Rescuing Economics from Neoliberalism

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A refreshing antidote to neoliberal ideology, stuffed with more excellent writing and economic ideas than are easily appreciated. "The fatal flaw of neoliberalism is that it does not even get the economics right. It must be rejected on its own terms for the simple reason that it is bad economics."

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The basic competitive-markets model dating back to Adam Smith has been modified over time by the inclusion, in rough historical order, of monopoly, externalities, scale economies, incomplete and asymmetric information, irrational behavior, and many other real world features.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"
Chile's neoliberal experiment eventually produced the worst economic crisis in all of Latin America.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"
Neoliberalism and its customary remedies -- always more markets, always less government -- are in fact a perversion of mainstream economics. Good economists know that the correct answer to any question in economics is: it depends.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"
The fatal flaw of neoliberalism is that it does not even get the economics right. It must be rejected on its own terms for the simple reason that it is bad economics.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"
Critics often point out that this emphasis on economics debases and sacrifices other important values such as equality, social inclusion, democratic deliberation, and justice. Those political and social objectives obviously matter enormously, and in some contexts they matter the most. They cannot always, or even often, be achieved by means of technocratic economic policies; politics must play a central role.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"
A journalist calls an economics professor for his view on whether free trade is a good idea. The professor responds enthusiastically in the affirmative. The journalist then goes undercover as a student in the professor's advanced graduate seminar on international trade. He poses the same question: Is free trade good? This time the professor is stymied. "What do you mean by 'good?'" he responds. "And good for whom?" The professor then launches into an extensive exegesis that will ultimately culminate in a heavily hedged statement: "So if the long list of conditions I have just described are satisfied, and assuming we can tax the beneficiaries to compensate the losers, freer trade has the potential to increase everyone's well being." If he is in an expansive mood, the professor might add that the effect of free trade on an economy's long-term growth rate is not clear either and would depend on an altogether different set of requirements.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"
There is nothing wrong with markets, private entrepreneurship, or incentives -- when deployed appropriately. Their creative use lies behind the most significant economic achievements of our time. As we heap scorn on neoliberalism, we risk throwing out some of neoliberalism's useful ideas. The real trouble is that mainstream economics shades too easily into ideology, constraining the choices that we appear to have and providing cookie-cutter solutions.
Dani Rodrik, "Rescuing Economics from NeoliberalismRescuing Economics from Neoliberalism"