Neoliberalism refers to the return to the policies of laissez-faire that were introduced by President Reagan - sometimes called Reaganomics - in 1971. Taxes were reduced, especially on private and company incomes.
Neoliberalism refers to the return to the policies of laissez-faire that were introduced by President Reagan - sometimes called Reaganomics - in 1971. Taxes were reduced, especially on private and company incomes.
Neoliberalism is a term I have often heard banded about, but wasn't sure what it meant. It is used almost as a term of abuse by left-wingers. Is Neoliberalism different to Conservatism, in which case why do Conservative Party politicians get accused of it? The Liberal Democratic party in this country are really very social democratic, and they were so even when they were just the Liberal party. So why is Neoliberalism called Neoliberalism? I gather it is because Liberal policies used to be different 150 years ago, when they believed in giving business owners a free hand to do what they thought best. Another source of confusion is that there is a Neoclassical school of economics. This has been the predominant school of economics for the past thirty years, but has been given a bit of a bashing recently. Do Neoliberal politicians follow Neoclassical economics, or are they not really linked?
According to Aldous Huxley, D.H. Lawrence once said that Balzac was 'a gigantic dwarf', and in a sense the same is true of Dickens.
Charles Dickens, by George Orwell
But what came before Neoliberalism? The answer is Ordoliberalism: see https://en.wikipedia.org/wiki/Ordoliberalism. And where did that come from? It was a German perspective on what was needed to prevent the occurrence of another major recession like the one in the 1930s. But neoliberalism took the world by storm, deaf ears turned towards the ordoliberal view and its carefully designed measures to prevent another major recession.
Many of their ideas were developed in the exile of ordoliberals during the Hitler era. They moved to Switzerland where universities and the German language provided a home for the ordoliberals. See https://en.wikipedia.org/wiki/Freiburg_school.
But after the Reagan years in the USA and the European phenomenon of Thatcherism, ordoliberalism was no longer "fashionable". There was instead "a rush to the market".
In this thread I want to examine the question of such major U-turns in history. This U-turn is interesting for a number of reasons. The end of poverty proved not to be what was hoped for. The election of President Trump is one expression of this. Not was the abandonment of ordoliberalism as being redundant in the early post-war prosperity. Instead we have a return to the boom-slump cycle. Class differences are once more widening, as the super rich begin to comprise a new ruling class, alongside the emergence of a disadvantaged underclass.
I've never heard of Ordiliberalism before. In the UK, it sounds somewhat similar to what we already have. We have a Monopolies Commission to stop any one company from dominating a sector, a minimum wage, and various watchdog bodies to ensure big business is behaving.
I think by the end of the 70's, there was a feeling that the government was incompetent at running businesses and that it was better to leave it to the professionals. All the nationalised industries were permanently on strike except when they were making shoddy products no one wanted. Inflation was high, Keynesianism had failed, and there was a sense the country was going to the dogs. I think this is why Margaret Thatcher won the election in 1979. I don't know what the situation was in the US. At the time I thought President Carter lost to Ronald Reagan because the Iranians had humiliated the US with the hostage taking at the American embassy, and Carter failed to deal with it robustly enough. I do not know if really, a lot of the economic problems in the 70s were just down to oil price shocks.
I read a booked called The Spirit Level. It argued that once a country had become wealthy enough so that basic needs of its citizens could be met, the contentment of its citizens was determined more by how equal everyone was rather than how much money they actually had. Japan and Sweden were the happiest. Pay differentials in Japan between top and bottom earners is much narrower in Japan than in many countries. In Sweden there is a high degree in wealth redistribution through taxes and welfare payments. Among the OECD countries, the US was the most unequal society with the most unhappy citizens. The UK was fairly unequal and unhappy too. Unhappiness manifests itself in social problems: drug abuse, crime, low life expectancy, etc; but it can also be detected by measuring stress hormones. I am not saying I buy all this, but this is what the book was arguing.
According to Aldous Huxley, D.H. Lawrence once said that Balzac was 'a gigantic dwarf', and in a sense the same is true of Dickens.
Charles Dickens, by George Orwell
The Spirit Level seems like an interesting book: https://en.wikipedia.org/wiki/The_Sp...ways_Do_Better. I must read it.
If you want to learn more about ordoliberalism this link may help: https://en.wikipedia.org/wiki/Social_market_economy
The Spirit Level is not the only book about inequality. For example, Joseph Stiglitz has written at least two books on the subject. I have not read any of his books. He is not a fan of Neoliberalism.
According to Aldous Huxley, D.H. Lawrence once said that Balzac was 'a gigantic dwarf', and in a sense the same is true of Dickens.
Charles Dickens, by George Orwell
There is a word in Swedish that expresses well the sense of neither too much, nor too little - lágom. It is a very Swedish word.
Jock Young, the critical criminologist, - see https://en.wikipedia.org/wiki/Jock_Young - wrote a trilogy of books on late modernity. Two of these The Vertigo of Late Modernity (2007), and The Exclusive Society (1999), are studies of neoliberalism today.
This is the Wikipedia entry on Lagom: https://en.wikipedia.org/wiki/LagomOriginally Posted by Dreamwoven
At the time liberalism was "reinvented" by President Reagan in the early 1970s no-one thought neoliberalism would have negative consequences. Now, we know know better. The 1929 crash - https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 - was matched by the 2007-2008 financial Crisis: https://en.wikipedia.org/wiki/Financ...07–2008:
"The financial crisis of 2007–2008, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s."
It has also involved the Federal Reserve to try to control the financial market using a special set of measures to keep interest-rates low. This zero interest-rate policy - https://en.wikipedia.org/wiki/Zero_interest-rate_policy - (ZIRP) - is managed by Janet Yellen: https://en.wikipedia.org/wiki/Janet_Yellen. It is still in force, a decade after the 2007-2008 financial crisis.
ZIRP is an unusual policy, hoping to dampen demand that was stimulated by the subprime mortgage crisis leading up to the 2007-2008 financial crisis. See https://en.wikipedia.org/wiki/Subprime_mortgage_crisis and the US Housing Bubble: https://en.wikipedia.org/wiki/United...housing_bubble. In short, ZIRP was an attempt to control the housing bubble. On this see Acting Man Blog, this post, especially: http://www.acting-man.com/?p=49118.
The tricky part is to judge when the Federal Reserve should phase out ZIRP? And what do people think of the Federal Reserve using its power over interest rates to "fool the market"? Will it work, or will its unintended consequences rebound on us?
The whole business about ZIRP is a huge experiment. We have no idea where it will lead...
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