I recently went to an event on industrial policy hosted by the Roosevelt Institute, and on one panel Rana Foroohar of the FT said the following about neoliberalism and post-neoliberalism:
So let me scene set a little bit about where we've been, and in particular, the neoliberal paradigm, and where we're headed into this post-neoliberal world, this world of Biden-omics, this world of industrial policy that we're hearing about.
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I think that we are moving into a post-neoliberal, post-globalized world. Not that globalization is going away, but we're gonna see much more of a focus, not just in the US, but globally on regionalization, localization and re-mooring wealth and place, because that's really what's been lost in the last 40 years. So, Heather and Felicia, I want to kind of sketch my paradigm of neoliberalism and see if you agree with it, and then get your sense of where we're going.
When I think about neoliberalism, I think about the Reagan-Thatcher revolution, you know, taxes were slashed, markets were deregulated, global capital was unleashed. And the assumption was that capital, goods and people were all going to be able to cross borders seamlessly, and, guess what, land where it was most productive for them to do so.
The problem with this paradigm is the global capital moved much faster and sort of began to float 35,000 feet above the challenges of the nation state, and that has become an issue that we're all grappling with. So while you saw more global growth than ever before, particularly in the years leading up to the financial crisis, you also saw increasing and dramatic growth in global inequity in almost every country around the world, not just the US. That of course has economic and political ramifications. And so that's where we are now. To me, the financial crisis, COVID, the pandemic, war in Ukraine, all have been sort of like a scrim that's been pulled up and shown us the fragility of the old world. From the debt crisis, the financialization, the imbalances in trade, you know, the rise of an asset based economy in the US versus one on actual income growth and good jobs.
I hear a lot these days about neoliberalism dying and post-neoliberalism emerging, generally from people who don't like neoliberalism. It's not always clear what they mean by neoliberalism, and what they don't like specifically, but in some general sense they want more government involvement in the economy and more regulation of markets.
One issue I have with these suggestions of the death of neoliberalism is that it makes it sound like we have gone through radical shifts in the economy over the years. The critics of neoliberalism seem to view the neoliberal period as an extreme journey into free markets, and the post-neoliberal world as -- they hope -- a return to heavier government regulation, industrial policy, and, for some people at least, economic nationalism.
But I don't think this view of how the U.S. economy has been run is correct. My sense is that the U.S. economy was, is, and in all likelihood will be a mixed one, with some market-oriented parts and plenty of government intervention. There are changes to the mix now and then, but they are fairly small shifts along the continuum. Reagan did push for a bigger role for markets; and then Bill Clinton pushed back. We saw this pattern repeated with Bush and Obama. But neither side's vision made very much progress in the direction they were pushing, and no matter which party has been in power, or if they were sharing power as they often were, there was always a mix of government-led and market-oriented economic policies. Our economy is a mixed one and the changes that occur now and then are mostly just tinkering at the margins of this mix.
So to sum up: Neoliberalism is not dead (if it ever existed!) and post-neoliberalism is not on its way in. We have a mixed economy, pretty much like the one we have always had.
That's kind of a boring story of the economy, and therefore may not get much attention. If I could think of a clever-sounding name for this state of affairs, maybe I could convince more people.
