I started this little series on neoliberalism by commenting on a piece that George Monbiot wrote in the Guardian newspaper some months ago.  Readers may recall that Monbiot had argued that the key policy response to the Great Depression of the 1930’s stemmed from J.M. Keynes advocacy of a stimulative fiscal policy, but that, when neoliberalism “fell apart” in recent years there “was nothing” to take its place: “The left and centre have produced no new general framework of economic thought for eighty years”.  Monbiot states: “For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.”

In my response I argued that “most, if not all, of the elements of a new system already exist. The ‘centre left’ holds that: a) there is no inherent tendency for the economy to operate continuously at maximum levels of output and employment, b) monopoly power is widespread in industrial economies so that many markets do not generate optimum levels of welfare, c) market failures occur, as in environmental degradation, and d) as a consequence the resulting distribution of income and well being may not be socially desirable. Government intervention is required to ameliorate each of these defects in the operation of market economies and remedies exist to deal with them.”

Thus, I argued that there exist elements of a system “tailored to the demands of the 21st century” and that it is overly simplistic at best to say, as does Monbiot, that “when neoliberalism fell apart in 2008 there was … nothing. The left and centre have produced no new general framework of economic thought for 80 years”.

Having read, reflected and written further on these issues – see my last post ‘Neoliberalism, Globalization and the Trumpist Fallout’ – I now think that, though it may be overly simplistic to say, as Monbiot did, that the centre left has produced no new “general framework of economic thought”, we DO need some new thinking about appropriate policy responses to the socioeconomic issues confronting the industrialized west.

I ended my last post by quoting – with approval – the response of Brad Delong, a University of California (Berkeley)  economist, to an article written by Dani Rodrik of Harvard University:

“The problem is that our current policy agenda is too much ‘do it again’!, where ‘it’ is Keynesianism, social democracy, the welfare state. And I believe we need more. I think Dani gets it right when he notes: The right thrives on deepening divisions in society – ‘us’ versus ‘them’ – while the left, when successful, overcomes these cleavages through reforms that bridge them…. But when he says: Earlier waves of reforms from the left – Keynesianism, social democracy, the welfare state – both saved capitalism from itself and effectively rendered themselves superfluous…’ he is both right and wrong: the earlier waves did save capitalism from itself, but they only rendered themselves apparently superfluous during the years of Global Convergence and the Years of the Great Moderation; they are not superfluous. We need them, And we need more. For Dani is right to close: Absent such a response again, the field will be left wide open for populists and far-right groups, who will lead the world – as they always have – to deeper division and more frequent conflict.”

So, Keynes’ analysis and policy conclusions remain valid and necessary as do the analyses –  and policy conclusions – of market failures noted above.  Both imply significant and substantial roles for government in managing the macro economy, in regulating the abuse of market power and in correcting such market failures as those emanating from environmental externalities.

Indeed arguably the role of government is even greater in the 21st century for a number of reasons: the severity of environmental problems, the substantial shift in income distribution that has occurred in favour of capital and against labour, and the related impact on individuals and communities of robotization and the geographical shifts in patterns of production.

Though there are many things governments can usefully do to help deal with these issues – more progressive tax and income transfer systems, for example, to deal with issues of income distribution, and aids to geographical and occupational mobility to help those who lose as a consequence of changes in the location and industrial distribution of economic activity –  existing measures appear to have been lacking in concept and/or in scale.  So new thinking is undoubtedly in order on a number of fronts, particularly with respect to income distribution and education.

The real question, I suggest, is why policies to address issues related to  income distribution and industrial and geographical dislocation have not been promoted more vigorously by institutions – political parties of the centre left and others?  (That said, I think the current Canadian federal government has done better than most in the industrialized world to recognize that there is a substantial role for government and to develop policies accordingly.)

Surely the answer lies to a substantial extent in institutional changes that have occurred in much of the industrialized world, particularly in North America, in recent decades.   I’m thinking primarily about the decline in the power and presence of organized labour in economic affairs and political dialogue.  The (liberal) power that organized labour once had to countervail the (conservative) power of  corporate interests, both in the realm of collective bargaining and in the realm of political action, has declined dramatically in recent decades.  The decline, like the change in the distribution of income, is more pronounced in the U.S. than in Canada but it is noticeable in this country. The decline in the political and economic strength of organized labour has had a direct and deleterious  impact on the distribution of income. But, in addition, labour’s much more muted public voice in recent decades  has also, I’m sure, made political parties  less likely to adopt policy platforms that recognize the role of governments  in addressing the economic and social problems confronting us.

Surely the American political scientists Hacker and Pierson are correct in their view, in American Amnesia (mentioned in my previous post), that traditional labour unions are unlikely to reattain their earlier strength.  So, what to do?   They suggest that what they call  ‘alt labour’  is “attractive”; that is mobilizing individuals and groups on an ad hoc basis to promote and advance a single cause such as increases in the minimum wage. They suggest, for example that innovative forms of mobilization using new technologies might be used to increase the participation of more citizens.  Though it can be difficult to maintain continuity in such cases the growth of the environmental movement suggests that it has potential.

But I think we need more than ‘single issue’ mobilizations – perhaps something like a Tea Party of the left –  an idea that is getting some coverage in the press.  See for example the article recently published in The Atlantic by Molly Ball: Is the Anti-Trump Resistance the New Tea Party?  ( https://www.theatlantic.com/politics/archive/2017/02/resistance-tea-party/516105/).

I don’t know how, when or where it will happen but I do think that public discussion of major economic and social policy issues must somehow be broadened to include a more left wing perspective as was once represented in Canada by the NDP.

But, even should that occur, so long as the bargaining power of labour remains in its weakened state, it is hard to see future growth of private sector institutions and mechanisms that could, over time, generate a more egalitarian distribution of the national income.  So it seems likely that, faute de mieux, there may well be an enhanced role for governments in this respect – through the tax and transfer system – in years to come.

 

 

 

 

 

 

 

 

 

 

 

 

Share this:
Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Google+ (Opens in new window)
Related
Neoliberalism, Globalization and the ‘Trumpist’ Fallout
December 6, 2016
Similar post
The Federal Budget, 2016
April 6, 2016
Similar post
The Alberta Government Deficit: What’s the Problem?
September 9, 2016
Similar post
Edit “Neoliberalism and the development of economics since Keynes.”
Post navigation
Health Care: The ‘Third Rail’ of politics!The Alberta Government Deficit: What’s the Problem?
Leave a Reply

Logged in as petermiles@shaw.ca. Log out?

Comment
Notify me of follow-up comments by email.

Notify me of new posts by email.

Search for:
Recent Posts
Neoliberalism, Globalization and the ‘Trumpist’ Fallout
The Alberta Government Deficit: What’s the Problem?
Neoliberalism and the development of economics since Keynes.
Health Care: The ‘Third Rail’ of politics!
The Federal Budget, 2016
Recent Comments
homemade strawberry lemonade on Health Care: The ‘Third Rail’ of politics!
Playa blanca Lanzarote on Health Care: The ‘Third Rail’ of politics!
Archives
December 2016
September 2016
June 2016
April 2016
March 2016
Categories
Uncategorized
Meta
Site Admin
Log out
Entries RSS
Comments RSS
WordPress.org

“The problem is that our current policy agenda is too much ‘do it again’!, where ‘it’ is Keynesianism, social democracy, the welfare state. And I believe we need more. I think Dani gets it right when he notes: The right thrives on deepening divisions in society – ‘us’ versus ‘them’ – while the left, when successful, overcomes these cleavages through reforms that bridge them…. But when he says: Earlier waves of reforms from the left – Keynesianism, social democracy, the welfare state – both saved capitalism from itself and effectively rendered themselves superfluous…’ he is both right and wrong: the earlier waves did save capitalism from itself, but they only rendered themselves apparently superfluous during the years of Global Convergence and the Years of the Great Moderation; they are not superfluous. We need them, And we need more. For Dani is right to close: Absent such a response again, the field will be left wide open for populists and far-right groups, who will lead the world – as they always have – to deeper division and more frequent conflict.”