Neoliberalism: Political Success, Economic Failure


Naked Capitalism has the article Neoliberalism: Political Success, Economic Failure.

It is much harder to articulate the case for a mixed economy than the case for free markets, precisely because the mixed economy is mixed. The rebuttal takes several paragraphs. The more complex story holds that markets are substantially efficient in some realms but far from efficient in others, because of positive and negative externalities, the tendency of financial markets to create cycles of boom and bust, the intersection of self-interest and corruption, the asymmetry of information between company and consumer, the asymmetry of power between corporation and employee, the power of the powerful to rig the rules, and the fact that there are realms of human life (the right to vote, human liberty, security of one’s person) that should not be marketized.
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The political reversal of neoliberalism can only come through practical politics and policies that demonstrate how government often can serve citizens more equitably and efficiently than markets. Revision of theory will take care of itself. There is no shortage of dissenting theorists and empirical policy researchers whose scholarly work has been vindicated by events. What they need is not more theory but more influence, both in the academy and in the corridors of power. They are available to advise a new progressive administration, ifthat administration can get elected and if it refrains from hiring neoliberal advisers.

This is a more detailed defense of mixed economies than the brief defense I have been stating. I have just said that profit-driven, free market systems are not good at delivering some of what society needs. This article goes into a lot of the details that explain why my observation is true and relevant.

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