I recall in the 1980’s, when I chaired a Labour Party electorate committee, moving out of the chair to argue with our local MP on how wrong neo-liberalism was, as its impacts I felt were dreadful. I was working with communities all over the South Island which were being decimated by this newly found dogma. The MP would hear none of it.
As Mayor I was frequently called names by the apostles of neo-liberalism. That had little impact on my philosophy. Oscar Wilde once said that “A fool is someone who knows the price of everything and the value of nothing”. I’m not sure who he was thinking about, but I have used that quote many times to describe neo-liberal economists.
There’re now great bodies of research, unread by the Act party, showing that neo-liberal beliefs are cruel and inhumane. So, I was delighted to read Andrea Vance’s recent writings in the Sunday Times where she wrote:
“Neo-liberalism, once a force as unstoppable as gravity, has fallen to its knees. Like trickle-down economics, austerity was consigned to the scrap heap of bad policy in the years following the Global Financial Crisis. Post-pandemic, austerity is having a bit of a resurgence, although politicians now take care not to use the ‘a-word’. But it is not a complete economic philosophy. For decades we’ve cycled in and out of periods of starving public services and the welfare safety net, followed by emergency funding injections. The result is under-resourced services and a general decline resulting from chronic lack of investment. Lower taxes, freer trade and immigration did create growth, but it was unequal. The theory of how a market economy delivers was very different to the reality. Its structural weaknesses have been exposed. An obsession with keeping taxes low means the schools, hospitals, public transport systems that sprang from a post-war building boom are coming to the end of their life. Conservatism is now less attractive to younger people because there is nothing left for them to conserve. Free trade has retrenched into protectionism, globalism is a dirty word, and Trumpism has dragged the right into a grievance culture.”
Then last week my favourite journalist, Bernard Hickey, provided a link to a recent IMF website where there is a robust review of economics. Here’s a link to them Rethinking Economics: How Economics Must Change in: Finance & Development Volume 61 Issue 001 (2024) (imf.org).
The introduction summarised the articles as:
Fifteen years ago, the global financial crisis shattered the intellectual consensus that prevailed after the Cold War. Since then, economists have failed to accurately predict repeated shocks, and there’s no consensus on a sustainable model for global development. More broadly, there’s a sense that economics as a discipline may need renewal. Does the profession sufficiently represent the range of people and problems it examines? Is it too far removed from the concerns of ordinary people? Does it define economic well-being too narrowly?
We asked six economists from across the ideological spectrum the following question: How must the profession change to become better at answering 21st century challenges? Here’s how they answered.
I will quote from few of the economists because they say what I believe in, but I recommend that you read them all.
Angus Deaton is the Dwight D. Eisenhower Professor of Economics and International Affairs, Emeritus, at the Princeton School of Public and International Affairs at Princeton University. He is the 2015 recipient of the Nobel Memorial Prize in Economic Sciences.
Philosophy and ethics. In contrast to economists from Smith and Marx through John Maynard Keynes, Fried-rich Hayek, and even Milton Friedman, we have largely stopped thinking about ethics and about what constitutes human well-being. We are technocrats who focus on efficiency. We get little training about the ends of economics, on the meaning of well-being—welfare economics has long since vanished from the curriculum—or on what philosophers say about equality. When pressed, we usually fall back on an income-based utilitarianism. We often equate well-being to money or consumption, missing much of what matters to people. In current economic thinking, individuals matter much more than relationships between people in families or in communities.
Jayati Ghosh is a professor of economics at the University of Massachusetts, Amherst.
The mainstream discipline is sorely in need of greater humility, a better sense of history and recognition of unequal power, and active encouragement of diversity. Clearly, much has to change if economics is really to become relevant and useful enough to confront the major challenges of our times.
Diane Coyle is the Bennett Professor of Public Policy at the University of Cambridge.
It is time for a reboot of welfare economics. And that means moving away from the simplistic set of assumptions that have shaped the worldview instilled in generations of economics policymakers.”
As a society many NZ politicians, along with politicians in many world economies, have endorsed the continuation of a cruel and unjust neo-liberal endorsed economy. I am a huge supporter of enterprise and trading. I’m not against markets. I was trained in this field. However, we pay taxes so that those who struggle for a huge number of reasons are supported. That our children get a good education. That we have a decent health system. That there is proper investment in our infrastructure. That we protect the environment etc.
Which thinking person would disagree that there’s something seriously wrong where a wealthy man boasts publicly that it is his “entitlement” (before his stooges told him to stop giving his personal thoughts in public) to charge the state $1000 per week for a home he owns mortgage free. At the same time, he leads a government which is removing meals for children at school. Or is taking the desperately needed interisland ferry’s away to pay already wealthy people a tax refund. Or chucking out families from motels when they are shot to bits and are only there because the economy was about “efficiency” and they haven’t had the dignity of work for generations. Since Labour’s 1980’s reforms.
George Galloway, in his umpteenth “maiden” speech, recently described the Labour and Tory parties in the UK as “two cheeks of the same backside”. I couldn’t agree more. The same applies here.
Government, go ahead and identify efficiencies within the economy and implement them. However, maybe you should all pause and reflect on the subtitle of Schumaker’s brilliant book, Small is Beautiful, where he described his writing as “a study of economics, as if people mattered”.
I do like these quotes. I have a book by Helen Thompson, “Disorder,” Hard Times in the 21st century, which maybe of interest to you. Thank you for your share views.