Economics after Neoliberalism by Joshua Cohen

Author:Joshua Cohen
Language: eng
Format: epub
Tags: Democracy; neoliberalism; activism; social movements; racism; climate change; polity; civic membership; immigration; refugees; patriotism; cosmopolitanism; citizenship; equality; inequality; social mobility; education; race; class; gender; income security; wealth gap; economic power; free market; monopsony; regulation; antitrust; digital technology; information; journalism privacy; polarization; carbon tax; environmental movements; adaptation; mitigation; geoengineering; labor movement; political parties; politics
Publisher: Boston Review
Published: 2019-08-22T16:00:00+00:00

OUR LAST GROUP of commentators offer a perspective from economic development and global inequality. While neoliberal economics may be obsolete in the advanced countries, some argue that its basic policy messages have proven to be effective in bringing large groups of desperately poor people into the global middle class. India and China have shown the power of liberalized markets and international trade. Might we be killing the golden goose by suggesting that this was a mistake?

In our view, portraying China and India as neoliberal success stories hides more than it reveals. The key reforms in these cases are reconfigurations of state–economy relationships, far from neoliberal prescriptions. Indeed, if these countries had been failures, there would be no shortage of neoliberal takes today as to why that is so: the state is still too powerful, there is too much industrial policy, trade is not free enough, and so on. Our main argument is that very little of why the policy changes worked can be understood with textbook economics or the first-best benchmarks of the neoliberal economist. One needs to account for pervasive market failures and apply the economics of the second-best.

Margaret Peters pushes us the furthest here and in a most welcome way, articulating the view that (trade and immigration) policy should not be set only in the interest of citizens of rich countries. We would not want a post-neoliberal economics to become an ideological tool for defending the rents of rich citizens against incursions by the poor. We agree with Peters in particular that there should be an increase in low-skill labor flows. But we would also like economists to understand that economic integration is a means and not an end, and that a panoply of institutional arrangements are needed to manage it and keep it politically sustainable. To that end, Rodrik's antisocial dumping proposal (which Peters criticizes) is designed to increase the public legitimacy of trade with developing nations. It is not meant to protect jobs or increase manufacturing employment in the advanced countries. To insist on free trade at all costs would be a pyrrhic victory if it ended up unleashing a wider backlash against economic openness.

All of this amounts to the beginning of a much longer conversation—one we look forward to continuing within the Economics for Inclusive Prosperity (EfIP) network, with these respondents, and others.

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