David Kotz asks: What does neoliberal ideology require? – Editor
The following has been extracted from a recent book by Prof David M. Kotz “The rise and fall of neoliberal capitalism” ( HUP, 2015).
Kotz analyses the reasons for the rise of free-market ideas, policies, and institutions beginning around 1980. He shows how the neoliberal capitalism that resulted was able to produce a series of long although tepid economic expansions, punctuated by relatively brief recessions, as well as a low rate of inflation. This created the impression of a “Great Moderation.”
However, the very same factors that promoted long expansions and low inflation – growing inequality, an increasingly risk-seeking financial sector, and a series of large asset bubbles – were not only objectionable in themselves but also put the economy on an unsustainable trajectory. Kotz interprets the current push for austerity as an attempt to deepen and preserve neoliberal capitalism. However economic theory and history suggest that neither austerity measures nor the other policy adjustments can bring another period of stable economic expansion.
Kotz also considers the possible directions of major economic restructuring that will be required if continuing stagnation is to be resolved.
Here is Kotz’s list of 16 ideas and institutions of neoliberal ideology:
- Dominance of neoliberal theories;
- Removal of barriers to the movement of goods, services, capital and money across national boundaries;
- Renunciation of aggregate demand management;
- Deregulation of basic industries;
- Deregulation of the financial sector;
- Weakening of regulation of consumer safety, job safety, and the environment.
- Weakening of anti-trust enforcement;
- Privatization and contracting out of public goods and services;
- Contraction of social welfare;
- Tax cuts for business and the rich;
- Marginalization of collective bargaining;
- Casualization of jobs;
- Unrestrained competition;
- External hiring of corporate CEOs;
- Penetration of market principles within corporations;
- Shifting of financial institutions towards activities which are independent of the non-financial sector.