Fighting neoliberalism

“Absent a great rebalancing [away from neoliberalism], shared prosperity will become a relic of the past and the Great Recession will likely evolve into the Great Stagnation. If that happens, it is easy to imagine a Weimar-style political scenario in which prolonged mass unemployment and economic hardship release the genie of intolerance and hate.

For these reasons a great rebalancing is essential and urgent, but escaping the pull of neoliberalism will not be easy. There exist major political obstacles associated with vested interests and the capture of political parties. Orthodox economists dominate thinking about economics and economic policy, and market fundamentalism has a deep hold on the public’s imagination. In part, this hold is because of its rhetoric about freedom and individualism, which resonates especially strongly with US cultural images and values. But it is also because extremes are attractive, offering simple but false certainties.

In contrast, economic perspectives that recognize the need for balance also require judgement, and the exercise of judgement is difficult and challenging, being the ultimate expression of individual responsibility. Ironically, neoliberalism, which touts individualism, avoids that responsibility by its embrace of the extreme. That makes it both dangerous and difficult to dislodge, but, to borrow from Mrs Thatcher, if we want shared prosperity, there is no alternative.”

Thomas Palley (words from his 2012 book From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics)

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