The specter of neoliberalism

When I talk about international economic policy with my students, one of the models they use to analyze it is a bizarre potpourri concept known as “neoliberalism”. I understand the appeal of the framework to non-specialists: there are good guys and bad guys, and because it’s so broad your pet concept probably always fits in. The problems, as I see them, are that it has good guys and bad guys, and it’s so broad that your pet concept probably always fits in. While it’s valuable to have some moral lens to see the world through, it’s crucially important for intellectually responsible people to separate questions of fact from questions of values.
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It’s sobering to have to remind people that Pinochet, Thatcher, and Reagan were not economic theorists, they were political leaders. In light of what we know from public choice theory it should be no surprise that political leaders sometimes do Bad Things. But ideas about how societies should go about seeing resources distributed and the limits of human ability to engineer broad-based solutions to social problems don’t depend on anything these politicians did.
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Most people are not familiar with the history of economic thought, and don’t understand how the failures of the orthodox Keynesian theory that dominated the West after World War II became so apparent that the intellectual tides changed in the economics profession long before any real policy changes resulted. It was because of these failures that new theories came to the fore, ultimately becoming accepted enough even to have some small influence on policy. (Small because public choice problems never went away.) If Jimmy Carter had won the 1980 US presidential election, he would have done many of the same things that Reagan did, because that’s what his economic advisers would have advised, because that’s what people who studied the topic had come to agree on. In fact, airline deregulation happened under Carter, not because Carter wanted to unleash the rich and powerful on all of us poor saps, but because that’s what the technical consensus had come to. We hardly even think about it anymore, but without that policy change many of us might never have been on planes before, much less been on planes enough to have routines for how we spend our time on flights. Lowering at least some barriers to trade was an idea whose time had come.
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For people unfamiliar with the history of economic thought it was a tale of certain people rising to the top and using their power to make massive and very bad policy changes. If you think that the top-down theories that had dominated policy prior to the change were the obviously right ones, then the only thing that makes sense is that people consciously torpedoed them, and probably people who were ill-intentioned. But that doesn’t hold up entirely. It wasn’t Reagan and Thatcher who killed orthodox Keynesianism. As a technical paradigm it was dead when they arrived. That they did many other things people still don’t like is beside the point.
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It’s tempting to succumb to a moralistic framework. It has a very primal appeal. But it makes me think of 1 Corinthians 13:11: “When I was a child, I used to talk as a child, think as a child, reason as a child; when I became a man, I put aside childish things.” Many of the things people get emotional about are really technical issues, and it’s the responsibility of academics and analysts to treat them that way, especially in front of non-specialist company.

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  • Frog Doe

    A perfect example of the appeal to a framework for elites/specialists: thoroughly apolitical, inevitable, value-free, unburdened by any history or morality.

    (I kid, but the whole Womkblog/Vox “inevitable framework that so happens to agree the the opinion of the current elite class” does get on my nerves sometimes.)

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