A Left Moral Vision Needs a Political Economy to Match
Gustavo Petro’s “economy for life” captures something essential about the planetary crisis. Turning it into a program requires confronting the structures that stand in the way.
The Progressive International, the Colombian government, and local think tanks coorganized the conference “Economy for Life,” during which President Gustavo Petro spoke. (Federico Parra / AFP via Getty Images)
“Today, it’s no longer about class struggle between capital and labor but about an economy that either serves life or death.” This remark by Gustavo Petro was at the center of a conference in Colombia on “The Economy for Life,” coorganized by the Progressive International, the Colombian government, and local think tanks. The phrase, cited by many participants, captures something real about the planetary crisis.
Climate change, external debt, extractivism, ecological destruction, hunger, and war all force us to ask what kind of economy is being organized and for whom. But it also reveals a danger in much of the contemporary progressive discourse: that is, the replacement of political economy with moral language.
An “economy for life” is a compelling slogan. Yet unless it is tied to the concrete interests of workers, distribution of income and power, and structures of global capitalism, it risks becoming too vague to guide policy. Neoliberalism has not been an abstract war against life in general. It has been, more specifically, a regime favorable to capital, as noted by David Harvey in his classic book on the subject. It has weakened labor, disciplined the periphery, restricted policy space, and reorganized the global economy around the requirements of capital accumulation. A serious alternative cannot simply be an economy for life in the abstract. It must be an economy organized around workers.
Welfare is not a moral abstraction. It is the concrete improvement of the living conditions of the majority, and the majority are workers. This is especially important because neoliberal ideology has consistently tried to erase workers as a political category. Under neoliberalism, there are no workers; everyone is, or potentially can become, an entrepreneur. It is a market world, with consumers and entrepreneurs, and no power relations. Progressive political economy must reject that narrative. The central subject of an alternative economic order is not the consumer or the entrepreneur but the worker.
This matters because the dominant diagnosis about the current state of affairs is often incorrect, and it also exaggerates the weakness of capital. At least since the 2008 global financial crisis, the dominant view has been that neoliberal capitalism is in crisis. There is a social and environmental crisis that has in many ways become one of political legitimacy, and the neoliberal order has suffered shocks. But the system has adapted to new circumstances remarkably well, and the foundations of the neoliberal regime remain surprisingly resilient.
Labor markets remain disciplined, unions are weak, and wage growth is sluggish. Inequality remains high. Fiscal policy remains constrained by policy rules, often implemented by progressive governments. Central banks remain independent and mainly concerned with inflation and bailing out investors. Progressive governments, even when elected, often find themselves operating within institutional limits created by neoliberal governments.
In that sense, neoliberalism is not failing. It is doing much of what it was designed to do. It has created favorable conditions for capital accumulation and has kept workers in line. Rising inequality, often cited as a sign of the crisis of the neoliberal order, is not necessarily a sign of neoliberalism’s breakdown. It is, in many respects, evidence of its success. The same can be said about environmental degradation or the crisis of democracy.
Another frequent misunderstanding is the comparison between the current moment and the crisis of the 1970s. The crisis of the 1970s was one of postwar regulated capitalism, or what is often called the Keynesian consensus. It was marked by intense distributive conflict, resting on two pillars that no longer exist: the bargaining power of organized labor and the ability of oil-producing countries, through the Organization of the Petroleum Exporting Countries (OPEC), to influence global prices. Note that the United States was also a net importer of energy back then. Today the conditions are diametrically opposed. Organized labor is weak. OPEC’s relative geopolitical power has evaporated. The United States is now a major energy producer and a net exporter.
This is not the collapse of neoliberal capitalism in the way the 1970s marked the exhaustion of the postwar order. These are the tensions of a global capitalist society — what Branko Milanović would call “capitalism, alone” — that has already disciplined workers and much of the periphery. But precisely because neoliberalism succeeded in reorganizing the world economy, it also created the conditions for the undermining of some of its own economic structures.
Challenging Myths
The rise of China represents a change in the global order. China is central to any serious account of the new world order that has emerged in this century. China has become the world’s great manufacturing productive center. This was not an accident nor was it simply a Chinese national miracle. It was facilitated by US geopolitical and economic strategy. First through Richard Nixon’s opening to China in the 1970s, then through Bill Clinton’s granting of permanent normal trade relations and China’s accession to the World Trade Organization (WTO). The result is what has been called China 2.0.
The first China shock involved the export of low-cost manufactured goods that devastated manufacturing employment in most of the advanced countries and large parts of the periphery of the capitalist world. The second is more profound. China is no longer merely a low-wage assembler of simple consumer goods. It is now moving aggressively into high-tech and high-value manufacturing, including electric vehicles, batteries, solar panels, and more. China is in many ways part of the center, similar to its counterparts and rivals in Europe, Japan, and the United States.
This also requires challenging myths about advanced capitalist economies. One of the most persistent is that the advanced economies, especially the United States, abandoned industrial policy and have only recently rediscovered it. The rediscovery of industrial policy has been touted by Jake Sullivan, a member of the Biden administration, as part of the so-called New Washington Consensus, and, more recently, by the World Bank. But this is largely false.
The United States has long practiced industrial policy through the military-industrial complex; Fred Block called it a hidden developmental state that always provided strategic support for key technologies. What changed was not the existence of state intervention but the ideological narrative. It was free markets for the periphery and industrial policy for the center. The rise of China has forced the United States and Europe to be more explicit about what they do and have always done. They kicked the ladder away, as Ha-Joon Chang suggested, over and over again.
However, and more importantly, this transformation in production has not been matched by an equivalent transformation in monetary matters. The hegemony of the dollar remains intact. China’s rise has changed the geography of global manufacturing, but it has not displaced the financial and military architecture centered on the United States. The geography of money has been more stable than often understood.
This is the crucial point missed by most accounts of the new multipolar world order. This is not a simple transition from American to Chinese hegemony. It is a more contradictory process, one in which productive power has shifted significantly toward China, while monetary and military power remain organized around the United States. But neoliberal capitalism remains in charge.
This is particularly important for Latin America. The region is now inserted into the world economy in a dual peripheral position. Commercially, it is increasingly tied to China, often through exports of commodities and imports of manufactured goods. Financially and geopolitically, however, it remains subordinate to the dollar system and ultimately to US power, or the Donroe Doctrine, as it has been renamed. Latin American progressive governments therefore confront a world in which China offers markets, mostly for its commodities; credit, often with harsh conditions; infrastructure investment, with many strings attached; and manufactured goods, but not development.
This distinction is essential. The Global South is not the same thing as Raúl Prebisch’s periphery. The term Global South often obscures more than it reveals. It suggests a unity of interest that does not exist. China, Brazil, Colombia, Mexico, India, and South Africa do not occupy the same position in the world economy. Nor should we assume that deeper ties with China automatically generate development.
China has a national strategy, as it should. It has no interest in promoting development in Latin America, or the rest of the Global South for that matter. That means development must be conceived from the periphery itself. It must be oriented toward workers, reducing social vulnerabilities by promoting domestic productive capacity, and external vulnerability by protecting policy autonomy. South-South integration can create opportunities, but it is not a panacea or a substitute for a national development strategy.
Fiscal Rules and Austerity
From the standpoint of development strategy, it is crucial to distinguish between what has worked in practice and what orthodoxy prescribes. What has worked in developing countries has not been fiscal austerity, full financial liberalization, or strict central bank independence. What has worked, when it has worked at all, are policies that reduce external vulnerability and expand domestic growth, while reducing inequality.
Some of these were applied during the Pink Tide in the region, admittedly under more favorable external conditions, before the 2008 financial crisis. Avoiding debt in foreign currency, accumulating international reserves, maintaining relatively stable nominal exchange rates within flexible regimes; raising real minimum wages; supporting transfer programs for the poor; using public banks to promote domestic technological capabilities; and promoting industrial policy, particularly using government procurement policies. Capital controls can help in some circumstances, though their effectiveness depends on institutional conditions and their usefulness is limited in a world in which the issuer of the global currency promotes financial openness and deregulation.
But this also means that the central political battle is against fiscal rules and austerity. The issue is not simply whether central banks should be independent or whether interest rates should be somewhat higher or lower. Those questions matter, especially in peripheral economies subject to the pressures of dollar hegemony and US monetary policy. Note that China keeps large amounts of dollar reserves and has not completely liberalized its capital account. But the deeper constraint is the self-imposed fiscal frameworks that prevent governments from using the state’s budget as an instrument of development.
Fiscal rules are often presented as neutral devices for credibility and stability. In practice, they limit the capacity of elected governments to expand demand, sustain employment, invest in infrastructure, and transform the productive structure. Fiscal policy is not merely a tool for short-run stabilization. It can create domestic productive capacity. It can sustain full employment, and, more importantly, it can create good-quality jobs, support domestic producers, and promote new technologies.
Public spending can shape markets and direct resources toward social needs that private capital will not meet on its own. Fiscal policy is the basis of Mariana Mazzucato’s entrepreneurial state. A serious development strategy requires fiscal policy to be used not only to compensate the poor but to build the productive and technological foundations of a more egalitarian society.
In the periphery, central banks do not operate in a vacuum. Their decisions are constrained by the global financial environment, especially by US monetary policy. Higher interest rates in the United States put pressure on developing countries to maintain relatively high rates in order to stabilize exchange rates, avoid capital flight, and contain depreciation that can be both inflationary and contractionary. But precisely for this reason, fiscal policy becomes even more central. If monetary policy is partially constrained by the hegemony of the dollar, then the struggle over domestic policy space must focus on freeing fiscal policy from rules that reproduce austerity.
Public investment is central. There is no serious development strategy without it. Nor is there a serious green transition without it. The idea that markets will spontaneously reorganize production around social and ecological needs is one of the great illusions of liberal environmentalism. Green development requires planning, coordination, and a state willing to discipline capital.
Policy autonomy is not an end in itself but a means to an end. It is desirable because it creates the space for policies that can directly increase the power of the working class. A state committed to full employment, good-quality jobs, rising wages, and stronger public services can fundamentally improve the lives of the majority. These conditions provide not only material security but also greater bargaining power for labor, giving workers a stronger voice in their workplaces and in society as a whole. Of course, this potential cannot be realized by top-down policy alone. It requires sustained organization from the bottom up to ensure that the benefits are widely shared and that the gains are politically durable.
Ideology vs. Analysis
The current geopolitical conjuncture may provide an opening for such a strategy. While the rise of China does not create an alternative economic system in the way the Soviet Union once did, the transformation of the global order may give peripheral countries, and workers in the advanced economies, greater room to maneuver. This space, however, must be used strategically to reduce external dependence and strengthen domestic productive capacity.
Even then, it is important to recognize the limits of this approach. Strengthening the working class will not solve every problem, as fundamental environmental challenges will remain, especially when the material interests of workers in the center and the periphery diverge, even if neoliberalism is defeated.
This brings us back to Petro’s phrase. An economy that serves life cannot be built by moral appeal alone. It requires confronting capital and rebuilding labor power. It requires understanding the hierarchy of the world economy. It requires recognizing that neoliberalism is not defeated, that the 1970s analogy is misleading, that China’s rise is real but partial, and that dollar hegemony remains central.
The great danger for the Left is to substitute ideology for analysis. It is possible to agree with many of the goals of the “economy for life” agenda — better living conditions, public goods, ecological sustainability, food security, peace, and human dignity, to name the most important — while disagreeing with the diagnosis that sometimes accompanies it.
The problem is not that the slogan is wrong but that it can obscure the central conflict between capital and labor. It lacks an adequate analytical core based on the understanding of distributive and geopolitical conflict. It names desirable ethical goals but does not explain the mechanisms through which capitalism produces inequality, ecological destruction, financial subordination, and austerity. The task, therefore, is not to choose between moral urgency and political economy. It is to connect them.