It's small comfort to recognize that most of the developed world remains in the clutches of neoliberalism. Introduced during the Reagan, Thatcher, Mulroney era, the neoliberal order has been acknowledged as a failed experiment even by one of its High Priests, Milton Friedman shortly before his death.
But, as noted by Joseph Stiglitz, neoliberalism, even the form envisioned by our Liberal government, has failed us.
The neoliberal experiment – lower taxes on the rich, deregulation of labour and product markets, financialisation, and globalisation – has been a spectacular failure. Growth is lower than it was in the quarter-century after World War II, and most of it has accrued to the very top of the income scale. After decades of stagnant or even falling incomes for those below them, neoliberalism must be pronounced dead and buried.
Vying to succeed it are at least three major political alternatives: far-right nationalism, centre-left reformism, and the progressive left (with the centre-right representing the neoliberal failure). And yet, with the exception of the progressive left, these alternatives remain beholden to some form of the ideology that has (or should have) expired.
The centre-left, for example, represents neoliberalism with a human face [Justin Trudeau's model]. Its goal is to bring the policies of former US President Bill Clinton and former British Prime Minister Tony Blair into the twenty-first century, making only slight revisions to the prevailing modes of financialisation and globalisation. Meanwhile, the nationalist right disowns globalisation, blaming migrants and foreigners for all of today’s problems. Yet as Donald Trump’s presidency has shown, it is no less committed – at least in its American variant – to tax cuts for the rich, deregulation, and shrinking or eliminating social programs.
By contrast, the third camp advocates what I call progressive capitalism, which prescribes a radically different economic agenda, based on four priorities. The first is to restore the balance between markets, the state, and civil society. Slow economic growth, rising inequality, financial instability, and environmental degradation are problems born of the market, and thus cannot and will not be overcome by the market on its own. Governments have a duty to limit and shape markets through environmental, health, occupational-safety, and other types of regulation. It is also the government’s job to do what the market cannot or will not do, like actively investing in basic research, technology, education, and the health of its constituents.
The second priority is to recognise that the ‘wealth of nations’ is the result of scientific inquiry – learning about the world around us – and social organisation that allows large groups of people to work together for the common good. Markets still have a crucial role to play in facilitating social cooperation, but they serve this purpose only if they are governed by the rule of law and subject to democratic checks.
Otherwise, individuals can get rich by exploiting others, extracting wealth through rent-seeking rather than creating wealth through genuine ingenuity. Many of today’s wealthy took the exploitation route to get where they are. They have been well served by Trump’s policies, which have encouraged rent-seeking while destroying the underlying sources of wealth creation. Progressive capitalism seeks to do precisely the opposite.