Vol 2 – Issue 3 by Catalyst

Author:Catalyst
Language: eng
Format: epub
Published: 2022-08-29T15:32:56+00:00

Ideas to Fill the Void

Though not the first to offer an idea-centered account of the neoliberal turn, Mark Blyth’s Great Transformations helped spur the recent surge in idea-centered political economy and so serves as a useful starting point for this discussion.5 Like other political economists, Blyth argues that transitions from one political-economic era to another are caused by deep, punctuated crisis. However, whereas realist political science imagines perfectly rational actors approaching a crisis like any other problem to be solved, Blyth questions this basic premise. Political actors are not rational, he argues, but rather rely on prevailing norms and ideas to serve as a kind of “instruction sheet” that they follow. During moments of crisis, dominant models of economic management fail, leaving political actors grasping for some way of understanding the nature of the problems that they face and means to address them. This opens the door to once-sidelined experts and intellectuals to chart a new path forward by writing a new, workable instruction sheet.

Great Transformations develops this argumentover two eras of crisis and policy change in the US and Sweden to show the independent, causal role that ideas played in the rise of Keynesianism after the Great Depression, and the return of monetarist and free market economic ideas after the crises of the 1970s. The fiscal prudence that was called for by classical liberal orthodoxy failed to bring down unemployment and restore economic growth during the US’s Depression. The election of fdr brought a new, “underconsumptionist” way of understanding the causes of economic stagnation which provided the instruction sheet for spending on public works, support for organized labor, and old-age insurance. By the end of World War ii, stagnationist thinking had been replaced with a new “growthsmanship” that charted a long-term course of sustained, peaceable economic growth through active state countercyclical policy along Keynesian lines. Keynesianism dominated US economic policymaking until it too came under pressure from external crisis, specifically the “stagflation” crisis of the 1970s. Unable to offer a way to manage the economy through the overheating caused by the Vietnam War and the turmoil of the breakdown of the Bretton Woods system, Keynesianism’s star fell as new economic doctrines rose to prominence. Monetarism, rational-choice theory, supply-side macroeconomic management, and public-choice theory all offered an ostensible way out of the impasse of stagflation, albeit one that called for a drastically reduced role for the state and an elevation of private business working in unfettered markets.

Great Transformations is a landmark study in the ideational turn in political economy because it makes a strong argument for the independent, causal role of ideas in explaining major shifts in economic policy. While Blyth is certainly successful at illuminating key debates in these critical periods, he does not muster the support for a strong ideational reading of the Keynesian and then neoliberal turn that he, and others, claim that he does. To make a strong ideational argument stick, it is not enough to show that some ideas mattered for some social or policy change.

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