Why nothing works

The Crisis of Neoliberal Democracy.

We are living through an era in which nothing seems to work. The expanding insecurity across Nigeria is not simply the product of failed governance; it is a backlash against a new socio-economic order shaped by decades of neoliberal reforms. These reforms have reshaped our institutions, reshuffled our social contracts, and redefined what it means to live, work, and survive in modern Nigeria.

The Origins of the Neoliberal Order

In August 1938, during the first Walter Lippmann Colloquium, German economist Alexander Rüstow introduced the term neoliberalism, which has since evolved into a fiercely contested global ideology. While the intellectual foundations of the market economy are familiar, what remains elusive is the existence of a truly “free” market.

What is far less elusive is the economic reality ushered in by neoliberalism: slower productive growth, deepening environmental destruction, the financialisation of nearly every aspect of life, rising inequality, escalating monopolisation of resources, and an epidemic of anxiety and mental health crises.

Despite its appealing name, new freedom, neoliberalism has produced liberty for some and precarity for most. At its core, it rewrites the social contract using assumptions about human behaviour that contradict the lived realities of human beings.

The Legacy of Neoclassical Thought

To understand how we arrived here, we must return to neoclassical economics, the intellectual foundation of neoliberal ideas. Neoclassical economics has been with us for over a century, yet longevity does not equate to truth. Alfred Marshall, its leading architect, sought to convert economics, a social phenomenon, into a precise, mathematical science by imposing rigid assumptions on human behaviour.

But mathematics is exact; human behaviour is not. To enable mathematical modelling, neoclassical economics assumes that humans are rational, that we always know what we want, and that we consistently make decisions that maximise our well-being. Preferences are stable; we do not change our minds. Markets tend toward equilibrium, where supply equals demand and welfare is maximised. Perfect competition exists; anyone can enter any market, information is ideal, and no one has undue market power.

In Nigerian terms, this would imply that anyone can open a cement company, secure identical financing, enter a perfectly competitive market, and challenge Dangote Cement on equal footing. This is patently untrue, here or anywhere else in the world.

These unrealistic assumptions nonetheless underpin the mathematical models that later became the ideological core of neoliberalism. They presume that people never make poor decisions, firms never go bankrupt, and markets never fail, a fantasy that collapses the moment it meets reality.

Neoliberal Economics: The Ideology of the “Free Market”

Neoliberal economics builds on these foundations with two principal claims: Firstly, markets are inherently efficient, far more so than governments, and secondly, government intervention should be minimal; privatise national assets, deregulate industries, and let the market allocate resources.

In practice, this ideology delivered a social reality in which the state retreats, and citizens are told to rely on markets for everything: healthcare, education, energy, water, housing, pensions, and even basic security, where most of our police are protecting VIP’s. If you are facing hardship, the fault lies not in a broken system but in your supposed lack of effort or rationality as an individual.

This is the central contradiction of neoliberal democratic capitalism: a system built on assumptions that deny the lived experiences of the very citizens it governs.

The Washington Consensus: Exporting Neoliberalism

The globalisation of neoliberalism gained momentum in the 1980s, amplified by the OPEC oil shock of the 70’s, decolonisation struggles across the global south, the global economic shock of the Vietnam War, and the end of the gold standard (the great default).

Margaret Thatcher announced this ideological shift with her famous declaration: “There is no such thing as society.” Ronald Reagan reinforced it when he insisted: “Government is not the solution to our problems; government is the problem.”

Together, they inaugurated the Washington Consensus, which imposed free-market fundamentalism on developing countries via IMF and World Bank structural adjustment programs. These policies demanded cuts in government spending, the removal of subsidies, the privatisation of state assets, market deregulation, tax reforms, trade liberalisation, currency devaluation, and the protection of private property as the highest public good. The human consequences have been devastating.

The Evidence: Social and Economic Harm

A growing body of global research has exposed the failures of this model: A 2024 Global Sustainability study concluded that neoclassical and neoliberal economics drive environmental destruction and social inequity, and that these models must be replaced with models grounded in ecological and social well-being.

UNICEF’s 1991 report, Adjustment with a Human Face, documented how the structural adjustment program ravaged the lives of children and vulnerable households across the global south. UNICEF’s 2021 report on fiscal equity reaffirmed that equitable public spending, not market forces, is essential for reducing poverty.

Multiple UN reports warn against relying solely on GDP, an indicator central to neoclassical growth theory, because it masks inequality and erases social suffering.

The FIRE Economy: Financial Capitalism at Its Peak

Nigeria today embodies the consequences of this ideology. Real productive work has been replaced by rent extraction, as banks, fintechs, and service providers become intermediaries whose primary function is to extract wealth from an already battered population.

This is the FIRE Economy, Finance, Insurance, and Real Estate, where economic growth is measured in PowerPoint slides rather than in improved living standards. Housing becomes unaffordable because real estate is tied to high-interest financing. Banks and fintechs report record profits while citizens grow poorer. Justice is commodified, elections are monetised, and even money, the medium of exchange, is for sale.

This is financial capitalism at its most extractive. It is the hollowing out of a nation’s economic soul.

Where Nigeria Stands Today

Nigeria has become dependent on “hot money”, short-term speculative capital, which cannot build prosperity. Interest rates are set not for domestic stability but to attract foreign investors and manage a currency treated as a speculative commodity.

Our labour market has collapsed. Career prospects are shrinking. Youth disillusionment is rising. Families are breaking under economic pressure. And as these social fractures deepen, the banking and fintech sectors grow richer, governments (mis)manage ever-expanding, confusing budgets with shrinking impact, and insecurity worsens.

The Fix – What Must Change

To reverse this trajectory:

With over 200 million people, our national interest cannot be managed through erratic neoliberal experimentation. Life itself requires long-term planning; families understand this. Nations must do the same.

Conclusion: What Is Unsustainable Cannot Be Sustained

Nigeria has the population, the talent, and the resources to be prosperous. Yet we have embraced an economic model fundamentally unfit for our realities. It has generated poverty instead of progress, insecurity instead of stability, cronyism instead of social values, and despair instead of opportunity.

This model is not sustainable.

And what is unsustainable cannot, and will not, be sustained.

Shamwil Mukhtar is a member of the Daily Trust Board of Economists

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