One of the weirdest contradictions of the neoliberal era is that the past 15 years have seen an unprecedented expansion of state power and authority. The state continues to intermediate 45% of EU GDP and a third of Japanese GDP, the East Asian developmental states continue to flourish, and a fresh crop of developmental states in Venezuela, Vietnam and Russia are about to reach escape velocity.
[WS:] Indeed. What is more, public welfare spending account for about 25-29% of GDP in major EU countries (vs. 15-16% in the US) and either have increased since 1980 or remain at that level. http://stats.oecd.org/wbos/default.aspx?datasetcode=SOCX_AGG
This also holds true for the US, where public social spending increased from 13.3% in 1980 to 16.2% in 2003. During the first two years of Bush administration, public social spending jumped 1.6 percentage points (from 14.6 in 2000 to 16.2 in 2003). Under Clinton administration it went up from 13.4 in 1990 to 15.4 in 1995 (2.1 percent point increase) and then slightly down to 14.6 in 2000 - most likely as a result of Repug Contract on America.
So the question is whether the neo-liberal rhetoric is a cover-up for the steady "state expansion' or whether it is a brake on it i.e. that expansions would have been even greater if it were not for the neo-liberal sentiments.
My conjecture is the latter variant. The growth of the welfare state and state expansion is a result of structural factors: corporatism (i.e. collaboration between government and organized interest groups) that has been the main institutional form of political organization in most democracies, and "legitimation crisis" (cf. Habermas' 1976 essay under the same title) i.e. the tendency of power structures to "buy" legitimacy by social spending as opposed to grounding it in ideology or religion. In that context, the neo-liberal rhetoric, which comes for a large part form state functionaries themselves, is merely an "emergency brake" on these tendencies, designed to keep them in check and not to overwhelm the state budget.
Wojtek