The article offers a critique of the prevailing understanding of the relationship between neoliberalism and classic 19th-century liberalism in contemporary IPE and offers a redefinition inspired by Polanyi and Gramsci. Within critical IPE studies, consensus has emerged that neoliberalism cannot be reduced to a simple attempt to roll back the economy and let loose free-market forces. However, this insight relies on contrasting neoliberalism with classic liberalism, that is, a simple attempt to implement just this naïve laissez-faire ideology. In contrast, this article argues that 19th-century liberalism is also characterised by an active use of state and legislative power. Through a historical study of two cases from 19th-century Britain, Poor Law reform and the Gold Standard, the paper will argue that state action played a central role even during the heyday of laissez-faire liberalism.
With a starting point in Polanyi’s dictum that ‘laissez-faire was planned’, this reinvestigation will point toward a need to develop a more nuanced understanding of the distinctions between economic theory, ideology, and practical policy, as well as pointing toward a general reinterpretation of the role of the state in liberal economic ideology.