Tuesday, July 7, 2020

Robert Kuttner - Neoliberalism: Political Success, Economic Failure

The invisible hand is more like a thumb on the scale for the world’s elites. That’s why market fundamentalism has been unmasked as bogus economics but keeps winning politically.

A long read, but excellent. 

Absolute freedom brings the opposite: oppression and control by the few. Libertarians and free market fundamentalists will give their blogs and sites names like, Liberty Radio, Liberty News, Learn Liberty, Freedom Radio, etc, but it's not freedom they offer, but enslavement: a harsh boss, long hours at work, poor pensions, low quality health care, anxiety and fear. 

The grand neoliberal experiment of the past 40 years has demonstrated that markets in fact do not regulate themselves. Managed markets turn out to be more equitable and more efficient. Yet the theory and practical influence of neoliberalism marches splendidly on, because it is so useful to society’s most powerful people—as a scholarly veneer to what would otherwise be a raw power grab. The British political economist Colin Crouch captured this anomaly in a book nicely titled The Strange Non-Death of Neoliberalism. Why did neoliberalism not die? As Crouch observed, neoliberalism failed both as theory and as policy, but succeeded superbly as power politics for economic elites.

The neoliberal ascendance has had another calamitous cost—to democratic legitimacy. As government ceased to buffer market forces, daily life has become more of a struggle for ordinary people. The elements of a decent middle-class life are elusive—reliable jobs and careers, adequate pensions, secure medical care, affordable housing, and college that doesn't require a lifetime of debt. Meanwhile, life has become ever sweeter for economic elites, whose income and wealth have pulled away and whose loyalty to place, neighbor, and nation has become more contingent and less reliable.

The failed neoliberal experiment also makes the case not just for better-regulated capitalism but for direct public alternatives as well. Banking, done properly, especially the provision of mortgage finance, is close to a public utility. Much of it could be public. A great deal of research is done more honestly and more cost-effectively in public, peer-reviewed institutions such as the NIHthan by a substantially corrupt private pharmaceutical industry. Social housing often is more cost-effective than so-called public-private partnerships. Public power is more efficient to generate, less prone to monopolistic price-gouging, and friendlier to the needed green transition than private power. The public option in health care is far more efficient than the current crazy quilt in which each layer of complexity adds opacity and cost. Public provision does require public oversight, but that is more straightforward and transparent than the byzantine dance of regulation and counter-regulation.

The American Prospect

1 comment:

Andrew Anderson said...

Banking, done properly, especially the provision of mortgage finance, is close to a public utility. Robert Kuttner

How does one "properly" use the PUBLIC'S credit but for private purposes?

E.g. shall the rich get PUBLIC financing to buy mansions while the poor get financing to buy used trailers?

And that's fair?