Headline: A Misplaced Mea Culpa for Neoliberalism
Sub-headline : The International Monetary Fund should stick to its knitting and tackle the decline in productivity
As an all-purpose insult, “neoliberalism” has lost any meaning it might once have had. Whether it is a supposed sin of commission, such as privatisation; one of omission, such as allowing a bankrupt company to close; or just an outcome with some losers, neoliberalism has become the catch-all criticism of unthinking radicals who lack the skills of empirical argument.
As it progresses this paragraph builds up into a kind of hysterical lashing out of a true believer confronted with a heretic! But note that a critique of Neo-Liberalism is never a rational, a reasoned exercise.Read this from the IMF essay and see how carefully its writers frame their critique of Neo-Liberalism:
There is much to cheer in the neoliberal agenda. The expansion of global trade has rescued millions from abject poverty. Foreign direct investment has often been a way to transfer technology and know-how to developing economies. Privatization of state-owned enterprises has in many instances led to more efficient provision of services and lowered the fiscal burden on governments.
However, there are aspects of the neoliberal agenda that have not delivered as expected. Our assessment of the agenda is confined to the effects of two policies: removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, sometimes called “austerity,” which is shorthand for policies to reduce fiscal deficits and debt levels. An assessment of these specific policies (rather than the broad neoliberal agenda) reaches three disquieting conclusions:
•The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.
•The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.
•Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.
As a Democratic Socialist/Unthinking Radical I was ready to engage, not without some shame, in a bit of schadenfreude, but I found the essay conventional, a bit too academically respectable. Or should I say too much the product of a Think Tank, whose main job is to cultivate both political and economic conformity, while challenging the current orthodoxy: a precarious balancing act. But what is of most interest is that even the most tepid criticisms of the Neo-Liberal dispensation is subjected to some rational argument, but not without resort to petty bickering chatter from one of the Vaticans of that very Neo-Liberalism. One can only wonder what the Oxbridgers at The Economist will make of this essay, perhaps Bagehot will reprise his politically strategic nostalgia for the year 1899:
Few places, in 1899, better encapsulated Britain’s industrial pomp than Oldham. Its skyline was the Manhattan of its day: a forest of smoke stacks emanating from the cotton mills, the Pennine hillsides freckled with mansions housing the country’s largest concentration of millionaires.
The very pressing question in 2016, the eighth year of the present Economic Depression, is how shall we judge the fruits of Neo-Liberalism, by what empirical standard do we assess the economic present? The Financial Times has an answer: angry defensive accusation against the economic heretics, no matter how well placed.