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11.1. The Neoliberal Turn, & Hyperglobalization: Readings
Required Readings Note:
The required readings for Module
11
are
rather long—but not nearly as long as
for Modules 9 & 5, where I wound up taking two weeks per module.
There is
Skidelsky
chapter 6 <
https://github.com/braddelong/public-fi les/blob/
master/readings/chapter-skidelsky-keynes-6.pdf
>. The chapters of Skidelsky
before this one I've been all about how Keynes was smart and right. This chapter
is, from Skidelsky’s view as of 1995, as an enthusiastic advocate of the
neoliberal turn, how Keynes’s disciples were dumb and wrong. It is a very good
analysis, on the level of events and ideas, of why people decided to take the
neoliberal turn. Frame your reading of it around these three quotes
‘A
nyone who wants to keep the spirit of Keynes alive has to face the failures of
Keynesianism honestly, without always trying to shield the Master from the
mistakes of the disciples. In essence, the Keynesian revolution was ruined by
over- ambition – hubris might be a better word -driven by impatience and backed
by unwarranted claims to both theoretical and practical knowledge. The
monetarist counter-revolution was a plea for more modesty, and greater trust in
the spontaneous forces of the market
…'
‘
Keynesian policies come to us today wrapped up in a history of rising inflation,
unsound public fi nance, expanding statism, collapsing corporatism, and general
ungovernability, all of which have seemed inseparable from the Keynesian cure
for the afflictions of industrial society
….
By the 1980s, Keynes
…
had joined
Marx as the God that failed
…’
‘
Keynes’s star was fading
…. T
he Keynesian age had collapsed in theoretical
disarray and policy disorder, victim of simultaneous inflation and unemployment
which Keynesian economists could not explain and Keynesian policy-makers
could not control. It was in this situation that classical economics
… [that]
Keynes had apparently overthrown
…
made a big comeback, and governments
reverted to a modifi ed pre-Keynesian policy stance. Markets were deemed to be
optimally self-regulating; the macroeconomic task of government was restricted
to
to maintaining ‘sound money’; government’s task in the micro-economy was
to free up markets in order to lower the ‘natural rate of unemployment’. The
revival of classical economics and its theory of economic policy…’
Eichengreen
:
Globalizing Capital
5-7 <
https://github.com/braddelong/public-
fi les/blob/master/readings/chapters-eichengreen-globalizing-5-6-7.pdf
> tells the
how, in the global north, neoliberal policies failed to deliver any notably
good results, and few results at all except for an enormous rise in income
and wealth inequality, the creation of plutocracy, and the illusion of stability
and low risk—an illusion that was going to be brutally shattered in 2008.
And then there are the three DeLong chapters. Usually you would be well-
advised to pay close attention to what I have written. Perhaps not here. I am
less confi dent that I have the right interpretation of these historical processes
than of the rest of this history. And I am less satisfi ed with the arrangement I
have made of things. Chapter 19 <
https://github.com/braddelong/public-
fi les/blob/master/slouching-19-neoliberal-%23tceh.pdf
> is worth studying.
Chapter 21 is worth skimming—I am far from sure I have gotten the
argument right here <
https://github.com/braddelong/public-fi les/blob/
master/slouching-21-cold-war-end-%23tceh.pdf
>. And chapter 22 <
https://
github.com/braddelong/public-fi les/blob/master/slouching-22-
hyperglobalization-%23tceh.pdf
> is both repetitious and unfi nished—I had
hoped to have another draft for you by now, but I do not. I regret this.
Required Readings:
Skidelsky
: Keynes
ch 6
<
https://github.com/braddelong/public-fi les/blob/
master/readings/chapter-skidelsky-keynes-6.pdf
>
Barry Eichengreen: The Populist Temptation ch 8
<
https://github.com/
braddelong/public-fi les/blob/master/readings/chapter-eichengreen-
populist-8.pdf
>
Barry
Eichengreen
:
Globalizing chs 5-7
<
https://github.com/braddelong/
public-fi les/blob/master/readings/chapters-eichengreen-
globalizing-5-6-7.pdf
>
DeLong chs 19, 21, & 22
<
https://github.com/braddelong/public-fi les/blob/
master/slouching-19-neoliberal-%23tceh.pdf
> <
https://github.com/
braddelong/public-fi les/blob/master/slouching-21-cold-war-end-
%23tceh.pdf
> <
https://github.com/braddelong/public-fi les/blob/master/
slouching-22-hyperglobalization-%23tceh.pdf
>
Optional Reading:
Richard Baldwin: The Great Convergence <
https://github.com/braddelong/
public-fi les/blob/master/readings/book-baldwin-great-convergence.pdf
>
same story as Skidelsky ch 6 at much greater length, and with much more focus
on the international side. It, too, broadly approves of the neoliberal turn—or at
least regards it as inevitable. In Eichengreen’s view, countries could not
simultaneously (a) reap the benefi ts of market allocation of investment capital
and incentivization of savings, (b) stabilize their domestic economies, and (c)
stabilize exchange rates so that they would not be massively vulnerable to
international currency and fi nancial markets. They could not control, but had to
submit to the market: the question was how best to do so.
Eichengreen when writing this version of GC (there is a later one) saw European
countries as giving up their individual abilities to stabilize their economies
(betting that recessions would be small, short, and infrequent) and other
countries as giving up exchange rate stability (in large part because half a
century had taught that countries could not keep their promises to forever peg
their currency to the dollar.)
I thought of making this Eichengreen reading optional—indeed, I would
recommend you skip it now, and read it during R&R week as review as an
alternative to rereading Skidelsky ch 6.
In fact, let me make that recommendation stronger. The other outside reading is
Eichengreen
:
Populist
ch 8 <
https://github.com/braddelong/public-fi les/blob/
master/readings/chapter-eichengreen-populist-8.pdf
>. It, too, goes over the same
ground—things falling apart, although Barry’s chapter title only echoes and does
not copy Achebe <
https://github.com/braddelong/public-fi les/blob/master/
readings/book-achebe-things.pdf
> and Yeats <
https://github.com/braddelong/
public-fi les/blob/master/readings/poem-yeats-1919-second-coming.pdf
>
<
https://en.wikipedia.org/wiki/The_Second_Coming_(poem)
>. One thing worth
noting is where Barry quotes economist Sidney Weintraub on the Carter years
1977-1981 that Carter had “
succeeded
… w
here all Democrats—and
Republicans—have failed— namely, in making his own name a synonym for
economic mismanagement and expunging memories of Herbert Hoover
dawdling at the onset of the Great Depression
”. The extraordinary thing is that
growth was faster in the Carter years than it was to be later—the only thing
wrong was moderate inflation. And yet: “AS BAD AS OR WROSE THAN
HERBERT HOOVER!!” was the then-public reaction. The
Trente Glorieuses
had really raised the bar. (But then, somehow, the bar was immediately lowered
again—for the new neoliberal order persisted.)
This chapter is worth reading closely, as Barry gives a masterful summary of
2020-10-30
<
https://www.icloud.com/keynote/0wiN44cBruFAXnvv0weXzgCNw
> <
https://github.com/braddelong/public-fi les/blob/master/econ-115-module-11.1-neoliberal-turn-readings.pptx
>
