that very element of plausibility leads us to forever search for ways to recapture such foundational innocence. Progressive commentators tend to criticize the neutrality axiom as the most out-of-touch tenet of orthodox economics. But that blinds us to the broader imaginary that it expresses and the way it modulates democratic engagement. The paradoxical image of the market as regulative yet neutral in its effects expresses a “transcendental”, Kantian structure of experience that is shaped by the tension between the keenly felt necessity of contingency and the powerful belief that we can move into the future in a self-transparent, predictable way (Konings 2018). This affectively charged structure of belief – what Adorno referred to as the “fallacy of constitutive subjectivity” (Adorno 1973: xx) – is tenacious: when our secular life fails to achieve the absolute security and immunity that we imagine for it, we don’t re-examine that imaginary but blame others for interfering with its workings. At such times, we become intensely concerned to differentiate between legitimate and illegitimate ways of moving into the future, between the representation of real value and irrationally speculative investments that lack foundations and do not respect objective limits (O’Malley 2012). This ability to switch back and forth between the recognition of our speculative condition on the one hand and the concern with objective foundations on the other constitutes a key mechanism by which moderns disavow their own participation in oppression and exclusion. The subjects of capitalist reason master a strange trick – namely, to reconcile their observation of exclusion and oppression with their belief in universalism (Balibar 1989). In the US context, the futurity embodied by money was central to the republican independence and democratic self-determination that could be imagined by white settler colonists (Baker 2005). When as present-day observers we look back at the politics of Jeffersonian and Jacksonian republicanism, we tend to see a glaring contradiction between claims of equality and inclusion on the one hand and the reality of oppression and exclusion on the other. However, diagnosing this as hypocrisy and being overly invested in our own indignation can easily distract attention from the fact that this paradoxical quality of the public sphere remains alive and well in the present. Indeed, it deeply shapes twentieth-century middle-class politics (Dahl 2018, Beltrán 2020). Reframing the Keynesian welfare state The Keynesian revolution responded to the growing difficulty that early twentieth century capitalism had in delivering personal independence to a white middle class and the way this undermined its promises of universal progress. Existing interpretations tend to understand Keynesianism on the Polanyian disembedding / re-embedding schema, which tends to reduce Keynesianism to a mechanical movement in capitalism’s cyclical logic and tends to understate the qualitative novelty and transformative impact of the Keynesian revolution. Two points are critical here. First, Keynesianism did not “de-commodify” labor. Rather, for the first time in history, it organized the social and political order comprehensively around the routine sale and reproduction of wage-labor. Until that time, wage-labor had remained a condition of social marginality, lacking in future prospects. Keynesianism created such a future by opening up the property-owning middle class to working people. Second, the Keynesian revolution did so not by suppressing money, but precisely by leveraging its futurity. What we routinely think of as an era of repressed finance in fact saw a very significant expansion of credit that played a key role in transforming wage-labour from a condition of social marginality into the basis for full citizenship for the white, wage-earning middle class (Konings 2011). It looked to money as a material source of temporality, a practical device to navigate the inherent condition of secular uncertainty (Tellmann 2017). Keynesianism further charged the paradoxical structure of capitalist subjectivity. On the one hand, it offered a powerful critique of the neutrality postulate and the rationalist mindset that could not understand the practical role of uncertainty. On the other hand, in offering an economic policy manual that would allow enlightened technocrats to make the economy work in a neutral way, it adopted precisely such a rationalist mindset (Mann 2017). Mid-twentieth century Keynesianism is only superficially grasped as a “balance” of politics and economics conceived as opposing principles; its key achievement was precisely the integration of the population into the speculative, future-oriented logic of capital. As much as Keynesianism was concerned with the inherent openness and malleability of the future, it was also deeply productivist, intensely concerned to differentiate subjectivities dedicated to the production of real value from those unwilling or unable to do so. It is reflective of our enduring blind spots that we have ample knowledge of Keynesianism’s affinity with all manner of pernicious biopolitical exclusions yet still look to it as an era that sets a normative standard for democratic life. The myth that surrounds the Keynesian mixed economy paradoxically not only reproduces the blind spots of that time but also lends credence to capital’s claim to universality that has been deployed so much more effective by neoliberal thought. To be sure, my intention here is not to rewrite the history of Keynesianism, but rather to draw attention to those aspect of its that just do not fit the standard picture, and to reconsider the neoliberal shift in this light. “Reversing” neoliberalism may well have been the stated purpose and core fantasy of many neoliberal thinkers, but to take this as our guide to the institutional politics assumes the kind of influence that intellectuals crave but rarely enjoy. Neoliberalism is best understood as an intervention into this middle-class politics at a time when the Keynesian mode of social integration came under pressure; and neoliberal ideologies were deployed in this context. In an important sense, the New Deal order was the victim of its own success: the historically unprecedented level of security that it had provided to a segment of the waged population generated a level of pressure on the system that it was not set up to accommodate. This found its most vivid expression in the levels of inflation that prevailed during the 1970s, which resulted from the specific organization of the financial system that had been created with the New Deal. In the aftermath of the Great Depression, US fiscal and monetary policy was set up to block the kind of financial deleveraging movements that had led the US and the world into the Great Depression (Minsky 2008 [1986]). This “financial safety net” allowed finance to work in the interest of a broader segment of the population and was a key component of the New Deal welfare state. The inflationary effect of this institutional arrangement became apparent in the mid-1960s. Letting dynamics of debt deflation play themselves out appeared to be the only way to contain inflation, and this was invariably considered an unacceptably high price to pay. In response, market actors started factoring the willingness of policymakers to accommodate their credit-expanding financial innovations into their risk calculus – what we would now refer to as the moral hazard associated with bailouts. From welfare to bailout state Critically, inflation was not a technical issue of concern only to monetary authorities: it was a pressing social issue at the heart of democratic politics and popular mobilization. It is certainly true that neoliberal and neoconservative thinkers managed to whip up a moral hysteria about inflation, but they were only able to do this because it had such affective, experiential relevance to begin with. Populist forces in Congress put a great deal of pressure on a reluctant Federal Reserve to take more decisive action on inflation (Young 2000). In this context, the monetarist idea that a simple overall limit to the quantity of money could be imposed found traction. This emblematic free-market idea has a strong Keynesian colouration, grounded as it is in the idea that a technical institutional device can be applied to neutralize problems arising endogenously. Of course, monetarism intellectually harkens to the quantity theory tradition of thinking, but the idea that “the money supply” was a discrete quantity that could be readily manipulated by authorities would have been inconceivable prior to the Keynesian rethinking of the macro-economy and its management (Mitchell 2005). The idea of quantity-targeting was no more capable of transcending the contradictions of the Keynesian welfare state than Keynesian policies had been. Volcker, appointed as Federal Reserve chairman by President Carter as he neared the end of his term and became convinced that containing inflation was imperative, did not come bearing any qualitatively new policy instruments (Silber 2012). The implementation of monetarism relied on existing techniques of monetary management, and Volcker’s main contribution consisted in his his willingness to do what previous chairmen had been reluctant to do – to stop accommodating financial market dynamics. The likely consequences must have been obvious to him. After all, on several occasions during the previous decade-and-a-half the Fed had sought to constrain the credit-creating capacity of the financial system, and it had always pulled back from the brink as it realized that following through would result in failures that would have significant impact on wider popular sectors of the economy. In an objective sense, then, the purpose of the Volcker shock was to put a decisive end to the constant socialization of risk through generalized inflation. This was of course never accompanied by a positive conviction that actually letting failing major financial institutions fail would in practice be possible. In that sense, Volcker’s turn represented a speculative (and, we can say with the benefit of hindsight, successful) attempt to force a shift in the American state’s approach to risk management. This new approach would become the too-big-to-fail regime, whereby the American state puts a floor under select market, permitting speculative investment to drive up asset prices but ensuring that in select areas the downward dynamic is blocked. The critical difference between preventing financial crisis through accommodating monetary policy on the one hand, and dealing with the fallout of financial crisis through bailouts on the other, consists in the fact that the latter can be much more selective than the former (Panitch and Gindin 2013). In the former case, risk gets socialized to a very high degree; in the latter case, resources are concentrated on maintaining the systematically important hubs of the system while many financial entities that are not directly part of this core are allowed to fail or devalue. As a consequence, the latter is much less inflationary than the former. Of course, the recourse to bailouts is typically depicted as a symptom of how incoherent neoliberalism is becoming. But such dismissal fails to recognize how the reliance on bailout logics allowed policymakers to navigate dilemmas that had previously seem intractable – which is what drove the transformation of bailout policies from spectacular public rescues in the 1980s to the far more systemically significant  drip-feed bailout logic of low interest rates and quantitative easing in the present (Konings 2011). It is certainly true that too-big-to-fail as a policy regime fuses problem and solution in paradoxical ways, constantly solving problems by reinforcing the underlying dynamics that generate them. But we should not assess the bailout regime against an idealized image of public policy and instead be alert to the internal logic that characterizes that regime (Vogl 2017). The shift from welfare state to bailout state gave the universalist credentials of capital a major new lease of life. In a context where it had become increasingly difficult to expand access to the wages of whiteness in a literal way (i.e. through wages), neoliberalism switched gears to offer such benefits through access to participation in the core logic of capital, i.e. speculative investment (Adkins 2018, Feher 2018). Repurposing the Keynesian machinery of fiscal and monetary policy to redirect inflationary pressures from wages to capital, neoliberalism put in place an aspirational middle-class politics that put a ceiling on wage rises and a floor under asset prices (Adkins, Cooper and Konings 2020). The prospect it held out was not simply full citizenship for wage-labor but the possibility of moving beyond the condition of wage-labor altogether – inclusion without the need for exclusion. In this way, neoliberalism fully leveraged the paradox of money, imagining speculative investment as the royal road to a neutral, republican market (Vogl 2014). It is easy to ridicule this imaginary as the distorted belief of professional economists and neoliberal ideologues, wilfully ignorant of practical realities on the ground. But this style of critique has reached its limit: the idea that we can fact-check our way out of neoliberalism is singularly powerless vis-à-vis the powerful affective impulses it can mobilize. Increasingly, there is no alternative to doing the much harder work of decoding how the fantasy of institutional neutrality expresses an affectively charged structure of economized citizenship that has given neoliberalism major traction as a governing philosophy. To be sure, as the normalization of too-big-to-fail principles through Quantitative Easing policies have received more attention, it has become recognized that bailouts – not deregulated “free markets” – have been a key factor main factors driving growing inequality (Pollin and Epstein 2021). While this connection is incontrovertible, such assessments remain stuck in an interpretive template that fails to acknowledge the complexity of the problem. By focusing primarily on the “1%”, they assume that the distributional effects of this kind of politics fully explain its origins and persistence, and it retains some of the sense that bailouts are somehow “exceptional”, a divergence from a more sustainable or rational politics. What is typically not sufficiently acknowledged is the specific middle-class politics that revolves around the democratic promise of asset appreciation. The nostalgia that the decade of the 1990s nowadays evokes should be seen in this light: it represented the high point of this asset-focused middle-class politics, when rising home and stock prices delivered benefits widely enough to give credence to the promise of inclusive wealth, and meaningful returns on education gave the human capital dream sufficient traction to divert attention from general wage stagnation. That dream no longer enjoys the same degree of plausibility, and therein consist the contradictions of the bailout state: its inability to make available access to the benefits of asset inflation on a sufficiently wide basis to substantiate the expectations of universal inclusion that it has done so much to foster. Conclusion At the level of institutional sprawl and technique, the bailout state is fully Keynesian (Malysheva and Walter 2010). This element of continuity very emphatically does not mean that little has changed: the institutional machinery of fiscal and monetary has been comprehensively re-oriented around the logic of asset ownership and inflation. This is something that Streeck’s work misses: he merely sees a series of increasingly unsustainable bubbles that are not sustained by an extensive complex and deeply rooted configuration of institutions and policies. In this chapter I have suggested a different way of looking at these trends. My approach also differs from the argument made by a cognate literature: close to the neo-Polanyian spirit of Streeck’s perspective, it emphasizes the interaction of “roll-back” and “roll-out” (Peck and Tickell 2002). On that interpretation, neoliberalism has been highly consequential in rolling back the welfare state but has also rolled out new, increasingly coercive and repressive ones, over time replacing public housing with prisons, welfare with workfare. However, this tendency to view neoliberalism as essentially authoritarian skirts past the more technical aspects of economic governance and the way in which a middle-class politics has evolved in that institutional space. The argument that I have tried to make in this paper engages neoliberalism on that level: it has not assumed neoliberalism’s ability to sideline or paralyze democratic public institutions but instead examined how it has transformed them from within. The bailouts in response to the 2007-08 crisis were widely hailed as the end of neoliberalism, and it took commentators a few years to come to terms with the fact that they were nothing of the sort. The economic policy measures taken in response to the Covid crisis have elicited similar, if more cautious, declarations (Polychroniou 2021). From the perspective presented here, however, the Covid bailouts and payments hardly appear as a break with the recent past. The Covid-19 crisis has made clear just how central the logic of bailouts has become to the way contemporary Western societies work – they have become the go-to option for dealing with the destabilizing effects of major shocks, even when the source is external to the economic system. To see in this a return to welfare state politics is to miss the fact that the Covid bailouts were heavily driven by the need to keep afloat asset values. They were not meant to boost demand and stimulate economic growth – indeed, lockdowns explicitly meant purposely slowing down economic growth. Instead, they served to keep at bay the possibility that the interruption to income streams would trigger a debt deflation on the scale of the 2007-08 crisis or worse (Adkins and Konings 2021). That significant amounts of money ended up outside the obvious too-big-to-fail constituency is to a large extent accounted for by the the tremendous uncertainty of the moment and the difficulty of determining, in medias res, whose risk mattered to the system as a whole and to draw clear boundaries around relevant constituencies. For instance, a widespread cessation of rent payments in a context where it is impossible to evict tenants could have posed a serious threat to home prices (Konings et al 2021). My point here is emphatically not to suggest that the bailout state is uniquely free of contradictions. It is precisely to suggest the usefulness of considering these as contradictions internal to a specific social formation that the neoliberal era has constructed, rather than against the inevitably moralistic yardstick provided by the image of the Keynesian welfare state. The central challenge that the bailout state faces is that it currently offers no asset class that is open to broad-based participation. Housing played this popular role for a long time, but rising home prices make it increasingly difficult for new entrants to secure buy-in. Each round of quantitative easing makes this problem worse: asset inflation works to concentrate wealth, benefitting existing asset owners at the expense of aspiring ones. This problem is not lost on policymakers. Central bankers in particular increasingly perceive the limitations of their policy toolkit in addressing the broader conditions of viability of an asset-driven political economy, and are increasingly concerned about the economic dynamic they seem to have no choice but to keep feeding. Some of this had already been visible in the widespread sense that, following the 2007-08 crisis, Western economies had landed in a never-ending recession. But to imagine that a return to welfare state Keynesianism is the only alternative to continuing down the current road would be to ignore how asset-driven capitalism has structurally transformed the socio-economic rules of engagement and to discount the possibility that these transformations may have opened up trajectories and options that we have yet to discern. For instance, it is remarkable how much traction the notion of human capital has retained even after the promise of rapid and effortless appreciation no longer holds the same currency. The idea of investment in and appreciation of one’s personal brand continues to structure even spaces that would have seemed unlikely candidates for it (whether it is because it involves unskilled, precarious labour or precisely because it demands critical thought, such as universities). Of central importance here is the fact that, in a world of fluctuating asset values, economic actors do not simply speculate; rather, they must ensure they are seen as worthy of being speculated on by others (Feher 2009) – a dynamic that even the marginalized must actively engage if only to stave off further depreciation (Elliott 2018). Neoliberal capital is a provocation machine, engendering new, more volatile modalities of subjectivation that we have yet to come to grips with. To frame this in terms of ideology holding things together while the basic economic mechanism have stopped working, would be to miss precisely how neoliberalism has irreversibly fused political, ideological and economic logics (Vogl 2017). What now increasingly appears as the persistent inability of democratic life to push back against capital has given rise to a cultural pessimism that centers on the idea of capital’s Grinch-like theft of the future (Fisher 2016). But the depressive stance of capitalist realism is more interesting as a cultural phenomenon than as a contribution to the critique of capital. Capital has never abandoned its promissory structure, and it constantly demands a renewal of our orientation to the future by forcing us to come up with constructive responses to situations not of our own making. It is our subjective receptiveness to these provocations that the Polanyian conception of capital as disembeddng allows us to disavow by figuring it as an external force. Contemporary critics have persistent difficulty coming to terms with the democratic aspect of capital and the logic of implication it engenders. Perhaps the main conclusion to draw from the current politicization of capital, then, is a negative one – that existing ways of seeing and the constitutive blind spots on which they work just do not allow us to formulate an effective critique of capital. 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