Neoliberalism – the ideology at the root of all our problems
theguardian.com
theguardian.com
"Part of the reason for neoliberalisms success is the lie (which Monbiot has repeated) that Keynesianism was proved wrong during the stagflation period of the 70’s and 80’s. Keynesians like Tobin (who Samuelson called the greatest economist of his generation ie. better than Samuelson) were actually proved right. It the late 60’s early 70’s, before the oil shocks and fed easy money, they had already worked out an adjusted Phillips curve where inflation was a function of unemployment and lagged or entrenched inflation. Everything that happened from 1972 until today has vindicated this view. In the early 80’s inflation was brought down from an entrenched high rate, only through a dramatic increase in unemployment. And once it was reduced it stayed there, even while unemployment stayed high. This vindicated Tobin, and contradicted Friedman, who said inflation should keep falling as long as unemployment remained high (it didn’t). Likewise in the post 2008 world – Tobins Phillips curve has been spot on, high unemployment yet stable although very low inflation. Again Friedman proved wrong. Keynesianism didn’t fail in the 70’s and 80’s. Economics failed, and has failed ever since. Unfortunately dimwitted journalists and liberal academics always need a black and white over simplified narrative of epoch changing events where one ideology replaces another. Keynesianism figured it out in 1933 and has been correct ever since."
Perhaps economics is failing, but I think it's not entirely because of a Neoliberal vs. Keynesian dichotomy, it's at least as much because the economy is shifting and we haven't come up with a good economic paradigm for coping with these rather important shifts.
That said, I think a more Keynesian approach to economics is well warranted. Largely they have had a much better approach to monetary policy in the recent crisis.
In any case it may all just be a matter of time. The current Greek tragedy that's playing out looks to be the bellweather of how it will be dealt with.
The years of Keyensian dominance in the post depression/post WW2 years were when the middle class was ascendent.
One of the core components of Neoliberal ideology is the primacy of the rights of capital above all others. If you have lots of capital, you can use your capital as a force to impose your will, and gain power over others.
For example, you want to breathe some air? Too bad. I own the air here. You must pay rent to me for the utility the air you are breathing delivers, as I own the rights to it.
This is where Neoliberals would like to take the world. Feudalism without heredity or Noblesse Oblige. Neofeudalism.