Good Riddance for Neoliberalism

I was initially resistant to the most common conceptions of “neoliberalism” I thought, “Isn’t that just the same old conservative crap?” I preferred to narrow it down to people like Bill Clinton and his economic brains, Robert Rubin and Larry Summers. That was too narrow a view. The real unfolding of neoliberalism happened over the 20th Century, as an anti-Keynesian, anti-social-democratic wave. Social-democracy in Europe and the U.S. blossomed after World War II but this growth is thought to begin to end in the 1970s.

At any rate, famous blogger, professor, and Washington Post columnist Dan Drezner appears in the libertarian Reason (sic) Magazine to bemoan the passing of neoliberalism. Its death is well-deserved, though like other zombie ideas it will probably revive.

Drezner fails completely to note three things that are important.

1. Macroeconomic policy. Business cycle downturns clearly interact with trade deficits, trade policy, and political economy in general. Biden's response to downturns after Covid and Ukraine were a boon to employment and incomes. Neglect of GDP gaps is a typical neoliberal error. If we conflate neoliberalism with mainstream macro policy, the professional consensus after 2020 to the effect that only huge increases in unemployment could tame inflation should be a scandal. If it was possible to impose capital punishment on macroeconomics, that would be justifiable.

2. Market concentration. For DD, "globalization" means geographic concentration and less resiliency. It is not obvious that market concentration that is associated with neoliberalism indulgence is also a source of inflexibility. A case in point was the Baby Formula uproar. Production dominated by fewer firms suggests that random factors affecting a firm can disrupt the market it dominates.

3. The energy sector is depicted as an economic problem, but the location of extractive resources is not a matter of policy but only comes from God. It's a political problem, one that arguably comes from the idiosyncratic matter of Russia's interest in Ukraine. If anything, neoliberalism's neglect of climate change supports the world's continuing dependence on fossil fuels, hence less resiliency.

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