Paul Krugman and Dani Rodrik are out with dueling op-eds on the subject of the latest bout of financial-market craziness in places like Argentina and Turkey. Both men have been following emerging-market crises for decades; both indeed, are world-class experts on such episodes. What’s more, both economists have a broadly left-liberal worldview: there’s no deep ideological or philosophical rift here. And yet the two seem diametrically opposed.
Reuters — Econoblog
Who’s to blame for the emerging-market crisis? Felix Salmon
Who's to blame. First, the institutional structure imposed under neoliberalism that rests on the myth assumption of "free markets, free trade, and free capital flows." Secondly, the requirement that the economy and therefore, the financial system as well, be run by capital for capital preservation and accumulation, the myth assumption being that capital formation is the sine qua non of growth, which includes the myth assumption that "growth" is identical with greater prosperity.
Of course, this is only part of the mythology which is ultimately to blame for recurrent social, political and economic problems. But it is an important part of it. There is no fix in an ill-designed or broken system without overhauling the system, or at least reforming it in a major way.
Neoliberalism is not only antithetical to democracy but also incompatible with distributed prosperity.
