The death of neoliberalism
The global financial crisis laid bare the underlying weaknesses of the neoliberal form of capitalism that has dominated policymaking in the West since the 1980s. But without a clear alternative to take its place, the response was to double down on a broken model. The impact of the crisis, and the austerity policies that followed, fractured the political argument in many countries, and contributed to a series of political earthquakes including Brexit, the election of Donald Trump, and the rise of nativist parties across Europe and beyond.
At the same time, the economics profession has entered a period of intellectual upheaval. Stagnant living standards, sharply rising inequality and environmental breakdown have led growing numbers of economists and commentators – including those in mainstream institutions such as the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) – to acknowledge the shortcomings of free-market orthodoxy.
If neoliberalism was already on life support, then the coronavirus has administered the lethal blow. The pandemic has laid bare the disastrous consequences of decades of privatisation, deregulation and outsourcing in countries like the US and UK, and highlighted the critical importance of strong public services and a well-resourced state bureaucracy. In order to contain the economic fallout from the pandemic, Western countries have ripped up the neoliberal playbook. Market forces have been shunned in favour of economic planning, industrial policy and regulatory controls. Even the IMF, for decades the standard bearer of neoliberal orthodoxy, has floated policy responses that have more in common with the Chinese model of capitalism. In a
recent blog, four senior researchers wrote that: “If the crisis worsens, one could imagine the establishment or expansion of large state holding companies to take over distressed private firms.”
But those who have spent years dreaming about a world beyond neoliberalism should think twice before popping the champagne. While some may celebrate the arrival of policies that, on the surface at least, involve a greater role for the state in the economy, there remains one problem: there is no evidence that state action inherently leads to progressive social outcomes.
https://www.opendemocracy.net/en/ou...west-the-spectre-of-authoritarian-capitalism/