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Neoliberalism and mainstream economics

from Lars Syll

Oxford professor Simon Wren-Lewis isn’t pleased with heterodox attacks on mainstream economics. One of the reasons is that he doesn’t share the heterodox view that mainstream economics and neoliberal ideas are highly linked.

In a post on his blog, Wren-Lewis defends the mainstream economics establishment against critique waged against it by Phil Mirowski:

Mirowski overestimates the extent to which neoliberal ideas have become “embedded in economic theory”, and underestimates the power that economic theory and evidence can have over even those academic economists who might have a neoliberal disposition. If the tide of neoliberal thought is going to be turned back, economics is going to be important in making that happen.

Wren-Lewis admits that “Philip Mirowski is a historian who has written a great deal about both the history of economics as a discipline and about neoliberalism” and that Mirowski “knows much more about the history of both subjects than I [W-L] do.”

632488Fair enough, but there are simple remedies for the lack of knowledge.

Read this essay, where yours truly try to further analyze — much inspired by the works of Amartya Sen — what kind of philosophical-ideological-political-economic doctrine neoliberalism is, and why it so often comes natural for mainstream economists to embrace neoliberal ideals.

Or maybe — if your Swedish isn’t too rusty … — you could take part of the book-length argumentation in Den dystra vetenskapen (‘The Dismal Science,’ Atlas 2001) for why there has been such a deep and long-standing connection between the dismal science and different varieties of neoliberalism.

  1. dmf
    March 19, 2017 at 6:09 pm
  2. March 20, 2017 at 10:39 am

    Before there was “neo’-liberalism there was liberalism. This is the philosophy developed in the 17th and 18th centuries to explain, defend, and expand the power of the new commercial and business groups that allied themselves with the democratic revolutions and then betrayed the democrats. For these groups government was the enemy. After all, for them monarchy was the government they fought. These groups also distrusted democracy. Preferring markets where their natural partners, customers could select as they liked. While the liberals didn’t believe it, they argued as their democratic allies did that each individual was free to live as s/he liked. Each individual had “inalienable” rights to life, liberty, and property that no government could rescind or curtail. Businesses, on the other hand could and would curtail or even obliterate such rights as it served business interests. Mostly, this was done to build and protect economic markets, the natural environment of business. Superior to democracy in terms of revealing the preferences of individuals and protecting individual rights. Again, most business persons didn’t really believe markets functioned this way. Uncontrolled by either law or regulation less than 100 years later liberalism had failed, creating economic crisis after crisis. As a result, Keynes attacked it and politicians like Atlee in the UK and FDR in the US set up strong government control and regulation of the capitalism evolved from liberalism. With liberalism controlled things in economics, government, and society improved. But the 1970s brought that to an end. Economic, political, and social problems multiplied and seemed insoluble. This was the result of technology change, the rise again of nations almost destroyed during WW2, the failure of the US to effectively adapt to these changes, and the cold war which was becoming increasingly difficult for the USSR, US, and the rest of the world to deal with. But regulation and control of capitalism (liberalism) got most the blame. The election of Thatcher in the UK and Reagan in the US, the end of the moderate SCOTUS, and the severe turmoil of the civil rights changes in the US the way was opened for liberalism to flower once again. It did, only this time with a great deal more money behind it and a propaganda machine second to none. Thus, the “new” liberalism took the west by storm. But it, like its ancestor is now failing. So, what comes next?

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