- js reader version
- view hidden posts
- tags and related articles
by Alain Faujas and Adrien de Tricornot
Friday, May. 14, 2010 at 11:03 AM
Reagan announced the state was "the problem" for the functioning of the economy. State action could not solve economic problems. The latest reality of economic crisis thoroughly destroyed the neoclassical theses. The crisis showed its ideological limitation and conditionality.
THE REBIRTH OF ECONOMIC THOUGHT FROM THE ASHES OF THE CRISIS
By Alain Faujas and Adrien de Tricornot
[This article published on 4/12/2010 is translated from the German on the Internet, http://www.nachdenkseiten.de/wp-print.php?p=5134.]
In the train of the Nobel Prize for Economics awarded to Milton Friedman in 1976, the neoliberal-monetarist dogma gained global acceptance as the mainstream of economic thought. The change of dogmas introduced with the awarding of the Nobel Prize was first converted into economic policy in industrial countries by Margaret Thatcher (1979-1990) and Ronald Reagan (1981-1989). The American president announced the state was “the problem” for the functioning of the economy. State action could not solve economic problems.
Battle against inflation, independence of the central banks, deregulation, flexibility of the labor market etc. were the new slogans of the conservative (counter-) revolution that were also adopted by the World Bank and the IMF. The Washington Consensus formulated by officials of the US Treasury Department together with representatives of the World Bank and the IMF demanded total market opening, reduction of public and social budgets, abolition of existing regulatory institutions and export orientation as the economic-political priorities.
Since the conversion of neoliberal prescriptions (as from 1815-1929) led to grave financial crises (Latin America, Far East, Russia etc), the opposition of renowned economists also raged. These economists were also distinguished with Nobel Prizes (the French Allais, the Indian Amartya Sen and the Americans Stiglitz, Krugman, Ostrom and Oliver). The criticism and thought of these economists was acknowledged through the state-economic intervention practiced in the current worldwide economic crisis.
The classical-neoclassical model of markets controlling themselves – through the self-interest of rational economic subjects – was an “obvious” truth (in public perception). This was also true for the neoclassical notion of money as a “veil” whose quantity could influence the price level but not production.
The latest reality of economic crises thoroughly destroyed the neoclassical thesis. The crisis showed its limitation and conditionality. Therefore economists today raise fundamentally new questions. Starting from Keynes’ theoretical economic conception, the recently named chief economist of the IMF, Oliver Blanchard and other economists develop more realistic and rational economic-political models than the neoliberal utopia. Christian Walter, economic researcher at the research center for the analysis of financial risks (Cefra) in Lyon, says neoclassicism in its models referred to economic-financial risks and tries to narrow down those risks with the help of probability models. In the 1920s, Keynes referred to the fact of complete uncertainty of economic development that could not be grasped by the probability calculus. Walter argues that Keynes in chapter 12 of his “General Theory” encouraged economic action through creation of a stable environment of social agreements (“conventions”).
New lines of academic thought based on this Keynesian approach will doubtlessly be more important in the future. However the hegemony of the praxis and theory of neoliberal economic policy oriented in “calculated risk” must be first broken. The recent international regulation agreements on the banking system, the insurance system and business management were still based on the risk-thinking or on models of rational conduct of neoclassicism and completely faded out the fact of insecurity emphasized by Keynes. The regulations actually agreed on rules for the pathogenic gambling that was the cause of the crisis.
According to Walter, the states were afraid of questioning their economic-political strategies despite their blatant failure. The main obstacles for a political change are the political power relations. The shrinking back of the British government from the pressure of regulating hedge funds and the vacillations in debt cancellation assistance for Greece through the pressure of the German government are examples.
Veroniques Riches-Flores, chief economist of the Societe Generale, has also outlined a new economic policy affecting social conditions. In any case, the economic policy of price stability priority propagated globally for 20 years broke down in the economic crisis. State action must now have priority for economic demand, promotion of structural growth, overcoming the crisis of inherited debts and regulation of the markets. The questioning of German economic policy by the French minister of finance and economics Christine Lagarde goes in the same direction: “Germany has been a model of supply-oriented economic policy. Today we tell Germans: create demand!”
Economic-political doctrine also changes worldwide through the stronger state economic policy of threshold countries. According to Riches-Flores, neoliberal ideology must be limited and accept its limits as the economic belief of yesterday. The new economic thinking must be more just to the dynamic of the real world.
“Work- and Social Criticism in the Time of Capitalist Running Amok”
MEMORANDUM 2008: SHORT VERSION
Redistributing Income, Work and Power: Alternatives to Serving the Upper Class
MEMORANDUM 2008 - CRISIS UNDERRATED
Without increasing internal demand, the upswing based on replacement-investments and exports cannot continue. Without reduced working hours, adequate jobs will not be created in a world of reduced work volumes, rationalization and information technology.
SEVEN LOOSE PIECES OF THE WORLD JIGSAW PUZZLE - Subcomandante Marcos 1997
VIDEO: MIGUEL D'ESCOTO, FORMER PRESIDENT OF THE UN GENERAL ASSEMBLY 2009-2010, interviewed by Amy Goodman on Democracy Now, April 26, 2010
ATTAC AUSTRIA CATALOG ON DEMOCRATIZING THE FINANCIAL MARKETS
"THE QUIET COUP" BY SIMON JOHNSON
MARC'S TRANSLATIONS ON WAR AND PEACE
Report this post as:
Change Links September 2018 posted
More Scandals Rock Southern California Nuke Plant San Onofre
Site Outage Friday
Change Links August 2018
Setback for Developer of SC Farm Land
More problems at Shutdown San Onofre Nuke
Change Links 2018 July posted
More Pix: "Families Belong Together," Pasadena
"Families Belong Together" March, Pasadena
Short Report on the Families Belong Together Protest in Los Angeles
Summer 2018 National Immigrant Solidarity Network News Alert!
Watch the Debate: Excluded Candidates for Governor of California
Change Links June 2018 posted
The Montrose Peace Vigil at 12 Years
Unity Archive Project
Dianne Feinstein's Promotion of War, Secret Animal Abuse, Military Profiteering, Censorshi
CA Senate Bill 1303 would require an independent coroner rather than being part of police
Three years after OC snitch scandal, no charges filed against sheriffs deputies
California police agencies violate Brown Act (open meetings)
Insane Company Wants To Send Nuke Plant Waste To New Mexico
Change Links May 2018
Worker-Owned Car Wash on Vermont Closed
GUIDE TO REBEL CITY LOS ANGELES AVAILABLE
lausd whistle blower
Help KCET and UCLA identify 60s-70s Chicano images
UCLA Luskin: Casting Youth Justice in a Different Light
Change Links April 2018
More Local News...
Addendum: Benjamin Tucker American Mutualist: Tucker Did Not Advocate Voting in Businesses
OUR HOUSE Grief Support Center Celebrates 25 Years with the House of Hope Gala
Against the Rent Madness and For a Nonprofit Orientation!
Cybermonde, cyberguerre, cyberespace, cyberterrorisme
Paraphysique de psychosomatique
Chuck Grassley: Women Abusing, Animal Murdering, Illegal War Supporting Criminal
Finance Capitalism and the Digital Economy
Muselières syndicales, muselières patronales
Jeff Bezos, Amazon, The Washington Post, Whole Foods, Etc
Why Choose Nut Milk Over Cows' Milk
Antrhopocène, le grand effondrement
The Dictatorship of Corporations
18 Lethal Consequences Of Hunting
Paraphysique de l'outplacement déontologue
Shopping du bashing
After Lehman Brothers, Experts Say Global Financial Crisis Can Happen Again
“Animaniacs in Concert!” Starring Voice Legend Rob Paulsen
Probabilités de fin d'humanité
Florida Area of Migrant Farmworkers Denied Right to Construct Health Clinic near NaplesCIW
Steer clear of work morality!
The Shortwave Report 09/07/18 Listen Globally!
August 2018 Honduras Coup update
Brett Kavanaugh Filled The 5th Circuit With Execution Judges
Augusta Georgia Woman Gets 5 Year Prison Sentence for Writing About Russians Crime Acts
Paraphysique de contextualité
Crisis Regulation in Global Capitalism
Ex-voto de réification
More Breaking News...