An Australian Asks "Are We Witnessing the Death of Neoliberalism?"

From the Australian Business Review.  ABR's Steve Keen writes that the "parallel universe of politics has changed immeasurably in the past two years."


Established parties that have dominated their country’s political agendas for decades have been defeated by newcomers that had existed for only a handful of years, and in some cases had not existed at all at the time of the previous election — think Syriza (formed in 2004) defeating PASOK/ND in Greece, and Podemos coming from nowhere in March 2014 to be the third largest party in Spain today.

Establishment candidates are faring badly, whether they are conservative or progressive — look at Hillary Clinton’s travails against the avowed “Democratic Socialist” Bernie Sanders, while Donald Trump lays waste to the Republican establishment. Another avowed socialist, Jeremy Corbyn, now leads a reluctant “Blairite” Labour Party in the UK. Canada deposed the Conservative Stephen Harper for the Liberal’s Justin Trudeau, even though the latter promised to run a budget deficit during the election campaign — and he delivered on his promise last week.

This is not going according to script. The rule for electoral success since the 1980s has been to promise to be, or to be believed to be, a “better economic manager” than your rivals. Now the people promising that — whether inside their parties (Clinton) or in electoral contests (Greece, Spain, Portugal, Poland, Ireland, Canada — the list is growing) either lose or get savaged in the polls, hanging on just by electoral momentum.

...My take is that there is indeed no script — or rather the only script that worked in the last 30 years, promising “good economic management” rather than ideology or passion — has been thrown out by the electorate. Anyone promising it receives the electoral kiss of death.

Why? Not because the public wants “bad economic management” — far from it. It’s because they no longer believe that the package of policies that came with that title — generally called Neoliberalism — actually delivers. If it did, why did an economic crisis occur in 2008? And why does it persist, in the form of outright depressions in much of Europe, and stagnant growth in the rest of the developed world?

Neoliberalism was always sold as a non-populist policy: rather like castor oil, it was supposed to taste bad, but prove ultimately to be good for you. Now, after 30 years of consumption, the public is saying that it tasted bad, and the outcome was bad too. If this is “good economic management”, they seem to be saying, then give me populism.

What John Ralston Saul has been arguing for a decade, that the age of neoliberalism, free market fundamentalism and globalization, has failed, is dead, and that we've entered a period of interregnum as we search for a new model of political economy does indeed seem to be reaching the electorate, generating discontent and a rejection of the old order. Economist James Galbraith also sees the death of the neoliberal foundation - perpetual exponential growth in GDP - in the rise of America's "bubble economy" from the Savings & Loan scandal, to the Dot.Com bubble, to Enron/WorldCom to the most recent and catastrophic housing bubble.

Hard as this might be for true believers to accept, there's a stirring among the public for redistributive solutions to reverse the wave of inequality that swept over society in the neoliberal era. There's just enough of that in Trump's windy talk to draw a good deal of support away from the establishment, neoliberal Republican apparatus.

Hold onto your hat. Change is coming but it won't arrive without a fight.