Liberalism began with what was then a radical notion: let business be business rather than Crown patronage/mercantilism. It turned out to be recognized initially for how little state management was needed to crank the economy. As the new technologies of manufacturing and industrial organization grew concurrently over the course of the 19th century something else became apparent. Despite the satanic mills highlighted by Dickens, the overall wellbeing in terms of longevity increased. With the Gilded Age, accumulated capital from the surpluses of improved productivity was having difficulty finding use as the continued driver of growth. The Great European Civil War of the Twentieth Century disrupted the growth of idle capital.
In our new and improved gilded age, capital is again being trapped, this time in financial instruments and their derivatives. Less plant and equipment and more speculation. Less R&D and more offshore shell enterprises. Frozen capital has no value in use, only value in exchange. It flees risks from the real economy of goods and services to seek shelter in political power for the primary purpose of protecting this frozen capitalism.
That is the problem the neoliberalism fertilized and post neoliberalism does nothing to weed out.
I have a problem with the definition of neoliberalism as the belief that markets know best, at least in the US. Around the time that neoliberalism because a thing in the US, with the Reagan administration in 1981, cuts in top tax rates were initiated. These have large effects on the economy that are *outside* of economics in that they operate at a *cultural* level. I see neoliberalism as the political ideology that supports shareholder primacy culture.
I suggest that neoliberalism (at least in the US) can be thought of as economic policy that selects for the evolution of shareholder primacy (SP) business/economic culture. Examples of SP-selecting policy are the shift to inflation control solely through Fed interest rate policy in 1979, tax cuts beginning in 1981, and legalization of stock buybacks in 1982. These changed the economic environment to favor SP over stakeholder capitalism (the dominant cultural variant in the period before the neoliberal era). What kind of culture you have largely depends on these policies, none of which affect the functioning of markets. So I don't see why neoliberalism needs to be associated with markets.
Markets are driven by the drive for an optimum outcome of the 'individual' players (which may include groups acting as an 'individual — like a company, which then has again an internal 'market' of shareholders). But not all best outcomes come from simply steering on these reductionist optimisations. It is not just true that the group is better off when the individuals are better off, it is also true that the individual is better off when the group is better off. This collectivism has been killed by the neo-liberal movement which naively believed (and often still does) that optimising for the individual members is the only way to go (in the UK, people like Liz Truss, Kwasi Kwarteng and friends are naive extremists here)
When do we decide that a 'group' (as in 'society is a group) is better off? We tend to look at averages (like GDP/capita). But that measure doesn't take inequality into account. A good measure should look at the median and the spread. The extreme setup — one person owning everything and the rest owning nothing (Liu short story) — might even have the highest 'average' but that average is meaningless for the 'group' being better off.
As has now been clearly illustrated, this reductionism leads to outcomes were few individuals hoover up most of the advantages. And as the measurement we use is economic, we tend to have a system that optimises for individual economic profit with two undesirable outcomes: low median wealth and high inequality. Add to that that value is more than economic (wealth) and such values suffer because they cannot be translated to money.
And even that wealth optimisation itself suffers from low median and high spread, there is a natural limit to how productive a free market can be. A free market without enough boundaries destroys itself. E.g. why does the US has such an infrastructure problem?
The question is: how do we get back to a more healthy situation? That requires politics, a conscious drive to look at how the 'group' is better off, not a free market built solely on that the 'individual' is better off. But individualism is very addictive, as a conviction, especially for those individuals who are lucky / successful. And they now have the power to influence democratic decisions, because — as we known — people are vulnerable with respect to their convictions. The chickens really do believe that with the FOXes in charge, they will be better off.
Liberalism began with what was then a radical notion: let business be business rather than Crown patronage/mercantilism. It turned out to be recognized initially for how little state management was needed to crank the economy. As the new technologies of manufacturing and industrial organization grew concurrently over the course of the 19th century something else became apparent. Despite the satanic mills highlighted by Dickens, the overall wellbeing in terms of longevity increased. With the Gilded Age, accumulated capital from the surpluses of improved productivity was having difficulty finding use as the continued driver of growth. The Great European Civil War of the Twentieth Century disrupted the growth of idle capital.
In our new and improved gilded age, capital is again being trapped, this time in financial instruments and their derivatives. Less plant and equipment and more speculation. Less R&D and more offshore shell enterprises. Frozen capital has no value in use, only value in exchange. It flees risks from the real economy of goods and services to seek shelter in political power for the primary purpose of protecting this frozen capitalism.
That is the problem the neoliberalism fertilized and post neoliberalism does nothing to weed out.
I have a problem with the definition of neoliberalism as the belief that markets know best, at least in the US. Around the time that neoliberalism because a thing in the US, with the Reagan administration in 1981, cuts in top tax rates were initiated. These have large effects on the economy that are *outside* of economics in that they operate at a *cultural* level. I see neoliberalism as the political ideology that supports shareholder primacy culture.
https://mikealexander.substack.com/p/how-economic-culture-evolves
Beff Jezos agrees with you, except that he thinks its all for the good. Neoliberalism will make everything work for the best in the best of all possible worlds. podcastnotes.org/lex-fridman-podcast/guillaume-verdon-beff-jezos-e-acc-movement-physics-computation-agi-lex-fridman-podcast-407/
seems like Rittel and Webber are back in style
I suggest that neoliberalism (at least in the US) can be thought of as economic policy that selects for the evolution of shareholder primacy (SP) business/economic culture. Examples of SP-selecting policy are the shift to inflation control solely through Fed interest rate policy in 1979, tax cuts beginning in 1981, and legalization of stock buybacks in 1982. These changed the economic environment to favor SP over stakeholder capitalism (the dominant cultural variant in the period before the neoliberal era). What kind of culture you have largely depends on these policies, none of which affect the functioning of markets. So I don't see why neoliberalism needs to be associated with markets.
More on neoliberalism here:
https://mikealexander.substack.com/p/an-overview-of-my-thesis-in-response
Markets are driven by the drive for an optimum outcome of the 'individual' players (which may include groups acting as an 'individual — like a company, which then has again an internal 'market' of shareholders). But not all best outcomes come from simply steering on these reductionist optimisations. It is not just true that the group is better off when the individuals are better off, it is also true that the individual is better off when the group is better off. This collectivism has been killed by the neo-liberal movement which naively believed (and often still does) that optimising for the individual members is the only way to go (in the UK, people like Liz Truss, Kwasi Kwarteng and friends are naive extremists here)
When do we decide that a 'group' (as in 'society is a group) is better off? We tend to look at averages (like GDP/capita). But that measure doesn't take inequality into account. A good measure should look at the median and the spread. The extreme setup — one person owning everything and the rest owning nothing (Liu short story) — might even have the highest 'average' but that average is meaningless for the 'group' being better off.
As has now been clearly illustrated, this reductionism leads to outcomes were few individuals hoover up most of the advantages. And as the measurement we use is economic, we tend to have a system that optimises for individual economic profit with two undesirable outcomes: low median wealth and high inequality. Add to that that value is more than economic (wealth) and such values suffer because they cannot be translated to money.
And even that wealth optimisation itself suffers from low median and high spread, there is a natural limit to how productive a free market can be. A free market without enough boundaries destroys itself. E.g. why does the US has such an infrastructure problem?
The question is: how do we get back to a more healthy situation? That requires politics, a conscious drive to look at how the 'group' is better off, not a free market built solely on that the 'individual' is better off. But individualism is very addictive, as a conviction, especially for those individuals who are lucky / successful. And they now have the power to influence democratic decisions, because — as we known — people are vulnerable with respect to their convictions. The chickens really do believe that with the FOXes in charge, they will be better off.