I also recommend on this subject the recent work by UK Cambridge-based US historian Gary Gerstle - The Rise and Fall of the Neoliberal Order. Gerstle makes the point that the post-WWII accommodation between business and labour under Keynesianism was helped by the existence of an alternative political/economic regime in the Soviet Union. Capital was more ready to accommodate with labour when there seemed a real prospect of capitalism losing the great competition of the mid-20th century. Politicians nominally of the right (like Eisenhower) accepted a high-tax mixed economy as a given. But the breakdown of Keynesianism in the 70s under stagflation and then the fall of the Soviet order in the 80s led the triumphalism as epitomised by the Fukuyama and Friedman books you mentioned. From that point and without a foil for capitalism, the shoe was on the other foot and the politicians of the nominal left (Clinton, Blair, right up to Obama) worked off the neoliberal template. As for today, it’s clear our own political institutions haven’t caught up to the market and economic reality. Hence an unmoored Liberal Party has drifted further and further to the Far Right and the Labor Party is marooned at a Karaoke Bar with Keating’s greatest hits as the only option.
Great comment - and I better prioritise that Gerstle book everyone keeps mentioning! As for Keating, unlike Rudd suspect he would not have initiated the NBN. He was also advised by Stone rather than Henry. Interesting to consider whether Keating who (once it was policy) supported Medicare would have supported the NDIS. Keating keeps taking credit for however many years of growth but on closer inspection that doesn't stand up to scrutiny - Australia merely rode the economic cycles and the China boom. The lack of TECHNICAL recession in 2008 was because of fiscal policy - nothing to do with Keating which he continually claims, and in any case makes a huge deal about how much growth there was in one or two quarters rather than the longer-term picture. Once we can dispense of the Keating myths perhaps then we can move on.
"By the time it became clear that this promise would not be realised, expectations had been lowered so much that (for example) a 5 per cent rate of unemployment was seen as a success rather than the disaster it would have been perceived as in the 1970s."
But what caused the lowering of the expectations? I think there's something or even much to unpack in why social democracy collapsed so easily. I think it was mostly atherosclerosis, a failure to provide useful new analyses in response to new problems, the complacency of the unionized workforce, and the internal lines of communication available to the neoliberal-friendly business community.
Great question. I like two authors. Peter Hall argued Thatcher used the opportunity and the idea of monetarism to advance over internal tory rivals and then over labour. Mirowski argues that capital (via its funded think tanks) uses ideas to poison economic debates and cause confusion until at least one of their favoured (market) solutions that sounds progressive but isn't gets a win. With Thatcher I think it's a signal that our democratic institutions aren't very strong. As soon as there is a recession we are easily willing to believe that any opposition party is a better choice. That is, elections are basically arbitrary - in my view arguably the fundamental problem. This confusion Mirowski uncovers in his work is (as he states) more of a delaying tactic. To answer your question of why it collapsed ... did it? It did take a couple of elections cycles (politicians change over only every ten years), but by the mid-late 1990s there were differences, and then I think social democracy, while not the same as the 1960s, has definitely been gradually on the way back, rather than the dismal view that it collapsed. The so-called neoliberalism of today is nothing like the 1980s, even despite claims of hard versus so-called soft neoliberalism.
if I had to pick one issue with explanatory power, I'd choose the intellectual, political, and cultural weakness of social democracy. In some sense, there's no natural cohering constituency, other than perhaps labor unions. And there's nothing equivalent to the intellectual impact of Hayek/vonMises/Friedman.
Great point. The one and only economic intellectual that the left claims who is not ridiculed is Keynes. But Keynes' motivation was to save capitalism from itself. Keynesianism does allow government spending (especially in recessions) but then - even worse - it probably endorses auserity through arguing that borrowing needs to be paid back. Social democracy did have one other big backer - Franklin D Roosevelt. But even he was only successful because of the war buildup - it was said he faced a lot of opposition around 1937 to the new deal. One thought to finish - you're right there is no new left 'Friedman'. Maybe in the modern world with its fragmentation such singular figures are not possible. If so even though there is no modern new left intellectual, it may be less likely that another Friedman/Hayek dominates in future as well.
IMHO, what's needed is a Keynes for redistribution, predistribution, and coordination. We're part-way there with Mariana Mazzucato and Modern Monetary Theory, but no epochal, synthesizing figure yet. DeLong could be one such, but he fearfully clings to soft neoliberalism rather than even trying to resolve the coordination problem posed by socialism.
It's said that the invisible hand resolves the coordination problem, but I haven't seen any serious work on resolving the coordination problem while retaining socialism. I mean, there is a wide range of tools-wage/price controls, pubic/private partnerships, government-owned corporations, regulations, etc., but I haven't seen anything attempt to address the issue in a comprehensive way....
The invisible hand has no role in the public-sector economy - hospitals, education (including unis), police, army, public parks/amenities, major infrastructure. Despite this there is no 'coordination problem' in these sectors; government 'planning' works fine as it is based on need. In the case of infrastructure there are urban planners and transport planners who determine need. For other sectors which are determined by wants rather than need (what sort of car or food you like), it feels like the market does just fine. The issue (which you identify) is the problem of redistribution and especially PREDISTRIBUTION. What we see as the solution to that depends on ideologies, which people will be divided on. I'm personally liking the land taxes governments levy and would be happy for more changes in that direction plus incremental changes to finance industry and speculative taxes and upping capital gains tax and also the inheritance tax (starting at high levels). I think a lot of our debates now will be moot in 10 years time because the world is moving on - although the timing will differ in different countries based on elections.
Suspect similar things were happening in the 50s and 60s as well rather than it being a case of now worse than then. Neoliberalism dying, then, is not meant to signify the beginnings of a perfect system like in the 60s, but only to signify that there are significant changes happening.
I also recommend on this subject the recent work by UK Cambridge-based US historian Gary Gerstle - The Rise and Fall of the Neoliberal Order. Gerstle makes the point that the post-WWII accommodation between business and labour under Keynesianism was helped by the existence of an alternative political/economic regime in the Soviet Union. Capital was more ready to accommodate with labour when there seemed a real prospect of capitalism losing the great competition of the mid-20th century. Politicians nominally of the right (like Eisenhower) accepted a high-tax mixed economy as a given. But the breakdown of Keynesianism in the 70s under stagflation and then the fall of the Soviet order in the 80s led the triumphalism as epitomised by the Fukuyama and Friedman books you mentioned. From that point and without a foil for capitalism, the shoe was on the other foot and the politicians of the nominal left (Clinton, Blair, right up to Obama) worked off the neoliberal template. As for today, it’s clear our own political institutions haven’t caught up to the market and economic reality. Hence an unmoored Liberal Party has drifted further and further to the Far Right and the Labor Party is marooned at a Karaoke Bar with Keating’s greatest hits as the only option.
Great comment - and I better prioritise that Gerstle book everyone keeps mentioning! As for Keating, unlike Rudd suspect he would not have initiated the NBN. He was also advised by Stone rather than Henry. Interesting to consider whether Keating who (once it was policy) supported Medicare would have supported the NDIS. Keating keeps taking credit for however many years of growth but on closer inspection that doesn't stand up to scrutiny - Australia merely rode the economic cycles and the China boom. The lack of TECHNICAL recession in 2008 was because of fiscal policy - nothing to do with Keating which he continually claims, and in any case makes a huge deal about how much growth there was in one or two quarters rather than the longer-term picture. Once we can dispense of the Keating myths perhaps then we can move on.
"By the time it became clear that this promise would not be realised, expectations had been lowered so much that (for example) a 5 per cent rate of unemployment was seen as a success rather than the disaster it would have been perceived as in the 1970s."
But what caused the lowering of the expectations? I think there's something or even much to unpack in why social democracy collapsed so easily. I think it was mostly atherosclerosis, a failure to provide useful new analyses in response to new problems, the complacency of the unionized workforce, and the internal lines of communication available to the neoliberal-friendly business community.
Great question. I like two authors. Peter Hall argued Thatcher used the opportunity and the idea of monetarism to advance over internal tory rivals and then over labour. Mirowski argues that capital (via its funded think tanks) uses ideas to poison economic debates and cause confusion until at least one of their favoured (market) solutions that sounds progressive but isn't gets a win. With Thatcher I think it's a signal that our democratic institutions aren't very strong. As soon as there is a recession we are easily willing to believe that any opposition party is a better choice. That is, elections are basically arbitrary - in my view arguably the fundamental problem. This confusion Mirowski uncovers in his work is (as he states) more of a delaying tactic. To answer your question of why it collapsed ... did it? It did take a couple of elections cycles (politicians change over only every ten years), but by the mid-late 1990s there were differences, and then I think social democracy, while not the same as the 1960s, has definitely been gradually on the way back, rather than the dismal view that it collapsed. The so-called neoliberalism of today is nothing like the 1980s, even despite claims of hard versus so-called soft neoliberalism.
Great points.
if I had to pick one issue with explanatory power, I'd choose the intellectual, political, and cultural weakness of social democracy. In some sense, there's no natural cohering constituency, other than perhaps labor unions. And there's nothing equivalent to the intellectual impact of Hayek/vonMises/Friedman.
Great point. The one and only economic intellectual that the left claims who is not ridiculed is Keynes. But Keynes' motivation was to save capitalism from itself. Keynesianism does allow government spending (especially in recessions) but then - even worse - it probably endorses auserity through arguing that borrowing needs to be paid back. Social democracy did have one other big backer - Franklin D Roosevelt. But even he was only successful because of the war buildup - it was said he faced a lot of opposition around 1937 to the new deal. One thought to finish - you're right there is no new left 'Friedman'. Maybe in the modern world with its fragmentation such singular figures are not possible. If so even though there is no modern new left intellectual, it may be less likely that another Friedman/Hayek dominates in future as well.
IMHO, what's needed is a Keynes for redistribution, predistribution, and coordination. We're part-way there with Mariana Mazzucato and Modern Monetary Theory, but no epochal, synthesizing figure yet. DeLong could be one such, but he fearfully clings to soft neoliberalism rather than even trying to resolve the coordination problem posed by socialism.
It's said that the invisible hand resolves the coordination problem, but I haven't seen any serious work on resolving the coordination problem while retaining socialism. I mean, there is a wide range of tools-wage/price controls, pubic/private partnerships, government-owned corporations, regulations, etc., but I haven't seen anything attempt to address the issue in a comprehensive way....
The invisible hand has no role in the public-sector economy - hospitals, education (including unis), police, army, public parks/amenities, major infrastructure. Despite this there is no 'coordination problem' in these sectors; government 'planning' works fine as it is based on need. In the case of infrastructure there are urban planners and transport planners who determine need. For other sectors which are determined by wants rather than need (what sort of car or food you like), it feels like the market does just fine. The issue (which you identify) is the problem of redistribution and especially PREDISTRIBUTION. What we see as the solution to that depends on ideologies, which people will be divided on. I'm personally liking the land taxes governments levy and would be happy for more changes in that direction plus incremental changes to finance industry and speculative taxes and upping capital gains tax and also the inheritance tax (starting at high levels). I think a lot of our debates now will be moot in 10 years time because the world is moving on - although the timing will differ in different countries based on elections.
Neo liberalism, Is it really dying?
Shell threatenng to wreck an evening out of power prices, whereby we actually get to use our own gas?
Suspect similar things were happening in the 50s and 60s as well rather than it being a case of now worse than then. Neoliberalism dying, then, is not meant to signify the beginnings of a perfect system like in the 60s, but only to signify that there are significant changes happening.