(2020-06-25) The Neoliberal Era Is Ending What Comes Next

Ruter Bregman: The neoliberal era is ending. What comes next? On 4 April 2020, the British-based Financial Times published an editorial likely to be quoted by historians for years to come.

“Radical reforms – reversing the prevailing policy direction of the last four decades – will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities

some 70 years ago – that it was the defenders of free market capitalism who were the radicals.

In those days, just after the war, most politicians and economists espoused the ideas of John Maynard Keynes, British economist and champion of a strong state, high taxes, and a robust social safety net. The neoliberals by contrast feared growing states would usher in a new kind of tyranny. So they rebelled.

Milton Friedman was an evangelist of free-market principles. He believed in the primacy of self-interest. Whatever the problem, his solution was simple: out with government; long live business. Or rather, government should turn every sector into a marketplace, from healthcare to education.

Crises played a central role in Friedman’s thinking. In the preface to his book Capitalism and Freedom (1982), he wrote the famous words: “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”

And that’s exactly what happened. During the crises of the 1970s (economic contraction, inflation, and the Opec oil embargo), the neoliberals were ready and waiting in the wings.

And then came 2008. (Credit Crisis 2008)

When massive government bailouts were needed to save the so-called “free” market, it seemed to signal the collapse of neoliberalism. And yet, 2008 did not mark a historic turning point. One country after another voted down its leftwing politicians. Deep cuts were made to education, healthcare, and social security

Where the neoliberals had spent years preparing for the crises of the 1970s, their challengers now stood empty-handed. Mostly, they just knew what they were against. Against the cutbacks. Against the establishment. But a programme? It wasn’t clear enough what they were for.

Now, 12 years later, crisis strikes again.

the most important distinction between 2008 and now? The intellectual groundwork. The ideas that are lying around

“Three Far-Left Economists Are Influencing The Way Young People View The Economy And Capitalism,” headlined a far-right website in October 2019.

Thomas Piketty

Together with fellow economist Emmanuel Saez – number two of the French trio – he then demonstrated that inequality in the United States is as high now as it was back in the roaring twenties

He toured the world to share his recipe with journalists and politicians. The main ingredient? Taxes.

That brings us to the specialty of number three of the French trio, the young economist Gabriel Zucman.

In his book The Hidden Wealth of Nations (2015), he worked out that $7.6tn of the world’s wealth is hidden in tax havens.

Zucman and Saez’s book can be read in a day. Concisely subtitled “How the Rich Dodge Taxes and How to Make Them Pay,”