“I think patrimonialism is exactly the right phrase to describe the way in which the current administration is governing.” — Peter Hall
Neoliberalism is dead. So what comes next? Peter Hall, a Harvard political economist for the last four decades, says the capitalist locomotive left the neoliberal station years ago. His new book, Governing Growth, names the next stop: the “knowledge economy,” the digital, globalized capitalism of the 21st century.
The knowledge economy made San Francisco, New York and Boston very rich. It left almost everyone else behind. Out of that came a new political cleavage — college degree versus no college degree — and, on both sides of the Atlantic, the populist wake-up call.
But as Jonathan Rauch and Jeff Kopstein have argued on this show, populism has since curdled into something worse: patrimonial capitalism, government on behalf of pitchfork-wielding oligarchs like Orbán and Trump. Ironically, it only deepens the inequalities that produced it. And it’s going to get worse. In the AI age, I suspect, we may end up looking back with nostalgia at good old late twentieth century neoliberalism.
Five Takeaways
• Three Growth Regimes. Hall’s framework is simpler than it sounds. A growth regime is the combination of what governments do and what firms do, reinforcing each other. The postwar era of modernization ran from 1945 to the mid-1970s, as Europe rebuilt to compete with American industry. Then came liberalization in the 1980s and 1990s — Thatcher and Reagan, shareholder value, companies shedding everything but their core competencies and outsourcing the rest. And around 2000 a third regime began: knowledge-based growth, driven by digital technology, investment in intangibles such as research, marketing and organization rather than plant and machinery, and the explosive growth of global value chains. His distinctive move is to treat corporations as agents of change on a par with governments — his own life, he notes, is shaped as much by Harvard’s practices as by Washington’s.
• Thirty Cities. The knowledge economy has a geography. Skill-biased technological change rewards people with college degrees, and it concentrates: about half of US GDP growth over the past twenty-five years, Hall says, has taken place in some thirty large metropolitan areas. His example is Kendall Square next to MIT, which when he arrived in the late 1970s was auto body shops and small machine tool shops and is now a centre of pharmaceutical engineering. Andrew’s is Central Square down the road, where he bought his first place in the early nineties — “you should have held on to that place,” Hall told him. The effect of all this is that many people feel left behind, and most Americans and Europeans now expect their children’s lives to be worse than their own.
• The Populist Cleavage. Politics follows economics through what Hall calls cleavages — systematic divisions between social groups. In the 1950s and ’60s the dominant one was class, blue-collar against white-collar, and it pushed working-class grievances to the top of the agenda; that, he argues, is what built the welfare state, in Europe after the war and in America in the 1930s under a Roosevelt who sounded, Hall says, like a raving leftist. Today the dominant cleavage is education. Its roots lie in the inequality of the 1980s and 1990s, supercharged by the knowledge economy and now by AI. Mainstream parties have responded by turning back towards intervention: Bidenomics, with its investments conspicuously placed in red states; the EU’s first collective bonds; Germany’s new semiconductor plants located in the East, where the AfD is strongest. But a return to the New Deal, he thinks, is wishful thinking.
• A Political Stomach. Andrew’s most persistent question: what are Hall’s politics? Big-name professors, Andrew suggested, sometimes hide behind their social science. Hall wouldn’t say — he doesn’t wear his political heart on his sleeve, he has a political stomach, perhaps — though he cares about climate change and inequality and lets the listener infer the rest. He was more forthcoming on populism: a good thing at one level, a democratic wake-up call for mainstream parties, with bad consequences at another, since right-wing populists tend to become what his colleagues Jacob Hacker and Paul Pierson call plutocrats with pitchforks. On Trump he was unusually direct. Patrimonialism is exactly the right word, he said, for an administration governing on behalf of favored oligarchs, as Orbán did in Hungary. And to Andrew’s suggestion that the real convergence is between Trump’s patrimonial capitalism and China’s statist model: “I think you’re all too right about that.” Whether it outlasts 2028, he wouldn’t bet.
• Growth, Climate and a Fourth Regime. Hall is an environmentalist who thinks the no-growth movement is a political mistake. Climate policy needs sticks as well as carrots — regulations that cost ordinary people something — and people will pay those costs only if there is growth and it is fairly shared. He quotes a French yellow-vest protester answering a climate campaigner: you’re worrying about the end of the world, I’m worrying about the end of the week. On AI, he sees a general purpose technology like electricity or steam, and the possible start of a fourth growth regime. How to regulate it? He doesn’t know — nor, Andrew added, do the people building it. But the lesson of history going back to the nineteenth century, Hall says, is that we have to figure it out. Andrew’s suspicion: the cleavages get so chasmic in the AI age that we may one day look back nostalgically at late twentieth century neoliberalism.
About the Guest
Peter A. Hall is the Krupp Foundation Professor of European Studies at Harvard University. His books include Governing the Economy, The Political Power of Economic Ideas and, with David Soskice, Varieties of Capitalism. He is a Fellow of the British Academy and of the American Academy of Arts and Sciences. Governing Growth: The Postwar Transformations of Capitalism and Democracy (Princeton University Press, September 22, 2026) is his latest. He lives in Massachusetts.
References:
• Governing Growth: The Postwar Transformations of Capitalism and Democracy by Peter A. Hall (Princeton University Press, 2026).
• The Rise and Fall of the Neoliberal Order by Gary Gerstle — the framework Hall builds on and revises.
• Modern Capitalism by Andrew Shonfield (1965), with which Hall’s book opens.
• Jacob Hacker and Paul Pierson on “plutocrats with pitchforks.”
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